Analysis of Financial Ratios on Corporate Social Responsibility in Indonesia

Transcription

1 ISSN: International Journal of Management, Accounting & Economics Vol.2, No.3: 34-45, September 2016 Available Analysis of Financial Ratios on Corporate Social Responsibility in Indonesia PUDJIONO 1, Teguh Sugiarto 1 * 1. Lecturer at Budi Luhur University, Jakarta, 12260, Indonesia. Telp: (021) * Corresponding Author s teguh_cconsulting@yahoo.com Abstract This study aims to determine the relationship between the ratio of the company's performance, with other financial ratios, on the disclosure of corporate social responsibility in the real estate company listed on the stock exchanges of Indonesia The study used multiple regression analysis and independent variables are variables such the current ratio, the debt to equity ratio, and the net profit margin. From research conducted that the ratio of the company's financial performance in conducting the research has a significant effect on all except for CR (current ratio). Keywords: Net Profit Margin (NPM), Asset Growth, Current Ratio (CR), Debt to Equity Ratio (DER) corporate social responsibility, Indonesia 1. INTRODUCTION Rapid development of financial accounting statements analysis is thus making accuracy a duty that must be followed by the owners of capital, and the company more supportive in orientation to the owners of capital. This position of the company affects the shareholders, so as to exploit the natural resources that are not controlled, and can result in damage to the natural environment and ultimately disrupt the lives of humans. Analysis of financial ratios or financial ratio analysis is a tool used by companies to assess the financial performance based on data comparison for each post are contained in the financial statements such as balance sheets, Loss / profit and cash flow in the period. Financial report to provide an overview of information about the financial position and performance of the company which can be used as guidance in making business decisions. Financial statement data analysis was performed by analyzing each post in the financial statements as a ratio of financial position with a view to be able to maximize the performance of the company for the future. Each covers the period from the end of the accounting reparation and usually results in preparation of financial statements consisting of the balance sheet report, profit loss, cash flow, Capital Changes, and reports submitted to the Chairman of the company. As that happens the only focus on the income statement, but there are more important that need to be presented in the submission of the report on the analysis of financial statements. In addition to the above factors, the disclosure of corporate social responsibility is also influenced by the response from investors. According to Melissa and Juniarti (2015), managers can improve the information activities of the company's social responsibility 34

2 disclosure in annual reports so that the information can be one of the considerations in the investment for investors. There are also the results of research conducted by Trisnawati (2014) concerning the size of the company. Corporate social responsibility itself is defined as a corporations initiatives to asses and take responsibility for the company s effect on environmental and social wellbeing. The term generally applies to efforts that go beyond what may be required by regulators or environmental protection groups ( Corporate Social Responsibility, 1). This may apply to behavior towards the environment, health and sanitation, diversity in hiring, fair pay, charitable contributions, or even peaceful acquisition of resources, or free or democratic exchange of information ( Corporate Social Responsibility, 1-3). Information about it can often be obtained from annual reports. This paper therefore takes the title, ANALYSIS OF FINANCIAL RATIOS ON CORPORATE SOCIAL RESPONSIBILITY IN INDONESIA. 2. REVIEW OF LITERATURE Results from previous studies that are useful for writers to develop research on the effect Net Profit Margin (NPM), Asset Growth, Current Ratio (CR), Debt To Equity Ratio (DER) on the disclosure of corporate social responsibility. Previous research provides information relating to research that will be examined. Research was conducted by Dewi Amalia in 2013, with the title, Influence of corporate characteristics on disclosure of corporate social responsibility. Variables in use characteristic of companie include in company size, profitability, industry type, the size of the Board of Commissioners. The population in this study are companies listed on stock exchanges in Indonesia. Sample selection was done by using purposive sampling method to obtain a representative sample in accordance with the specified criteria. The criteria for the samples to be used, namely: listed compani in the Stock Exchange for 2009 and 2010, the companies publish annual report 2009 and 2010, having the data associated with the variables used in this study. The data used is the average of the years 2009 and 2010 to facilitate the measurement of CSR'S Group companies that do and do not do CSR. Research was done by Francine, Prasetyono, and Anis in 2014 with the title of Influence of profitability, liquidity, growth, and Media Exposure on the disclosure of corporate social responsibility. The population in this research is manufacturing companies listed on the Stock Exchange in The sampling method in this study is done with the study documentation, ie, collected data from secondary IDX sites based on criteria. Secondary research data in the form of annual reports (annual report) manufacturing company that has been published. We made a list of manufacturing companies that disclose social responsibility of the company, which comes from the IDX website. In addition, collecting data from the official website of the company to disclose or not to disclose CSR, to measure Media Exposure. Based on the results of research and discussion about the profitability, liquidity, growth, and Media Exposure on the disclosure of corporate social responsibility, which is 35

