The Effect of Return on Assets, Current Ratio, Earnings per Share, and Debtto-Equity Ratio on Company Value

Abstract

Indonesia’s agricultural sector plays an important role in economic growth and employment; however, agricultural companies face fluctuating input costs, supply-chain disruptions, climate-related risks, and changing investor expectations that may influence firm value. This study aimed to examine the partial and simultaneous effects of Return on Assets (ROA), Current Ratio (CR), Earnings per Share (EPS), and Debt-to-Equity Ratio (DER) on the firm value of agricultural companies listed on the Indonesia Stock Exchange during 2021–2024. A quantitative causal-associative research design was applied using financial statement data. Purposive sampling was used to select 18 of 24 companies, resulting in 72 firm-year observations. Panel-data regression analysis was conducted using EViews 13, with Chow, Hausman, and Lagrange Multiplier tests identifying the Random Effects Model as the most appropriate estimator. The findings showed that ROA and DER had positive but statistically insignificant effects on Price-to-Book Value (PBV), whereas CR and EPS had negative but statistically insignificant effects. Simultaneously, the four financial ratios did not significantly affect firm value, with an F-test probability value of 0.842861. The model explained only 2.05% of the variation in firm value, indicating that other factors played a more substantial role. The study concluded that conventional profitability, liquidity, earnings, and leverage indicators were insufficient to explain agricultural company value during the post-pandemic period, suggesting that future research should incorporate broader financial and nonfinancial determinants.