The Effect of Profitability and Tangibility on Capital Structures

Abstract

The aims of this study to determine the overview of the profitability measured by Return On Equity (ROE), tangibility, and the capital structure measured by Debt to Equity Ratio (DER), and to know the profitability and tangibility of the capital structure. The research methods used are descriptive and verificative. The research population is a sub-sector company of Pharmaceuticals registered in the Indonesian Stock Exchange period 2012-2017. Samples were taken with purposive sampling techniques. The analytical techniques used are classical assumption testing and panel regression analysis, and hypothesis testing using the F test and T-test. The results revealed that the development of profitability decreased, the development of tangibility increased, and the development of capital structures that experienced increases and decreases that tend to decline. Based on the F test, the profitability and tangibility are pensive to the capital structure. Based on the T-test, profitability affects the capital structure, and tangibility does not affect the capital structure.