The Effect of Financial Ratios on Stock Prices with Profitability as a Moderating Variable in Food Companies Listed on the Indonesia Stock Exchange

Abstract

This study aims to examine and analyze the effect of financial ratios namely liquidity, solvency, and market value on stock prices, with profitability as a moderating variable. A quantitative approach was employed, using purposive sampling on 29 food sector companies listed on the Indonesia Stock Exchange during the 2019–2023 period, resulting in 145 observational data points. Secondary data were analyzed using multiple linear regression and Moderated Regression Analysis (MRA) with SPSS. The results indicate that liquidity and market value have a significant positive effect on stock prices, while solvency has a significant negative effect. Profitability, measured by Earnings Per Share (EPS), was found to significantly strengthen the influence of the three financial ratios on stock prices. The implications of this study highlight the importance of profitability as a financial signal that enhances a company's stock attractiveness in the eyes of investors. The limitation of this research lies in the sample scope, which is restricted to the food sector. This study offers both practical and academic contributions in understanding the moderating role of profitability in the relationship between financial ratios and stock prices.