ANALYSIS OF THE EFFECT OF LONG TERM DEBT, SHORT TERM DEBT, TOTAL DEBT ON FINANCIAL PERFORMANCE IN MANUFACTURING COMPANIES LISTED ON THE IDX

Abstract

This research aims to investigate the effect of Long Term Debt, Short Term Debt, and Total Debt on Return on Equity (ROE) in manufacturing companies listed on the Indonesia Stock Exchange (BEI). The data used are the company's annual financial reports for the period 2018 - 2020. The panel regression analysis method is used to evaluate the relationship between long-term debt, short-term debt, and total debt variables with the company's ROE. The research results show that Long Term Debt has a negative and significant influence on ROE, indicating that the use of long term debt can reduce the rate of return on a company's own capital. On the other hand, Short Term Debt does not have a significant effect on ROE. However, Total Debt shows a negative and significant influence on ROE, indicating that too much dependence on debt can reduce the company's rate of return on its own capital. These findings provide valuable insights for company management in managing their capital structure to achieve optimal profit levels.