Analysis of Factors Affecting Profitability in Automotive and Component Sub-Sector Companies on the Indonesia Stock Exchange 2018 – 2022

ABSTRACT


INTRODUCTION
Automotive and component companies are one of the sub-sector companies on the Indonesia Stock Exchange that is growing in Indonesia.Indonesia is a country with rapid economic growth.This condition is supported by developments in the industrial sector, one of them.The increasing quantity of automotive and component companies is proof that the automotive and component industry attracts many parties based on the fact that Indonesia's economic strength is seen from people who have high purchasing power, especially because vehicles or automotive and components are community needs as a means of transportation..
A newly founded company needs to have specific goals.Maximizing profit or making as much profit as possible is the company's primary objective.High profitability is a reflection of the business's capacity to make money from its day-to-day operations.On the other hand, low profitability is indicative of the business's subpar operational performance, which limits its potential for profit-making.

Corresponding Author: Nurjanti Takarini *Cite this Article: Safirah Mardhiana, Nurjanti Takarini (2024). Analysis of Factors Affecting Profitability in Automotive and Component Sub-Sector Companies on the Indonesia Stock Exchange 2018 -2022. International Journal of Social Science and Education Research Studies, 4(5), 428-435
Because of this, every business needs competent managers in order for them to run efficiently and turn a profit.Every business uses a different approach to boost sales and enable its items to draw in customers in order to boost product sales.Profitability of the business will rise in tandem with sales growth.Based on the table data above, it shows that the average level of profitability (ROA) in automotive sub-sector companies from 2018 -2022 has fluctuated every year.The average ROA for 2018 was 4.23 then in 2019 it increased by 8.16 then in 2020 it decreased by 1.68 then in 2021 it increased by 6.35 and the last year it decreased by 6.26.
According to Asyikin et al., 2018, profitability is a ratio to show how effective and efficient the company's operational capabilities are in generating profits or profits.This profitability provides an overview to know how effectively the company operates so that it can benefit the company itself.Profitability can be measured by linking the profit or profit obtained in the company's main activities with the wealth or assets that have been owned to generate company profits.In the company's operations, profit is an important part in ensuring the continuity of the company.With the ability to make a profit or profit using all the company's resources, the objectives in the company can be achieved.
The ability of a business to fulfill its immediate obligations is referred to as liquidity.One of the elements that determines whether a business succeeds or fails is liquidity.The liquidity ratio, according to (Napitupulu, 2019), is a statistic that gives a general idea of the company's capacity to pay off short-term debt.According to (Wijaya and Isnani, 2019), a high liquidity ratio indicates better business performance since it attracts creditors who are willing to lend the company short-term money, which helps it run smoothly.
Solvency also known as leverage is a ratio used in order to assess the ability of a company to pay off debts and all obligations using capital guarantees and assets (assets in any form) owned in the long term and short term.(Akbar & Fahmi, 2020) state that a firm's capital structure describes the relationship between its own capital, which comes from shareholders' equity, and its owned capital, which comes from long-term debt (long-term liabilities).This relationship is what allows a company to be financed.

II. LITERATURE REVIEW Signal Theory
The way in which owners are informed about the success or failure of management is explained by signal theory.Positive aspects of signaling theory include companies' ability to set themselves apart from those with "bad news" by telling the market about their situation.The market will not trust signals about strong future performance from companies with poor past financial performance.(Tearney and Folk in Dwiyanti, 2019).

Profitability
According to Harun and Jeandry (2018), profitability is the capacity of an organization to use working capital to generate profits so that it can pay off its short-and long-term debt and provide dividends to investors.According to Turkocma and Sugiyono (2018), profitability demonstrates a company's capacity to turn a profit over a specific time period at a given level of revenue, assets, and share capital.A company's ability to make money off of its capital or assets is reflected in its profitability (Arifianto & Chabachid, 2019).

