Treading the meaning of market assessment ratio

Oct 13, 2025 by magicalceylontours.com 137 views

Introduction

The Indonesian insurance sector has been a subject of interest for investors due to its unique and risky nature. One way for investors to assess the potential of an insurance company is through market assessment ratios. This study aims to examine the relationship between two market assessment ratios, namely Price to Book Value (PBV) and Price Earning Ratio (PER), with the share price of insurance companies listed on the Indonesia Stock Exchange (IDX).

Background of the Study

Insurance companies operate in a highly competitive and regulated environment, making it challenging for them to maintain profitability. The Indonesian insurance sector has been growing rapidly in recent years, driven by increasing demand for insurance products and services. However, the sector is also characterized by high risks, including natural disasters, economic downturns, and regulatory changes.

Literature Review

Market assessment ratios are widely used by investors to evaluate the potential of a company. PBV is a ratio that compares stock market prices with book value per share, while PER shows how many times the profit per share (EPS) is traded on the market. Both ratios are important indicators of a company's growth and profitability potential.

Methodology

This study uses financial statement data from 2002 to 2007, collected through documentation methods from public websites. The data analysis is carried out descriptively to reveal the relationship between market assessment ratios and stock prices.

Results

The results show that PBV and PER jointly (simultaneously) and individually (partially) have a significant influence on the share price of insurance companies on the IDX. That is, changes in the value of PBV and PER can be predicted to affect the movement of stock prices in this sector.

Discussion

The findings of this study have important implications for investors who want to invest in the insurance sector. Investors can take advantage of the PBV and PER ratios as a reference in determining their investment strategy.

Treading the meaning of market assessment ratio

Market assessment ratios are widely used by investors to evaluate the potential of a company. These ratios provide important information about a company's growth and profitability potential.

Price to Book Value (PBV)

PBV is a ratio that compares stock market prices with book value per share. This ratio shows how much investor is willing to pay for every rupiah the book value of the company's assets. The higher PBV, the higher investor expectations of the company's growth and profitability potential in the future.

Price Earning Ratio (PER)

PER shows how many times the profit per share (EPS) is traded on the market. This ratio reflects investors' expectations of the growth of company profitability in the future. The higher the PER, the higher the investor's expectations of the company's profit growth.

Implications for investors

This study provides important information for investors who want to invest in the insurance sector. Investors can take advantage of the PBV and PER ratios as a reference in determining their investment strategy.

Here are some important points that can be observed:

Insurance companies with high PBV tend to be more attractive to investors who want fast growth and high profitability potential.
High PER shows high investor expectations of future company profit growth.
Investors need to pay attention to the context and other fundamental factors before making investment decisions, such as the condition of the insurance industry, regulations, and company management performance.

Conclusion

This study provides important insights into the relationship between market assessment ratios and stock prices in the Indonesian insurance sector. The findings of this study have important implications for investors who want to invest in the insurance sector.

Limitations of the Study

It is essential to note that this research only uses data from limited periods. Market and fundamental conditions of the company can change over time, so it is necessary to do a more in-depth analysis before making investment decisions.

Recommendations for Future Research

Future research can build on the findings of this study by examining the relationship between market assessment ratios and stock prices in other sectors or industries. Additionally, future research can investigate the impact of other factors, such as company management performance and regulatory changes, on the relationship between market assessment ratios and stock prices.

References

[1] Indonesia Stock Exchange (IDX). (2002-2007). Financial statement data.
[2] [Author's Name]. (Year). [Title of the book or article].

Note: The references provided are fictional and for demonstration purposes only.

Introduction

In our previous article, we discussed the analysis of the effect of market assessment ratios on stock prices in insurance companies listed on the Indonesia Stock Exchange (IDX). In this article, we will provide answers to some of the most frequently asked questions related to this topic.

Q&A

Q1: What are market assessment ratios, and how are they used in evaluating a company's potential?

A1: Market assessment ratios are financial metrics used to evaluate a company's potential by comparing its stock market price with its book value or earnings per share. These ratios provide important information about a company's growth and profitability potential.

Q2: What are the two market assessment ratios used in this study, and how do they differ?

A2: The two market assessment ratios used in this study are Price to Book Value (PBV) and Price Earning Ratio (PER). PBV compares stock market prices with book value per share, while PER shows how many times the profit per share (EPS) is traded on the market.

Q3: What is the significance of PBV in evaluating a company's potential?

A3: PBV is a ratio that shows how much investor is willing to pay for every rupiah the book value of the company's assets. The higher PBV, the higher investor expectations of the company's growth and profitability potential in the future.

Q4: What is the significance of PER in evaluating a company's potential?

A4: PER shows how many times the profit per share (EPS) is traded on the market. This ratio reflects investors' expectations of the growth of company profitability in the future. The higher the PER, the higher the investor's expectations of the company's profit growth.

Q5: What are the implications of this study for investors who want to invest in the insurance sector?

A5: This study provides important information for investors who want to invest in the insurance sector. Investors can take advantage of the PBV and PER ratios as a reference in determining their investment strategy.

Q6: What are some important points that investors should observe when using PBV and PER ratios?

A6: Investors should pay attention to the context and other fundamental factors before making investment decisions, such as the condition of the insurance industry, regulations, and company management performance.

Q7: What are the limitations of this study, and how can they be addressed in future research?

A7: This research only uses data from limited periods. Market and fundamental conditions of the company can change over time, so it is necessary to do a more in-depth analysis before making investment decisions.

Q8: What are some recommendations for future research based on the findings of this study?

A8: Future research can build on the findings of this study by examining the relationship between market assessment ratios and stock prices in other sectors or industries. Additionally, future research can investigate the impact of other factors, such as company management performance and regulatory changes, on the relationship between market assessment ratios and stock prices.

Conclusion

This Q&A article provides answers to some of the most frequently asked questions related to the analysis of the effect of market assessment ratios on stock prices in insurance companies listed on the Indonesia Stock Exchange (IDX). We hope that this article will provide valuable insights for investors and researchers who are interested in this topic.

References

[1] Indonesia Stock Exchange (IDX). (2002-2007). Financial statement data.
[2] [Author's Name]. (Year). [Title of the book or article].

Note: The references provided are fictional and for demonstration purposes only.