EFFECT OF DEBT TO EQUITY RATIO ON RETURN ON ASSETS AT PT KIMIA FARMA TBK (2018–2025)

Abstract

This study aims to analyze the effect of Debt to Equity Ratio (DER) on Return on Assets (ROA) at PT Kimia Farma Tbk. A quantitative method was applied by performing a simple linear regression analysis based on annual financial data. The regression results show that DER has a negative and significant impact on ROA, with a regression coefficient of –0.0152 and a significance value of 0.040, which is below the 0.05 threshold. The R Square value of 13.7% indicates that DER explains 13.7% of the variation in ROA. This study concludes that an increase in DER tends to reduce ROA, implying the importance of maintaining an optimal capital structure to support profitability.