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The Economics and Finance Letters

March 2019, Volume 6, 1, pp 78-91

Profitability Behavior of Plastic Industries in Indonesia

Erwin Mangaratua Pardosi

,

Bambang Mulyana

Erwin Mangaratua Pardosi 1 ,

Bambang Mulyana 1 
  1. Postgraduate Program, Mercu Buana University, Indonesia. 1

Pages: 78-91

DOI: 10.18488/journal.29.2019.61.78.91

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Article History:

Received: 22 January, 2019
Revised: 05 March, 2019
Accepted: 12 April, 2019
Published: 03 June, 2019


Abstract:

This study aims to analyze the effects on the profitability (net profit margin, return on assets and return on equity) of plastic companies by internal influences (current ratio, debt to equity ratio and total asset turnover) and external influences (exchange rate, petroleum price and inflation). The object of the research is the plastic industries registered in the Indonesian stock exchange with a total of 9 industries and in the period 2012 - 2017. The methodology used is descriptive quantitative research and causality with purposive sampling technique and panel data regression analysis. The results of this study indicate that the current ratio has a partially positive effect, particularly significant in terms of net profit margin. Current ratio and total asset turnover also have a partially positive effect, with significant return on assets. Debt to equity ratio partially has a partially negative effect, but a significant return on equity.
Contribution/ Originality
This study is one of very few that has investigated the causal relationship between internal and external influences on profitability. Consequently, it highlights the importance of identifying financial ratios and macroeconomics with a view to increasing profitability.

Keywords:

Profitability, Financial behavior, Internal influence, External influence, Financial ratios.

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Funding:

This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.

Acknowledgement:

Both authors contributed equally to the conception and design of the study.

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