The Effect of ROE and NPM on ROA in Communication and Network Sector Companies in Indonesia

Abstract

This study aims to analyze the effect of Return on Equity and Net Profit Margin on Return on Assets in communication and network sector companies listed on the Indonesia Stock Exchange over the last five years. The research method used is a quantitative approach with multiple linear regression analysis using the IBM SPSS Statistics program. The research sample includes five companies, namely PT XL Axiata Tbk, PT Smartfren Telecom Tbk, PT Gihon Telekomunikasi Indonesia Tbk, PT Tower Bersama Infrastructure Tbk, and PT Axis Telekom Indonesia. The results showed that simultaneously ROE and NPM did not have a significant effect on ROA (Sig. value = 0.060 > 0.05). Partially, ROE had a negative and insignificant effect on ROA (Sig. = 0.078), while NPM had a positive but insignificant effect on ROA (Sig. = 0.064). A determination coefficient value (R²) of 0.940 indicates that 94% of ROA variations can be explained by ROE and NPM. These results indicate that the efficiency of a company's assets is more influenced by structural and operational factors than by profitability ratios.