Track: Business Management

Abstract

Consumer Goods Industry (CGI) is one form of the manufacturing sector and promising choice in contributing to Indonesia's economic growth. Therefore, CGI always requires maintaining and increase the company's profit to encourage the country's economy. To achieve its objective, CGI needs to attract more and more investment and expand its business into national and even to international levels. Usually, the companies seeking additional funds; thus, they need issuing and selling the securities product such as bonds or shares to the public. In line with the previous elaboration, the present study examines determinant factors that affect manufacturing sectors profitability (Consumer Goods Industry) in Indonesia Stock Exchange. This study is designed using a quantitative approach through panel data series. The data collected from the online financial statement of 34 manufacturing listed companies for 2014 to 2018 using purposive sampling method and analysed using static panel data regression by assisting the econometric software, namely EVIEWS. This study found that operating leverage has a significant positive effect on manufacturing sectors profitability. Meanwhile, the company size has a significant negative effect on manufacturing sectors profitability. Besides that, debt to equity ratio, current ratio and company growth does not affect manufacturing companies' CGI profitability in the Indonesian Stock Exchange. This study's findings indicate that manufacturing companies in the Consumer Goods Industry sector need to increase their operating leverage because optimal operating leverage can increase profitability. Also, it is necessary to study the company size's efficiency level due to inefficient company size reduces the level of profitability of CGI companies.

Keywords: Operating leverage, debt to equity ratio, current ratio, company size and growth, profitability, manufacturing sectors (Consumer Goods Industry).