p–ISSN: 2723 - 6609 e-ISSN: 2745-5254
Vol. 5, No. 10, October 2024 http://jist.publikasiindonesia.id/
Jurnal Indonesian Sosial Teknology, Vol. 5, No. 10, October 2024 4007
The Effect of Firm Size, Current Ratio, and Debt to Equity
Ratio on Share Price in Food and Beverage Subsector
Manufacturing Companies Listed on the Indonesia Stock
Exchange
Khairul Anwar
1*
, Isnurhadi
2
, Marlina Widiyanti
3
, Mohamad Adam
4
Universitas Sriwijaya, Indonesia
Email: [email protected]
1*
, [email protected]
2
,
[email protected]
3
, [email protected]
4
*Correspondence
ABSTRACT
Keywords: firm size,
current ratio, debt to equity
ratio, profitability, stock
prices.
The purpose of this study is to understand how company
size, liquidity, and capital structure can affect stock prices in
the food and beverage industry in Indonesia, and to provide
practical guidance for stakeholders in making financial and
investment decisions. This research method uses a sample of
18 manufacturing companies in the food and beverage
subsector on the IDX in the 2019-2022 period. Sample
selection is carried out by purposive sampling technique,
which is a technique that considers and determines samples
based on certain criteria. The purposive sampling technique
was chosen to ensure that the samples taken were relevant to
the research objectives. The results of this study show that
the number means that the independent variable is only able
to explain the bound variable of 0.299 or 29.9%. *The Stock
Price variable can be explained by 29.9% by variables such
as company size, debt-to-equity ratio, current ratio, and
return on equity while the remaining 70.1% can be
influenced by other factors that are not studied.
Introduction
The capital market has an important role in a country's economy because it
functions as a means of raising funds for companies and an investment place for investors.
(Saefurrohmat et al., 2022). One of the popular investment instruments in the capital
market is stocks. The stock price is an important indicator that reflects the company's
performance and is the main concern for investors in making investment decisions.
Manufacturing companies, especially the food and beverage subsector, are one of
the attractive subsectors for investors because of the stable and increasing demand for
products in line with population growth and changes in people's consumption patterns.
(Saefurrohmat et al., 2022). However, stock price fluctuations in these companies are
influenced by various factors, both internal and external.
Khairul Anwar, Isnurhadi, Marlina Widiyanti, Mohamad Adam
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 10, October 2024 4008
The global economy is currently experiencing very sharp fluctuations, leading to a
decline in performance and stock prices in various companies around the world. Since the
COVID-19 pandemic hit in 2020 to 2021, the global economic trend has tended to
decline. Companies in various sectors experienced a decline in performance to increase
corporate value. Large and important companies in daily life such as manufacturing
companies, with high liquidity and market capitalization in Indonesia, experienced a
decline in performance. During the COVID-19 pandemic, people's purchasing power and
consumption around the world decreased significantly (Ratnaningtyas & Nurbaeti, 2023).
This decline hurts the global economy, including Indonesia. This decrease in
consumption was due to strict regulations and prohibitions on going out and gathering in
public places during the pandemic. The public is encouraged to stay at home and avoid
direct contact and normal socialization. (Kurniati et al., 2023). As a result, many business
places have experienced a decline, including companies in the food and beverage sector.
Several efforts have been made to increase the share price, one of which is by controlling
the financial aspects of the Company. (Aldimiyyathi et al., 2023).
Figure 1
Average Company Size and Share Price in Manufacturing Companies in the Food and
Beverage Subsector Listed on the IDX for the 2019-2022 Period
In Chart 1 above, you can see the phenomenon from 2021 to 2022, where the
average stock price decreased to IDR 2,440.73 however, the average size of the company
increased from a natural logarithmic value of 29.23 to 29.28. This is a phenomenon where
the larger the size of the company, the higher the stock price. The larger size of the
company will be a good benchmark for the performance and quality of a company
because there is no doubt that large assets will also have a large market price. Investors
will not abandon their intention to invest because the stock price will also increase.
