THE EFFECT OF COMPANY GROWTH AND LEVERAGE ON PROFITABILITY AT PT SUMBER ALFARIA TRIJAYA TBK FOR THE PERIOD 2015–2024

Abstract

This research aims to analyse the influence of company growth and leverage on the profitability of PT Sumber Alfaria Trijaya Tbk from 2015-2024. An interesting phenomenon occurred when declining growth and deleveraging were followed by a significant increase in Return on Equity (ROE) from 23.97% to 45.61%, contradicting Penrose's theory of firm growth. The research method uses a quantitative approach with multiple regression analysis on audited annual financial statement secondary data. The independent variables include profit growth (Growth) and the Debt-to-Equity Ratio (DER), while the dependent variable is ROE. The test results show that partially, company growth has no significant effect on profitability (sig. 0.590 > 0.05), while DER has a negative and significant effect on ROE (sig. 0.000 < 0.05) with a coefficient of -0.115. Simultaneously, both variables significantly influence profitability with an F-statistic of 102.681 and a contribution of 95.8% (Adjusted R² = 0.958). This finding indicates that in the retail industry with thin margins, operational efficiency and a conservative capital structure play a more significant role in improving profitability than aggressive expansion. This research provides practical implications for management to implement deleveraging and asset optimization strategies, as well as theoretical contributions to enrich financial management literature in the context of retail companies in the developing Indonesian market.