Profitability of Manufacturing Firms in Indonesia Amidst the Pandemic

Sholikha Oktavi Khalifaturofi’ah · Rahmat Setiawan

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Financial Analysis and Corporate Governance Corporate Finance and Governance Working Capital and Financial Performance

Abstract

Research Originality: In the realm of manufacturing firms, the pursuit of profitability remains a foremost concern. This paper distinguishes itself through its innovative approach, integrating key factors such as liquidity, leverage, activity, and the influence of the COVID-19 pandemic. Utilizing panel regression analysis, the study scrutinizes Indonesia's total manufacturing firms to shed light on this critical issue.Research Objectives: This study primarily aims to evaluate the profitability of manufacturing firms in Indonesia. It specifically delves into the impact of liquidity, leverage, and activity measures on profitability, while also examining how the COVID-19 pandemic factors into this equation.Research Methods: Employing a quantitative approach, this study utilizes panel data gathered from 134 manufacturing firms in Indonesia spanning from 2018 to 2023. The analysis relies on a panel regression model to draw insights.Empirical Results: The analysis yields significant findings. Notably, leverage demonstrates a negative and statistically significant influence on manufacturing firms' profitability, whereas firm activity shows a positive and statistically significant effect. Conversely, liquidity and the COVID-19 pandemic appear to have negligible impacts on profitability.Implications: These findings hold critical implications for policymakers and practitioners within Indonesia's manufacturing sector. To bolster the profitability of manufacturing firms, policymakers should prioritize reducing leverage and fostering increased company activity, possibly through amplified sales efforts.JEL Classification: G32, G33, G01, L60How to Cite:Khalifaturofi’ah, S. O., & Setiawan, R. (2024). Profitability of Manufacturing Firms in Indonesia Amidst the Pandemic. Etikonomi, 23(2), 497-510. htttps://doi.org/10.15408/etk.v23i2.35169.

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2020The Impact of COVID-19 Pandemic on the Financial Performance of Firms on the Indonesia Stock Exchange 2022The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector 2021An assessment of the short-term impact of COVID-19 on economics and the environment: A case study of Indonesia 2017Determinants of Profitability and Firm Value: Evidence from Indonesian Banks 2020Determinants of Profitability: A Study on Manufacturing Companies Listed on the Dhaka Stock Exchange 2021THE EFFECT OF PROFITABILITY, FIRM SIZE, EQUITY OWNERSHIP AND FIRM AGE ON FIRM VALUE (LEVERAGE BASIS): Evidence from the Indonesian Manufacturer Companies 2021Profitability and value of firm: An evidence from manufacturing industry in Indonesia 2023The Role of Liquidity Creation in Managing the COVID-19 Banking Crisis in Selected Mena Countries

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