(Prasetyo et al., 2021).
The Effect of Firm Size, Current Ratio, and Debt to Equity Ratio on Share Price in Food and
Beverage Subsector Manufacturing Companies Listed on the Indonesia Stock Exchange
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 10, October 2024 4009
Figure 2 Average Debt to Equity Ratio and Share Price in Food and Beverage
Manufacturing Companies Listed on the IDX for the 2019-2022 Period
Graph 2 above shows a phenomenon in 2020-2021 where the debt-to-equity ratio
increased by 74% accompanied by an increase in the stock price at Rp. 2,975.67. This is
not in line with the theory from previous research, a higher debt-to-equity ratio will show
that the performance of a company will deteriorate due to the company's increasing
dependence on foreign capital. A large debt-to-equity ratio can cause a company's stock
price to decrease. This is because if the company makes a profit, then the profit will be
used to pay the company's debt rather than allocating it to shareholders. (Zakaria et al.,
2021).
In this study, the Stock Price is a dependent variable, and independent variables,
namely Company Size, Current Ratio, and Debt to Equity Ratio. The supporting theories
used in this study are Signalling Theory, Pecking Order Theory, and Trade-Off Theory.
Method
According to (Sugiyono, 2020), Population is a general area of objects and subjects
that have certain characteristics. Meanwhile, the population in this study is manufacturing
companies in the food and beverage subsector listed on the Indonesia Stock Exchange in
2019-2022. There is also a population of 24 manufacturing companies in the food and
beverage subsector found on the Indonesia Stock Exchange in 2019-2022.
A sample is several units owned by a population. In this study, there are 18
manufacturing companies in the food and beverage subsector listed on the Indonesia
Stock Exchange in 2019-2022. Sample selection is carried out by the purposive sampling
technique, which is a technique carried out to consider and determine samples with certain
criteria, (Sugiyono, 2020). The following are the sample criteria for this research:
Table 1
Calculation of Sampling Criteria
Information
Sum
Manufacturing companies in the food and
beverage subsector consecutively during
the 2019-2022 period
24
Khairul Anwar, Isnurhadi, Marlina Widiyanti, Mohamad Adam
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 10, October 2024 4010
Manufacturing companies in the food and
beverage subsector on the Indonesia Stock
Exchange that do not meet the selection
criteria
6
Manufacturing companies in the food and
beverage subsector on the Indonesia Stock
Exchange that are used as sample
18
The sample in this study was obtained from as many as 18 companies that were
included in the research criteria using purposive sampling techniques. Based on the
process of selecting research samples that have been carried out, 18 companies meet the
criteria and can be used as samples in the research, so the number of observation data (n)
is 18x4 = 72 observation data in the study.
Results and Discussion
Multicollinearity Test
According to (Arifudin et al., 2020), the multicollinearity test is intended to see the
existence of linear relationships, both perfectly and near-perfect independent variables in
a regression model, and to find out the existence of multicollinearity in the regression
model by looking at the tolerance value and the variance inflation factor (VIF) value. If
the tolerance value > 0.10 and the VIF value < 10, then multicollinearity does not occur.
The results of the multicollinearity test are presented in Table 2 as follows:
Table 2
Multicollinearity Test
Coefficients
Model
Unstandardized
Coefficients
t
Mr.
Collinearity
Statistics
B
Std.
Error
Tolera
nce
BRI
GH
T
1
(Consta
nt)
-28.640
7.861
-
3.643
.001
LNSIZ
E
10.919
2.326
4.694
.000
.816
1.2
26
LNCR
-.033
.393
-.084
.933
.214
4.6
75
LNDE
R
-.230
.368
-.623
.535
.193
5.1
72
a. Dependent Variable: LNHS
Table 2 shows that the tolerance value in the LNSIZE variable is 0.816 and VIF is
1.226. The tolerance value of the LNCR variable was 0.214 and the VIF was 4.675. The
tolerance value of the LNDER variable is 0.193 and the VIF is 5.172. The tolerance value
in the LNROE variable was 0.969 and the VIF was 1.032. Each variable has a tolerance
The Effect of Firm Size, Current Ratio, and Debt to Equity Ratio on Share Price in Food and
Beverage Subsector Manufacturing Companies Listed on the Indonesia Stock Exchange
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 10, October 2024 4011
value of > 0.01 and a VIF value of < 10, so it can be concluded that there is no
multicollinearity symptom for each variable in the model.
