The Effect of Debt to Assets Ratio (DAR) and Cash Ratio on Corporate Profitability
DOI:
https://doi.org/10.36555/jasa.v10i2.3034Keywords:
Debt to Assets Ratio, Cash Ratio, Profitability, Financial Ratios, Indonesia Stock ExchangeAbstract
This study aims to analyze the effect of Debt to Assets Ratio (DAR) and Cash Ratio on profitability, measured by Net Profit Margin (NPM), of Consumer Non-Cyclicals companies listed on the Indonesia Stock Exchange (IDX) during 2021–2025. The study uses panel data from 11 companies, resulting in 55 observations, and applies panel data regression analysis. The results show that DAR has a significant negative effect on profitability, with a regression coefficient of -0.219383 and a probability value of 0.0092. In contrast, Cash Ratio has a significant positive effect on profitability, with a regression coefficient of 0.077351 and a probability value of 0.0253. These findings indicate that higher leverage is associated with lower profitability, while stronger liquidity is associated with higher profitability. The findings suggest that companies should manage debt prudently while maintaining adequate liquidity to support operational stability and profitability. The study provides practical implications for corporate financial management and investment decision-making.
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