<![CDATA[This study aims to analyze the impact of profitability and leverage on firm value through a literature review approach. A qualitative descriptive method was employed, involving the identification, examination, and evaluation of various scholarly articles and prior research findings relevant to the topic. Through this review process, the study seeks to construct a comprehensive understanding of the relationships between profitability, leverage, and firm value based on empirical evidence published by previous researchers. The literature analysis indicates that profitability tends to have a positive effect on firm value. A company's ability to generate high profits signifies strong financial performance and reflects promising business prospects. Such conditions serve as a positive signal to investors, thereby boosting their confidence in the company. Increased investor confidence drives demand for shares, which subsequently contributes to an increase in firm value. Conversely, the impact of leverage on firm value yields mixed results. Some studies suggest that leverage can enhance firm value when debt is managed optimally, as it offers benefits such as tax efficiency and improved corporate performance. However, other studies have found that leverage does not significantly affect firm value. These divergent findings are generally attributed to high debt levels, which can heighten financial risk and diminish investor confidence in the company.]]>
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