THE EFFECT OF PROFITABILITY ON FIRM VALUE IN MANUFACTURING COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE
- Prosiding Internasional
- Erik Kartiko, Dida Farida Latipatul Hamdah, Lina Nurlaela, Milda Apriliya Royani
- Proceedings of International Conference on Sustainable Collaboration in Business, Technology, Information and Innovation (SCBTII) Third Edition, December 2022 Vol 3. Year 2022 e-ISSN: 2621-3192
Abstrak
The research topic discusses the effect of profitability on firm value. Fatima (2017) that the relationship between profitability and firm value can be said to be directly proportional or positively related, thereby showing the companys performance. According to Arizona (2020): Companies that can generate high profits will tend to have a higher company value, because high company profits will increase the companys stock price, which means it will increase the value of the company in the eyes of investors. However, in reality, the return on equity (ROE) has increased but the price to book value (PBV) has actually decreased. The population and sample of this research are 26 companies listed in the food and beverage industry sub-sector manufacturing companies on the Indonesia Stock Exchange. The sampling technique is non-probability sampling with quantitative methods. Then data collection using library research, internet studies and documentation. SPSS Version 20.0 application is used for data processing. The results of the study explain that profitability has no significant effect on firm value. This is because investors pay more attention to prospects, risks and commodities. In addition, because profitability is not the only indicator that investors pay attention to in investing. The results of this study are in line with the results of research conducted by Lambu (2019) that: Profitability partially has no significant effect on firm value. The results of this study provide a broad idea so that the companys value can be optimal in considering what factors are the companys weaknesses. Keywords: Profitability, Firm Value.
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