Profitability and solvability analysis in an effort to improve dividend distribution

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Eni Wuryani

2020 International Journal of Innovation, Creativity and Change Vol. 13 Issue 3 Article Cited by 0 SDG 11 Quartile

Abstract

This research aims to analyse profitability and solvability in an effort to observe how dividend distribution may be increased. Quantitative data was used in this research. This study used a secondary data source; the data was collected from the Indonesian Stock Exchange (ISE) in the form of annual financial reports from transportation companys shown to be distributing a dividend in the 2010-2016 period. The study used 32 transportation companies listed on the ISE for the sample. The independent variable (X) of this research was that the profitability variable consisted of ROA (Return on Assets) and the solvability comprised DAR (Debt to Assets Ratio), while the dependent (Y) variable was Dividend Payout Ratio (DPR). Profitability has an influence on dividend distribution. Profitability measured by an asset is the basic element representing an investor's benchmark for a company in managing profit. Solvability has an influence on dividend distribution since solvability, or debt to asset ratio, is an ideal indicator for a transportation company. The amount of company assets financed by debt will affect the company's debt payment and dividend distribution. The amount of dividend is also influenced by solvability. According to the previous research results, the influence of ROA on stock distribution results in a different finding, so this research can still be utilised to test the influence of ROA on dividend distribution. The originality of this paper is that it shows the comprehensive profitability, solvency, and dividend payouts in Indonesia. © 2020 Primrose Hall Publishing Group.

Affiliations

Faculty of Economy, Universitas Negeri Surabaya, Indonesia

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