THE IMPACT OF DEBT ON RETURN ON ASSET IN INDONESIA`S CONSTRUCTION COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE (2019-2023)

Siti Nur Khofifah; Aida Aulia  Fadilah

Authors

Siti Nur Khofifah Universitas Negeri Surabaya Author
Aida Aulia Fadilah Universitas Negeri Surabaya Author

Keywords:

Return on Asset, Debt to Equity , Construction Sector

Abstract

This research investigates the outcome of debt-related variables on Return on Assets (ROA) in the Indonesian construction sector from 2019 to 2023, focusing on total Debt and the Debt to Asset Ratio (DER). Analyzing data from 20 construction companies through multiple linear regression, it was found that while total debt does not significantly influence ROA, the Debt to Asset Ratio significantly negatively impacts profitability, with each unit increase resulting in a 9.59% decrease in ROA. These findings highlight the importance of managing the proportion of debt relative to total assets as a critical factor in financial performance. The study emphasizes the need for strategic debt management to balance growth with financial stability, providing insights for financial managers in optimizing capital structure to enhance operational efficiency and long-term sustainability

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