Factors Affecting Financial Performance of Pharmaceutical Companies Listed of Indonesia

Abstract

The financial performance of an organization has increasingly become a necessary element for organizational success and has been widely considered by scholars and practitioners alike. Thus, the current study investigates into the impact of various financial factors such as net profit margin, debt to equity ratio, return on assets, return on equity, and firm size, on the financial performance of listed pharmaceutical companies in Indonesia. The secondary data is extracted from secondary sources such as the Indonesian Stock Exchange (IDX) database and the financial statements of selected companies from 2016 to 2020. The current study has used the robust standard error and fixed effect model (FEM) to test relationships among the variables. The results indicate that net profit margin, debt to equity ratio, return on assets, return on equity, and firm size have a positive association with the financial performance of listed pharmaceutical companies in Indonesia. This research is potentially valuable for upcoming researchers while examining this area in future and is also particularly helpful for policymakers while formulating policies related to the financial performance of pharmaceutical companies.