The Effect of Profitability and Liquidity on Firm Value
Ratu Dintha IZFS (*), Eded Tarmedi, Yusuf Murtadlo Hidayat, Ahim Surachim, Christy Debora

Faculty of Economic and Business Education
Indonesia University of Education
Jl. Dr. Setiabudi No.229, Bandung 40154, Indonesia
*ratudinthaizfs[at]upi.edu

Abstract

This study aims to determine and examine the effect of Profitability as measured by Return on Equity (ROE) and Liquidity as measured by Current Ratio (CR) to Firm Value as measured by Price to Book Value (PBV). The research method used in this study is descriptive and verification. The data analysis method used is panel data regression analyst with Eviews Version 10 tool. This research was conducted on Cosmetics and Home Goods Sub-Sector Companies listed on the Indonesia Stock Exchange for the period 2011 to 2018, including 4 companies that met the sample requirements by using purposive sampling from 6 Cosmetics and Home Goods Sub-Sector Companies for the 2011 to 2018 period. The results of this study indicate that profitability has a positive and significant effect on firm value. Furthermore, liquidity has a negative and insignificant effect on firm value. The results of the model suitability test show that simultaneously profitability and liquidity have an effect on firm value.

Keywords: profitability- liquidity- firm value

Topic: Financial Management and Accounting