THE EFFECT OF LEVERAGE ON FINANCIAL PERFORMANCE PT KINO INDONESIA TBK THROUGH AN EMPIRICAL APPROACH

Abstract

This study aims to determine the influence of leverage on the financial performance of PT Kino Indonesia Tbk during the 2020–2024 period using an empirical approach. Leverage is measured through several financial ratios, namely Debt Ratio (DR), Debt to Equity Ratio (DER), and Long-Term Debt to Equity Ratio (LDER), while a company's financial performance is measured using Return on Investment (ROI). This study uses a quantitative method with multiple linear regression analysis processed using SPSS software version 16.0. The results showed that the DR and DER variables had a significant effect on ROI, while LDER did not have a partial significant effect. However, simultaneously, the three leverage variables have a significant effect on ROI with a determination coefficient value (R²) of 0.999. This suggests that 99.9% of the variation in financial performance can be explained by changes in the leverage ratio. These findings confirm that optimal use of leverage can improve a company's performance through capital management efficiency, while excessive use of debt can increase financial risk and lower profitability. Therefore, the balance between debt and capital itself is an important factor in achieving sustainable financial performance