• Indah Nur Lailiyah
  • Bambang Suryono


ABSTRACT The dividend policy determines the amount of profit divided in the form of cash dividends and profits retained by funding sources. If the company decides to share the profit that is given as dividends, it means that it affects the reduction in the amount of retained earnings, which in turn reduces the source of internal funds that will be used to develop the company. This research aimed to examine the effect of financial performance on dividend policy. The financial performance referred to profitability, which was measured by ROA (Return On Asset), liquidity was measured by CR (Current Ratio), solvability was measured by DER (Debt Equity Ratio), and dividend policy was measured by DPR (Dividend Payout Ratio). The research was quantitative. Moreover, the data collection technique used purposive sampling, in which the sample was based on the criteria given. In line with that, there were 30 samples from 6 Automotive and Components, mining as always as contruction and building companies which were listed on Indonesia Stock Exchange from 2016-to 2020. Furthermore, the data analysis technique used multiple linear regression with SPSS (Statistical Product and Service Solution) 23. The research result concluded that profitability affected the dividend policy of Automotive and Components companies. On the other hand, liquidity, as well as solvability, did not affect the dividend policy of Automotive and Component companies.