The Influence of Activity Ratio and Leverage on Dividends in Manufacturing Companies on the Indonesia Stock Exchange

Oct 13, 2025 by magicalceylontours.com 82 views

The Influence of Activity Ratio and Leverage on Dividends in Manufacturing Companies on the Indonesia Stock Exchange

Introduction

In the business world, dividends are one of the most important indicators for investors to assess a company's health and performance. Dividends are a way for companies to distribute a portion of their profits to shareholders, and they can provide valuable insights into a company's financial performance and prospects. However, the decision to pay dividends is not a simple one, and it is influenced by a variety of factors, including a company's financial ratios and leverage.

The Importance of Activity Ratios and Leverage in Dividend Decisions

Activity ratios, such as total assets turnover (TATTOO) and fixed assets turnover (FATO), are important indicators of a company's ability to generate sales from its assets. These ratios can provide insights into a company's efficiency and effectiveness in using its assets to generate revenue. Leverage ratios, such as debt ratio and debt to equity ratio (DER), are also important indicators of a company's financial health and risk profile. These ratios can provide insights into a company's ability to manage its debt and equity, and they can influence a company's dividend decisions.

The Effect of Activity Ratios on Dividends

This study aims to analyze the effect of activity ratios on dividends in manufacturing companies listed on the Indonesia Stock Exchange. The study uses secondary data obtained from the official website of the Indonesia Stock Exchange (www.idx.co.id) and uses a causal association research design to determine the relationship between these variables. The analysis method used is multiple linear regression.

The results of this study show that total assets turnover (TATTOO) has an insignificant positive influence on the dividend payout ratio, while fixed assets turnover (FATO) shows a negative effect which is also not significant. This suggests that the efficiency and effectiveness of a company's assets in generating revenue may not be directly related to its dividend payments.

The Effect of Leverage Ratios on Dividends

The study also analyzes the effect of leverage ratios on dividends in manufacturing companies listed on the Indonesia Stock Exchange. The results show that the debt ratio has an insignificant negative effect on the dividend payout ratio, while the debt to equity ratio (DER) has a significant positive influence on the dividend payout ratio. This suggests that a company's ability to manage its debt and equity may have a positive impact on its dividend payments.

The R Square Value and the Limitations of the Study

The R Square value in this regression model is 0.187, meaning that TATTOO, FATO, debt ratio, and DER as a whole only explain 18.7% of variations in the dividend payout ratio. This shows that there are still 81.3% of other factors that are not included in this study that can affect the company's dividend payments. Therefore, it is important for stakeholders to understand that dividend decisions not only depend on these ratios, but are also influenced by various other external and internal factors, such as economic conditions, company strategies, and management policies.

Conclusion

By understanding the effect of the ratio of activities and leverage on dividends, investors and company managers can make better decisions related to the allocation of resources and dividend policies. This study provides important insights for companies in formulating efficient and effective financial strategies in order to achieve long-term goals and increase company value in the eyes of investors.

Recommendations for Future Research

This study provides a foundation for future research on the effect of activity ratios and leverage on dividends in manufacturing companies listed on the Indonesia Stock Exchange. Future research can build on this study by incorporating additional variables and using more advanced statistical techniques to analyze the relationships between these variables. Additionally, future research can explore the effect of other factors, such as economic conditions and company strategies, on dividend decisions.

Limitations of the Study

This study has several limitations that should be noted. First, the study uses secondary data obtained from the official website of the Indonesia Stock Exchange, which may not be comprehensive or up-to-date. Second, the study uses a causal association research design, which may not be able to capture the complex relationships between variables. Third, the study only analyzes the effect of activity ratios and leverage on dividends, and does not consider other factors that may influence dividend decisions.

Implications for Practice

This study has several implications for practice. First, it highlights the importance of understanding the effect of activity ratios and leverage on dividends in manufacturing companies listed on the Indonesia Stock Exchange. Second, it suggests that companies should consider these ratios when making decisions related to the allocation of resources and dividend policies. Third, it emphasizes the need for companies to formulate efficient and effective financial strategies in order to achieve long-term goals and increase company value in the eyes of investors.