Liquidity
The liquidity ratio serves as a gauge for the company's capacity to use its available current assets to pay down shortterm debt when it matures.The liquidity ratio is employed to evaluate a company's capacity to fulfill its short-term and maturing debt (AS & Yuniningsih, 2020).The liquidity ratio is a well-known tool for assessing a company's capacity to pay short-term debt (Akbar & Fahmi, 2020).
From the above understanding, it can be concluded that the liquidity ratio is a ratio that shows the company's ability to pay short-term debt.

Solvency
According to (Safitri et al., 2018) the solvency ratio is a ratio used to measure the company's ability to meet its financial obligations, both short and long term.According to Brigham & Hauston (2018) the solvency ratio is a ratio used to measure how far a company uses debt.This means how much debt burden the company bears compared to its assets.

Capital Structure
According to Akbar and Fahmi (2020), a company's capital structure is how its financial proportions are arranged.Specifically, it is the ratio of owned capital, which comes from long-term debt or long-term liabilities, to own capital, or shareholders' equity, which is the company's funding source.According to (Fung, 2019), the capital structure is a long-term financing arrangement consisting of preferred stock, long-term debt, and shareholder capital that shows the appropriate ratio of long-term debt to equity.Meanwhile, Brigham & Houston, 2018: 476 state that the capital structure is a combination of debt, preferred stock, and common stock that is used to finance the business's assets.

Liquidity and Profitability
The results of this study are consistent with research by Khumairoh & Suprihhadi (2022), which also found that the current ratio has a positive and significant effect on profitability.Research by Wijaya & Isnani (2019) found that liquidity has a positive influence on profitability.
This shows that placing such a large amount of funds on the current asset side can have two different effects.The company's liquidity can improve, but also the company can lose profit because there should be funds used for profitable investments but are reserved to fulfill liquidity (Khumairoh & Suprihhadi, 2022).H1 : Profitability is positively and significantly impacted by liquidity.in Indonesia Stock Exchange Automobile and Component Sub-Sector Companies

Solvency and Profitability
The results of Rahmawati's research (2019) show that Debt to Equity Ratio has a negative effect on Profitability.Meanwhile, Noor (2011) shows the results of the Debt to Equity Ratio has no effect on Profitability.According to Sudjaja & Suwaidi, (2022) the greater this ratio for the company, the better.Conversely, if this ratio is low, the higher the level of funding provided by the owner.
Signal theory is related to the solvency ratio.The solvency ratio is used to determine the extent to which a company can repay its debts, both short and long term, or to measure the amount of funds in its debt balance.Higher debt usage indicates that the company may have difficulty paying or repaying its debts.The lower the solvency ratio, the better the company's signal to investors (Hardaniyah, 2020).H2 : The Indonesia Stock Exchange's automotive and component sub-sector companies' profitability is positively and significantly impacted by solvency..

Capital Structure and Profitability
According to study findings (Maulita & Tania, 2018), profitability is significantly impacted by the long-term debt to equity ratio.The study by Vidyasari et al. (2022) on capital structure indicates that the higher the debt-to-ownership ratio (DER) in the debt-equity ratio (DER), the higher the financial risk.This financial risk may be a sign that the company is facing increasing costs in order to meet its responsibilities.Furthermore, taking on a lot of debt results in fixed costs like loan principle and interest charges, and larger fixed costs can lower business profitability.Profitability falls when a business with the same total assets has a decline in profit.The explanation aligns with the findings of Iskandar et al. ( 2014

III. RESEARCH METHODS
The dependent variable in this study is profitability while the independent variables in this study are liquidity, solvency and model structure.The population in this study is automotive sub-sector companies and components listed on the Indonesia Stock Exchange with a total population of 15 companies.This study uses purposive sampling technique with a sample size of 9 companies.The data used in this study are secondary data.The data analysis technique used is multiple linear regression analysis whose calculations use IBM SPSS 24 software.

