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Journal : Interdisciplinary Social Studies

Does free cash flow moderate the effect of profitability and capital structure on company value? Mangku, I Ketut; Patonangan, Markliv; Najmudin, Najmudin; Susanti, Fatonah Eka
Interdisciplinary Social Studies Vol. 3 No. 2 (2024): January-March 2024 (Regular Issue)
Publisher : International Journal Labs

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.55324/iss.v3i2.647

Abstract

This study aims to obtain empirical evidence about the effect of profitability and capital structure moderated by free cash flow on firm value. The research object is a company included in the classification of the raw material industry sector which is listed on the Indonesia Stock Exchange. The variables used as proxies for profitability return on assets (ROA) and return on equity (ROE); the capital structure variable is proxied by the debt to assets ratio (DAR) and the debt to equity ratio (DER), and the firm value is proxied by the price to book value (PBV). While the moderating variable uses free cash flow (FCF). Data analysis used multiple regression with the least squares method, and the sample selection method used purposive sampling. Based on the best model produced in this study, it is proven that free cash flow can significantly strengthen the effect of company profitability proxied by return on assets ROA and return on equity (ROE); the effect of capital structure proxied by DAR on firm value, but not as good as the direct effect of the moderated variables. The study reveals that profitability and capital structure significantly impact firm value, with free cash flow moderated by ROA. However, the model does not outperform direct effects, suggesting improved ROE, DAR management, and effective free cash flow management.
Co-Authors Abidin, Maula Zaenal Ade Banani Adipura Danang Maulana Agus Setiono Agustin, Fitria Ahmad Fatoni Ahmed Bakhit, Mohammed Elfadil Aida Maqbullah Akbar Ilham Adi Pangestu Amalyah, Sarah Anggraeni, Ade Irma Anggun Mely Mustika Arini Zubaedah Atiyah, Isti Nuzulul BAMBANG SUNARKO Bosdon Andre Gevril Sinaga Budi Rahardjo Carolina Ety Widjayanti Daryono Daryono, Daryono Dea Nur Safitri Della Nanda Puspitararas Devy Apriandi Devy Widya Apriandi Devy Widya Apriandi Dian Siska Verawati Diego Agung Laksono Dini Nurjannah Dwita Setiyani Ekaningtyas Widiastuti Ekaningtyas Widiastuti Ekaningtyas Widiastuti Esih Jayanti Fajar Adi Prakoso Fajar Adi Prakoso Fajar Adi Prakoso Faraby Muhammad Zabaril Febriyanti, Erika Fika Rahmanita Gigih Rafif Suthanto Hanifah, Fitria Hasibuan, Reza Rahmadi Hasuri, Hasuri Helmia Mabchut Nahdi Ika Yustina Rahmawati Inastasya Shafira Indiyastuti, Nurhayati Indyastuti, Devani Laksmi Intan Shaferi, Intan Iqbal Iqbal Irfan Muhaimin Iwan Ridwan Jakaria Jakaria Jaryono Jaryono Jaryono Jaryono Jaryono, Jaryono Jihan Amalia Joni Prayogi Laksana, Rio Dhani Lasmedi Afuan Leni Susanti Lina Rifda Naufalin Lusi Suwandari ma'zumi, ma'zumi Maemonah, Maemonah Maisaroh, Ima Maksum, Maharani Pratiwi Mangku, I Ketut Marwah, Amelia Siti Maula Zaenal Abidin Mei Rani Amalia Muhammad Raditya Rahagi Muhammad Taufiq Nahdi, Helmia Mabchut Najib, Mohamad Ainun Nandang Bekti Karnowati Nandang Bekti Karnowati Nandang Bekti Karnowati Naufal Amara Syihan Neneng Sofiyanti Novandri, Weni Nunik Kadarwati Nurbaeti, Anindya Rizki Nurhayati Indiyastuti Nurtania Sudarmi Patonangan, Markliv Pradipta Setyanto, Refius Putra Pratama Putriana Setyaningtyas Fadilah Rabiatul Adawiyah, Wiwiek Rachmaniar Myrianda Dwiputri Rayhan Fidho Baghaskoro RETNO WIDURI Retno Widuri Reza Faizal Anshori Rio Dhani Laksana Ronald Haryanto Saleh, Sujai Sarah Triayuni Setyanto, Refius Pradipta Sigit Wibowo Dwi Nugroho Sofiatul Khotimah, Sofiatul SRI LESTARI Sri Lestari Sri Lestari Sri Rahayu Subroto, Muhammad Arshy Andika Sudarto Sudarto Sudarto Sudarto Sujanah, Nanah Suliyanto Suliyanto Susanti, Fatonah Eka Syahrul Syarifudin Syifa Fitriani Syihabudin, Syihabudin Tiyan Fatkhurrokhman Wahyudin Wahyudin Wandika , Hari Wely Hadi Gunawan. Weni Novandari Weni, Weni When Nada Milenia Wina Taskia Aulia Wisanggeni Bagus Anggoro Wiwiek R. Adawiyah Wiwiek Rabiatul Adawiyah Wiwiek Rabiatul Adawiyah Yulis Maulida Berniz Yuni Utami Yunus Agung Kristanto Zainal Abidin Zubaedah, Arini