The Impact of Debt Equity Ratio and Return on Assets on Net Profit Margin

Frans Augusta Adipermana; Rizky Aprian Alvikar; Yudhistira Adwimurti; Watriningsih Watriningsih; R.A. Afera Ratna Wijayanti

Authors

Frans Augusta Adipermana Universitas Prof. Dr. Moestopo (Beragama)
Rizky Aprian Alvikar Universitas Prof. Dr. Moestopo (Beragama)
Yudhistira Adwimurti Universitas Prof. Dr. Moestopo (Beragama)
Watriningsih Watriningsih Prof. Dr. Moestopo (Beragama) University Jakarta
R.A. Afera Ratna Wijayanti UILI University

Abstract

This study examines the association of Debt Equity Ratio (DER) and Return on Assets (ROA) with Net Profit Margin (NPM) at PT. Bank KB Bukopin Tbk. during 2016–2021 in response to reviewer concerns about measurement choice, undeclared scaling, and small-sample inference. Using audited annual reports, the article is repositioned as an exploratory single-case study with six firm-year observations. All ratios are reported in their original percentage values; no transformation or standardization was applied. In the banking context, NPM is retained only as a supplementary bottom-line margin proxy and is defined here as net income after tax divided by total revenue reported in the annual reports. Shapiro-Wilk diagnostics and OLS estimates are reported cautiously because the sample is very small. Recalculated results show that DER has a positive but statistically insignificant association with NPM, whereas ROA has a strong positive association. In the joint model, ROA remains statistically significant while DER does not. The findings are specific to KB Bukopin and should not be generalized beyond this case.

Author Biographies

Frans Augusta Adipermana, Universitas Prof. Dr. Moestopo (Beragama)

Fakultas Ekonomi dan Bisnis

Rizky Aprian Alvikar, Universitas Prof. Dr. Moestopo (Beragama)

Fakultas Ekonomi dan Bisnis

Yudhistira Adwimurti, Universitas Prof. Dr. Moestopo (Beragama)

Fakultas Ekonomi dan Bisnis

R.A. Afera Ratna Wijayanti, UILI University

Faculty of Business and Social Science

References

Ali, M., & Puah, C. H. (2019). The internal determinants of bank profitability and stability: An insight from banking sector of Pakistan. Management Research Review, 42(1), 49–67. https://doi.org/10.1108/MRR-04-2017-0103

Amelia, R., & Gulo, N. (2021). Pengaruh debt to assets ratio, debt to equity ratio terhadap net profit margin pada perusahaan industri makanan dan minuman yang terdaftar di BEI 2016–2019. Jurnal Manajemen Retail Indonesia, 2(2), 115–124. https://doi.org/10.33050/jmari.v2i2.1657

Athanasoglou, P. P., Brissimis, S. N., & Delis, M. D. (2008). Bank-specific, industry-specific and macroeconomic determinants of bank profitability. Journal of International Financial Markets, Institutions and Money, 18(2), 121–136. https://doi.org/10.1016/j.intfin.2006.07.001

Ayalew, Z. A., & McMillan, D. (2021). Capital structure and profitability: Panel data evidence of private banks in Ethiopia. Cogent Economics & Finance, 9(1), Article 1953736. https://doi.org/10.1080/23322039.2021.1953736

Berger, A. N. (1995). The relationship between capital and earnings in banking. Journal of Money, Credit and Banking, 27(2), 432–456. https://doi.org/10.2307/2077877

Dietrich, A., & Wanzenried, G. (2011). Determinants of bank profitability before and during the crisis: Evidence from Switzerland. Journal of International Financial Markets, Institutions and Money, 21(3), 307–327. https://doi.org/10.1016/j.intfin.2010.11.002

Ghasemi, A., & Zahediasl, S. (2012). Normality tests for statistical analysis: A guide for non-statisticians. International Journal of Endocrinology and Metabolism, 10(2), 486–489. https://doi.org/10.5812/ijem.3505

Glejser, H. (1969). A new test for heteroskedasticity. Journal of the American Statistical Association, 64(325), 316–323. https://doi.org/10.1080/01621459.1969.10500976

Gnawali, B., & Niroula, B. (2024). Deposit mobilization and profitability in Nepalese commercial banks. Jurnal Studi Manajemen dan Bisnis, 11(1), 39–46. https://doi.org/10.21107/jsmb.v11i1.27086

Le, T. D. Q., & Ngo, T. (2020). The determinants of bank profitability: A cross-country analysis. Central Bank Review, 20(2), 65–73. https://doi.org/10.1016/j.cbrev.2020.04.001

Menicucci, E., & Paolucci, G. (2016). The determinants of bank profitability: Empirical evidence from European banking sector. Journal of Financial Reporting and Accounting, 14(1), 86–115. https://doi.org/10.1108/JFRA-05-2015-0060

O’Brien, R. M. (2007). A caution regarding rules of thumb for variance inflation factors. Quality & Quantity, 41(5), 673–690. https://doi.org/10.1007/s11135-006-9018-6

Otoritas Jasa Keuangan. (n.d.). Undang-undang Nomor 8 Tahun 1995 tentang Pasar Modal. https://www.ojk.go.id/id/kanal/pasar-modal/regulasi/undang-undang/Pages/undang-undang-nomor-8-tahun-1995-tentang-pasar-modal.aspx

PT Bank KB Bukopin Tbk. (n.d.). Annual reports. https://www.kbbank.co.id/annual-report

Salim, M., & Yadav, R. (2012). Capital structure and firm performance: Evidence from Malaysian listed companies. Procedia - Social and Behavioral Sciences, 65, 156–166. https://doi.org/10.1016/j.sbspro.2012.11.105

Soesetio, Y., Waffiudin, W., Rudiningtyas, D. A., & Siswanto, E. (2022). The impact of bank-specific and macro economic factors on profitability in small banks. Jurnal Dinamika Akuntansi, 14(1), 1–16. https://doi.org/10.15294/jda.v14i1.33532

Stefanie, & Setiawati, L. W. (2019). Pengaruh net profit margin, arus kas operasi dan reputasi auditor terhadap return saham pada perusahaan manufaktur periode 2014–2017. AJAR, 2(2), 1–18. https://doi.org/10.35129/ajar.v2i02.79