IV. RESULTS AND DISCUSSION
The subject of this study is the automotive and component sub-sector companies listed on the IDX for the period of 2018-2022.Up to nine companies have been chosen based on specific criteria: ( It can be seen in table 5 that the average Return On Assets of 9 companies in the Automotive and Component sub-sectors listed on the Indonesia Stock Exchange from 2018 to 2022 fluctuates and tends to decrease.In 2018 the average ROA was 6.25 percent, decreased in 2019 by 5.47 percent, decreased in 2020 by 2.25 percent, increased in 2021 by 5.31 percent and then rose again in 2022 by 5.68 percent.

Source: Data Processed
The worth of Mahal.Since there are no outliers in the data and the maximum distance of 15.893 is less than the outlier limit of 18.466, the data is of excellent quality and may be processed further using a sample size of 45 cases.

Normality Test
Normality: Whether or not the independent and dependent variables in a regression model have a normal distribution.

Source : Data Processed 2023
It was determined that all of the variables under study had a normal distribution using the Kolmogorov-Smirnov test, and that all of the data met the assumption of a normal distribution because the Asymp.Sig (significance) Unstandardized Residual of 0.092 is greater than 0.05 or NonSignificant.

Multicollinearity Test
Multicollinearity: The correlation of independent variables in multiple regression.

Source: Dara Processed
The results of the analysis of this study show the absence of multicollinearity symptoms in all independent variables (CR, DR, and DER) where the VIF value on the three independent variables is smaller than 10, which tests the traditional assumptions of multiple linear regression analysis.

Source: Data Processed
The eigenvalue and condition index are also taken into account in the collinearity diagnostics table that follows from the linear regression test.In the event that the Eigenvalue exceeds 0.01 and/or the Condition Index falls below 30, it can be said that the regression model does not exhibit multicollinearity symptoms.The greatest condition index is 6.801 less than 30, and the lowest eigenvalue is 0.060> 0.010, according to the Collinearity Diagnostics table.For this reason, multicollinearity is absent from this regression model.

Heteroscedasticity Test
Heteroscedasticity: The variants of the residuals from one observation to another have different variants.If it is the same, it is called Homoscedasticity.A good regression model does not have heteroscedasticity..

Source: Data Processed
Based on the results of the correlation analysis between the independent variables and Unstandardized residuals, it shows that the independent variables, namely CR, DR, and DER, do not have a significant correlation with the residuals, where all variables of Significance value with unstandardized residuals are greater than 0.05 or Non Significant, so the results of this analysis can be concluded that all research variables do not occur Heteroscedasticity.

Autocorrelation Test
Autocorrelation: There is a correlation between the confounding error in period t and the confounding error in period t-1 (previous).If the data is above 15 Thus, it can be said that the multiple linear regression model that was obtained for this study satisfies the traditional assumptions, which include the normative data for all variables, autocorrelation, heteroscedasticity, and multicollinearity.

Souce: Data Processed
The constant value of 10.914 denotes that the value of ROA (Y) is 10.914 in the case where the independent variables CR, DR, and DER are zero or constant.X1's coefficient value is 3.00687, indicating a unidirectional change between X1 and Y.This implies that for every unit rise in CR, there is a corresponding increase in Y. assuming that the other independent variables in the regression model are fixed, the ROA (Y) variable grows by 3.00687 units, and vice versa, for every unit reduction in CR, the ROA (Y) variable reduces by 3.00687 units.Assuming that the other independent variables of the regression model remain fixed, the coefficient value of X2 = 0.097 indicates a unidirectional change between X2 and Y.This means that for every unit increase in CR, the ROA (Y) variable increases by 0.097 units, and vice versa.Based on this relationship.The coefficient value of X3 is 0.026, indicating a unidirectional change between X3 and Y.This suggests that the ROA (Y) variable increases by 0.026 units for every unit increase in DER and decreases by 0.026 units for every unit decrease in DER.Under the assumption that the remaining independent variables in the regression model are fixed, (Y) reduces by 0.026 units.

