The Influence of Current Ratio and Net Profit Margin on Profit Growth in the Automotive Industry: An Empirical Study from 2018 to 2022
Journal Title: Journal of Accounting, Finance and Auditing Studies - Year 2024, Vol 10, Issue 2
Abstract
To maintain competitiveness and ensure long-term sustainability in the automotive sector, understanding the determinants of profit growth is crucial. This study empirically examines the impact of the Current Ratio (CR) and Net Profit Margin (NPM) on profit growth from 2018 to 2022, focusing on ten automotive companies listed on the Indonesia Stock Exchange. A quantitative methodology, utilizing panel data regression analysis and specifically the Fixed Effects Model (FEM), was employed to uncover significant insights. It was found that the CR positively influences profit growth, whereas the NPM exhibits a negative effect. These empirical findings offer valuable insights into financial management practices within the automotive industry. By understanding the impact of key financial metrics on profitability, investors, managers, and policymakers are better equipped to make informed decisions to optimize financial strategies for profit growth. This study contributes to the existing literature by addressing the relationship between the CR and NPM within the context of the automotive sector, an area where comprehensive analysis has been lacking. These insights are vital for informing strategic financial decisions and supporting the long-term health of the industry in a fiercely competitive global market.
Authors and Affiliations
Apriliana Putri, Edi Purwanto
Keywords
Related Articles
- EP ID EP752342
- DOI https://doi.org/10.56578/jafas100204
- Views 6
- Downloads 0
Impact of Corporate Social Responsibility, Profitability, Leverage, and Capital Intensity on Tax Aggressiveness: The Moderating Role of Firm Size in Indonesian Manufacturing Sector
In Indonesian manufacturing, the evasion of tax obligations presents a formidable challenge, diminishing the potential tax revenues accruing to the state. Rooted in agency theory, this investigation seeks to empirically...
The Role of Complex Systems Theory in Harmonising Non-Financial Reporting for Sustainable Finance in Zimbabwean Commercial Banks
This study investigates the harmonising potential of complex systems theory in non-financial reporting of sustainable finance practices within Zimbabwean commercial banks. The increasing prominence of sustainable finance...
Evolution and Trends in Financial Inclusion Research: A Systematic Literature Review and Bibliometric Analysis (2004–2023)
This study examines the development and trends in financial inclusion research between 2004 and 2023, with a focus on the trajectory of publication growth, key contributors (including influential authors, journals, and i...
Enhancing Operational Efficiency and Financial Performance Through Internal Audit: A Case Study of BLESSING Finance
Internal audits serve as critical assurance services that support the enhancement of operational efficiency and financial performance within organizations. This study examines the role of internal auditing in improving t...
Benchmarking Sustainable Performance in Shareholder Wealth Creation: A Data Envelopment Analysis Approach
The evaluation of companies' sustainability performance in generating shareholder wealth is increasingly reliant on environmental, social, and governance (ESG) ratings. This study introduces a novel approach by applying...