ANALYSIS OF THE RELATIONSHIP BETWEEN CURRENT RATIO TO COMPANY PROFITABILITY

Abstract

This study aims to analyze the relationship between the current ratio and the company's profitability. The current ratio is a financial indicator measuring a company's ability to meet its short-term obligations. Meanwhile, profitability is a measure of a company's efficiency and financial performance. This study uses financial data from 6 companies from 2018-2022, which are included in the LQ45 list, several companies listed on the IDX. The analytical method used is linear regression to examine the relationship between the current ratio and profitability. The test results show that the current ratio and profitability could be at a much higher level of relationship. The results of the influence test show that the current ratio has no significant effect on profitability. For future research, it is recommended to conduct research by expanding the study area sector, increasing the number of samples, using other statistical tools, and examining DER, DAR, Accounts Receivable, Inventory, and others.