37 In this study the authors used or Current Ratio Current Ratio. According to
Hery 2015: 152 The current ratio is the ratio used to measure a companys ability to meet its short term obligations are immediately due to the use of total current
assets available. In other words, the current ratio describes how large amount of available liquid assets of the company as compared to total current liabilities.
Therefore, the current ratio is calculated as the quotient between total current assets to total current liabilities.
Companies must continuously monitor the relationship between the magnitude of current liabilities with current assets. This relationship is especially
important to evaluate the companys ability to meet its short-term liabilities using current assets. Companies that have more current liabilities than current assets, the
company typically will experience liquidity problems when its current liabilities due.
b. Profitability 1 Understanding Profitability
According to Kashmir 2014: 196-197 profitability is the companys ability to make a profit, it also provides a measure of the effectiveness of
management of a company. This is demonstrated by the profit generated from sales and investment income. The point is the use of this ratio shows the
efficiency of the company. The use of profitability can be done by using a comparison between the various components in the financial statements,
especially financial statement balance sheet and income statement. Measurements can be made for some period of operation. The aim is to look development of the
38 company within a certain time frame, either decrease or increase, while searching
for the cause of these changes. Meanwhile, according to Hery 2015: 192 Profitability ratio is the ratio
used to measure a companys ability to generate earnings from normal business activity. The Company is an organization that operates with the goal of making a
profit by selling products goods and or services to its customers. Operational goal of most companies is to maximize profits, both short-term profit and long-
term profit. Management is required to improve yields returns to the owner of the company, as well as to improve the welfare of employees. This all can only
happen if the company makes a profit in its business activities.
2 Objectives and Benefits Profitability
Profitability also has a purpose and benefit, not only for the business owner or management, but also for parties outside the company, especially those who
have a relationship or interest with the Company. According to Kashmir 2014: 197-198 the intended use for the companys
profitability, as well as for parties outside the company, namely: a to measure or calculate the profits from the company within a certain
period; b to assess the companys earnings position of the previous year with the
current year; c to assess the profit development from time to time;
d to assess the magnitude of the net profit after tax with their own capital;
39 e to measure the productivity of the entire fund company that used both loan
capital or equity capital; f to measure the productivity of the entire fund company used both its own
capital; g and other destinations
h Meanwhile, the benefits are to: i determine the level of profits from the company during the period;
j know the position of the companys profit the previous year with the current year;
k know the profit development from time to time; l determine the magnitude of net profit after tax with their own capital;
m determine the productivity of the entire fund company that used both loan capital or equity capital.
Other benefits. Meanwhile, according to Hery 2015: 192-193 profitability ratios also
provides many benefits to the parties concerned. Profitability ratios are not only useful for companies, but also for parties outside the company. In practice, there
are many benefits to be gained from profitability ratios, both for the owner of the company, the companys management, as well as other stakeholders associated
with the company.
40 Here are the objectives and benefits of profitability ratio according to
Hery: 192-193 as a whole: a To measure the companys ability to generate profits for a certain period.
b To assess the companys earnings position of the previous year with the current year.
c To assess the earnings growth over time. d To measure the amount of net income that will be generated from any
embedded Emitter rupiah funds total assets. e To measure the amount of net income that will be generated from every
rupiah of funds that are embedded in total equity. f To measure the gross margin on net sales.
g To measure the operating profit margin on net sales. h To quantify the net margin on net sales.
3 Types of Profitability Ratios
The use of profitability ratios adjusted to the goals and needs of the company. The company can use the overall profitability ratios or only a part of the
existing types of profitability ratios. Use partially ratio means that the company only uses several types of ratios are indeed deemed necessary to be known.
In this study the profitability ratio used in this study is the Return on Assets ROA. According to Hery, 2015: 193 is a ratio that shows how much the
contribution of assets in creating net income. In other words, this ratio is used to measure the amount of net income that will be generated from every rupiah of
41 funds that are embedded in total assets. This ratio is calculated by dividing net
income to total assets. The higher the return on assets means the higher the amount of net profit generated from each rupiah funds that are embedded in total
assets. Conversely, the lower the return on assets means that the lower the amount of the net profit generated from each rupiah funds that are embedded in total
assets.
c. Solvency
