PENGARUH FREE CASH FLOW, PROFITABILITAS, DAN UKURAN PERUSAHAAN TERHADAP DEBT TO EQUITY RATIO

Abstract

This research intended to examine the effect of free cash flow, profitability, and the company size on debt to
equity ratio throught their annual financial report. Obviously, the report was arranged by property
manufacturer company, real estate and building construction as stated in Indonesia Stock Exchange market.
This research used nine property companies, real estate and building construction during 2012-2016 as samples,
so that 45 annual financial report were considered to be analyzed. In this research, the sampling technique used
purposive sampling; and it used multiple linier regression with software SPSS version 23 for data analysis.
According to research result, this concluded that company size gave significant positive effect of debt on equity
ratio. This was caused by the companies’ bigger size as well as their amount numbers of operational activities.
Therefore, they needed a lot of fund in relation to the usage of debt to equity ratio. On the other hand, free cash
flow and profitability did not give significant positive effect of debt on equity ratio since the companies gave more
interest to internal fund which gain from the profit, than external fund taken from the debt. All of these results
were in line with pecking order theory.
Keywords: debt to equity ratio, free cash flow, profitability, company size