The Impact of Financial Ratios on Return on Asset, Moderated by Total Assets: A Study on Pharmaceutical Companies in Indonesia

This research aims to examine the relationship between independent variables, including Debt to Assets Ratio, Debt to Equity Ratio, Current Ratio, Inventory Turnover Ratio, and Accounts Receivable Ratio, and the dependent variable of Return on Assets. The moderating variable in this study is Total Assets. The research was conducted on pharmaceutical companies listed on the Indonesia Stock Exchange (IDX) from 2019 to 2022, a period marked by the Covid-19 health outbreak. This study explores whether the outbreak has impacted the pharmaceutical sector, which is integral to disease prevention and treatment of Covid-19. The findings indicate that most independent variables have an insignificant relationship with the dependent variable of Return on Assets, which is moderated by firm size. However, there is a significant positive relationship between Inventory Turnover and Return on Assets, moderated by firm size. These results suggest that Inventory Turnover is a crucial factor for pharmaceutical companies to consider when aiming to improve their Return on Assets. Overall, this study offers valuable insights into the relationship between various financial ratios and Return on Assets for pharmaceutical companies during a period of unprecedented global health crisis. The results provide a basis for future research in this field and can inform decision-making for pharmaceutical firms looking to improve their financial performance.