3 measured by whether companies disclose it in the annual reports, it can be deduced and/or hypothesized: 1. Profitability has a significant effect on the disclosure of corporate social responsibility. 2. Liquidity has no effect on the disclosure of corporate social responsibility 3. Growth does not affect the disclosure of corporate social responsibility 4. Media Exposure has a significant effect on the disclosure of corporate social responsibility. Methods and Techniques of corporate financial ratio analysis are used in analyzing financial statements, which can also serve as a benchmark to assess the financial position of the company: 1. The growth of analysis method Analysis Techniques are compiled by comparing the increase or decrease in financial reporting position at a certain period with other periods of each post contained in the financial statements using the value of percentage. Data presented can by comparing the increase or decrease in each post financial statements last month by month now, or period of the Year to Date to the same period of last year to now. 2. The method of Trend and analysis techniques: Almost the same as the analysis method of growth but the comparison figures are financial statements a certain period which index and selected as the base year. This trend is very useful technique to project financial reports in the future by using historical data. 3. The method of ratio analysis: Analysis techniques by comparing each post financial reports that relevant or significant data. The company's financial statement Ratio analysis: Analysis financial ratios used are: 1. The liquidity ratio the ratio of to measure the company's ability to meet the financial ability in the short term. Here are several types of liquidity ratios that include: a. Current Ratio, ratio to measure the company's ability in repaying short-term financial liabilities by using current assets. 36

4 The formula to calculate the Current Ratio: Current Ratio = current assets/debt Smoothly X 100% b. Cash Ratio, ratio to measure the company's ability to pay financial obligations in the short term by using the available cash and the following securities or short-term effects. The formula to calculate the Cash Ratio: Cash Ratio = Cash + Effects/debt Smoothly X 100% c. Quick Ratio or Acid Test Ratio, ratio to measure the company's ability in repaying shortterm financial liabilities by using current assets that are more liquid (Liquid Assets) The formula to calculate the Quick Ratio: Quick Ratio = Cash + Effects + Receivables/Payables Smoothly X 100% Note: the ideal Values of the liquidity ratio analysis is the third it is a minimum of 150%, the greater is the better and healthy conditions in the company. 2. The ratio of Profitability or earning ratio the extent of the ability of the company profit in relation to the value of sales, assets, and capital himself. There are several types of ratio of profitability, among others: a. Gross Profit Margin, the ratio to measure the company's ability in getting the gross profit from the sale of. The formula to calculate Gross Profit Margin: Gross Profit Margin = Net Sales-Net sales of HPP/X 100% b. Operating Income Ratio, the ratio to measure the company's ability to get operating profit before interest and taxes from sale. The formula to calculate Operating Income Ratio: Operating Income Ratio = Net Sales-HPP General administrative expenses (EBIT) &/Net Sales X 100%. c. Net Profit Margin, the ratio to measure the company's ability in getting the net profit from the sale of goods. The formula calculates the Net Profit Margin: Net Profit Margin = net profit after tax (EAT)/Net Sales X 100% 37

