The Analysis of Financial Performance to Capital Structure

Capital structure is very important to analyze the company sustainability in �inance aspect. Establishing capital structures need to consider some variables that may the company's condition in determining ability of the company to endure and develop company’s �inancial performance. This study was aimed to examine the effect of pro�itability, liquidity, company size and asset structure on capital structure at company of large trade sub sectors of production and consumer goods in Indonesia Stock Exchange (IDX) in year 20142018. The sampling technique used in this study was purposive sampling; the number of samples used was 9 companies from a population of 28 companies. Analytical tool used in this study is multiple linear regression assisted by SPSS version 20.0 programs with enter methods. Results of this study indicate that the pro�itability, liquidity and asset structure are negatively and signi�icantly affected by the capital structure while the company size has a positive and signi�icant effect on capital structure. INTRODUCTION Competition between companies that increase very tight causes companies to be encouraged to improve the company's �inancial performance. Company needs capital to carry out operations and business development. Capital structure is a comparison between foreign capital and own capital (Riyanto, 2001). By strengthening the capital structure, company will have an increasingly greater access to obtaining funding from banks and other funding variations. Capital structure policy in a company is the thing that should be properly considered as much as possible to �it the needs of the company, let alone the company of the large trade sub sectors of production goods and certainly requires a very large funding system in running the company's performance on business competition. Companies in this sector have a high growth rate so that it should provide suf�icient capital for the opening of business and development of its businesses. The Analysis of Financial Performance to Capital Structure


INTRODUCTION
Competition between companies that increase very tight causes companies to be encouraged to improve the company's �inancial performance. Company needs capital to carry out operations and business development. Capital structure is a comparison between foreign capital and own capital (Riyanto, 2001). By strengthening the capital structure, company will have an increasingly greater access to obtaining funding from banks and other funding variations.
Capital structure policy in a company is the thing that should be properly considered as much as possible to �it the needs of the company, let alone the company of the large trade sub sectors of production goods and certainly requires a very large funding system in running the company's performance on business competition. Companies in this sector have a high growth rate so that it should provide suf�icient capital for the opening of business and development of its businesses.
With this phenomenon we will re-analyze by implementing some ratio of the company to know how much impact of each ratio. Based on the background description described above, the author chose the title "in�luence of pro�itability, liquidity, company size and asset structure to capital structure (empirical study of large trade sub-sector companies of production goods and consumer goods in the Indonesia Stock Exchange period 2014 -2018)".

LITERATURE REVIEW
Many theories and concepts relate to the discussion and research the problem, the various perspectives and the solving of such theories need to be implemented into certain related practices and cases. There are two theories of capital structure that aims to give the foundation of thinking to know the optimal structure of capital in this study, that is; a. Balancing Theories Balancing Theories, according to Fahmi (2017) is a policy taken by the company to �ind additional funds by looking for loans to the banking or also by issuing bonds (bonds), the implementation of balancing Theories is also possible to be applied by a government is to make loans from foreigners such as foreign governments or also to international donor agencies such as World Bank, International Monetery Found, Asian Development Bank and etc.
b. Pecking Order Theory Pecking order theory stated that the company liked internal �inancial (funding from the company's operating results tangible pro�it balance). If the external �inancing is required, the company will issue the safest securities �irst, which is initiated by debt, then followed by securities with characteristic options, if not enough new shares will be issued (Nanda and Retnani, 2017).

Capital Structure
Hartijo and Martono (2013), stated that the capital structure is a long-term �inancing comparison of the company, which is indicated by a ratio of long-term debt to its own capital. In other words, this ratio serves to know every rupiahs of its own capital which is used for debt assurance. The capital structure in this study was proscribed with a debt to equity ratio (DER).

Pro�itability
Pro�itability is ratio to measure company's ability to generate pro�it from its normal business activities (Hery, 2015). Some ratios are commonly used in measuring pro�itability i.e. ROA, ROE and ROI.

Liquidity
Liquidity indicates that the company's ability to ful�ill its �inancial obligations must be ful�illed or the company's ability to ful�ill the monetary obligation at the time of invoiced (Munawir in Satriana, 2017:18). Current Ratio is one of ratios to measure company's ability to ful�ill short-term obligations without facing any dif�iculties.

Company Size
Company Size is the condition of a large company that will be easier to obtain the capital in the market compared with small companies. Because such ease of access, large companies have greater �lexibility (Sartono, 2015).

Asset Structure
Asset Structure is a relative composition of �ixed assets owned by the company (Tangiduk et al., 2017), it can be said the asset structure can be used to determine how much longterm debt can be taken and this will affect the determination of the magnitude the capital structure.

