Arranged by        :

Name                  : Dwike Agustina Saraswati

Class / NPM         : 4EA01 / 15209056

Faculty / Major   : Economi / Management







                                                              CHAPTER I


1.1 Background

Dividend is one form of increasing shareholder wealth. Investors will be very happy if it gets the higher the investment return from time to time. Therefore, potential investors have an interest in being able to predict how much return on investment they are doing. Rate of return on investment in the form of dividend income is not easy to predict. This was due to dividend policy is a tough and versatile policy dilemma for the management company. Dividend policy is analogous to an ongoing puzzle. Dividend policy is a puzzle that is hard to explain, and always raises a big question mark for investors, creditors, even to academics. Determination of the exact amount to be paid as dividends is a tough financial decision for management. A firm decision regarding the dividend is sometimes integrated with financing decisions and investment decisions. In the case of a profit company, but may be due to lower dividends because management is very concerned about the survival of the company, to make an arrest (retained) earnings to expand or need cash for the company’s operations. Investors who are not willing to take high risk (risk aversion) will of course choose the dividend rather than capital gains. Investors like these are usually short-term investors and very carefully consider where the funds will be invested. Such investors do not intend to take the risk for the sake of capital gains in the future. They will be more oriented to the current dividend.

Therefore, an investor or potential investor is determined to be able to predict the company’s dividend policy. Statement of Financial Accounting Standards (IAI, 2007) explains that includes a flexible dividend policy which will be distributed as dividends to shareholders, namely: cash dividends, stock dividends, stock splits (stock split), and stock returns back. Dividend policy of the company is reflected in the dividend payout ratio (Dividend Payout Ratio). According Suharli (2004) rate of return on investment in the form of dividends for investors can be predicted by the ratio of profitability, liquidity, and leverage (debt). Levels of profitability and liquidity has a positive relationship with dividend policy, while leverage has a negative ties with the dividend policy.

Profitability is the company’s ability to generate profits (profit). Profit is what will be the basis of corporate dividends, whether cash dividends or stock dividends. Suharli (2004) expresses the difference between the income earned from the property entrance (revenue and profit) and the treasure out (expenses and losses).

According Suharli (2004) suggested that to measure the profitability of one of them using the ratio of Return on Investment (ROI). According to Hanafi (2004, 43) ratio is often used to gauge the return (rates of return) earned investment shareholder is the Return on Investment (ROI). Liquidity of the company shows the company’s ability to fund its operations and repay short-term obligations. Liquidity can be measured via financial ratios such as current ratio and quick ratio (Hanafi, 2004, 37).

The current ratio is often used as a measure of liquidity, so this study uses the current ratio to determine liquidity. Dividend distribution to the shareholders of the company has a cash position of the company on the wane. Cash is one of the components in the current assets, so that the cash dividend will reduce the level of liquidity of the company. This will cause the leverage (the ratio of debt to equity) will be even greater. Suharli (2004) states that companies operating leverage or high debt will provide a low dividend. Basically this study is a replication of the study Meike (2005) with different objects. Meike study (2005) conducted a study on public companies incorporated in the LQ-45 Index by using variable Return on Investment (ROI), current ratio (CR), and Debt to Equity Ratio (DER) affects the Dividend Payout Ratio (DPR ). Based on the explanation above, this article entitled “ANALYSIS OF FACTORS AFFECTING CREDIT COMPANIES DIVIDEND POLICY ON GO PUBLIC AGENCIES IN INDONESIA STOCK EXCHANGE

1.2 Problem Formulation

Based on the above, the issue in this study is formulated as follows:

(1) Is the Return On Investment (ROI), Current Ratio and Asset Turnover simultaneously affect the Dividend Payout ratio on Cridet Agencies company went public on the Stock Exchange?

(2) Is the Return On Investment (ROI), Current Ratio and Asset Turnover partially affect the Dividend Payout ratio on Cridet Agencies company went public on the Stock Exchange?


The purpose of this article are :

1. To find a variable Retrun On Investment (ROI), Current Assets Turnover Ratio and affect the rate of dividend (Dividend Payout Ratio) simultaneously.

2. To find a variable Retrun On Investment (ROI), Current Assets Turnover Ratio and affect the rate of dividend (Dividend Payout Ratio) is partially.


The benefits of this article are :

1. for Readers

Increase knowledge about the ROI, the Current Ratio, Assets Turnover Ratio and Dividend Payout clearer simultaneously.

2. for Investors

With the existence of this article is expected to provide benefits for investors in making decisions partially.



