The Influence of Debt to Equity Ratio (DER) and Debt to Asset Ratio (DAR) on Profitability in Telecommunications Companies Listed on The Indonesian Stock Exchange (IDX) Period 2021 – 2024

Muhammad Luthfi Raharja; Arry Widodo; Nurafni Rubiyanti

doi:10.55927/fjmr.v4i12.616

Authors

Muhammad Luthfi Raharja Telkom University
Arry Widodo Telkom University
Nurafni Rubiyanti Telkom University

DOI:

https://doi.org/10.55927/fjmr.v4i12.616

Keywords:

DER, DAR, Profitability, Telecommunication Companies, Capital Structure

Abstract

This study analyzes the influence of Debt to Equity Ratio (DER) and Debt to Asset Ratio (DAR) on the profitability of telecommunications companies listed on the Indonesia Stock Exchange for the 2021-2024 period. The research background is based on the capital-intensive nature of the telecommunications industry and post- pandemic recovery dynamics that require massive infrastructure investments. The research method uses a quantitative approach with explanatory design and panel data regression analysis on four major telecommunications companies. The results indicate that DER and DAR significantly affect profitability, with complex and not always linear relationship patterns. The research findings reveal that the effectiveness of leverage in increasing profitability highly depends on asset utilization efficiency and management's ability to optimize capital structure. The practical implications of this research highlight the importance of appropriate capital structure policies and effective investment strategies in improving the financial performance of telecommunications companies in Indonesia.

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