Effect of Profitability Mediation on Solvency, Liquidity and Activity Ratios on Company Value in IPO Companies in Indonesia

Abstract

The high opportunity to attract investors to IPO companies in Indonesia requires companies to be able to carry out efficiency and effectiveness in their operational activities. This paper aims to review the performance of IPO companies in Indonesia by examining the relationship between solvency, liquidity, activity and profitability of companies to the achievement of company value. This study uses secondary data through the analysis of annual financial statements for the period 2018 – 2023. The performance of IPO companies is measured by looking at the movement of stock values within five years since going public on the Indonesia Stock Exchange The analysis method used is descriptive statistics with classical assumption tests. The findings of the study show that profitability has an important role as a mediator of solvency to the value of the company and simultaneously solvency, liquidity and activities affect the value of the company by being mediated by profitability. The results of the study also show that solvency, liquidity and activities have no direct effect on profitability or company value. This condition occurs because IPO companies prioritize the determination and implementation of strategic policies over existing regulations. Potential investors can benefit from these findings in an effort to consider investment decisions and determine the high or low value to invest in IPO companies in Indonesia. To the researcher's knowledge, this study provides new insights into the performance of IPO companies in Indonesia, the relationship between asset turnover and the value of the company's shares, which is mediated by the company's ability to generate profits from its capital.