THE EFFECT OF INVESTMENT OPPORTUNITIES AND SOLVENCY ON THE PROFITABILITY OF NON-FINANCIAL COMPANIES ON THE IDX

Abstract

This research was made to examine the role of investment opportunity and solvency to the profitability of non-financial companies listed on the Indonesia Stock Exchange in 2016-2018. The investment opportunity is measured by the ratio of the market value of the common stock to book value of common stock and earnings per share to the price per share. Solvency is measured by Debt to Equity Ratio. Profitability is measured by Return on Equity. The population in this research are non-financial companies listed on the IDX. The samples used are property and real estate companies. The sampling method used is purposive sampling method. The data source used is secondary data collected through documentation of data obtained from the official website of the Indonesia Stock Exchange (www.idx.co.id). Data analysis used panel data regression analysis with the Random Effect model. Processing data used the Eviews 9.0 program. The results of this study indicate that there is a significant positive effect between the ratio of the market value of the common stock to book value of the common stock, earnings per share to the price per share, and debt to equity on return on equity.

Keywords: Investment Opportunities, Solvability, Profitability.