Financial ratio analysis in stock price: Evidence from Indonesia

Nurul Fitriani, Adib Minanurohman, Gery Lusiano Firmansah

Abstract


Main Purpose - This study aims to examine the association between financial ratios (including return on assets, debt to equity ratio, cash ratio, and total assets turnover ratio) with stock prices of Indonesian listed company in Indonesia Stock Exchange (IDX) except SIC 6 during 2015 – 2020.

Method - This study used Signaling theory and asymmetric information as a theoretical base for testing this association using purposive sampling technique. This research obtained final samples of 1603 firm-year observation and used regression analysis to answer the hypotheses.

Main Findings - The results show that return on assets ratio and cash ratio have positive and significant correlation with stock price. While debt to equity ratio has negative and significant correlation with stock price. Meanwhile, total assets turnover ratio has no significant correlation with stock price.

Theory and Practical Implications - The results of this study are expected to contribute to both the literature and practice. First, this study expands the literature on the types of financial ratios associated with stock prices as well as the literature on asymmetric information, and second, the results of this study are expected to help investors perform fundamental analysis to estimate the value of the target company.

Novelty - This research provides novelty in the form of the latest data updates until 2020 and analysis using old or young company categories which are related to low or high asymmetric information.


Keywords


financial ratio; stock price; signaling theory; firm age; Indonesia

Full Text:

PDF

References


Agustina, L., Meyliana, & Joni. (2021). Analysis of IPO Performance in Indonesia in the “Hot Market” Period and Its Influencing Factors. Jurnal Aset (Akuntansi Riset), 13(1): hal. 99-109.

Antara, I. M. Y., & Suryantini, N. P. S. (2019). Influence of market ratio to stock return on LQ 45 shares on Indonesian Stock Exchange. E-Jurnal Manajemen, 8(9): hal. 5507-5526.

Astutik, E.D., Surachman, Djazuli, A. (2014). The effect of fundamental and technical variables on stock price (Study on manufacturing companies listed in Indonesia Stock Exchange). Journal of Economics, Business, and Accountancy Ventura, 17(3): hal. 345-352.

Buigut, K., Soi, N., Koskei, I., Kibet, J. (2013). The effect of capital structure on share price on listed firms in Kenya. A case of energy listed firms. European Journal of Business and Management, 5(9): hal. 29-34.

Cleary, S., Povel, P., & Raith, M. (2007). The U-shaped investment curve: Theory and evidence. Journal of Financial and Quantitative Analysis, 42(1): hal. 1-39.

Connelly, B.L., Certo, S.T., Ireland, R.D., Reutzel, C.R. (2011). Signaling Theory: A Review and Assessment. Journal of Management, 37(1): hal. 39-67.

Daniel, H. (2015). The effect of internal factors on stock price of the company LQ 45 listed on the Indonesian Stock Exchange (IDX). EMBA Journals, 3(3): hal. 863-876.

Deitiana, T. (2013). Influence of current ratio on equity and total asset turn over against dividend payout ratio and implication on stock price company LQ 45. Journal of Business and Accounting, 15(1), hal. 82-88.

Durrah, O., Rahman, A. A. A., Jamil, S. A., Ghafeer, H. A. (2016). Exploring the relationship between liquidity ratios indicators of financial performance: an analytical study on food industrial companies listed in Amman Bursa. International Journal of Economics and Financial Issues, 6(2): hal. 435-441.

Fathinah, H., & Setiawan, C. (2021). The effect of financial ratios and firm size toward stock price of consumer goods industry listed in the IDX. 1st ICEMAC 2020: International Conference on Economics, Management, and Accounting: hal. 203-211.

Hanafi, M.M., & Halim, A. (2007). Financial Statement Analysis, 3rd Edition. Yogyakarta, UPP STIM, YPKN.

Harris, L. E. (1994). Minimum price variations, discrete bid-ask spreads, and quotation sizes. Review of Financial Studies 7(1): hal. 149-178.

Herawati, A., & Putra, A.S. (2018). The Influence of Fundamental Analysis on Stock Prices: The Case of Food and Beverage Industries. European Research Studies Journal, XXI(3): hal. 316-326.

Karasek, R., & Bryant, P. (2015). Signaling Theory: Past, Present, and Future. Electronic Business Journal, 14(12): hal. 550-558.

Kenton, W. (2022). Cash Ratio. Investopedia. Diakses pada 23 Juni 2022 melalui https://www.investopedia.com/terms/c/cash-ratio.asp#:~:text=A%20cash%20ratio%20is%20expressed,to%20pay%20off%20those%20debts.

Krasker, W.S. (1986). Stock price movements in response to stock issues under asymmetric information. Journal of finance, 41: hal. 93-105.

