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August 19, 2025

The Effect of Current Ratio, Debt to Asset Ratio, and Return on Assets on Price to Book Value in Non-Bank Companies in the LQ45 Index Listed on the Indonesian Stock Exchange from 2019 to 2023

Key Points

Current ratio, debt to asset ratio, and return on assets did not individually affect price to book value (PBV).
Simultaneously, the three financial ratios significantly impacted PBV, showing their combined relevance.
Using panel data regression, the study analyzed 35 non-bank companies from the LQ45 index and included 175 observations.
The model explained 22.01% of the variation in PBV, indicating other factors also influence firm value.

Abstract

This study aims to analyze the effect of Current Ratio, Debt to Asset Ratio, and Return on Assets on Price to Book Value (PBV) in non-bank companies listed in the LQ45 index on the Indonesia Stock Exchange during 2019–2023. Using a quantitative approach with panel data regression and a purposive sampling technique, the study selected 35 non-bank companies as samples, resulting in 175 observations. The data analysis used the Fixed Effect Model, with classical assumption testing and hypothesis testing through t-test, F-test, and the coefficient of determination (Adjusted R²). The results showed that individually, Current Ratio, Debt to Asset Ratio, and Return on Assets did not significantly affect Price to Book Value. However, simultaneously, the three variables significantly influenced PBV. The Adjusted R² value of 22.01% indicates that the model explains a moderate portion of the variation in PBV, while the rest is influenced by other factors not included in the model. These findings provide insight for investors and companies regarding the financial ratios’ roles in determining firm value.

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