Siti Marfuah, Fanlia Prima Jaya, Diana, Muhammad Nurdin, Muhammad Darwis Meyandie Nasution

The Effect of Cash Turnover Ratio, Total Asset Turnover, and Debt to Asset Ratio on Return on Assets

Introduction

The effect of cash turnover ratio, total asset turnover, and debt to asset ratio on return on assets . Analyze how Cash Turnover, Total Asset Turnover, and Debt to Asset Ratios affect Return on Assets in Indonesian automotive companies (2020-2024). TATO is key to profitability.

Abstract

This study is motivated by the importance of financial performance analysis in the automotive industry listed on the Indonesia Stock Exchange (IDX), particularly in assessing the effectiveness of asset management, liquidity, and capital structure on company profitability. This study aims to analyze the effect of Cash Turnover Ratio (CTR), Total Assets Turnover Ratio (TATO), and Debt to Asset Ratio (DAR) on the Return on Asset (ROA) of automotive companies listed on the Indonesia Stock Exchange in 2020-2024. The method used is a quantitative approach with multiple linear regression analysis. The sample consists of 9 automotive companies listed on the IDX over a five-year period (2020–2024), using financial statement data as the primary source. The results show that, partially, CTR and DAR have no significant effect on ROA, while TATO has a significant effect on ROA. Simultaneously, CTR, TATO, and DAR significantly affect ROA. The findings indicate that asset utilization efficiency is the key determinant of profitability in automotive companies. These results can serve as a reference for management in improving asset management efficiency and for investors in evaluating company performance.

Review

This study critically examines the financial performance of automotive companies listed on the Indonesia Stock Exchange (IDX) by analyzing the impact of key financial ratios on profitability. The research is appropriately motivated by the significance of understanding asset management, liquidity, and capital structure in driving company performance. Using a quantitative approach, the authors aim to determine how the Cash Turnover Ratio (CTR), Total Asset Turnover (TATO), and Debt to Asset Ratio (DAR) individually and collectively affect Return on Assets (ROA) for a sample of nine automotive firms over the period 2020-2024, employing multiple linear regression. The findings present an interesting dichotomy regarding the influence of the selected financial ratios. Partially, the study indicates that while CTR and DAR do not individually have a significant effect on ROA, TATO emerges as a significant determinant, suggesting that the efficiency of asset utilization is a standalone driver of profitability. However, when these three variables are considered simultaneously, the analysis reveals a significant combined effect on ROA. This highlights the complex interplay between asset management, liquidity, and capital structure, where their collective influence outweighs their individual non-significant impacts on profitability. The primary conclusion, emphasizing asset utilization efficiency as a key determinant of profitability, offers valuable insights for both academic understanding and practical application. For management, these results serve as a direct reference to prioritize and refine strategies aimed at optimizing asset deployment and operational efficiency. For investors, the study provides a useful framework for evaluating company performance, particularly by focusing on metrics like Total Asset Turnover. Future research might expand on these findings by exploring sector-specific nuances or incorporating qualitative factors that could further elucidate the dynamics of profitability in this crucial industry.

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