The Effect of Financial Ratios On Company Value in Real Estate Companies In Makassar City

Abstract

This study aims to analyze the effect of financial ratios on company value in real estate companies in Makassar City. In a dynamic and challenging industry such as real estate, efficient management of financial ratios is essential to increase competitiveness and company value. The financial ratios analyzed in this study include liquidity, profitability, and solvency ratios, which are considered to reflect the financial health and overall performance of the company. Company value is measured using indicators such as Price to Earnings Ratio (PER) and market capitalization. The method used in this study is multiple linear regression, with a sample of real estate companies listed in Makassar City during the period 2019 to 2022. The results of the study show that financial ratios, especially the profitability ratio (Return on Assets/ROA) and the solvency ratio (Debt to Equity Ratio/DER), have a significant effect on company value. In particular, companies with higher profitability ratios tend to have better market value. On the other hand, the liquidity ratio does not show a significant effect on company value. This study fills a gap in the existing literature, by providing insights into how real estate companies in developing regions such as Makassar can leverage financial ratios to enhance their value in the market. The findings also provide important implications for financial managers and investors, by demonstrating that proper management of financial ratios can be a key strategy in enhancing the performance and attractiveness of companies in the real estate sector.