THE EFFECT OF LEVERAGE AND OPERATIONAL EFFICIENCY ON PROFITABILITY: A CASE STUDY OF PT UNILEVER INDONESIA TBK FOR THE PERIOD 2015-2024

Abstract

This study aims to analyze the effect of leverage, measured by the Debt-to-Equity Ratio (DER), and operational efficiency, measured by the Operating Expenses to Operating Income ratio (BOPO), on profitability, which is proxied by Return on Assets (ROA) at PT Unilever Indonesia Tbk for the 2015–2024 period. The study employs a quantitative descriptive approach using secondary data derived from the company’s annual financial reports published by the Indonesia Stock Exchange (IDX). Data analysis was carried out through classical assumption tests, multiple linear regression, as well as t- test and F-test with the assistance of SPSS version 25. The results show that simultaneously, leverage and operational efficiency have a significant effect on profitability with a significance value of 0.001 (< 0.05). Partially, leverage has a negative and significant effect on profitability with a significance value of 0.043, indicating that higher leverage tends to decrease profitability due to the increased financial burden. Meanwhile, operational efficiency has a negative but not significant effect on profitability with a significance value of 0.409, suggesting that cost efficiency improvements do not have a direct measurable impact on profitability. The coefficient of determination (R²) of 0.865 indicates that 86.5% of the variation in profitability is explained by leverage and operational efficiency, while the remaining 13.5% is influenced by other factors outside the model, such as sales growth, liquidity, and company size. These findings highlight the importance of maintaining an optimal capital structure and enhancing cost management efficiency to sustain profitability in the consumer goods sector.