Improve asset management efficiency

Oct 13, 2025 by windailys.com 39 views

The Effect of Total Assets, Liquidity, Solvency, and Company Size on Profitability in Infrastructure, Utility, and Transportation Sector Service Companies Listed on the Indonesia Stock Exchange for the 2016-2020 Period

Introduction

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a wide range of companies listed across various sectors, including infrastructure, utility, and transportation. These sectors are crucial to the country's economic growth, providing essential services such as energy, water, and transportation. However, the profitability of companies in these sectors can be influenced by various factors, including total assets, liquidity, solvency, and company size. This study aims to determine and analyze the effect of these factors on profitability in service companies listed on the IDX during the 2016-2020 period.

Methodology

This study employed a causal associative research design with quantitative data obtained from audited financial statements. The analysis method used was multiple linear regression with panel data. The population studied consisted of 220 companies, while the samples taken were 44 companies. The data was collected from the IDX database and analyzed using statistical software.

Results

The results of this study showed that simultaneously, the total rotation of the total assets, liquidity, solvency, and company size had a significant influence on profitability in infrastructure, utility, and transportation service companies listed on the IDX. However, when viewed partially, there were variations in the impact of each variable on profitability.

Total Turnover of Assets

The total turnover of assets had a positive and significant influence on profitability. This shows that the more efficient a company in managing its assets, the higher the profit produced. Companies that are able to maximize the use of assets can increase income, so that it has a positive impact on profitability. This finding is consistent with previous studies that have shown that asset management efficiency is a key factor in determining profitability.

Liquidity

Despite having a positive impact, the effect of liquidity on profitability was not significant. This may be caused by the fact that service companies in this sector are more focused on short-term cash flow management and fulfillment of financial liabilities, not solely in increasing long-term profitability. This finding suggests that liquidity is not a critical factor in determining profitability in this sector.

Solvency

The results showed that solvency had a negative and significant influence on profitability. This may reflect that companies with high levels of debt experience financial pressure that can reduce their ability to generate profits. Debt that is too large can be a burden for the company in the long run, reducing its capacity to invest in new projects or innovations. This finding is consistent with previous studies that have shown that high levels of debt can negatively impact profitability.

Company Size

This variable also showed a positive but not significant impact on profitability. The size of the company is often associated with the ability to achieve economy scale, but in the context of this study, other factors may be more influential on profitability than the size of the company itself. This finding suggests that company size is not a critical factor in determining profitability in this sector.

Conclusion

Overall, this research provides important insights for investors and company management in making decisions. Understanding the effect of financial variables such as the total turnover of assets, liquidity, solvency, and company size on profitability can help companies in financial management strategies and improve business performance in competitive markets. This finding is expected to be a reference in developing policies and business strategies to increase profitability in the infrastructure, utility and transportation sectors in Indonesia.

Recommendations

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

Improve asset management efficiency: Companies should focus on improving their asset management efficiency to increase profitability.
Manage liquidity effectively: Companies should manage their liquidity effectively to ensure that they have sufficient cash flow to meet their financial liabilities.
Reduce debt levels: Companies should reduce their debt levels to avoid financial pressure and improve their ability to generate profits.
Focus on long-term profitability: Companies should focus on long-term profitability rather than short-term cash flow management.

Limitations

This study has several limitations, including:

Sample size: The sample size was limited to 44 companies, which may not be representative of the entire population.
Data quality: The data used in this study was obtained from audited financial statements, which may not be accurate or reliable.
Methodology: The multiple linear regression analysis used in this study may not be the most appropriate method for analyzing the data.

Future Research

Future research should focus on:

Increasing the sample size: Future studies should aim to increase the sample size to ensure that the results are more representative of the entire population.
Using alternative data sources: Future studies should use alternative data sources, such as company reports or industry publications, to ensure that the data is accurate and reliable.
Using alternative methodologies: Future studies should use alternative methodologies, such as panel data analysis or time series analysis, to ensure that the results are more robust and reliable.
Frequently Asked Questions (FAQs) about the Effect of Total Assets, Liquidity, Solvency, and Company Size on Profitability in Infrastructure, Utility, and Transportation Sector Service Companies Listed on the Indonesia Stock Exchange for the 2016-2020 Period

Q: What is the main objective of this study? A: The main objective of this study is to determine and analyze the effect of total assets, liquidity, solvency, and company size on profitability in service companies in the infrastructure, utility, and transportation sectors listed on the Indonesia Stock Exchange during the 2016-2020 period.

Q: What type of research design was used in this study? A: This study employed a causal associative research design with quantitative data obtained from audited financial statements.

Q: What analysis method was used in this study? A: The analysis method used in this study was multiple linear regression with panel data.

Q: What were the results of this study? A: The results of this study showed that simultaneously, the total rotation of the total assets, liquidity, solvency, and company size had a significant influence on profitability in infrastructure, utility, and transportation service companies listed on the Indonesia Stock Exchange. However, when viewed partially, there were variations in the impact of each variable on profitability.

Q: What is the significance of the total turnover of assets on profitability? A: The total turnover of assets had a positive and significant influence on profitability. This shows that the more efficient a company in managing its assets, the higher the profit produced.

Q: What is the significance of liquidity on profitability? A: Despite having a positive impact, the effect of liquidity on profitability was not significant. This may be caused by the fact that service companies in this sector are more focused on short-term cash flow management and fulfillment of financial liabilities, not solely in increasing long-term profitability.

Q: What is the significance of solvency on profitability? A: The results showed that solvency had a negative and significant influence on profitability. This may reflect that companies with high levels of debt experience financial pressure that can reduce their ability to generate profits.

Q: What is the significance of company size on profitability? A: This variable also showed a positive but not significant impact on profitability. The size of the company is often associated with the ability to achieve economy scale, but in the context of this study, other factors may be more influential on profitability than the size of the company itself.

Q: What are the implications of this study for investors and company management? A: Understanding the effect of financial variables such as the total turnover of assets, liquidity, solvency, and company size on profitability can help companies in financial management strategies and improve business performance in competitive markets.

Q: What are the limitations of this study? A: This study has several limitations, including the sample size, data quality, and methodology used.

Q: What are the recommendations for future research? A: Future research should focus on increasing the sample size, using alternative data sources, and using alternative methodologies to ensure that the results are more robust and reliable.

Q: What are the practical implications of this study for the infrastructure, utility, and transportation sectors in Indonesia? A: This study provides important insights for investors and company management in making decisions. Understanding the effect of financial variables such as the total turnover of assets, liquidity, solvency, and company size on profitability can help companies in financial management strategies and improve business performance in competitive markets. This finding is expected to be a reference in developing policies and business strategies to increase profitability in the infrastructure, utility and transportation sectors in Indonesia.