Kohansal, M.R., Dadrasmoghaddam, A., Karmozdi, K.M., Mohseni, A. (2013). Relationship between Financial Ratios and Stock Prices for the Food Industry Firms in Stock Exchange of Iran. World Applied Programming, 3(10): hal. 512-521.

Kundiman, A., & Hakim, L (2016). Pengaruh current ratio, debt to equity ratio, return on asset, return on equity terhadap harga saham pada indeks LQ 45 di BEI periode 2010-2014. Among Makarti, 9(18): hal. 80-98.

Leary, M.T., & Roberts, M.R. (2008). The Pecking Order, Debt Capacity, and Information Asymmetry. Working paper, Cornell University.

Pandansari, F.A. (2012). Analysis of Fundamental Factors Against Stock Price. Accounting Analysis Journal, 1(1): hal. 27-34.

Perdana, M.K., & Adriana, C.H. (2018). Factors influencing the stock price of banking companies in the Indonesia Stoke Exchange. Journal of Accounting and Strategic Finance, 1(1): hal.57-68.

Puspitaningtyas, Z. (2019). Empirical evidence of market reactions based on signaling theory in Indonesia stock exchange. Investment Management and Financial Innovations, 16(2): hal. 66-77.

Putri, L.P. (2015). Pengaruh profitabilitas terhadap harga saham pada perusahaan pertambangan batubara di Indonesia. Jurnal Ilmiah Manajemen dan Bisnis, 16(2): 49-59.

Putri, V.A., & Yustisia, N. (2021). Dampak rasio keuangan terhadap harga saham perusahaan barang konsumsi yang terdaftar di Bursa Efek Indonesia. Lisyabab Jurnal Studi Islam dan Sosial, 2(1): hal.1-16.

Roudaki, J., Babajani, J., & Tahriri, A. (2016). Informasi asymmetry: evidence from Iran listed companies. The international journal of accounting and business society, 24(1): hal. 47-65.

Sarwendhi, R. A., & Samekto, A. (2014). The effect of market-to-book ratio, asset structure, and earning after tax on the level of leverage in non-financial companies listed in Indonesia Stock Exchange 2007-2012. The Indonesian Accounting Review, 4(2): hal. 149-156.

Solihin, A., Afrizal, Sulistyowati, L. (2021). The effect of price earning ratio, current ratio, net profit margin, and debt to equity ratio on stock prices of the LQ 45 index the Indonesia stock exchange 2016-2018. International Journal of Science, Technology & Management, 2(5): hal. 1441-1448.

Subramanyam, K., & Wild, J. (2009). Financial statement analysis (10th ed.) USA: McGrawhill.

Sunardi, N., & Permana, R. (2019). Faktor-faktor yang mempengaruhi harga saham dan dampaknya pada nilai perusahaan (Studi kasus pada perusahaan sub sektor pertambangan minyak dan gas bumi yang terdaftar di bursa efek Indonesia tahun 2013-2017). Jurnal Ilmiah Manajemen Forkamma, 2(2): hal.62-72.

Sutrisno, W. A., & Yulianeu. (2017). Pengaruh CR, DER DAN TATO Terhadap PBV Dengan ROA Sebagai Variabel Intervening (Studi Pada Perusahaan Property & Real Estate Yang Terdaftar Pada BEI Tahun 2010-2014). Journal of Management, 3(3): hal. 1689–1699.

Thalassinos, I.E., Hanias, P.M., dan Curtis, G.P. (2012). Time series prediction with neural networks for the Athens Stock Exchange indicator. European Research Studies Journal, 15(2): hal.23-31.

Widodo, A. (2018). Analisis pengaruh current ratio (CR), total asset turnover (TATO), dan debt to asset ratio (DAR) terhadap return on asset (ROA) serta dampaknya terhadap nilai perusahaan (studi terhadap perusahaan jasa penunjang migas pada Bursa Efek Indonesia periode Ta. JIMF (Jurnal Ilmiah Manajemen Forkamma), 1(2): hal. 87-112.

Wijaya, R. (2017). Kinerja keuangan dan ukuran perusahaan terhadap harga saham dengan kebijakan dividen sebagai variabel intervening. Jurnal Keuangan dan Perbankan, 21(3): hal. 459-472.

Wulandari, A. I., & Badjra, I. B. (2019). Pengaruh profitabilitas terhadap harga saham pada perusahaan LQ 45 di Bursa Efek Indonesia (BEI). E-Jurnal Manajemen, 8(9): hal. 5722-5740.

Zaigham, G.H.K., Wang, X., Ali, H.S. (2019). Causal relation between stock market performance and firm investment in China: Mediating role of information asymmetry. Sage Open, Oktober-December: hal. 1-13.




DOI: https://doi.org/10.17509/jaset.v14i2.49132

Refbacks

  • There are currently no refbacks.


Creative Commons License

Jurnal ASET (Akuntansi Riset) is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License

View My Stats Visitor