The Effect of Cash Availability and Debt Paying Ability on PT Astra International Value

Abstract

This research aims to analyze the effect of cash availability (Cash Ratio) and debt payment ability (Debt to Equity Ratio) on company value as measured by Price to Book Value (PBV) at PT AstraInternasional Tbk during the period 2013 -2 022. The research uses a quantitative approach with secondary data obtained from the company’s financial reports. Data analysis methods include descriptive statistics, classical assumption tests, multiple linear regression analysis, and a hypothesis testing using t - test, F - test, and coefficient of determination (R 2 ). The results show that partially, Cash Ratio has a significant but negative effect on PBV with a significance value of 0.038 < 0.05. This indicates that excessive cash holdings, if not utilized effectively, can lower the firm’s market value in the eyes of investors. Meanwhile, the Debt to Equity Ratio (DER) has a significant and positive effect on PBV with a significance value of 0.001 < 0.05, meaning that efficient debt management can enhance company value. Simultaneously, both Cash Ratio and Debt to Equity Ratio have a significant effect on PBV with a significance value of 0.006 < 0.05. The coefficient of determination (R 2 ) of 0.772 indicates that 77.2% of the variation in company value can be explained by these two financial ratios. Overall, the study concludes that liquidity and capital structure play an important role in influencing company value, with DER having a stronger impact than CR