Examining the Factors that Influence capital structure in the basic industry and Chemicals Companies on the Indonesia Stock Exchange: Mediating Role of Stock Return

Abstract

Abstract: This study aims to examine the total asset turnover (TATO), return on investment (ROI), earnings per share (EPS), current ratio (CR) and stock risk in influencing the capital structure through stock return in the basic industry and chemical companies on the Indonesia Stock exchange for 2016-2021. This study is designed using a quantitative approach, with causality and inferential approach. The population used in this study were 88 basic industries and chemical companies listed on the Indonesia Stock Exchange. Meanwhile, the samples were 17 companies determined using purposive sampling. The technique used is a documentation in the form of the annual financial reports from basic Industries and chemical companies published through the official website of the Indonesia Stock Exchange, www.idx.co.id and www.idnfinancial.com. This study uses Path Analysis measured using the STATA software. This study provides significant information that is taken into consideration in determining and deciding on making investments. Potential investors are also likely to look at the value of the current ratio and whether the company can cover its obligations, as seen from the comparison between total current assets and current liabilities. It is recommended that potential investors choose companies with a total current asset value more significant than the entire current debt value.