THE EFFECT OF CAPITAL STRUCTURE ON PROFITABILITY AT PT INDOFOOD SUKSES MAKMUR, TBK LISTED ON THE INDONESIA STOCK EXCHANGE FOR THE PERIOD 2019-2023

Abstract

Capital structure is the balance between the use of borrowed capital, which consists of permanent short-term debt and long-term debt, and equity capital, which consists of preferred stock and common stock. This study aims to analyze the effect of Capital Structure, measured using the Debt to Asset Ratio (DAR) and Debt to Equity Ratio (DER), on Profitability, which is measured using the Return on Assets (ROA) and Return on Equity (ROE) at PT Indofood Sukses Makmur, Tbk, which is listed on the Indonesia Stock Exchange (IDX). This research employs a descriptive quantitative approach. The data source used in this study is secondary data, with documentation as the data collection technique. The data analysis technique used is crosstab analysis.  The results of the study show that the crosstab analysis indicates that Capital Structure as measured by the Debt to Asset Ratio has no significant effect on Profitability as measured by Return on Assets. Capital Structure measured by the Debt to Asset Ratio also has no significant effect on Profitability as measured by Return on Equity. Furthermore, Capital Structure measured by the Debt to Equity Ratio has no significant effect on Profitability measured by Return on Assets. Similarly, Capital Structure measured by the Debt to Equity Ratio has no significant effect on Profitability measured by Return on Equity at PT Indofood Sukses Makmur, Tbk during the period 2019–2023.