THE EFFECT OF FINANCIAL RATIOS ON PHARMACEUTICAL INDUSTRY STOCK PRICES ON IDX

Abstract

The development of the pharmaceutical industry in Indonesia has increased quite rapidly, especially with the Covid-19 pandemic in 2020. This has made people aware of the importance of the availability of medicines and other supporting equipment, resulting in high demand for pharmaceutical products. The capital market is one of the fund investment options in the hope of getting benefits from the companies invested, either in the form of increasing share prices or getting dividends on the profits of the companies they own. This study aims to analyze the effect of financial ratios on stock prices of companies that are Pharmaceutical Sector Companies for the 2016-2022 period. The financial ratios are represented by the Current Ratio (CR), Debt to Equity Ratio (DER), and Debt to Asset Ratio (DAR) and Return on Assets (ROA). The data used in this study are panel data, which has cross section and time series characteristics. There are 7 (seven) companies listed on the Indonesia Stock Exchange used as samples. The analysis technique uses a panel data regression approach with the fixed effect method. The results of the study concluded that CR and DAR partially had a negative and significant effect on the stock prices of pharmaceutical sector companies, while DER and ROA partially had no significant effect on the stock prices of pharmaceutical sector companies. Simultaneously CR, DER, DAR and ROA have a significant effect on the stock prices of pharmaceutical sector companies.