Simultaneous Test Results (F)
Based on the test results with the F test, which show that the significance value (Sig.)= 0.000 <0.05, we can conclude that the multiple regression analysis tool used in this research model is appropriate or feasible to use as a research model with a significant level of 0.000, as shown in the following table.

Partial Test (t)
The t test is a test used to prove the hypothesis proposed in the study.There are 3 hypotheses regarding the relationship between the dependent variable and the independent variable proposed at the beginning of the study.The hypothesis will then be proven to determine the facts or findings of the research.The t test can be used to see whether there is an influence between research variables or not.

Table 14. Partial Test Results (t) Source: Data Processed
From the coeficients table above, we can conclude the results of hypothesis testing as follows: H1 : The Indonesia Stock Exchange's Automotive and Component Sub-Sector Companies can acknowledge that liquidity (CR) has a positive and substantial effect on profitability (ROA), with a coefficient of 3.00687 and a sig level of 0.035 < α = 0.05 showing significant (positive) results.H2 : The Indonesia Stock Exchange's Automotive Sub-Sector Companies and Components can acknowledge that solvency (DR) has a positive and substantial effect on profitability (ROA), with a coefficient of 0.097 and a sig level of 0.000 < α = 0.05 showing significant (positive) results.H3 : The Indonesia Stock Exchange's Automotive Sub-Sector Companies and Components can acknowledge that Capital Structure (DER) has a positive and substantial effect on profitability (ROA), with a coefficient of 0.026 and a sig level of 0.000 < α = 0.05 showing significant (positive) results.

Coefficient of Determination
The percentage contribution of each independent variable's combined influence on the dependent variable is ascertained via determination analysis in linear regression.This coefficient indicates the extent to which the percentage fluctuation in the model's independent variables can account for variations in the dependent variable.

Source: Data Processed
The independent variables CR, DR, and DER have an influence on the ROA (Y) variable, which has a variance of 94.1%.Variables not included in this study have an influence on the remaining 5.9% of the variance.This is seen from the following table, where the link between the independent variables CR, DR, and DER is correlated with a coefficient of determination (R-square) of 0.941, as indicated by the multiple correlation coefficient (R) value of 0.970.

V. DISCUSSION Effect of Liquidity (X1) on Profitability (Y)
Based on this study, it shows that Likuditas proxied by CR (Current Ratio) has a significant positive effect on profitability (ROA) of the automotive and component subsectors listed on the IDX for the 2018-2022 period.In this case the coefficient value for Current Ratio with Return On Assets is 3.00687.This shows that Current Ratio has a positive effect with Return On Assets.Based on this research, the company can manage current assets so that profitability also increases.However, high liquidity cannot be said to be good because without the utilization of the value owned to generate profits, it will become a burden which can be said that the cash in the company is idle.The higher the current ratio can also be said to be better, which means the higher the ability to pay current debt.The company is able to manage its short-term debt as well and has an impact on the company's profitability.
This study has similarities with the results of research conducted by (Erina, 2020) and (Randy & Nurjanti, 2020) which state that liquidity has a positive effect on profitability.But it does not support research conducted by (Putra, 2017) which states that liquidity has a negative effect on profitability.

Effect of Solvency (X2) on Profitability (Y)
This study demonstrates that, for the 2018-2022 timeframe, profitability (ROA) of the automotive and component sub-sectors listed on the IDX is significantly positively impacted by solvency, as measured by the debt ratio (DR).In this instance, the debt ratio with return on assets has a coefficient value of 0.097.This demonstrates how the Debt Ratio and Return on Assets have a favorable relationship.
Based on this research, it shows that funding with more and more debt, so that the company will be financed by debt to financial institutions to be able to finance operational activities in the company.These results indicate that companies that have low debt and high profits or high debt and low profits, therefore high leverage will reduce the company's profitability because it can lead to increased interest costs and the risk of default.
This study has similarities with the results of research conducted by (Damanik, 2018) and (Turrochma, 2018) which state that leverage has a positive effect on profitability.But it does not support research conducted by (Randy & Nurjanti, 2020) which states that solvency has no effect on profitability.

