Analysis Of The Effect Of Capital Structure (Solvency) On Profitability At PT Telkom Indonesia (Persero) Tbk 2015-2024

Abstract

This study analyzes the effect of capital structure (solvency) on the profitability of PT Telkom Indonesia Tbk for the period 2015–2024. Capital structure is assessed using the Debt to Asset Ratio (DAR) and Debt to Equity Ratio (DER), while profitability is evaluated through Return on Assets (ROA) and Net Profit Margin (NPM). A quantitative descriptive approach was employed, utilizing secondary data sourced from the company’s financial statements. The results show that DAR and DER were in the range of 41%–51% and 70%–104%, reflecting a healthy and stable capital structure despite an increase in debt in 2020 to support operations during the pandemic. Profitability, although declining after 2017, remained at a healthy level, with ROA and NPM as the main indicators. The F statistical test confirmed the significant simultaneous effect of capital structure and NPM on ROA. However, the partial t-test revealed that only NPM had a significant effect on ROA, while DAR and DER were insignificant. Thus, PT Telkom's profitability is determined more by the efficiency of net profit management than by debt utilization policies. This study implies that focusing on effective net profit management is more crucial than the level of leverage in maintaining and improving the company's profitability amid the dynamics of the economy and the telecommunications industry.