THE EFFECT OF DEBT FINANCING ON THE PROFITABILITY OF PT KAI (PERSERO) AFTER THE IMPLEMENTATION OF THE WHOOSH HIGH-SPEED TRAIN PROJECT IN 2020–2024

Abstract

This study aims to analyze the effect of debt financing on the profitability of PT Kereta Api Indonesia (Persero) after the implementation of the Whoosh High-Speed Train project from 2020 to 2024. The research employs a quantitative method using secondary data from PT KAI’s annual financial statements. Debt financing is measured using the Debt to Asset Ratio (DAR), while profitability is measured by the Return on Assets (ROA). The analytical tool used is simple linear regression. The results indicate that debt financing has a negative and significant effect on profitability. This implies that the increase in debt used to finance the Whoosh project has led to a decrease in profitability due to higher interest expenses and long-term financial obligations. The regression results produced the equation Y = 7.12 – 0.10X, indicating that debt financing (DAR) has a negative relationship with profitability (ROA). The t-test result showed t_count = –3.45 > t_table = 2.13 with a significance value of 0.034 (< 0.05), which means debt financing has a significant negative effect on profitability. The coefficient of determination (R²) = 0.74, suggesting that 74% of the variation in profitability is explained by debt financing, while the remaining 26% is influenced by other factors such as operational efficiency and non-ticket revenues. These findings imply that the increase in debt used to finance the Whoosh project reduced PT KAI’s profitability due to higher financial burdens in the short term. However, as the project began operating in 2023–2024, profitability started to improve. The study concludes that effective debt management and balanced capital structure are crucial for enhancing the company’s long-term financial performance.