Effect of Capital Structure (X3) on Profitability (Y)
Based on this study, it shows that the Capital Structure proxied by Debt to Equity Ratio (DER) has a significant positive effect on profitability (ROA) of the automotive and component sub-sectors listed on the IDX for the 2018-2022 period.In this case the coefficient value for DER with Return On Assets is 0.026.This shows that DER has a significant positive effect on Return On Assets.
Based on this research, a large company size does not guarantee that it will fully manage the existence of assets owned by the company as the main source of profit achievement.
This study has similarities with the results of research conducted by (Erina, 2020) which states that capital structure has a significant positive effect on profitability.But it does not support research conducted by (Amrita, 2019) and (Kevin, 2018) which states that capital structure has a significant negative effect on profitability.

VI. CONCLUSION
On the basis of the findings of the investigation carried out, it can be concluded that: 1. Liquidity proxied by CR (Current Ratio) contributes and has a positive direction towards the profitability of automotive sub-sector companies and components listed on the Indonesia Stock Exchange for the period 2018-2022.,970 a 0,941 0,937 0,99314 Fig 1. Conceptual Framework

2 .
Solvency proxied by DR (Debt Ratio) contributes and has a positive direction towards the profitability of automotive sub-sector companies and components listed on the Indonesia Stock Exchange for the period 2018-2022.3. Capital Structure proxied by DER (Debt to Equity Ratio) contributes and has a positive direction on the profitability of automotive sub-sector companies and components listed on the Indonesia Stock Exchange for the 2018-2022 period.Model R R Square Adjusted R Square Std.Error of the Estimate 1

Table 2 . Liquidity Data (Current Ratio) in Automotive and Component Sub-Sector Companies Listed on the Indonesia Stock Exchange during the period 2018-2022 Source: www.idx.co.id (data processed)
It can be seen in table 2 that the average Current Ratio of 9 Automotive and Component sub-sector companies listed on the Indonesia Stock Exchange from 2018 to 2022 fluctuates and tends to decrease.In 2018 the average CR was 1340.11percent, decreased in 2019 by 260.90 percent, decreased in 2020 by -626.01 percent, decreased again in 2021 by -6670 percent and increased in 2022 by 174.11 percent.

Table 3 . Solvency Data (Debt Ratio) in Automotive and Component Sub-Sector Companies Listed on the Indonesia Stock Exchange during the period 2018-2022 Source: www.idx.co.id (data processed)
It can be seen in table3that the average Debt Ratio of 9 companies in the Automotive and Component sub-sectors listed on the Indonesia Stock Exchange from 2018 to 2022 fluctuates and tends to decrease.In 2018 the average DR was 41.04 percent, decreased in 2019 by 39.81 percent, decreased in 2020 by 38.63 percent, increased in 2021 by 41.15 percent and then rose again in 2022 by 42.43 percent.

Table 4 . Capital Structure Data (Debt to Equity Ratio) in Automotive and Component Sub-Sector Companies Listed on the Indonesia Stock Exchange during the period 2018-2022 Source: www.idx.co.id (data processed)
4t can be seen in table4.that the average Debt to Equity Ratio of 9 companies in the Automotive and Component subsectors listed on the Indonesia Stock Exchange from 2018 to 2022 fluctuates and tends to decrease.In 2018 the average DER was 79.80 percent, decreased in 2019 by 74.33 percent, decreased in 2020 by 73.61 percent, increased in 2021 by 78.55 percent and then rose again in 2022 by 89.09 percent.

Table 11 . Autocorrelation Test Results Source: Data Processed The
analysis's results demonstrate that the Durbin Watson value for the traditional assumptions used to identify autocorrelation in this case is 1.899.The Durbin Watson Table values are dL = 1.383 and dU = 1.666 with the quantity of data (N) = 45, the number of independent variables (K) = 3, and α = 0.05.It may be observed that the estimated Durbin (DW) value is still in the question area by comparing it to the Durbin Watson table. Watson