The Effect of Financial Leverage on Profitability in Telecommunications Sub Sector Companies Listed on the Indonesia Stock Exchange

Abstract

This study aims to determine the effect of Financial Leverage on Profitability in Telecommunications Sub Sector companies listed on the Indonesia Stock Exchange with the Debt to Equity Ratio sub variable as a measuring tool to calculate the company's Financial Leverage and the Return On Equity variable to calculate the company's profitability. The population in this study are all financial statements of Telecommunications Sub Sector companies listed on the Indonesia Stock Exchange which have been audited and published and the sample is the financial statements of Telecommunications Sub Sector companies for the period 2016-2021 which were taken through purposive sampling of five companies. Data collection was carried out using documentation techniques. The analytical techniques used were simple linear regression analysis, person product moment correlation analysis, and hypothesis testing (t test). Based on the results of the data analysis carried out, the model Y = 85.439 + 0.995X means that Financial Leverage has a positive effect on Profitability in which for each addition of 1 Financial Leverage value, the Profitability value has increased by 0.995. From the results of the correlation analysis (r) of 0.994 which is in the interval 0.800 - 1.000 has a very strong relationship between Financial Leverage on Profitability. From the analysis the coefficient of determination is 98.9 percent while the remaining 1.1 percent is influenced by other factors.