Impact of Financial Ratio and Dividend Policy on LQ45 Companies’ Stock Returns

Key Points

MAIN FINDING: Profitability ratios and dividend policies significantly influence stock returns in LQ45 companies.
KEY EVIDENCE: Analysis revealed a positive relationship between profitability ratios and stock returns, while liquidity and solvency were non-significant.
APPROACH: The study utilized a quantitative method, specifically multiple linear regression, on financial reports from LQ45 indexed firms.
SIGNIFICANCE: Findings suggest that investors should prioritize profitability and dividend policies for better investment decisions.

Abstract

This study aims to determine the effect of profitability ratios (ROA), liquidity (CR), solvency (DER), and dividend policy (DPR) on stock returns (CAR) in LQ45 indexed companies in 2021-2024.This study uses a quantitative approach with secondary data in the form of annual financial reports from LQ45 companies for the period 2021–2024. The analytical method used is multiple linear regression.The population of this study was all companies listed in the LQ45 index in Indonesia. The results found that profitability ratios and dividend policies influence stock returns. Meanwhile, liquidity and solvency ratios have no effect on stock returns. The findings provide important implications for investors in considering fundamental factors and dividend policies before making investment decisions in the capital market.

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