Heteroskedasticity Test
The heteroscedasticity test is used to test whether there is an unevenness in the
variance of the residual for all observations in the regression model. The Glejser test is a
test used in this study to see if there is a heteroscedasticity problem in this study. The
following are the results of the heteroscedasticity test in this study which is available in
Table 3:
Table 3
Heteroskedasticity Test
Coefficients
Model
Unstandardized Coefficients
Standardized
Coefficients
t
Mr.
B
Std. Error
Beta
1
(Constant)
9.846
4.765
2.066
.043
LNSIZE
-2.434
1.410
-.205
-1.726
.089
LNCR
-.134
.238
-.131
-.563
.575
LNDER
.021
.223
.023
.093
.926
a. Dependent Variable: ABSRES
Based on Table 3, it can be concluded that the significance value of each
independent variable in this study is greater than (0.05). LNSIZE is 0.089, LNCR is 0.575,
LDER is 0.926 and LNROE is 0.60. So, it can be concluded that the research data does
not have heteroscedasticity.
Uji Autokorelasi
The autocorrelation test is used for a purpose, namely to find out whether there is a
correlation between members of a series of data that is observed and analyzed according
to space or according to time or time series. (Arifudin et al., 2020)(Ghozali, 2016). The
autocorrelation test is used for a purpose, namely to find out whether there is a correlation
between members of a series of data that is observed and analyzed according to space or
according to time or time series. This test aims to see if there is a correlation between the
interference error in the t period and the error in the t-1 period or earlier. A good
regression model is a regression that is free from autocorrelation. One way to test for
autocorrelation is to use the Durbin-Watson test (DW test). To detect the presence or
absence of autocorrelation, it can be done through testing the Durbin-Watson (DW) test
value with the following conditions (Santoso, 2020):
1) If the DW number is above +2, then a negative autocorrelation occurs
2) The DW number is between -2 and +2 so there is no autocorrelation
3) If the DW number is below -2, then a positive autocorrelation occurs
Table 4
Uji Autokorelasi
Model Summaryb
Khairul Anwar, Isnurhadi, Marlina Widiyanti, Mohamad Adam
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 10, October 2024 4012
Model
R
R Square
Adjusted R
Square
Std. Error of
the Estimate
Durbin-
Watson
1
.583a
.340
.299
1.04025
1.814
a. Predictors: (Constant), LNROE, LNCR, LNSIZE, LNDER
b. Dependent Variable: LNHS
Based on the results of Table 4, it can be seen that the model has a Durbin-Watson
value of 1,814 This result satisfies – 2 < dw < + 2, so it can be concluded that there is no
autocorrelation in the regression model.
Coefficient of Determination (Adjusted R2)
The determination coefficient test is used to measure whether independent variables
can explain the variation of dependent variables. The results of the research determination
coefficient test can be seen in the following table:
Table 5
Hasil Koefisien Determinasi
Model Summary
Model
R
R Square
Adjusted R
Square
Std. Error of
the Estimate
Durbin-
Watson
1
.583
a
.340
.299
1.04025
1.814
a. Predictors: (Constant), LNCR, LNSIZE, LNDER
b. Dependent Variable: LNHS
Based on the results of Table 5, the value of the Adjusted R Square that was
prepared had a model result of 0.299 or 29.9%. The Stock Price variable can be explained
by 29.9% by variables such as company size, debt-to-equity ratio, current ratio, and return
on equity while the remaining 70.1% can be influenced by other factors that are not
studied.
Model Conformance Test (Test F)
The F test was carried out to find out whether the independent variables collected
in the research regression model had a joint influence on the dependent variables. This
test is seen through criteria by looking at the value of probability (sig), If the value is of
sig 5, then the probability of the regression model is suitable and suitable for use in testing.
