Factors that Influence Profitability in the Industrial and Chemical Companies Listed on Indonesia Stock Exchange

Profitability. ____________________ ABSTRACT ____________________________________________________________________ This study aims to determine whether Firm Size, Debt to Equity Ratio, and Working Capital Turnover Ratio partially or simultaneously give a significant effect on profitability in the basic industrial and chemical sector companies listed on the Indonesia Stock Exchange. The method uses in this study is a quantitative approach, a type of descriptive research, the nature of explanatory research. The type of data uses is secondary data. While the purposive sampling method is employed as a sample collection technique. The population is 69 companies and the sample of 27 samples (108 samples in 4 years). The test results of the coefficient of determination show Firm Size, Debt to Equity Ratio, and Working Capital Turnover Ratio to Profitability

A high solvency ratio has a large loss, but there is also an opportunity to get bigger profits. The researcher used Debt to Equity Ratio as a substitute for solvability ratios where this ratio can show the ability of the company's capital to fulfil its obligations.
There is a lot of working capital in operational activities to directly meet the costs of routine company activities that continue to rotate as long as the company is still running and will end when the company is liquidated or dissolved. The use of working capital must be monitored, regulated and controlled in order to get the desired profit.
The size of an asset owned by a company can be described as a measure of the company in increasing the company's own capital. The size of the company can affect profitability because the larger a company, the more capital it has that allows the company to get a higher profit.
Profitability is the same as generating profit. Researchers use the ratio of return on assets as a substitute for profitability ratios. High return on assets illustrates the existence of large profits obtained, depending on each company in obtaining it. An increase or decrease in return on assets can be influenced by several factors, such as Firm Size, Debt to Equity Ratio, working capital turnover ratio.
Based on the above things, the researchers want to test whether the explanation above can improve the company's financial performance seen in the basic industrial and chemical sectors listed on the Indonesia Stock Exchange for the period 2014-2017. Below this is using Firm Size, Debt to Equity Ratio, and Working Capital Turnover Ratio.

Firm Size
According to Wikardi, Dewi and Wiyani (2017), company size can be expressed by the total assets of the company. The size of the company reflects how the company can manage its resources to the maximum extent possible. According to Hermuningsih (2012), the size of the company can be stated as follows:

Debt to Equity Ratio
According to Marberya and Suaryana (2006), Debt to Equity Ratio is a comparison that shows how much debt the company uses and an explanation of the size of the source of funds for the assets owned by the company. According to Fatimatuz (2016), the DER formula is:

Working Capital Turnover Ratio
According to Widiyanti, Marlina, and Samadi (2014), this ratio shows the relationship between working capital and the company's sales proceeds for each working capital. According to Azlina (2009), the working capital turnover formulation is: Nofrita (2013) states that profitability is the net profit generated from the company's activities in the current year. According to Arilaha (2009), profitability is an appropriate assessment based on the rate of return obtained from its investment activities. While according to Nurhayati (2013), the formulation of profitability (ROA) is as follows:

Effect of Firm Size on Profitability
According to Ratnasari et al (2018), large companies tend to have greater scale and economic flexibility than small companies, so it will be easier to get a loan which will ultimately increase the profitability of the company.
According to Fachrudin (2011) Firm size is not a guarantee that the company has the ability to generate good profits. While according to Sari and Budiasih (2014) This insignificant effect is due to the greater size of a company, then the company requires greater costs also to carry out operational activities such as labour costs, administrative costs, and others so that it will be able to reduce the profitability of the company.

Effect of DER on Profitability
According to Afrinda (2012), the higher the solvency of the company the lower the company's ability to generate profits. While, according to Purnamasari (2017), The funding policy reflected in the Debt to Equity Ratio (DER) greatly affect the achievement of the profit obtained by the company.
According to Fitri, Supriyanto, and Abrar (2016), The higher DER shows the great trust from outside parties, it is very possible to improve the performance of the company, because with large capital then the opportunity to achieve the level of profit is also large.

Effect of WCTO on Profitability
According to Utami and Prasetiono (2016), working capital turnover is when cash is invested into working capital components such as raw materials, labour, and BOP which are processed into finished goods sold and become sales that increase profitability.
According to Fitri, Supriyanto, and Abrar (2016), working capital turnover can affect the level of profitability. If the low level of profitability associated with working capital can indicate the possibility of lower sales volume compared to the costs used.
According to Ginting (2018), The higher working capital turnover the better performance of a company where the percentage of working capital there can generate sales with a certain amount. The greater this ratio indicates the effective utilization of working capital available in increasing the profitability of the company.

