The Effects of Profitability Ratio, Liquidity, and Debt towards Investment Return

Lievia Angela Pinkan Komala, Paskah Ika Nugroho
(Faculty of Economics and Business, Universitas Kristen Satya Wacana, Jl Diponegoro 52-60 Salatiga, Indonesia)

Abstract: This research performed in order to test the influence of fundamental factors toward investment return which was measured by dividend payout ratio in manufacturing companies that listed in Indonesian Stock Exchange (BEI/IDX) during the period 2008-2010. The profitability ratio in this research was measured by Return on Equity, while liquidity ratio in this research used Current Ratio and leverage was measured by Debt to Equity Ratio. The samples were collected using the purposive sampling method and it has 35 companies for the resulting samples. The samples were analyzed using multiple linear regression technique. The result shows that the ROE has negative and significant effects to investment return, while CR and DER have no significant effects towards investment return.

Key words: return on equity; current ratio; debt to equity ratio; dividend payout ratio

JEL code: G1