DETERMINANT OF CAPITAL STRUCTURE: STUDY IN INDONESIAN STOCK EXCHANGE

Abstract

This research aimed to analyze the effect of liquidity which was measured by current ratio, firm size which was measured by size, and asset structure which was measured by debt to equity ratio on the capital structure of cosmetics companies. The research was quantitative. Meanwhile, the population was some cosmetics companies which were listed on Indonesia Stock Exchange 2013-2018. Moreover, the data collection technique used purposive sampling, in which the sample was based on criteria given. In line with, there were 5 cosmetics companies as sample. In addition, the data analysis technique used multiple linear regression with SPSS 25. The research result concluded liquidity (CR) had negative effect on the capital structure. Likewise, firm size had negative and significant effect on the capital structure. On the other hand, asset structure had positive and significant effect on the capital structure in short, it showed the determination coefficient was 90,8%. This meant, liquidity, firm size, and asset structure had affected capital structure of 90,8%. Meanwhile, the rest of 9,2% was affected by other factors which outside this research.
Keywords: liquidity, firm size, asset structure, capital structure