The Effect of Profitability and Capital Structure on Company Performance in Helping Investors Analyze Financial Information: Market To Book Value and Price Earnings Ratio as a Mediation

DOI

10.2991/978-2-38476-228-6_29How to use a DOI?

Keywords

sustainable economy; company performance; investment decisions

Abstract

This research help to investors and analysts evaluate information from company financial reports in reducing economic uncertainty by using economic variables or company variables, that are predicted (observed) to become estimates of company performance. There are several methods that can be used to assess company performance, analysts used by Multiple Regression Analysis method. The ratio approach in this research is Return on Equity, Debt to Equity, Earnings per Share, Market Book Value Equity, Price Earnings and Tobins Q. The main objective of this research is to build an estimation model with these three approaches through mediation to be used as an analytical tool in estimating company performance, then compare which model is better in predicting the company's future investment decisions. The data analyzed in this research is cross section data, only samples that meet the criteria for helping investors are 476 years from 68 manufacturing companies listed on the Indonesia Stock Exchange with an observation period in 2016 - 2022 through purposive sampling. Model testing was carried out using statistical criteria tests and Sobel tests. The findings of this research found that net profit from capital and debt to capital ratio as well as stock market price and book value can influence company performance as investors consider investing their capital. However, net profit from the number of shares outstanding and the assessment of whether a share is expensive or cheap do not influence investment decisions. The novelty of this study helps investors in a sustainable economy regarding economic variables in selecting the best model by looking at the accuracy of the model in predicting investment decisions.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Andy Ismail
AU  - Djuminah Djuminah
PY  - 2024
DA  - 2024/06/12
TI  - The Effect of Profitability and Capital Structure on Company Performance in Helping Investors Analyze Financial Information: Market To Book Value and Price Earnings Ratio as a Mediation
BT  - Proceedings of the International Conference on Multidisciplinary Studies (ICoMSi 2023)
PB  - Atlantis Press
SP  - 341
EP  - 358
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-228-6_29
DO  - 10.2991/978-2-38476-228-6_29
ID  - Ismail2024
ER  -