February 25, 2025

The Effect of Net Profit Margin and Debt to Equity Ratio on Profit Growth

Key Points

Profit growth is not significantly influenced by net profit margin, though it shows a positive trend.
The debt to equity ratio also indicates a positive but statistically insignificant impact on profit growth.
Data analysis was conducted using multiple regression analysis on 12 banks listed on the Indonesia Stock Exchange from 2017 to 2022.
These findings suggest a need for further research to enhance understanding of profit growth determinants in banking.

Abstract

Purpose – This study aims to determine the effect of net profit margin and debt to equity ratio on profit growth. Design/methodology/approach – This research uses quantitative data, the sample in this study is profit growth sub sector banks which are listed on the Indonesia Stock Exchange in the period 2017 – 2022 as many as 12 companies. The analysis technique used to test the hypothesis is multiple regression analysis using Eviews 9 software. Findings – The results of this study indicate that the net profit margin variable has a positive and statistically insignificant effect on profit growth, the debt to equity ratio variable has a positive and statistically insignificant effect on profit growth. Research limitations/implications – This research hopes to provide information regarding profit growth and can provide benefits in decision making and can be used as reference material for further research.

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