RESEARCH METHOD
Pro�itability is the ability of a company to gain pro�it during speci�ied period of time. By having a high level of pro�itability, the company is categorized more independent when compared to companies that have low pro�itability (Gunadhi and Putra, 2019). H1: Pro�itability of signi�icant effect on capital structure.
Liquidity is the ratio that shows the relationship of cash and other current assets with a smooth obligation in �inancial performance. So it can be assumed that the current ratio affects the capital structure. It can be explained that if the ratio value is low, the company undertakes to pay the debt (cashmere, 2018). H2: Liquidity of signi�icant impact on capital structure Company size often used as an indicator for the possibility of bankruptcy for a company, where larger companies are seen more capable of facing a crisis in running its business. This will make it easier for companies with large size to obtain loans from creditors because they have more capability in managing their �inancial performance of business. H3: Company size signi�icant effect on capital structure Companies whose assets or activities have a comparison of long-term �ixed assets are more likely to use more long-term debt due to existing �ixed assets that can be used as debt collateral. This the asset structure can be used to determine how much long-term debt can be taken and this will affect the determination of the magnitude of the capital structure. H4: Asset structure signi�icant in�luence on capital structure The research used a secondary data with a capital structure (DER) as dependent variables and independent variables consisting of pro�itability (ROA), Liquidity (CR), company size, asset structure. The population in this research is a large trading sub-sector company of production goods and consumer goods listed on the Indonesia Stock Exchange (IDX) period 2014 to 2018 which amounted to 28 companies with sampling method purposive sampling based on prede�ined criteria so that 9 companies can be obtained as a sample. The limited criteria speci�ied in sampling are: 1. It is a large trading company sub-sector of production goods and consumer goods listed on Indonesia Stock Exchange period 2014 -2018. 2. In presenting the �inancial report of the company sub-sector of large trade of production goods and consumer goods using the value of rupiah in the Indonesian stock exchange for 2014-2018. 3. The company has a large trade sub-sector of production goods and consumer goods in presenting a complete �inancial report that always ends on December 31�� every year.

RESULT AND DISCUSSION
The P-Plot Graph used to know whether the population of distributed data is normal or not. It can be seen from the above diagonal chart, if most of the dots are very close to the line or even attached to the line, then the data can be concluded assuming the normality.
From the image P-Plot Graph visible data spread around and follow the direction of the diagonal line, then the data used is normal distribution and regression model has ful�illed the assumption of normality.

Heteroscedasticity Test
Heteroscedasticity can be analyzed by looking at the scatterplots chart, i.e. if the dots form a particular pattern that is orderly (wavy then widens and narrowed, shrink then enlarged or otherwise) then there has been heteroscedasticity, otherwise if the dots are not forming a certain pattern then it does not occur heteroscedasticity.
From Image Scatterplot graph, it appears that the dots ' spread does not form a speci�ic pattern and the dots spread randomly, as well as scattered above and below the 0 number. This means that there is no heteroscedasticity on this regression model, so this model deserves use in research.

Autocorrelation Test
Autocorrelation is the circumstance in which the regression have a correlation between the residual in the T period with the residual in the previous period (T-1 a. The correlation between pro�itability to the capital structure if seen from the signi�icance value of 0.000 is smaller than 0.05 (0.000 < 0.05) means there is a signi�icant between pro�itability and capital structure of the correlation coef�icient between the pro�itability and capital structure -0.574 which means that the number indicates that the correlation is negative and strong, meaning that if pro�itability moves up then the capital structure will decrease. b. The correlation between liquidity to the capital structure when viewed from a signi�icant value 0,047 is smaller than 0.05 (0047 < 0.05) meaning there is a signi�icant link between liquidity with capital structure, correlation coef�icient-0.253 being negative. The meaning of direction negative relations is if liquidity rises then the capital structure goes down and vice versa, if the liquidity decreases then capital structure will rise. c. The correlation between the company size to the capital structure when viewed from a signi�icant value of 0431 is greater than 0.05 (0431 > 0.05) meaning there is no signi�icant link between the company size to the capital structure. d. The correlation between asset structure to the capital structure when viewed from a signi�icant value 0.017 is smaller than 0.05 (0.017 < 0.05) means there is a signi�icant relationship between asset structure and capital structure, correlation coef�icient between asset structure and capital structure of -0.316 which means the number indicates that the correlation is negative. The higher company's asset structure, company will tend to reduce the company's external funding use.