2.1 Theory Framework

2.1.1 Definition of Investment

Investment is a form of delay consumption of the present to the future, the risks and uncertainties contained therein, for it is necessary to compensate for the delay is known as profit or gain from investments. Medium to long-term investors generally want a rate of return or a reasonable rate of return on its investment by taking into account the risk that must be faced. In addition, medium-and long-term investors are very concerned about or consider growth equity firms in the relatively long period of time, so that the future prospects of the company are the main factors considered in the decision of investment securities. The investment decision is a matter of how financial managers must allocate funds into other forms of investment that will be profitable in the future. Shapes, sorts, and the composition of the investment and support will affect the level of profits in the future. According Sutrisno (2001) future gains expected from the investment can not be predicted with certainty.

Therefore the investment will involve risks or uncertainties. Risk and expected return on investment that will greatly affect the achievement of objectives, policies, and the value of the company. A common type of investment in the Indonesia Stock Exchange is in the form of shares. Financial instruments which may diterbitka in Indonesian Capital Market by the company can be a bond, preferred stock and common stock. Bonds issued by companies in Indonesia generally has a value per unit is large (up to hundreds of dollars), with most having a maturity of 5 years and by using fixed rate (fixed rate) and some others use floating (floating rate) . Bond trading liquidity in the Indonesian capital market is still relatively low, in the sense of trading are not as active as ordinary shares.

Supporting institutions in the capital market has a very important role for  implementation of financial transactions in the capital market. These supporting institutions instrumental in bringing the issuers (companies issuing securities) with financiers / investors and in its function lies between the interests of issuers and investors. Activities supporting institutions are providing services to both the issuer and the investor.

Stock as investment options

Shares can be divided into two types of preferred stock and common stock. Preferred stock is a form of spending blend, which combines the characteristics of debt and common stock. Debt characteristics in common with both of them having preferred stock is the cost of funds (cost of funds) in the amount fixed. With these characteristics, the preferred shares are included in the fixed-income securities (fixed-income security). On the other hand, the similarity characteristic of common stock and preferred stock, that they have no maturity date. With these characteristics, preferred stock does not have the risk of causing bankruptcy for the company (Warsono, 2003).

While ordinary shares (common stock) is a security that show evidence or ownership of a company that has issued. The amount of individual and institutional investor ownership of a company as shown by the proportion of shares owned company.

2.1.2 Definition of Financial Ratios

According to Hanafi (2004) Financial ratios calculated with combine the figures in the balance sheet or the figures in the income statement. Types of ratios according to the intended use of the ratio in question according to Sutrisno (2001, 247) can be grouped into liquidity ratios, activity ratios, the ratio of debt / leverage, the ratio of profit / profitability.

a. Liquidity Ratios

Liquidity ratio according to Sutrisno (2001) is the company’s ability to pay its obligations to be fulfilled immediately. Meanwhile, according to Muna (2004, 72) liquidity ratios, ratios that are intended to measure a company’s liquidity or the ability of the company to meet all obligations that must be paid finansiil. To be able to meet its obligations at any time, then the company must have the tools to pay in the form of current assets that amount should be much greater than the liability obligations that must be paid in the form of debt smoothly. Liquidity ratios measure the ability of the company’s short-term liquidity by looking at the amount of debt relative to assets lancer smooth. Debt in this case is the liability of the company. There are some liquidity ratios are the current ratio and quick ratio (Hanafi, 2004).

According to Muna (2004) current ratio is the ratio between the amount of assets smoothly with current debts. Current ratio according to Hanafi (2004, 37) to measure the company’s ability to meet its short-term debt (maturity of less than one year) by using current assets. High current ratio indicates excess of current assets (high liquidity and low risk), but has a negative effect on profitability or rate of return lower than fixed assets.

b. Activity Ratio

According Husnan (2000), the ratio is the ratio of activity to measure the extent of the effectiveness of the company in doing its resources. Are included in the activity ratio is inventory turnover, total asset turnover, receivables turnover, working capital turnover. While according to Sutrisno (2001). Activity ratio is a ratio that measures how much the company’s effectiveness in utilizing its financial resources. Activity ratio is expressed as a ratio of sales to the various elements of the asset. Fund assets as an element of the user should be able to be controlled in order to be optimally used. More effective use of resources by the faster rotation of the funds, the activity is generally measured as the ratio of the velocity of each element of the asset.

c. Profitability Ratios

Hanafi (2004) mengemukkan profitability ratios are ratios that measure a company’s ability to generate profits on the level of sales, assets, capital stock and certain. There are three commonly used ratios, ie profit margin (PM), return on investment (ROI), and return on equity (ROE). Profit margin to calculate the extent of the company’s ability to generate net income of certain sales levels. High profit margin indicates the company’s ability to generate profits is high on certain sales levels, whereas a low profit margin indicates management inefficiencies. Return on Investment (ROI) measures the company’s ability to generate net income under a certain level of assets. Return on Investment (ROI) that showed high efficiency and effectiveness of the management of the assets, which means the better. Ratio is often used to gauge the return (rate of return) is received shareholder return on investment (ROI).