5 d. Earning Power of Total Investment, the ratio to measure the company's ability to manage the invested capital owned in overall assets to generate profits for investors and shareholders. The formula to calculate the Earning Power of Total Investment: Earning Power of Total Investment = EBIT/total assets X 100% e. Rate of Return of Investment (ROI) or Net Earning Power Ratio, the ratio to measure the ability of the invested capital in the overall assets to generate net income. The formula to calculate the Rate of Return of Investment (ROI): Rate of Return of Investment (ROI) = EAT/total assets X 100% f. Return on Equity (ROE), the ability to measure the ratio of equity to generate net income. Formula to calculate Return on Equity (ROE): Return on Equity (ROE) = EAT/number of Equity X 100% g. Rate of Return on Net Worth or the Rate of Return for the Owners, the ratio to measure the ability of private equity invested in generating income for shareholders. The formula to calculate the Rate of Return on Net Worth: Rate of Return on Net Worth = EAT/number of private equity X 100% Note: the higher the value of this Profitability Ratio is the percentage is getting better, you should be able to compare it with the average value of the sex industry in the market. 3. The Solvency Ratio or Leverage Ratio measures how big corporate capabilities meet all financial obligations long term: Here are several types of Solvency ratios include: a. Total Debt to Asset Ratio, a ratio used to measure the ability of the company in ensuring what owes to a number of assets. The formula to calculate the Total Debt to Assets Ratio: 38

6 Total Debt to Assets Ratio = Total Debts/Total Assets X 100% b. Total Debt to Equity Ratio, ratio to measure how big a company financed by the borrower is compared with equity. The formula to calculate the Total Debt to Equity Ratio: Total Debt to Assets Ratio = Total Debt/private equity X 100% Note: the higher the value of the Solvency Ratio percentage this is the worse the company's ability to pay for long-term liabilities, the maximum value is 200%. 4. The ratio of Activity or Activity Ratio measure how effectively the company in utilizing resources. There are several types of Solvency ratios, including: a. Total Assets Turn Over, the ratio to the total assets turnover measures the level against sales. The formula to calculate Total Assets Turn Over Ratio: Total Assets Turn Over Ratio = Sales/Total Assets X 100% b. Working Capital Turn Over, the ratio to measure the level of turnover net working capital current assets-debt Smoothly) against sales during a period the cash cycle of the company. The formula to calculate Working Capital Turn Over Ratio: Working Capital Turn Over Ratio = sales/net working capital X 100% c. Fixed Assets Turn Over, the ratio to measure comparison between fixed assets owned against sales. This ratio is useful for evaluating the extent of the ability level of the company in utilizing fixed asset owned efficiently in order to improve revenues. The formula to calculate the Fixed Assets Turn Over Ratio: Fixed Assets Turn Over Ratio = sales/fixed assets X 100% 39

7 d. Inventory Turn Over ratio to measure the level of efficiency of the management of inventory turnaround owned against sales. The higher this ratio will be getting better and efficient supplies management shows. The formula to calculate the Inventory Turn Over Ratio: Inventory Turn Over Ratio = Sales/Inventory X 100% e. Average Collection Period Ratio, ratio to measure how long it takes a company in accepting the entire Bill from the consumer. The formula to calculate the Average Collection Period Ratio: Average Collection Period Ratio = accounts receivable/sales X 365 X 100% f. Receivable Turn Over, the ratio to measure the level of accounts receivable turnover by dividing the value of the sales credit against receivables average. The higher this ratio, and working capital indicates embedded in accounts receivables. 3.1 population and Sample the Study Research Population 3. RESEARCH METHODS The population in this study is a real estate company listed on the Indonesia Stock Exchange (BEI) , which amounted to 37 companies. The indicated that social responsibility found in the annual report for the accounting period of the years , can be accessed through the website of the Indonesian stock market ( Research Sample As for the sample of companies is based on the following criteria: 1. Real Estate companies listed in Indonesia Stock Exchange (BEI) Real Estate Company which publishes financial statements and annual report in full, and they published in succession during the study period ( ) Real Estate company's financial statements that contain information related to corporate social responsibility variable used in the study during the study period ( ). 40

