The Impact of Fundamental Analysis on Equity Prices: The Food and Drink Sector

Abstract

This research aims to ascertain the impact of fundamental factors, such as Return on Assets (ROA), Debt Equity Ratio (DER), Price Earnings Ratio (PER), Current Ratio (CR), and Total Assets Turnover (TATO), on stock prices. The study targets on the listed companies in the food and beverage sectors listed on the Indonesia Stock Exchange between 2012 and 2015. The research design is causal research methods, and the sampling technique is purposive sampling method. During the four-year observation period, 11 out of 17 companies met the criteria. The data was analyzed using data regression analysis technique, employing three approaches: Common Effect, two types of effects: random and fixed. Using the F test and t-statistical test, the Hausman test, Chow test model and Lagrange multiplier test were employed for the model selection. By using F tests, the study’s findings showed that ROA, CR, DER, TATO, and PER have an impact on changes in stock prices. The t-statistic test result indicated that while the variables DER, CR, and PER had no effect on the stock price of food and beverage companies, ROA and TATO have a partial influence on the share price.