On the other hand, if the value of the sig > 0.05. Therefore, the model equation of
regression has no conformity or is not suitable to be used as a regression model. The
results of the F-value test are presented in the following table:
Table 6
F-Grade Test Results
ANOVA
a
Model
Sum of
Squares
df
Mean
Square
F
Sig.
1
Regression
35.672
4
8.918
8.241
.000
b
Residual
69.256
64
1.082
Total
104.928
68
a. Dependent Variable: LNHS
b. Predictors: (Constant), LNROE, LNCR, LNSIZE, LNDER
The Effect of Firm Size, Current Ratio, and Debt to Equity Ratio on Share Price in Food and
Beverage Subsector Manufacturing Companies Listed on the Indonesia Stock Exchange
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 10, October 2024 4013
Table 6 shows the results of the f-test with an f-value of 8,241 and a sig value of
0.000 < 0.05, so it can be concluded that variables such as company size, debt to equity
ratio, current ratio and return on equity have a significant effect on the stock price.
Partial Test (T-Test)
The Partial Test or t-Value Test can be used to determine empirically the influence
of independent variables studied on partial dependent variables. The criteria obtained
from the t-test are by looking at the results of the significance value or Sig and the
direction of the coefficient. If the significance value obtained > 0.05 and or the regression
coefficient value is opposite or negative, then the results of the alternative hypothesis are
not supported. On the other hand, if the significance value obtained < 0.05 and the
coefficient regression is unidirectional or positive, then the alternative hypothesis is
supported. The results of the t-value test of the hypotheses are presented.
Table 7
t-Value Test Results
Coefficients
Model
Unstandardized Coefficients
Standardized
Coefficients
t
Mr.
B
Std. Error
Beta
1
(Consta
nt)
-28.640
7.861
-3.643
.001
LNSIZ
E
10.919
2.326
.528
4.694
.000
LNCR
-.033
.393
-.018
-.084
.933
LNDE
R
-.230
.368
-.144
-.623
.535
a. Dependent Variable: LNHS
Firm Size Relative to Stock Price
Based on the table, firm size has a regression coefficient value of 0.528 with
positive and unidirectional values and a significance of 0.000 < α 0.05. These results show
that the SIZE variable is proven to be influential and significant on the Stock Price.
CR on the Stock Price
Based on Table 4.13, CR has a regression coefficient value of -0.018 with negative
and non-directional values and a significance of 0.933 > α 0.05. The results show that the
CR variable is proven to have a negative and insignificant effect on the Stock Price.
DER Against Stock Price
Based on Table 4.13, DER has a regression coefficient value of -0.144 with negative
and non-unidirectional values and a significance of 0.535 > α 0.05. The results show that
the DER variable is proven to have a negative and insignificant effect on the Stock Price.
Company Size Relative to Stock Price
Based on the results of the T-Test in the table, the results of the Company Size
have a positive and significant effect on the Stock Price of manufacturing companies in
the food and beverage sector listed on the Indonesia Stock Exchange for the 2019-2022
period. Based on the table, SIZE has a regression coefficient value of 0.528 with positive
Khairul Anwar, Isnurhadi, Marlina Widiyanti, Mohamad Adam
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 10, October 2024 4014
and unidirectional values and a significance of 0.000 < α 0.05. These results show that
the SIZE variable is proven to be influential and significant on the Stock Price.
The results of this study are in line with the signaling theory discovered by Spence
(1973), stating that the larger the size of the company, the better the signal that investors
can receive for the company, which will increase investment and stock prices. Investor
Perception: Investors are generally more confident to invest in large companies because,
of more established reputation and credibility; Longer and tested performance history,
and wider diversification of businesses, so they are more resistant to risks and have easier
access to funding and capital sources; greater growth potential (Hu et al., 2022). Company
size is an indicator that shows the financial strength of the company. The larger the
company, the higher the interest of investors to invest in their shares compared to small
companies. This is because large companies are considered to have a stronger financial
structure such as total assets and capital compared to small companies. This condition is
natural because investors want stable profits, and usually large companies have more
stable profits than small companies (Saputri and Supramono, 2021).
