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All Journal Implementasi Manajemen & Kewirausahaan
al'an Falina Rizkya
Universitas Singaperbangsa Karawang
Decision Sciences, Operations Research & Management Economics, Econometrics & Finance

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Profitability in Indonesian basic materials firms: Asset turnover, leverage, and growth al'an Falina Rizkya; Gusganda Suria Manda; Kosasih Kosasih; Nunung Nurhasanah
Implementasi Manajemen & Kewirausahaan Vol 6 No 2 (2026): IMKA JOURNAL
Publisher : Prodi Manajemen Fakultas Ekonomi dan Bisnis Universitas Wijaya Putra

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.38156/imka.v6i2.844

Abstract

This study analyzes the factors that influence profitability measured by Return on Assets (ROA) through Total Asset Turnover (TATO), Debt to Equity Ratio (DER), Sales Growth, and Firm Size in basic materials companies in Indonesia in 2019-2025. This research uses a balanced panel data set of 14 firms (98 firm-year observations) and applies a Fixed Effect Model with firm-level cluster-robust standard errors. The results show that DER has a significant negative effect on ROA, which means that higher leverage is related to lower profitability. Firm Size has a significant positive effect on ROA, suggesting that larger firms enjoy economies of scale and more robust operational capacity. On the other hand, TATO and Sales Growth have positive but insignificant effects, which suggest that efficiency in the use of assets and growth in revenues do not necessarily lead to higher profitability in capital intensive industries. Overall, capital structure and firm size are more important drivers of profitability than operational efficiency alone. These results emphasize the importance of prudent financing decisions and the appropriate asset size to maintain financial performance in the basic materials industry.
Co-Authors Gusganda Suria Manda Kosasih Nunung Nurhasanah