The Effects of Current Ratio and Debt to Equity Ratio on Dividend Policy through Net Profit Margin (A Study on Manufacturing Companies Listed in Indonesia Stock Exchange in the Period of 2013)

Abstract

This study aims at determining the effects of Current Ratio and Debt to Equity Ratio on Dividend Policy both directly or through Net Profit Margin. The variables employed cover the Current Ratio, Debt to Equity Ratio, Net Profit Margin and Dividend Policy. Data processing used in this study is descriptive analysis techniques and path analysis by SPSS 16.0. The population of this study is 134 manufacturing companies listed in BEI in the period of 2013. By using purposive sampling technique, it is obtained a sample of 39 companies. The study finds that: (1) Current Ratio has no effect on either Dividend Policy; Debt to Equity Ratio or Net Profit Margin; (2) Net Profit Margin and Debt to Equity Ratio have positive effects on Debt to Equity Ratio; (3) Net Profit Margin constitutes intervening variables that functions as a link between Current Ratio and Dividend Policy; (4) Net Profit Margin does not function as an intervening variable in the equity ratio of Debt to Equity Ratio on Dividend Policy, but as a dependent variable that has positive effects upon Dividend Policy.

Keywords: Current Ratio, Debt to Equity Ratio, Net Profit Margin, Dividend Policy