The Effect of Profitability and Liquidity on Firms Value

Abstract

This study aims to determine the description of Profitability as measured by Return on Equity (ROE), Liquidity as measured by the Current Ratio (CR) and Firm Value as measured by Price to Book Value (PBV) and the influence between these variables. This research uses descriptive and verification research methods. This research was conducted on 4 companies in the Cosmetics and household goods sub-sector listed on the Indonesia Stock Exchange (IDX) with data ranging from 2011-2018. Samples were taken using purposive sampling technique with several criteria. Because the data are panel data, to test the effect between variables, panel regression analysis is used. The research findings show that profitability has a positive and significant effect on firm value. Furthermore, liquidity has a negative and insignificant effect on firm value. The results of the model fit test show that simultaneously profitability and liquidity have an effect on firm value.