Ratio is directly related to the interests of a company’s financial performance analysis is a profitability ratio or profitability. Profitability is itself a ratio used to calculate the extent of the company’s ability to generate earnings from all levels of assets, and capital pejualanm owned company.

Management often uses aspects of profitability as a criterion of success, because the profitability gives an overview of the comparison between the earnings of capital that has been invested. Profitability reflects the company’s ability to generate capital gains. Profitability can be used as guidelines to attract investors to invest their capital into the company. Short-term investors who are particularly interested in the value of high investment returns in the form of dividends.

2.1.3 Definition of Dividend Policy

Dividend policy relate to the determination of the distribution of income (earnings) between the use of the income to be paid to shareholders as dividends or for use in the company which means that income must be retained in the company (Riyanto, 2001). Financial decisions related to determining how much income available to common stockholders were distributed to the holders of common stock as a dividend and how much of the withheld amount is often referred to as the dividend decision. Decision in the company’s dividend policy will yield dividends. Financial policy is an important decision, as it can affect the value of the company. Thus the appropriate dividend policy may have implications on the wealth of the company’s shareholders.

Wisdom dividend is an integral part of corporate financing decisions. Dividend payout ratio (Dividend Payout Ratio) determine the amount of earnings that can be retained as a source of funding. The greater the amount of retained earnings less income allocated to the payment of dividends. Determining the allocation of profits as retained earnings and dividend payments is an essential aspect of dividend policy. Additional aspects are the legal aspects, liquidity, and supervision of shares issued, the stability of dividends. Stock dividends and stock splits, stock re-purchases, and administrative considerations.

2.2 Hypothesis

The hypothesis of this study is:

H1: Return on Investment, Current Assets Turnover Ratio and simultaneously influence the dividend payout ratio at Credit Agencies company went public on the Stock Exchange simmultanly.

H2: Return on Investment, Current Assets Turnover Ratio and partial effect on Dividend Payout Ratio on Credit Agencies company went public on the Stock Exchange partially.




3.1.1 Population and Sample

The population is the total number of objects to be analyzed and characteristics that will supposedly. The population in this study were all Credit Agencies company went public on the Stock Exchange amounted to 12 companies. Sampling techniques (sampling) were used in this study is aimed at using the method of sampling (purposive sampling). The criteria for this sample are: (1) Credit Agencies companies listed in Indonesia Stock Exchange during the period of study (2003-2007), (2) the company must profit in a row during the study period (2003-2007). Based on these considerations, the number of samples in this study amounted to 10 companies.

3.1.2 Sources of Data

Research data used in the preparation of this research is secondary data obtained from the Internet site http / form of financial statements (balance sheet and statement Profit / Loss) company Credit Agencies.

3.1.3 Data Analysis and Testing Techniques

Data analysis techniques used in this article are the objects that exist in the Credit Agencies company went public on the Stock Exchange. Data processing was performed using the computer program SPSS version 13 for Windows. Multiple linear regression analysis was used to analyze this hypothesis and significance level used was 5%. Multiple regression analysis model can be formulated as follows:

DPR = ß o ß + 1. ROI + ß 2. + CR + ß 3. ATO + e


Y = Dividend Payout Ratio (DPR)

DPR = Dividend Payout Ratio

ROI = Return on Investment

CR = Current Ratio

ATO = Assets Turnover

ß1, 2,3 = Coefficient Regression

ß0 = constant

e = Error

To test the hypothesis 1 F test was used to test the influence of the independent variable (X) on the dependent variable (Y) simultaneously. Confidence level used in this study was 95% with degrees of freedom (df) = (k-1) (nk) or alpha error rate = 5%. While to test the hypothesis 2 t test was used to test the influence of the independent variable (X) on the dependent variable (Y) partially. Confidence level used in this study was 95% with degrees of freedom (df) = (k-1) or the level of alpha = 5% error.



4.1 Research Results

Descriptive statistics of financial statement variables menjadivsampel ten companies in this study are shown in Table 1.

Table 1.

