PROFITABILITY, SOLVABILITY, PRICE EARNINGS RATIO AND PRICE TO BOOK RATIO AN EVIDENCE FROM INDONESIAN MANUFACTURING COMPANIES | Zendy

Geubrina Ria Andarint | Zendy

Open Access

PROFITABILITY, SOLVABILITY, PRICE EARNINGS RATIO AND PRICE TO BOOK RATIO AN EVIDENCE FROM INDONESIAN MANUFACTURING COMPANIES

Author(s) -

Geubrina Ria Andarint

Publication year - 2016

Publication title -

jurnal dinamika akuntansi dan bisnis

Language(s) - English

Resource type - Journals

eISSN - 2528-1143

pISSN - 2355-9462

DOI - 10.24815/jdab.v2i2.4212

Subject(s) - price–earnings ratio , profitability index , earnings , stock exchange , economics , financial ratio , financial statement , nonprobability sampling , econometrics , financial economics , business , monetary economics , earnings per share , accounting , finance , demography , population , audit , sociology

This study aims atexamining the correlation of profitability ratio and solvability ratio, collectively and partially, on price earnings ratio and price to book ratio of manufacturing companies listed on the Indonesian stock Exchange. The data were obtained from the annual financial statement of the companied with the period of study wasbetween 2011 and 2013.A multiple regression analysis has been performed to analysesamples of 57 manufacturing companies that have been selected based on the purposive sampling. The results showed that the profitability has a positive and significant correlation on the price earnings ratio and price to book ratio of the companiesstudied. Meanwhile, the solvabilityhas a negative and significant effect on the price earnings ratio and price to book ratio. This study has also documented that theprofitability and solvability of the companies are better in explaining change of the Price to Book Ratio (PBR) than the Price Earnings Ratio (PER). Keywords: profitability ratio, solvability ratio, price earnings ratio, price to book ratio, Indonesia, Manufacturing Companies

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