ANALYSIS OF THE EFFECT OF FINANCIAL LEVERAGE ON PROFITABILITY IN FOOD AND BEVERAGE SUBSECTOR COMPANIES LISTED ON THE IDX FOR THE PERIOD 2017-2023

Abstract

This study aims to analyze the effect of leverage on profitability in food and beverage subsector companies listed on the Indonesia Stock Exchange from 2017 to 2023. This research employs a quantitative approach using documentation methods. The research objects are secondary data in the form of financial reports from food and beverage companies listed on the Indonesia Stock Exchange during the 2017-2023 period. The independent variables in this study include DAR, Debt to EBITDA, DER, and ICR, while the dependent variable is Return on Equity (ROE). The samples were selected purposively, comprising 22 companies. Panel data regression analysis was conducted. The results indicate that Debt to EBITDA and DER have a significant influence on ROE, with negative and positive directions, respectively. Meanwhile, DAR and ICR do not show a significant effect on ROE in food and beverage companies in Indonesia. This research is expected to contribute to the profitability literature and assist investors in making investment decisions by considering internal company aspects such as DAR, Debt to EBITDA, DER, and ICR.