Financial Performance Analysis And The Effect Of Profitability And Market Return On The Stock Return Of PT. Adaro Energy Indonesia Tbk - A Coal Mining Company In Indonesia

Halim, Benny and Sembel, Roy and Malau, Melinda (2022) Financial Performance Analysis And The Effect Of Profitability And Market Return On The Stock Return Of PT. Adaro Energy Indonesia Tbk - A Coal Mining Company In Indonesia. In: 5 th International CEO Communication, Economics, Organization & Social Sciences Congress. NCM Publishing House, pp. 994-1012. ISBN 978-605-73822-7-6

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Abstract

The aim of this study is to analyze the financial performance of a coal mining company listed in Indonesia Stock Exchange (IDX), PT. Adaro Energy Indonesia Tbk (ADRO). A financial ratio analysis is applied to compare ADRO financial performance position relative to its competitors and industry average; and to analyze factors affecting ADRO stock return and profitability. The selected ratios and indicators include ROA, DER, DAR, Asset Turnover, Current Ratios, Profit Margin, ROE, Market Return and Stock Return. This research uses quantitative research method, and purposive sampling technique in collecting the required data. The sample consists of 40 quarterly financial reports of ADRO and coal mining companies representative of the industry, from 2012 to 2021. ADRO’s quarterly reports are then compared against ADRO’s closest competitor, PT Indika Energy Tbk (INDY), and with the average coal mining industry metrics. Based on the financial performance analysis, ADRO has a relatively remarkable financial performance compared to its competitor and average industry in terms of profitability and liquidity. Despite positive trend on profitability and solvency, ADRO’s asset-use efficiency is found to be fairly concerning. In terms of factors that predict ADRO stock returns, this research found that fundamental factors have statistically limited effect on stock returns. It also reveals that only profitability is affected by fundamental financial factors such as asset turnover and financial leverage. The findings in this study provide investors in the coal mining industry with key insights on how stock returns and financial performance of a coal mining company are affected by certain fundamental financial factors. The study also features potential macroeconomic variables as the determinants in predicting coal mining company stock return. Keywords: financial analysis, profitability, stock return, coal mining company

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