Analyzing the impact of other debt ratios on EPS

Oct 13, 2025 by windailys.com 128 views

Analysis of the Effect of Debt to Total Asset Ratio and Debt to Equity Ratio on Earnings Per Share in Property Sector Companies and Manufacturing Sectors that Go Public on the IDX

Introduction

The use of debt in a company's capital structure is a common practice in the business world. However, the impact of debt on a company's financial performance is a topic of ongoing debate among financial experts. In this study, we aim to analyze the effect of Debt to Total Asset Ratio (DTA) and Debt to Equity Ratio (DER) on Earning Per Share (EPS) in companies incorporated in the property sector and manufacturing sector listed on the Indonesia Stock Exchange (IDX). Our hypothesis is that both DTA and DER have a positive and significant influence on EPS in both sectors.

Research Methodology

In this study, we employed descriptive and statistical analysis methods to process the data obtained. The data analyzed were secondary data, which included 13 companies from the property sector and 57 companies from the manufacturing sector. The hypothesis test was carried out using the F test and the T test, with a significance level (α) of 5%. Data processing was done using SPSS 15.00 statistical software for Windows.

Research Result

The analysis results show that the DTA and DER variables can affect EPS in the analytical model for both sectors.

Property Sector

In the property sector, the analysis shows that:

Debt to Total Asset Ratio (DTA) variable has a positive and significant influence on Earning Per Share (EPS). This shows that the higher the DTA ratio, the greater the potential for earnings that can be received per share, indicating that companies can utilize debt effectively to improve their financial performance.
The debt to equity ratio (DER) variable also shows positive and significant effects on EPS. This reflects that the use of debt in a greater capital structure can contribute to increasing profit per share.

Manufacturing Sector

In the manufacturing sector, the results of the analysis showed:

Debt to Total Asset Ratio (DTA) variable has a positive and significant effect on Earning Per Share (EPS). As in the property sector, this indicates that companies can use their debts to generate higher profits per share.
However, the debt to equity ratio (DER) variable shows negative and significant effects on Earning Per Share (EPS). This can be interpreted that in the manufacturing sector, increasing the use of debt in the capital structure actually has a negative impact on profits per share, may be caused by higher interest expenses or the inability of the company to generate sufficient income to cover existing debts.

Conclusion

Based on the analysis above, it can be concluded that DTA has a positive influence on EPS in both sectors, while DER shows a positive influence in the property sector but on the contrary in the manufacturing sector. This finding provides important insights for company management and investors regarding how debt ratios can affect company performance listed on the IDX. Through wise debt management, companies can increase profitability and attract investors. This study provides a strong basis for further analysis and development of more effective financial strategies in dealing with market dynamics.

Implications of the Study

The findings of this study have several implications for company management and investors. Firstly, the results suggest that companies in the property sector can benefit from using debt in their capital structure, as it can lead to increased profits per share. However, in the manufacturing sector, the use of debt may have a negative impact on profits per share. Therefore, company management should carefully consider the use of debt in their capital structure and ensure that it is aligned with their business strategy.

Secondly, the study highlights the importance of debt management in achieving financial performance. Companies should strive to maintain a healthy debt-to-equity ratio and ensure that their debt is used effectively to generate profits. Investors should also consider the debt ratio of a company when making investment decisions, as it can have a significant impact on the company's financial performance.

Limitations of the Study

This study has several limitations that should be noted. Firstly, the study only analyzed data from companies listed on the IDX, which may not be representative of all companies in the property and manufacturing sectors. Secondly, the study only considered two debt ratios, DTA and DER, which may not be the only factors that affect EPS. Finally, the study only analyzed data from a specific time period, which may not be representative of the current market conditions.