8 3.2 Analysis of Data Technique As with Sekaran (2006: 298), Multiple Regression analysis was conducted to test the effect of multiple variables simultaneously free of the variables that interval scale. In this study, your authors used multiple regression analysis to determine the effect the relationship between the independent consists of the Net Profit Margin (NPM), Asset Growth, Current Ratio (CR), Debt to Equity Ratio (DER), the dependent variable is the disclosure of corporate social responsibility (CSR ). Multiple linear regression model for this study are: 3.3 Model Research CSRD = ɑ + β1npm + β2growth+ β3cr + β4der + Description: CSRD = Disclosure social responsibility Constants Α = β1, β2, β3, β4 = regression Coefficient (increase or decrease in value) NPM = Net Profit Margin GROWTH = Asset Growth CR = Current Ratio DER = Debt to Equity Ratio = Error 4. RESULTS AND DISCUSSION Research that has been done can be seen results as attached in Table 1 below. The study used multiple regression analysis, the variable y is CSR, and x is DER, GRWT, NPM and CR. The results showed as presented in Table 1. Table 1: Result Multiple Regression Dependent Variable: CSR Method: Least Squares Date: 03/05/16 Time: 05:22 Sample: 1 30 Included observations: 30 41

9 Variable Coefficient Std. Error t-statistic Prob. C DER GRWT NPM CR R-squared Mean dependent var Adjusted R-squared S.D. dependent var S.E. of regression Akaike info criterion Sum squared resid Schwarz criterion Log likelihood Hannan-Quinn criter F-statistic Durbin-Watson stat Prob(F-statistic) Sources : Proceed by author Look at how the results are presented in Table 1 above, between the variables research. We can almost be sure that all the variables that are visible, as only one variable that does not look significant, namely the Variable Value CR adjusted. The R Squared at yield is relatively low, but that does not mean that regression generated spurious regression or wrong. To model the correlation analysis using regression model analysis or in the proposals above, for that we can see the results in Table 2 below. Table 2: Result Correlation C DER GRWT NPM CR C DER e-05 GRWT e-05 NPM e-05 CR e e e e-07 Sources : Proceed by author If we look at the table above, the correlation value is generated for the whole or between variables in the study are nearly as significant and there are some that are not significant. The degree of correlation between the value of a variable still classified in the category of low number of correlation values. There are no in-between variables in conducting the research to find a very high level of correlation between the variables, which proposes a good thing in little correlation. From the number in the estimated regression equation, in the proposal, we can see the results on the estimation the commands below. 42

10 Estimation Command: ========================= LS CSR C DER GRWT NPM CR Estimation Equation: ========================= CSR = C(1) + C(2)*DER + C(3)*GRWT + C(4)*NPM + C(5)*CR Substituted Coefficients: ========================= CSR = *DER *GRWT *NPM *CR The figures are a result of the estimated regression equation is created. If we read it, then in that case, if there is an increase of variables for CSR, we will be able to increase the amount of 0.13 for the variable DER, whereas at reducing the GRWT value of 0.16, and reduced to the amount of 0.88 NPM as well as reducing the number of CR as well. 5. CONCLUSION This study was conducted to determine the effect of Net Profit Margin, Asset Growth, Current Ratio, and Debt to Equity Ratio on the disclosure of corporate social responsibility in the company's Real Estate listed on the Indonesian stock exchange in the period , by using simple multiple regression analysis, Based on the results of this study, we conclude that only one of the financial variables does not have a significant effect, while other variables significantly CSR corporate social responsibility. REFERENCES Corporate Social Responsibility. Accessed 9/7/16. Ardinto, Elvinaro dan Dindin M.Machfudz. (2011). Efek Kedermawanan Pebisnis dan CSR Jakarta : Kompas Gramedia. Fahmi, Irham. (2013). Analisis Laporan Keuangan. Bandung: Alfabeta. Ghozali, Imam. (2013). AplikasiAnalisis Multivariate Dengan Program IBM SPSS 21 Update PLS RegresiEdisi7. Semarang: BP Universitas Diponegoro. 43

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12 Responsibility terhadap Pengaruh Kinerja Keuangan Pada Nilai Perusahaan. Journal ISSN: Additional Websites: