The Analysis of Effects of Operating Leverage, Financial Leverage, and Liquidity on Profitability in the Telecommunications Industry Listed in Indonesia Stock Exchange

DOI

10.2991/aebmr.k.200514.025How to use a DOI?

Keywords

financial leverage, liquidity, operating leverage, profitability, telecommunication company

Abstract

The creativity and innovation of domestic telecommunications operators is still very slow and lagging behind the creativity and innovation developed abroad. This has an impact on profitability measured by ROA on five telecommunications companies listed in the IDX. Often companies need additional funds in expanding their business units. Therefore, one of the ways in which companies fulfill their funding needs is to use operating leverage and financial leverage. In this case the company must also pay attention to company liquidity, which is the company’s ability to pay all short-term financial obligations at maturity. The purpose of this study is to analyze the effect of operating leverage (DOL), financial leverage (DFL) and liquidity (CR) on profitability (ROA) in the telecommunications industry listed in the IDX. The research method used is descriptive verification analysis with explanatory survey approach and hypothesis testing using multiple regression analysis with panel data. The sampling technique uses purposive sampling to obtain five companies of research samples. Research period for 2012-2018. The results of this study are operating leverage and financial leverage not significant positive effect on profitability, liquidity has a significant negative effect on profitability, and simultaneously operating leverage, financial leverage, and liquidity have an effect on profitability. Suggestions that can be given in accordance with the results of the study are for Telecommunications Companies need to perform liquidity risk management which means maintaining sufficient cash balances in the effort to fulfill financial liabilities.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Lokita Rizky Megawati
PY  - 2020
DA  - 2020/05/18
TI  - The Analysis of Effects of Operating Leverage, Financial Leverage, and Liquidity on Profitability in the Telecommunications Industry Listed in Indonesia Stock Exchange
BT  - Proceedings of the First ASEAN Business, Environment, and Technology Symposium (ABEATS 2019)
PB  - Atlantis Press
SP  - 110
EP  - 115
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.200514.025
DO  - 10.2991/aebmr.k.200514.025
ID  - Megawati2020
ER  -