1
CHAPTER I INTRODUCTION
A. BACKGROUND
Real estate development in Indonesia, especially in Indonesia Stock Exchange very significant indeed. According to data gathered from the Association
of Real Estate Indonesia REI estimated growth in property business in Indonesia continued to increase, reaching 20-30 percent, much higher than in 2014 which is
only increased by 15-20. One of the factors that influence the high demand from the public is a factor Loan to Value LTV related to the amount Down Payment
DP for first home buyers, second and third. This certainly shows the cycle of the property sector has not yet reached a climax. Seeing the situation, making the
property business, especially the real estate business into a very promising business. The real estate industry is basically not a company that has a product that is
sold. However, it is different in Indonesia with a very high level of consumptive public Indonesia own. Ranked the highest growth in property prices, it turns
Indonesia ranked first in the world with growth of as much as 27.3. However, despite showing the highest growth in real estate prices Indonesia declined sharply to
2.5 from the first six months of 2015. Looking at high prices, proved the high interest in the community for real estate in the Greater Jakarta. This is what makes
this study interesting to discuss. Setyo Maharso, 2013 Real estate itself is essentially a new business that benefits can be felt in the
long term or the long term, especially for the new tenants may benefit after the real estate is completed, therefore, the financial management of the company engaged in
industrial estate must be maintained properly. Financial management itself is all the
2 companys activities related to efforts to get the companys funds at a low cost as well
as efforts to use and allocate funds efficiently. Sutrisno, 2003 Certainly companies that build real estate must have good financial
management, but also a good financial must have a clear source for the financial performance of a company can be measured from various things, one of which is the
ratio of profit or profitability ratio. Profitability ratio is a measure to determine how far the effectiveness of management in managing the company. The effectiveness of
management includes management of functional activities, such as finance, marketing, human resources, and operations. The purpose of this ratio is to measure
the overall effectiveness of management that can be seen from the profits generated. In this study, several factors are thought to affect the profitability ratio is the current
ratio, debt ratio, activity ratio, and the inflation. Sugiyono, 2008
The first factor that may affect the profitability ratio is the current ratio. Current ratio itself is a ratio used to measure the companys ability to pay its short-
term liabilities using current assets owned. Current ratio is the focus of companies engaged in the real estate itself because the current ratio is the ratio of the division
between current assets and current liabilities. In the real estate company, the use of current assets certainly very common, especially in the form of accounts with
contractors and supplies such as raw materials and so on. The linkage between the current ratio is a profitability ratio that if a real estate company to have an increase in
the current ratio, then it can happen because the companys current debt decreased or current assets of the company increased. If indeed the real estate company became
one of the companies that have the potential, certainly in high demand will be revenue for the company and can be used to pay current debts. However, it could
3 result in revenue which can be streamed to the assets and make the current debt does
not decline, on the other hand, with the addition of assets, can increase the profitability of the company, although in a fairly long period of time. Therefore, it is
becoming of interest for authors to analyze the extent to which the current ratio can affect the profitability ratio for real estate companies. Wasterfield 2010:55
In addition to the current ratio, other factor that may affect the profitability ratio is the activity ratio. Activity ratio according to Wasterfield, 2010:55 is a ratio
to measure how far the effectiveness of the company in managing financial resources and can be measured from the total asset turnover, inventory turnover, and Working
Capital Turn Over. The linkage between the current ratio and profitability ratio is where the net sales of the company increased certainly will increase the profitability
ratio. However, it can be inversely if the assets of the company exceed net sales. Some real estate company erred in determining the companys assets so as to make
the housing being sold into the companys assets. This causes the assets will experience a large increase compared to sales when homes sold is still small,
therefore this research will try to analyze the linkages between the activity ratio, profitability ratio.
Other factor that may affect the profitability ratio is the debt ratio. Debt ratio according to Wasterfield, 2010:55
is the ratio of the measurement of the amount of the companys assets that are financed by debt. The linkage between the debt ratios to
the ratio of profitability can be seen from the amount of debt held by the company. If the debt is used to buy assets, then indirectly, the high debt ratio will make a
profitability ratio that is lower in the short term and will make the profitability ratio increased in the long term.
4 The final factor that may affect the profitability ratio is inflation. In
economics, inflation is a process of rising prices in general and constantly associated with the market mechanism that can be caused by various factors, among others,
private consumption increased, excess liquidity in the market which triggers consumption or even speculation, to include also due to the lack of launch
distribution of goods. In other words, inflation is also a process of decline in currency values continuously. Inflation according to
Pohan, 2008
is the process of an event, not the high-low price levels. That is, the price level is considered high is
not necessarily indicating inflation. Inflation is an indicator to see the rate of change, and is considered to occur if the price increase takes place continuously and interplay
of influence. Inflation relationships with profitability ratios have relevance because it affects the price of building materials. The raw material base of the building is a very
important component for development. Therefore, inflation can affect the profitability of companies in the field of real estate companies.
The Previous research of Saleem and Rehman 2011 about impacts of liquidity ratios on profitability case of oil and gas companies of Pakistan and the
result is the liquidity ratio effect on profitability ratio on oil and gas companies. From the results of the study explained that it is the ratio of liquidity or liquidity ratio has a
significant effect on the profitability ratio. The other researcher Yanuardi, Alindra 2011 about Effect of Liquidity Ratio, Solvency Ratio to Profitability Ratios
Banking and Credits Agencies Other Than Bank, Securities Listing on the Stock Exchange Before and After the Global Crisis 2008. From the results of the study
explained that indeed the solvency ratio to affect profitability ratio
5 In this study, the companies that will be examined are Lippo Karawaci,
Bakrie Development, Ciputra Development, Sentul City, Bumi Citra Permai, Bekasi Asri Pemula, Alam Sutera Realty, and Agung Podomoro. The reason for the
selection of these companies is because the company is engaged in the same, as well as data from the company that supplied complete until 2014. The last reasons of the
selection of these companies are companies that are in the same grade, thus making the data obtained will be more specific.
From the description of the background research that has been described above, this research will be carried out to determine the effect of the current ratio,
activity ratio and debt ratio to profitability ratio and further research will be followed
by the title The Effect of Current Ratio, Activity Ratio, Debt Ratio, and Inflation on Profitability Ratio in the Real Estate Company in Indonesia Stock
Exchange 2010-2013 .
B. RESEARCH PROBLEM
