Determinants of the Dividend Payout Policy of Public Companies in Indonesia, Based on Financial Ratio Analysis

Abstract

Public companies are substantial revenue contributors to the state through taxes and contracts. Public companies’ existence is highly influenced by the dividends paid. Research on dividends is still relevant to conduct given the inconsistency in the existing research results. This study aims to conduct an analysis of the effects of financial ratios that is Current Ratio, Debt to Equity Ratio, Return on Assets, Growth, and Firm Size on Dividend Payout Ratio. The research sample is manufacturing industry companies listed on the Indonesian Stock Exchange. Multiple linear regression analysis was used to test the research hypotheses. The research results show that only the independent variable Current Ratio has a significant effect on the dependent variable Dividend Payout Ratio, for other independent variables does not significantly influence Dividend Payout Ratio. Based on these results, the liquidity ratio needs to be considered by public companies in dividend payments.