THE VALUE OF THE COMPANY AND ITS FACTORS

Abstract

ABSTRACT
The value of the company is an important factor in internal and external decision making. The value of a company is contingent upon number of factors, such as liquidity, solvency, rentability and profitability. This research, the researchers analyze the impact of these four elements on the
company’s value. This research is interesting because it has relevance for managerial and investment decision making, as well as helping companies in designing effective financial strategies to increase company’s value amidst fierce business competition and give insight about how financial factors can influence investment decisions. Investors are inclined to invest in companies that they believe will perform well. The current phenomenon is the fluctuation in the company's value over the past four years in the period 2020-2023. The purpose of this research is to analyze whether liquidity, solvency, rentability and profitability factors affect the value of
the company or not. The research represents an update to previous studies that incorporates additional independent variables with the aim of providing comprehensive understanding of the factors influencing the company's value, the sampling period covered by this study is more recent than that of previous research, spanning the years 2020 to 2023. This is because the new research provides more accurate picture of the current period’s impacting corporate value. A sample of 34 companies in the food and beverage sector on Indonesia Stock Exchange for period 2020-2023, using purposive sampling technique with multiple criteria, resulting in a total sample of 136. The data used are secondary. They are obtained from publicly available financial reports of companies listed on the Indonesia Stock Exchange. The method of this analysis used is descriptive analysis, normality test, classical assumption test and hypothesis test. The results of the hypothesis test indicate that liquidity and solvency have no significant impact on the value of the company. Conversely, rentability and profitability have a positive and significant impact on the value of a company. The findings thus suggest that company's value is primarily determined by rentability and profitability, while liquidity and solvency have no effect on a company's value.

Keywords: Liquidity, Solvency, Rentability, Profitability, Company’s Value