Current Ratio to Stock Price
Based on the results of the T-Test in the table, the results of the Current Ratio
have a negative and insignificant effect on the Stock Price of manufacturing companies
in the food and beverage sector listed on the Indonesia Stock Exchange for the 2019-2022
period. Based on the table, the Current Ratio has a regression coefficient value of -0.018
with negative and non-unidirectional values and a significance of 0.933 > α 0.05. These
results show that the Current Ratio variable is proven to have a negative and insignificant
effect on the Stock Price.
This result means that the rise and fall of the value of the Current Ratio does not
affect the Stock Price. This research is not in line with the signal theory which explains
that the current ratio is an important signal that describes the liquidity condition of a
company. Companies that have high liquidity, which is a signal for investors, will
increase their stock price due to the increasing demand for company shares.
The reason the results of this study are not in line with the signal theory is that it is
estimated that investors consider a high CR value not to mean that the company is
performing well. This can be due to the high value of inventory. The high value of
inventory will cause low company profits and ultimately not be able to provide the
expected returns. (Febriani, 2020). So, not only CR is used by investors as a signal to
consider making their investments. Investors can use other aspects as signals such as the
company's profitability, solvency, activities, and profit management of a company.
External factors such as the macroeconomic conditions of a country influence stock prices
(Romanello et al., 2021).
Debt to Equity Ratio to Stock Price
Based on the results of the T-Test in the table, the results of the Debt to Equity
Ratio have a negative and insignificant effect on the Stock Price of manufacturing
companies in the food and beverage sector listed on the Indonesia Stock Exchange for the
2019-2022 period. Based on the table, the Debt to Equity Ratio has a regression
The Effect of Firm Size, Current Ratio, and Debt to Equity Ratio on Share Price in Food and
Beverage Subsector Manufacturing Companies Listed on the Indonesia Stock Exchange
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 10, October 2024 4015
coefficient value of -0.144 with negative and non-directional values and a significance of
0.535 > α 0.05. The results show that the Debt to Equity Ratio variable is proven to have
a negative and insignificant effect on the Stock Price.
The rise and fall of the DER value does not affect the stock price. The results of this
study do not support the theory that has been used as a theoretical basis. Signal theory
explains that a moderate DER can show investors that the company's management has
confidence in the company's prospects. This is because the company is willing to take
financial risks by using debt to fund its operations and expansion. Investors who are
confident in the company's prospects will be willing to provide a higher risk premium,
thus encouraging an increase in stock prices.
The effect of the Debt to the debt-to-equity ratio (DER) on the Share Price is
assumed because the funding decision made by the company is not a direct factor for
investors in investing their capital in the company. Investors prioritize information on
how the company's management uses the funds as the company's capital effectively and
efficiently. Investors consider other factors in deciding to invest such as considering the
Company's profit. (Rahmawati & Subardjo, 2023).
Conclusion
This study aims to test independent variables consisting of Firm Size, Current Ratio,
Debt to Equity Ratio to Stock Price. The determination coefficient of this study shows a
number which means that the independent variable is only able to explain the bound
variable of 0.299 or 29.9%. The Stock Price variable can be explained by 29.9% by
variables such as company size, debt-to-equity ratio, current ratio, and return on equity
while the remaining 70.1% can be influenced by other factors that are not studied.
Along with the variable, the Stock Price has changed in average value from year
to year. The results of the study can be concluded as follows:
1. It partially proves that the Firm Size variable has a positive and significant effect on
the Stock Price.
2. Partially proving that the Current Ratio variable does not affect the Stock Price
3. Partially proving that the Debt to Equity Ratio variable does not affect the Stock Price
4. Partially proving that the Profitability variable does not affect the Stock Price
Khairul Anwar, Isnurhadi, Marlina Widiyanti, Mohamad Adam
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 10, October 2024 4016
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