JEFMS Journal

ABSTRACT:

Market confidence in a company is determined by the size of the company's value. This trust is not only in the current financial performance but includes the company's prospects in the future. Reilly & Brown (2011) said that among the methods that can be used to determine firm value is by comparing stock prices to relevant variables that affect the stock value such as price to book value (PBV). The price to book value (PBV) is the comparison between the market price per share and the book value per share or the comparison between the market value (market price) and its book value (original value). Based on previous research, there are several factors that can affect firm value, including: funding decisions, dividend policy, investment decisions, CSR, company growth, and company size. Some of these factors have an inconsistent relationship and influence on firm value. This study aims to determine the effect of DER and CR on ROE and PBV in the Food and Beverages industry sub-sector companies listed on the Indonesia Stock Exchange for the period 2014-2019. The company that became the population in this study were 32 with a sample of 12 companies determined by purposive sampling method. Research data processing and hypothesis testing using path analysis techniques with SPSS version 22 application tools.

The results of this study indicate that, simultaneously or partially DER and CR have a positive and significant effect on ROE, DER and CR simultaneously have a negative and significant effect on PBV, but partially DER and CR have a negative and insignificant effect on PBV. ROE has a positive and significant effect on PBV, and ROE is proven to be an intervening variable or a mediating variable for the effect of DER and CR on PBV.

KEYWORDS:

Debt to Equity Ratio, Current Ratio, Return on Equity, and Price to Book Value

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