Research Article
THE EMPIRICAL RELATIONSHIP OF ROA AND NPM ON THE PERFORMANCE OF CONSUMER GOODS COMPANIES IN INDONESIA: A GENERAL REVIEW OF BUILDING UP ECONOMY
@INPROCEEDINGS{10.4108/eai.7-11-2019.2295254, author={Dewi Wuisan}, title={THE EMPIRICAL RELATIONSHIP OF ROA AND NPM ON THE PERFORMANCE OF CONSUMER GOODS COMPANIES IN INDONESIA: A GENERAL REVIEW OF BUILDING UP ECONOMY}, proceedings={Proceedings of The First International Conference on Global Innovation and Trends in Economy, InCoGITE, 7 November 2019, Tangerang, Banten, Indonesia}, publisher={EAI}, proceedings_a={INCOGITE}, year={2020}, month={5}, keywords={consumer goods 5 classical assumptions roa npm arima}, doi={10.4108/eai.7-11-2019.2295254} }- Dewi Wuisan
Year: 2020
THE EMPIRICAL RELATIONSHIP OF ROA AND NPM ON THE PERFORMANCE OF CONSUMER GOODS COMPANIES IN INDONESIA: A GENERAL REVIEW OF BUILDING UP ECONOMY
INCOGITE
EAI
DOI: 10.4108/eai.7-11-2019.2295254
Abstract
Understanding the company's performance is the desire of the company and useful for investors. A consumer goods company continues to survive in every economic situation because it is a consumption business needed by every society regardless of the country's economic situation. Looking at the company's performance in generating profits and knowing how to predict return on asset (ROA) for the coming year helps the company to see its growth in challenges of future economic. There were 6 companies involved in this study: ADES, ALTO, CEKA, DLTA, INDF and MYOR with 54 data from 2009 to 2017, taken from Jakarta Stock Exchange. There were 2 equations used: ROA (independent variables were net profit margin (NPM), R_MKT, return on equity (ROE), revenue and the dummy variable was type to distinguish food and beverage companies), and NPM (independent variable: ROA, current ratio and earnings per share (EPS)). The results show that ROA and NPM had a simultaneous relationship where they influence each other. Therefore, the increase in current ratio would result in an increase in NPM so as to increase the company performance described by the increase in ROA. In the calculation using a dummy variable (type), it was found that it would reduce the influence of each independent variable to dependent variable although the decrease was not significant. Meanwhile, the calculation by using ARIMA was the goal of predicting ROA in the years to come to see the company development.
