The Effect of Debt to Equity Ratio, Return on Assets, and Cash Ratio on Firm Value with Firm Size as a Moderating Variable in Financial Sector Companies Listed on the Indonesia Stock Exchange

Abstract

This study aims to analyze the effect of Debt to Equity Ratio (DER), Return on Assets (ROA), and Cash Ratio on Firm Value and to examine the role of Firm Size as a moderating variable in financial sector companies listed on the Indonesia Stock Exchange. This study uses a quantitative approach with an associative research design. The research sample consisted of 89 companies selected using purposive sampling. The data used in this study were secondary data obtained from company financial statements. Data analysis was conducted using Moderated Regression Analysis (MRA) with the assistance of SPSS through classical assumption tests, correlation coefficient analysis, coefficient of determination analysis, and hypothesis testing using the t-test and F-test. The results show that, partially, Debt to Equity Ratio (DER) and Cash Ratio have a positive and significant effect on Firm Value, while Return on Assets (ROA) does not have a significant effect on Firm Value. Simultaneously, DER, ROA, and Cash Ratio have a significant effect on Firm Value, with an F-value of 22.184 and a significance value of 0.000. The coefficient of determination (R²) of 0.345 indicates that 34.5% of the variation in Firm Value can be explained by DER, ROA, and Cash Ratio, while the remaining percentage is influenced by other variables outside this study. The moderation test results show that Firm Size moderates the effect of DER on Firm Value, but does not moderate the effect of ROA and Cash Ratio on Firm Value. The R² value increased to 0.411 after the moderating variable was included, indicating an improvement in the model’s ability to explain the dependent variable.