Specific industrial dynamics

Oct 13, 2025 by pynkocean.com 139 views

The Influence of Current Ratio, Debt to Equity Ratio, and Cash Dividends on the Growth of Consumer Goods Companies Listed on the Indonesia Stock Exchange

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. The consumer goods sector is a significant contributor to the IDX, with many well-established companies operating in this space. However, the growth of consumer goods companies on the IDX is influenced by various factors, including financial ratios such as current ratio, debt to equity ratio, and cash dividends. This study aims to analyze the effect of these financial ratios on the growth of consumer goods companies listed on the IDX.

Background

The current ratio, debt to equity ratio, and cash dividends are three key financial ratios that are widely used to assess a company's financial health and performance. The current ratio, also known as the working capital ratio, measures a company's ability to pay its short-term debts. A high current ratio indicates that a company has sufficient liquid assets to meet its short-term obligations. The debt to equity ratio, on the other hand, measures a company's level of indebtedness and its ability to meet its long-term obligations. A high debt to equity ratio indicates that a company is highly leveraged and may be at risk of defaulting on its debt obligations. Cash dividends, on the other hand, are payments made by a company to its shareholders in the form of cash or other liquid assets.

Methodology

This study uses a quantitative approach with multiple linear regression analysis techniques as a calculation aid. The research sample was taken by the Purposive Sampling Method, with a total of 14 consumer goods companies listed on the IDX. The study period was conducted for 3 years, from 2007 to 2009. The data was collected from various sources, including the IDX, company annual reports, and financial databases.

Results

The results of this study show that simultaneously, the ratio of current, debt to equity ratio, and cash dividends did not have a significant effect on the growth of consumer goods companies on the IDX. Partially, the current ratio, debt to equity, and cash dividends ratio also have no significant influence on the growth of consumer goods companies on the IDX.

Deeper Analysis

The results of this study reveal interesting facts that financial factors that are generally considered to have an effect on company growth, such as current ratios, debt to equity ratios, and cash dividends, do not show significant effects on the growth of consumer goods companies on the IDX. This can be caused by several factors, including:

The dominant role of non-financial factors: Most likely, non-financial factors, such as marketing strategies, product innovation, and macroeconomic conditions, play a more dominant role in determining the growth of consumer goods companies.
Specific industrial dynamics: The consumer goods industry has unique characteristics and dynamics. Factors such as rapidly changing consumer tastes, fierce competition, and short product cycles can be the main determinant of the company's growth.
Limited samples and research periods: This research only involved 14 consumer goods companies for 3 years. Sample expansion and research period can produce different results.

Recommendations and Implications

The results of this study provide several implications and recommendations for industry players, investors, and other stakeholders:

Focus on non-financial factors: Consumer goods companies need to focus on effective marketing strategies, innovative product development, and adaptation to changes in consumer trends.
The importance of monitoring macroeconomic conditions: Macroeconomic conditions, such as inflation rates, currency exchange rates, and consumer purchasing power, have a big influence on the performance of consumer goods companies.
Further research: Further research with a broader sample and a longer research period is needed to test the effect of financial variables on the growth of consumer goods companies.

Conclusion

This study opens space for a deeper understanding of the factors that influence the growth of consumer goods companies in Indonesia. With a focus on the analysis of non-financial and industrial dynamics factors, it is hoped that more comprehensive insights can be obtained to improve company performance and achieve sustainable growth.

Limitations

This study has several limitations, including:

Limited sample size: The study only involved 14 consumer goods companies, which may not be representative of the entire consumer goods sector on the IDX.
Short research period: The study was conducted for only 3 years, which may not be sufficient to capture the long-term effects of financial ratios on company growth.
Data quality: The quality of the data used in this study may be affected by various factors, including data accuracy, completeness, and consistency.

Future Research Directions

Future research should focus on addressing the limitations of this study, including:

Increasing sample size: Future research should involve a larger sample size to ensure that the results are more representative of the entire consumer goods sector on the IDX.
Extending research period: Future research should be conducted over a longer period to capture the long-term effects of financial ratios on company growth.
Improving data quality: Future research should focus on improving data quality by using more accurate, complete, and consistent data sources.

References

[List of references used in the study]

Appendix

[Appendix containing additional information, such as tables, figures, and raw data]
Frequently Asked Questions (FAQs) about the Influence of Current Ratio, Debt to Equity Ratio, and Cash Dividends on the Growth of Consumer Goods Companies Listed on the Indonesia Stock Exchange

Q: What is the purpose of this study? A: The purpose of this study is to analyze the effect of current ratio, debt to equity ratio, and cash dividends on the growth of consumer goods companies listed on the Indonesia Stock Exchange.

Q: What is the current ratio, and how does it affect company growth? A: The current ratio, also known as the working capital ratio, measures a company's ability to pay its short-term debts. A high current ratio indicates that a company has sufficient liquid assets to meet its short-term obligations. However, this study found that the current ratio does not have a significant effect on the growth of consumer goods companies on the IDX.

Q: What is the debt to equity ratio, and how does it affect company growth? A: The debt to equity ratio measures a company's level of indebtedness and its ability to meet its long-term obligations. A high debt to equity ratio indicates that a company is highly leveraged and may be at risk of defaulting on its debt obligations. However, this study found that the debt to equity ratio does not have a significant effect on the growth of consumer goods companies on the IDX.

Q: What is cash dividend, and how does it affect company growth? A: Cash dividend is a payment made by a company to its shareholders in the form of cash or other liquid assets. This study found that cash dividend does not have a significant effect on the growth of consumer goods companies on the IDX.

Q: What are the implications of this study for industry players, investors, and other stakeholders? A: The results of this study suggest that consumer goods companies should focus on effective marketing strategies, innovative product development, and adaptation to changes in consumer trends. Additionally, macroeconomic conditions, such as inflation rates, currency exchange rates, and consumer purchasing power, have a big influence on the performance of consumer goods companies.

Q: What are the limitations of this study? A: This study has several limitations, including a limited sample size, a short research period, and potential data quality issues.

Q: What are the future research directions for this study? A: Future research should focus on addressing the limitations of this study, including increasing the sample size, extending the research period, and improving data quality.

Q: What are the practical implications of this study for consumer goods companies? A: The results of this study suggest that consumer goods companies should focus on non-financial factors, such as marketing strategies, product innovation, and adaptation to changes in consumer trends, to achieve sustainable growth.

Q: What are the implications of this study for investors and other stakeholders? A: The results of this study suggest that investors and other stakeholders should consider non-financial factors, such as marketing strategies, product innovation, and adaptation to changes in consumer trends, when evaluating the performance of consumer goods companies.

Q: What are the implications of this study for policymakers and regulators? A: The results of this study suggest that policymakers and regulators should consider the impact of non-financial factors, such as marketing strategies, product innovation, and adaptation to changes in consumer trends, on the growth of consumer goods companies when developing policies and regulations.

Q: What are the implications of this study for the Indonesia Stock Exchange (IDX)? A: The results of this study suggest that the IDX should consider the impact of non-financial factors, such as marketing strategies, product innovation, and adaptation to changes in consumer trends, on the growth of consumer goods companies when developing listing requirements and other regulations.