The Influence of Profitability, Liquidity and Solvency on Firm Value

Novitayanti, Ni Putu Siska and Bagiada, I Made and Wicaksana, Ketut Arya Bayu (2022) The Influence of Profitability, Liquidity and Solvency on Firm Value. Repositori Politeknik Negeri Bali.

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Abstract

Firm value is a condition that has been achieved by a company as a reflection of public trust since its inception. Several factors can affect firm value, including profitability, liquidity and solvency. Profitability must be an important concern because to continue its life a company must be in a favorable condition. Liquidity is the ability of a company to try to meet its obligations to pay its short-term debt within a certain period of time. If the calculation shows that the company's liquidity is high, then the company's performance in fulfilling its short-term obligations is getting better. Solvency is the company's ability to pay all of its debts upon liquidation. This study aims to examine the effect of profitability, liquidity and solvency on firm value (a case study on the banking sector listed on the Indonesia Stock Exchange for the period 2019-2021). This study analyzes secondary data from the financial statements of banking sector companies listed on the Indonesia Stock Exchange for the 2019-2021 period. The search variables were tested using the SPSS version 26.00 application. The results showed that profitability partially had a positive and significant effect on firm value. Liquidity partially has a positive and significant effect on firm value. Solvency has a positive and significant effect on the value and profitability of the company, liquidity and solvency have a positive and significant effect on firm value simultaneously.

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