THE RELATIONSHIP BETWEEN FINANCIAL RATIOS AND FIRM VALUES OF COMPANIES LISTED ON THE MARKET FOR ALTERNATIVE INVESTMENT (MAI)

Abstract

This research article of this study was: 1) study relationship between financial rations of business values by measured using Tobin’s Q theory, 2) study relationship between financial rations of business values by evaluated using market price earnings ratio (P/E), and 3) study relationship between financial rations of business values by measured using earning per share (EPS). This study was quantitative research; the questionnaire was selecting a specific sample of the representative of companies listed on Market for Alternative Investment (MAI). The example of industry sector such as: 1) agro and food industry, 2) consumer products, 3) industrial, 4) property and contraction, 5) resource, 6) service, and 7) technology for all 115 companies. The data analysis using means, standard deviation, maximum and minimum values and summarized as overview. The research suggested that 1) relationships were evaluated by using business value, Tobin’s Q theory means gross margin and total asset turnover. On one hand there was a positive correlation with the business value at the level of significance 0.05 and 0.01, and on another hand the other variables were not correlated with the evaluation by business value. 2. correlation was evaluated using the market price for earnings per share ratio that it was working capital ratio and total asset turnover. Not only there was a positive correlation with the business value at the level of significance 0.05 and 0.01, but also the other variables were not correlated with the evaluation by capital ratio and total asset turnover. And 3. correlation was evaluated using the earning per share (EPS) that it means working capital ratio and total asset turnover. There was a positive correlation with the business value at the level of significance 0.05 and 0.01, and hand the other variables were not correlated with the evaluation by market price to earnings ratio.