Effect of TATO and ROA on profit growth in sharia food and beverage companies

Abstract

This study aims to examine the effect of financial ratios, namely Total Asset Turnover (TATO) and Return on Asset (ROA), on profit growth in food and beverage sector companies listed on IDX Sharia Growth during the period of 2014-2023. This study uses a quantitative approach with a sample of 30 companies and 10 years of data. The data analysis methods used include descriptive statistics, classical assumption tests, and multiple linear regression. The results of the study indicate that, simultaneously, Total Asset Turnover (TATO) and Return on Asset (ROA) have a significant effect on the company's profit growth. Specifically, the study finds that TATO has a significant negative effect on profit growth, suggesting that high asset turnover may not always lead to profit growth if operational costs are not effectively managed. On the other hand, ROA has a significant positive effect on profit growth, indicating that companies that effectively manage assets to generate profit tend to experience better profit growth. These findings have important implications for company management, investors, and other stakeholders in designing more effective financial strategies. Company management should focus on cost efficiency to maximize the positive impact of asset utilization, while investors can look for companies with high ROA as indicators of better potential for profit growth. This study contributes to the limited literature on financial performance in the food and beverage sector, especially within the sharia index, and offers valuable insights for strategic decision-making