THE RELATIONSHIP BETWEEN DEBT MANAGEMENT WITH PROFITABILITY AND STOCK PRICE OF COMPANIES LISTED ON THE MARKET OF ALTERNATIVE INVESTMENT

Abstract

This study aims to investigate the relationship between debt management capability with profitability and stock prices of companies listed on the Market of Alternative Investment (MAI) during the period of 2019 to 2022 across 8 industrial groups, totaling 207 companies. The secondary data were collected from SETSMART. Independent variables include debt management, measured by the Debt-to-Asset ratio (D/A) and the Debt-to-Equity ratio (D/E). The dependent variables include profitability of companies measured by Basic Earning Power (BEP), EBITDA margin, and Net Profit Margin, as well as stock price which reflected from Price-to-Earnings ratio (P/E) and Price to Book Value Ratio (P/BV). The control variables include total assets, total revenue, and number of registered shares. Data were analyzed using descriptive statistics, correlation analysis, and multiple linear regression analysis. Results indicate that both of Debt-to-Asset ratio and the Debt-to-Equity ratio have negative correlation with Basic Earning Power, EBITDA margin, Net Profit Margin, and Price-to-Earnings ratio. Although Debt-to-Asset ratio and the Debt-to-Equity ratio can significantly predict Basic Earning Power and Net Profit Margin, however usage of debt has negative impact on the profitability of companies in the MAI, but it does not increase the value of securities.