Financial Performance Determinants of Firm Value in Indonesian Industrial Sector

Abstract

This investigation examines financial performance indicators affecting firm valuation within Indonesia's industrial sector during 2020-2023. Utilizing quantitative methodology with 19 purposively selected companies from the Indonesia Stock Exchange, the study analyzes profitability, leverage, total asset turnover, and firm size impacts through panel data regression. Results demonstrate profitability (t=3.937, p=0.000) and leverage (t=2.070, p=0.042) exert significant positive influences on firm value, while total asset turnover and firm size show negligible effects. The determination coefficient (R²=0.199) indicates examined variables explain 19.9% of firm value variance, with additional factors including market conditions and corporate governance contributing to the remaining variance. Findings validate that earnings capacity and capital structure optimization constitute critical value drivers for industrial enterprises.