Profitability as a Mediator of the Impact of Financial Health on Firm Value

Abstract

Introduction/Main Objectives: This study aims to examine liquidity, solvency, on firm value with profitability mediation, either partially, simultaneously or mediation. Background Problems: How companies in this case management manage their assets to generate profits that are used as positive signals to increase firm value. Novelty: This study re-examines variables in previous studies combining liquidity, solvency, profitability and firm value in one research framework by placing profitability as a mediator in different years. Research Methods: Using secondary data from financial statements of consumer goods sector companies listed on the IDX, and obtaining a sample of 52 companies with a purposive sampling method. Finding/Results: Profitability can mediate the effect of liquidity on firm value although in direct influence, liquidity does not affect profitability, and the Adjusted R Square value is very low. Conclusion: Liquidity and profitability can be used as indicators in investment considerations for investors.