Regression Analysis Results

Research Variable Regression Coefficients (i) Beta Coefficient Value t Sig.
Konstanta 0,109
Retun On Investment (ROI) 0,386 0,496 4,981 0,000
Current Ratio(CR) 0,043 0,036 0,364 0,718
Assets Turnover (ATO) 0,276 0,316 3,512 0,001
R = 0,800; R 2 = 0,640 F = 19,992 Sig F = 0,000

Source: Data processed

Based on the results of the above processing, the data showed that the profitability ratios represented by the Return On Investment (ROI) has a significant level of 0.000 is smaller than 0.05, which means that there is influence between ROI with dividends. But for the liquidity ratios represented by the dividend does not affect the current ratio because the level of significance of 0.718 is greater than 0.05. And to the activity which is represented by the ratio of Assets Turnover (ATO) has an influence on the dividend because the value of the significance level of 0.001 is smaller than 0.05. While simultaneously or third overall ratios above, the third-party influence dividend returns are characterized by a significant F value of 0.000 is smaller than 0.05.

4.2 Discussion

Results of data analysis showed that profitability can predict or influence the dividend policy of a company. Profitability is measured by return on investment (ROI). This is supported by research Meike (2005), and Tandjeng (2007) which measures the profitability of one of them using the ratio of return on investment (ROI). The results Soetjipto (2002) also showed that the level of profitability partially affect dividend policy. ROI is the return on investment on the company’s assets investsi. Profitability ratios or profitability ratios show the company’s success in generating profits. Stability is an important advantage to reduce the risk of decline in earnings in the event that forced management to cut dividends. Company that has stability advantages can set the level of dividend payments with confidence and signaling the quality of their profits. Therefore, the higher the ratio, the greater profitability of the dividends to investors.

Liquidity variables suggests that Current Ratio can not be used to predict the rate of return on investment in the form of dividends. Because according to Table 1 above be obtained significant value above 0.05, which indicates that the current ratio does not affect the dividend payout ratio. And variable activity indicates that the higher activity of the dividend increases. Activities of the company shows the company’s ability to manage its working capital in inventory and assets. Therefore, a company that has a good ratio of activity, allowing payment of dividends is better anyway. Activity ratio in this study was measured by asset turnover ratio. Asset turnover variable has a positive impact on the company’s dividend payout ratio credit agencies went public in Indonesia Stock Exchange.



5.1 Conclusions

Based on the analysis, the variables simultaneously Return on Investment (ROI), Current Ratio (CR) and Assets Turnover has a significant influence on the Dividend Payout Ratio in credit agencies publicly traded company on the Indonesian Stock Exchange with a significance level below 5%. The third independent variable is able to explain the changes to the Dividend Payout Ratio credit agencies publicly traded companies in Indonesia Stock Exchange. Thus, it can be said that the rate of return on investment in the form of dividends to investors through a predictable profitability ratios, liquidity ratios and activity ratios.

Partially only variable current ratio has no effect on the Dividend Payout Ratio companies go public credit agencies in Indonesia Stock Exchange. While the variable is Return on Investment and Assets Turnover has significant influence on the Dividend Payout Ratio credit agencies publicly traded companies in Indonesia Stock Exchange. Return on Investment is a variable which is the dominant influence on Dividend Payout Ratio. Level of profitability, liquidity and corporate activity has positive correlation with the return on investment in the form of dividends to investors because it shows the level of success of the company’s profitability gain, liquidity indicates a company’s ability to pay off short-term debt and to fund operating activities, the activity shows that run the business turnover of the company, so companies that have high levels of profitability, liquidity and high activity enabled the company distributing dividends to investors in high quantities anyway.


Hanafi, Mamduh, M., 2004. Financial Management, Edition 2004/2005. the Agency Publisher Faculty of Economics-UGM. Yogyakarta.

Husnan, Suad, 2000. Financial Management, Theory and Practice. Third Edition. BPFE Universitas Gadjah Mada. Yogyakarta.

Indonesian Institute of Accountants. 2007. the Financial Accounting Standards as of September 1, 2007 Four Salemba. Jakarta.

Muna. S., 2004. Financial Statement Analysis. Liberty. Yogyakarta.

Riyanto, Bambang. 2000. Basics Company Spending. Agency-Publisher Faculty of Economics UGM. Yogyakarta.

Suharli. 2004. Predicting the Return on Investment in Equity Securities through Ratios Profitability, Liquidity and Debt Public Company in Jakarta. Thesis. University of Diponegoro. Semarang.

Sutrisno. 2001. Financial Management, Theory, Concepts and Applications. Ekonisia. Yogyakarta.

Warsono. 2003. Corporate Financial Management. Bayumedia Publishing. Jakarta.


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