The Effect of Liquidity and Leverage on Profitability in Agricultural Sector Companies

Abstract

This study aimed to determine the effect of liquidity and leverage on company profitability. The research method used in this research is a descriptive verificative method. The data used is secondary data, namely the type of data obtained indirectly from the first source (company) in the form of a summary of its performance for six years (2013-2018). The sampling technique used purposive sampling, obtained a sample of 14 companies. The data analysis conducted in this study used panel data regression. After the data was obtained, the classical assumption test was carried out (using the linearity, multicollinearity, heteroscedasticity, and autocorrelation test) with Chow's test and Hausman test. This study indicates that the picture of liquidity is in an unfavorable condition, as well as leverage and profitability are in the unfavorable category, and profitability is not significantly affected by liquidity in a negative direction, while leverage has a significant negative effect on profitability.