Determinant Capital Structure and Profitability Impact (Study of Listed Company in Indonesian Stock Exchange)

Abstract

Profit is primary factor to be achieved by every companies. To achieve this profit, companies must empower all of its resources optimally. The problem arise when the resource is insufficient, and companies decide to obtain debt with consideration of profitability and risk of bankruptcy. This research using debt equity and debt asset ratio as indicators for capital structure, where growth, size, tangibility and degree of operating leverage as its determinant. For profitability, this research using return on asset and return on equity. Samples of research are 247 companies in period 2009 to 2011. With path analysis, this research finds that size negative significant to DAR, DOL negative significant to DER, DAR negative significant to ROA, and DER negative significant to ROE.

Keywords : determinant capital structure, profitability