Conceptual Framework and Hypothesis
Chart 1: Conceptual Framework Based on the conceptual framework, the hypothesis that can be developed in this study as follows:

METHODS
In this study, the researcher used quantitative descriptive research. The data used is quantitative data in the form of financial statements issued by the company, with a secondary data source obtained by downloading from the official site of the Indonesia stock exchange. In this study, the researcher uses the population in the basic industrial and chemical companies listed on the Indonesia Stock Exchange from 2014-2017. The data used is quantitative data in the form of financial statements published by companies, with secondary data sources obtained by downloading through the official website of the IDX. The population of this company were 69 companies. Some of the characteristics specified are: (1). Basic and chemical industry companies The number of companies that became the study sample 27 Year of observation 4 Total sample during the study period 108

Research variable
1. The independent variables in this study are Firm Size (X1), Debt To Equity Ratio (X2), and Working Capital Turnover Ratio (X3). 2. The dependent variable in this study is Profitability (Y).

Firm Size (X1)
Company size is measured using LN (total assets) to find out how much the basic industrial and chemical sector companies on the IDX in 2014-2017.

Debt To Equity Ratio (X2)
DER is a comparison between company debt and company equity in basic and chemical industry companies on the IDX in 2014-2017.
3. Working Capital Turnover Ratio (X3) WCTO is a comparison between company sales and working capital owned by the company at the basic and chemical industry on the IDX in 2014-2017.

Profitability (Y)
Profitability is measured using a comparison between the company's net profit and the total assets of the company in basic and chemical industry companies on the IDX in 2014-2017.

Descriptive statistics
Descriptive statistical analysis is an analysis tool used to see the value of the variable Firm Size, Debt to Equity Ratio, working capital turnover ratio, and profitability. The results of the descriptive statistical analysis of the study can be looked at. The minimum value of Debt to Equity Ratio is -6.93, the maximum value is 94.10, and the mean value is 1.6758, and the standard deviation value is 9.11818.
The minimum value of the Working Capital Turnover Ratio is -5.99, the maximum value is 25.02, and the mean value is 0.8065, and the standard deviation value is 3.41132.
The minimum profitability value is 0.00, the maximum value is 0.37, the mean value is 0.0636 and the standard deviation value is 0.05738. Valid N (listwise) 108 From the histogram graph in Chart 2 above, it can be concluded that the residual data is normally distributed because the histogram graph shows the distribution of data that follows a bell-shaped curve without skewing left or right.   Based on table 4, it can be seen that the tolerance value obtained for each variable is greater than 0.10 and the VIF value obtained for each variable is less than 10, meaning that the data are Firm Size variables, Debt to Equity Ratio, and Working Capital Turnover Ratio free from the symptoms of multicollinearity.

Model
Durbin-Watson 1 1.792     2. LN Firm Size regression coefficient of -0.437 states that for every increase in Firm Size once, the return rate will decrease by 0.437.
3. The regression coefficient of LN Debt to Equity Ratio of -0.543 states that every one-time decrease in the Debt to Equity Ratio, the return rate will decrease by 0.543.

LN regression coefficient
Working Capital Turnover Ratio of 0.256 states that every increase in the one-time working capital turnover ratio, the return rate will increase by 0.256.

Coefficient of Determination
Model R R Square Adjusted R Square Std. Error of the Estimate 1 .605 a .366 .345 .73477

CONCLUSION
This study intends to examine the influence of Debt to Equity Ratio, Working Capital Turnover Ratio and Firm Size in basic and chemicals sector companies listed on the Indonesian Stock Exchange. By using a purposive sampling approach, this study obtained 27 companies as a sample during the 2014-2017 periods. In total, there are 108 observations.
The results of hypothesis testing using SPSS obtained that simultaneously Firm Size, Debt to Equity Ratio and Working Capital Turnover Ratio affect the profitability of basic industry and chemicals sector companies listed on the Indonesia Stock Exchange in 2014-2017. This study concludes that both Debt to Equity Ratio and Working Capital Turnover Ratio have a partially positive influence on profitability while Firm Size does not affect profitability in basic and chemicals sector companies in the Indonesia Stock Exchange in 2014-2017.
The theoretical implication that can be obtained from this study is that the results of this research can add insight and knowledge for the development of science in the field of financial accounting. While practically, this research is beneficial to the Indonesian Government related to tax by the corporation as taxpayers and the investor making the decision to choose investment in the shares of the company.
This study only examines basic and chemicals companies for the period of 2014-2017. It is possible to obtain different results if the analysis involves other types of companies, different periods of time, or other statistical models.
For other researchers who are interested in researching the same topic, this research model can be further developed while considering different settings, population, independent variables and possibly also increase the period of the observation.