Analysis of Coef�icient Determination (R2)
Coef�icient Determination (R2) Essentially measures the percentage of how far a model is capable of describing the variation of the dependent variable. Coef�icient value of determination is between zero and one.

Based on SPSS output in table Coef�icient
Determination Test (R2 test). Above appears that from the calculation result of Adjust R² value of 0.610 or 61%. This indicates that 61% of capital structure variables are affected by the pro�itability, liquidity, company size and asset structure variables, remaining amount 39% (100%-61%) In�luenced by other factors not examined in this study.

Hypothesis Test Goodness Fit Test (F test)
Statistical test F Basically indicates whether the independent variables studied are the return on asset, current ratio, company size and asset structure when included in the model has a simultaneous in�luence on the dependent variable that is the capital structure. Using a signi�icance rate of 5%, F test is also used to determine whether the model deserves to be used in research.
From the statistical test results F can be seen in table. i.e. the signi�icance value of the known output is 0.000 (0.000 < 0.05) then a �it or worthy model used in research.

Result of the t test on return on asset variable indicates that the signi�icance value
Of 0.000 (0.000 < 0.05) indicates that there is a signi�icant in�luence between the return on asset variable and the capital structure.

T test result on the current ratio variable
indicates that the signi�icance value of 0.004 (0.004 < 0.05) indicates that the current ratio variable has signi�icant effect on the capital structure.

Test results in the t test on company size
variables indicate that the signi�icance value of 0.005 (0.005 < 0.05) indicates that the company size variable has a signi�icant in�luence on the capital structure. 3. Result on t test of asset structure variable indicates that the signi�icance value of 0.000 (0.000 < 0.05) indicates that the asset structure variable has a signi�icant in�luence on the capital structure.

Multiple Linear regression analysis
Based on table test coef�icient t and multiple linear regression above formulated the following equation: The regression equation is interpreted as: 1. Constants value is -1.647. Meaning if the pro�itability (X1), liquidity (X2), company size (X3), asset structure (X4) value is 1, then the capital structure (Y) value is -1.647. 2. Coef�icient value of the return on asset (X1) variable is negative, which is-32.342. That means that every increase in return on asset is 1, then the capital structure will decrease -32.342. 3. Current ratio (X2) variable regression coef�icient value is negative, which is -0.053. It means that each increase in current ratio of 1, then the capital structure will decrease by -0.053. 4. Company size (X3) has a regression coef�icient positive value, which is 0.200. That means in every company size increase by 1, then capital structure will increase by 0.200. 5. value of regression coef�icient of asset structure (X4) is negative, which is -2.818. This means that any increase in the asset structure is 1, then the capital structure will decrease by -2.818.

D. Asset Structure Effect on Capital Structure
The results of the fourth analysis show the asset structure signi�icant effect on the capital structure and the regression coef�icient in the negative direction which means that if the asset structure increases one unit then the capital structure decreases. When the company has a high �ixedasset it will tend to use internal funds compared to external funds in �inancing its investments. The results of this study were consistent with the research of Tangiduk et al. (2017) which states that the asset structure is negatively and signi�icantly affect the capital structure.
Based on the results of the testing factors affecting the capital structure in the company of the large trade Sub-sector of production goods and consumer goods in the Indonesia Stock Exchange period 2014-2018, it can be withdrawn as follows: 1. Pro�itability has negative and signi�icant impact on the capital structure of the company's large trade sub sectors of production goods and consumer goods. 2. Liquidity has negative and signi�icant impact on the capital structure of the company's large trade sub-sectors of production goods and consumer goods. 3. Company size positively and signi�icantly affect the capital structure of the company's large trade sub sectors of production goods and consumer goods. 4. The asset structure is negatively and signi�icantly in�luential on the capital structure of the company's large trade subsector of production goods and consumer goods.

Managerial Implications
In this study, especially for the company of large trade sub sectors of production goods and consumer goods in the Indonesia Stock Exchange to reconsider the current capital structure of the company in holding operational activities as well as any factors other than in this research that greatly affects the capital structure of its company, because the return on asset, current ratio, company size and asset structure in this research have a considerable in�luence on the components of the capital structure. The company is expected to be able to pay attention to the use of debt optimally, because with the addition of too large debts can decrease the �inancial performance. For the investor to pay attention to the capital structure as a source of funding, whether the company decides to use the source of funds derived from the debt or originating from the internal company is the pro�it withheld. Investors should choose a company with a smaller level of debt because the greater the debt that the company will use, the greater the risk that investors will bear.