Regression Equation Coefficient of Determination R Square

49

d. Regression Equation

Furthermore, based on table 4.26, the SPSS result of coefficient regression formed a multiple linear regression equation as follow Y=-47.047+0.494CR+2.859AR+42.457DR+947.176INFLATION+e This means that: Y value when the variable CR, AR, DR and Inflation = 0 is -47 047 which means that all changes in Y has a high dependence on the value of CR, AR, DR, and Inflation. If the DR increased by 1 point while CR, AR, and inflation has a fixed point it will affect Y or PR by 42.457 If the Inflation increased by 1 point while CR, AR, and DR has a fixed point it will affect Y or PR by 947.176 This study fits with previous research that has been run by Saleem and Rehman 2011, which explained that the liquidity ratio effect on profitability ratios, further research Yanuardi, Alindra 2011 explained that the solvency ratio to Affect profitability ratio, and the latter according to research results Kabajeh et al 2012 described that the activity ratios with a profitability ratio. Other than that according to Heikal et al 2014 and Fengju et al 2013 which is also explained that the debt ratio may affect the profitability ratio has been proven in this study. 50

e. Coefficient of Determination R Square

Coefficient determination measures the ability of independent variable CR, AR, DR, INFLATION elaborate dependent variables PR. Coefficient determination value shows how much variation in the data can be explained by the regression model built. Table 4.13 Coefficient of Determination R Square Model Summary b Model R R Square Adjusted R Square Std. Error of the Estimate Durbin-Watson 1 .901 a .811 .783 7.84257 1.333 a. Predictors: Constant, Inflation, Current_Ratio, Activity_Ratio, Debt_Ratio b. Dependent Variable: Profitability_Ratio From the table above, it appears that the value of R square of 0.811 which means CR, AR, DR, inflation simultaneously affect PR by 0811 or 81 variation were formed on the PR generated by the CR, AR, DR, inflation simultaneously and there are still 19 factors beyond the actual research also affect PR. Some other factors that could affect the PR in addition to the above four factors such as accounts receivable, long-term debt, as well as the amount of dividends. 51 CHAPTER V CONCLUSSION

A. Conclusion