Analysis of the Effect of Debt to Equity Ratio, Current Ratio, Total Asset Turnover, Net Profit Margin & Gross Profit Margin on Profit Growth

Abstract

This study aims to examine the financial ratios that affect profit growth in textile and garment sector companies listed on the Indonesia Stock Exchange (IDX) for the 2016-2020 period. In this study, the authors use 6 (six) variables, where the dependent variable is profit growth (Y), then the independent variables consist of Debt to Equity Ratio (X1), Current Ratio (X2), Total Asset Turnover (X3), Net Profit Margin (X4), and Gross Profit Margin (X5). The population taken from the BEI is 21 companies with a sample of 9 companies. This sample was taken using a purposive sampling technique by taking data from the 2016-2020 financial statements. The type of data used in this research is secondary data. The research method used is descriptive analysis, classical assumption test, multiple linear regression analysis, and hypothesis testing. Based on the results of the partial study, the variable that has a significant effect on profit growth is only the Gross Profit Margin (GPM) variable, and for the other 4 variables it has no significant effect on profit growth. But simultaneously, all independent variables can have a significant effect on profit growth.Keywords: current ratio • debt to equity ratio • gross profit margin • net profit margin • profit growth • total asset turnover