References

Indonesia Stock Exchange. (2022). Annual Report.
[Insert other relevant references]

Appendix

List of variables used in the study
Description of the data collection process
Description of the data analysis process

Table of Contents

Introduction
The Importance of Activity Ratios and Leverage in Dividend Decisions
The Effect of Activity Ratios on Dividends
The Effect of Leverage Ratios on Dividends
The R Square Value and the Limitations of the Study
Conclusion
Recommendations for Future Research
Limitations of the Study
Implications for Practice
References
Appendix
Frequently Asked Questions (FAQs) about the Influence of Activity Ratio and Leverage on Dividends in Manufacturing Companies on the Indonesia Stock Exchange

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the effect of activity ratios and leverage on dividends in manufacturing companies listed on the Indonesia Stock Exchange.

Q: What are activity ratios and leverage ratios?

A: Activity ratios are measures of a company's ability to generate sales from its assets, such as total assets turnover (TATTOO) and fixed assets turnover (FATO). Leverage ratios are measures of a company's financial health and risk profile, such as debt ratio and debt to equity ratio (DER).

Q: What is the significance of this study?

A: This study provides important insights for investors and company managers to make better decisions related to the allocation of resources and dividend policies. It also highlights the importance of understanding the effect of activity ratios and leverage on dividends in manufacturing companies listed on the Indonesia Stock Exchange.

Q: What are the limitations of this study?

A: This study has several limitations, including the use of secondary data obtained from the official website of the Indonesia Stock Exchange, which may not be comprehensive or up-to-date. Additionally, the study uses a causal association research design, which may not be able to capture the complex relationships between variables.

Q: What are the implications of this study for practice?

A: This study has several implications for practice, including the importance of understanding the effect of activity ratios and leverage on dividends in manufacturing companies listed on the Indonesia Stock Exchange. It also suggests that companies should consider these ratios when making decisions related to the allocation of resources and dividend policies.

Q: What are the recommendations for future research?

A: This study provides a foundation for future research on the effect of activity ratios and leverage on dividends in manufacturing companies listed on the Indonesia Stock Exchange. Future research can build on this study by incorporating additional variables and using more advanced statistical techniques to analyze the relationships between these variables.

Q: What are the key findings of this study?

A: The key findings of this study include the following:

Total assets turnover (TATTOO) has an insignificant positive influence on the dividend payout ratio.
Fixed assets turnover (FATO) shows a negative effect which is also not significant.
The debt ratio has an insignificant negative effect on the dividend payout ratio.
The debt to equity ratio (DER) has a significant positive influence on the dividend payout ratio.

Q: What are the implications of these findings for investors and company managers?

A: These findings suggest that investors and company managers should consider the effect of activity ratios and leverage on dividends when making decisions related to the allocation of resources and dividend policies. They also highlight the importance of understanding the complex relationships between these variables.

Q: What are the future directions for research on this topic?

A: Future research can build on this study by incorporating additional variables and using more advanced statistical techniques to analyze the relationships between these variables. It can also explore the effect of other factors, such as economic conditions and company strategies, on dividend decisions.

Q: What are the practical implications of this study for companies listed on the Indonesia Stock Exchange?

A: This study provides important insights for companies listed on the Indonesia Stock Exchange to formulate efficient and effective financial strategies in order to achieve long-term goals and increase company value in the eyes of investors.

Q: What are the limitations of the R Square value in this study?

A: The R Square value in this study is 0.187, meaning that TATTOO, FATO, debt ratio, and DER as a whole only explain 18.7% of variations in the dividend payout ratio. This shows that there are still 81.3% of other factors that are not included in this study that can affect the company's dividend payments.

Q: What are the implications of the R Square value for investors and company managers?

A: The R Square value highlights the importance of understanding the complex relationships between variables and the need for companies to consider other factors that may influence dividend decisions. It also emphasizes the need for investors and company managers to be aware of the limitations of this study and to consider other factors when making decisions related to the allocation of resources and dividend policies.