Future Research Directions

This study provides a strong basis for further analysis and development of more effective financial strategies in dealing with market dynamics. Future research should consider the following directions:

Analyzing the impact of other debt ratios on EPS: This study only considered two debt ratios, DTA and DER. Future research should consider other debt ratios, such as debt-to-total asset ratio and debt-to-equity ratio, to determine their impact on EPS.
Examining the impact of debt on EPS in other sectors: This study only analyzed data from the property and manufacturing sectors. Future research should consider other sectors, such as the service sector, to determine the impact of debt on EPS.
Analyzing the impact of debt on EPS in different market conditions: This study only analyzed data from a specific time period. Future research should consider different market conditions, such as economic downturns or recessions, to determine the impact of debt on EPS.

Conclusion

In conclusion, this study provides important insights into the impact of debt on EPS in companies listed on the IDX. The findings suggest that DTA has a positive influence on EPS in both sectors, while DER shows a positive influence in the property sector but on the contrary in the manufacturing sector. This study provides a strong basis for further analysis and development of more effective financial strategies in dealing with market dynamics.
Q&A: Analysis of the Effect of Debt to Total Asset Ratio and Debt to Equity Ratio on Earnings Per Share in Property Sector Companies and Manufacturing Sectors that Go Public on the IDX

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the effect of Debt to Total Asset Ratio (DTA) and Debt to Equity Ratio (DER) on Earning Per Share (EPS) in companies incorporated in the property sector and manufacturing sector listed on the Indonesia Stock Exchange (IDX).

Q: What is the hypothesis of this study?

A: The hypothesis of this study is that both DTA and DER have a positive and significant influence on EPS in both sectors.

Q: What are the research methodologies used in this study?

A: The research methodologies used in this study are descriptive and statistical analysis methods. The data analyzed are secondary data, which include 13 companies from the property sector and 57 companies from the manufacturing sector. The hypothesis test was carried out using the F test and the T test, with a significance level (α) of 5%. Data processing was done using SPSS 15.00 statistical software for Windows.

Q: What are the findings of this study?

A: The analysis results show that the DTA and DER variables can affect EPS in the analytical model for both sectors. In the property sector, the DTA variable has a positive and significant influence on EPS, while the DER variable also shows positive and significant effects on EPS. In the manufacturing sector, the DTA variable has a positive and significant effect on EPS, while the DER variable shows negative and significant effects on EPS.

Q: What are the implications of this study?

A: The findings of this study have several implications for company management and investors. Firstly, the results suggest that companies in the property sector can benefit from using debt in their capital structure, as it can lead to increased profits per share. However, in the manufacturing sector, the use of debt may have a negative impact on profits per share. Therefore, company management should carefully consider the use of debt in their capital structure and ensure that it is aligned with their business strategy.

Q: What are the limitations of this study?

A: This study has several limitations that should be noted. Firstly, the study only analyzed data from companies listed on the IDX, which may not be representative of all companies in the property and manufacturing sectors. Secondly, the study only considered two debt ratios, DTA and DER, which may not be the only factors that affect EPS. Finally, the study only analyzed data from a specific time period, which may not be representative of the current market conditions.

Q: What are the future research directions?

A: This study provides a strong basis for further analysis and development of more effective financial strategies in dealing with market dynamics. Future research should consider the following directions:

Analyzing the impact of other debt ratios on EPS
Examining the impact of debt on EPS in other sectors
Analyzing the impact of debt on EPS in different market conditions

Q: What are the conclusions of this study?

A: In conclusion, this study provides important insights into the impact of debt on EPS in companies listed on the IDX. The findings suggest that DTA has a positive influence on EPS in both sectors, while DER shows a positive influence in the property sector but on the contrary in the manufacturing sector. This study provides a strong basis for further analysis and development of more effective financial strategies in dealing with market dynamics.

Q: What are the recommendations of this study?

A: Based on the findings of this study, the following recommendations are made:

Company management should carefully consider the use of debt in their capital structure and ensure that it is aligned with their business strategy.
Investors should consider the debt ratio of a company when making investment decisions, as it can have a significant impact on the company's financial performance.
Further research should be conducted to analyze the impact of other debt ratios on EPS and to examine the impact of debt on EPS in other sectors and different market conditions.