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© 2020 by the authors; licensee Eastern Centre of Science and Education, USA 

 

Asian Business Research Journal 
Vol. 5, 39-47, 2020 
ISSN: 2576-6759 
DOI: 10.20448/journal.518.2020.5.39.47 
© 2020 by the authors; licensee Eastern Centre of Science and Education, USA 

 
 

 

Effect of Debt to Equity Ratio and Return on Assets on Earnings per Share with 
Firm Value as a Moderating Variable in Various Industrial Sub-Sector 
Manufacturing Companies Indonesia 

 
Citra Larasati1    

Abdul Rivai2    

Suharto3    
  

( Corresponding Author) 
 
 
 

 

1,2,3Universita Krisnadwipayana, Campus Unkris Jatiwaringin Jat CM Jakarta, Indonesia. 

 

 
Abstract 

This study aims to examine and determine the effect of debt to equity ratio and return on assets on earnings per 
share with firm value as a moderating variable in various industrial sub-sector manufacturing companies listed 
on the Indonesia Stock Exchange for the period 2016-2018. The population in this study was 45 companies in 
various industrial sub-sectors listed on the Indonesia Stock Exchange (BEI) during the 2016 - 2018 period. The 
sample is part of the number and characteristics of the population. The sampling technique used in this research 
was purposive sampling. The data analysis technique used path analysis. The results showed that the Debt To 
Equity Ratio (DER) had a significant effect on Earning Per Share, meaning that partially the Debt to Equity 
Ratio (DER) had an effect on Earning Per Share (EPS). Return On Asset (ROA) affects Earning Per Share 
(EPS), which means that partially, Return On Asset (ROA) affects Earning Per Share (EPS). Price to Book 
Value (PBV) as a moderating variable is proven to be able to strengthen the effect of Debt to Equity Ratio 
(DER) on Earning Per Share, this shows that Price to Book Value (PBV) moderates the Debt to Equity Ratio 
(DER) against Earning Per Share (EPS). Price to Book Value (PBV) as a moderating variable is proven to be 
able to strengthen the effect of Return On Assets (ROA) on Earning Per Share (EPS), this shows that Price to 
Book Value (PBV) moderates the Return On Asset relationship. (ROA) against Earning Per Share (EPS). 
 

Keywords: Debt to equity ratio, Return on asset, Earning per share, Price to book value, Various industrial sub-sectors, Indonesia stock 
exchange. 

JEL Classification: B27, H54, L60. 

 
1. Introduction 

Indonesia is ready to welcome the era of industrial revolution 4.0 which is targeted to have an impact on the 
manufacturing industry. When viewed from the national Gross Domestic Product (GDP), the manufacturing 
industry has consistently been the largest contributor to the national Gross Domestic Product (GDP), which was 
recorded at 19.83% in the second quarter of 2018. The rapid growth rate in the national industry is a multiplier 
effect and high investment in this sector. As of 2010, the trend of investment in the industrial sector in Indonesia 
has continued to increase even though it was restrained by the financial crisis in 2008. If we take it further back, 
the growth of the manufacturing industry in the Indonesian economy has gradually increased. 
 

 
Figure-1. Development of the Manufacturing Industry, Contribution to GDP, and GDP of Indonesia in 1990-2015. 

      Source: BPS, 2015. 

 
In the era of industrial revolution 4.0, which certainly requires a commitment to work together through the 

implementation of strategic regional programs that bring economic prosperity. As well as to share policies, 
experiences, technology, knowledge, and best practices related to the development of the manufacturing sector and 
the implementation of industry 4.0. The Minister of Industry stated that he believed that the transformation of 
industry 4.0 would lead to a new business model for the globally competitive manufacturing industry. The 

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manufacturing industry sector is stable and is one of the pillars of the country's economy amidst the uncertainty of 
the world economy with a positive growth rate. 

The manufacturing industry creates added value which means production or products produced by various 
companies in the manufacturing sector, such as food, beverages, automotive textiles, pharmaceuticals, electronics, 
and so on. If the processing is carried out properly and optimally, all the basic ingredients processed in the 
manufacturing industry can create added value to the resulting product. The more variety and product innovation 
that is produced, the greater the potential for development. Especially considering that Indonesia has abundant 
natural resources so that it can be used as a spur to increase the growth of the industrial sector in Indonesia, 
especially in the manufacturing industry sector. 

Behind the increasing economic growth in Indonesia through the manufacturing industry, it is necessary to 
encourage investment in terms of investment as well. This investment will create an attractive and conducive 
climate in Indonesia. So that domestic and foreign investors are interested in investing their shares in Indonesia. 
One of the securities used to invest in stocks. Shares are a sign of someone's participation or ownership in a 
company (Lukman & Solihin, 2018). In general, investors will be interested in investing (stocks) if the company can 
provide the return they expect. 

The following is a table of the movement of the manufacturing sector stock price index on the Indonesia Stock 
Exchange from 2012 to 2015. 

 
Table-1.The Movement of the manufacturing sector stock price index in the Indonesia Stock Exchange in 2012-2015. 

Year Basic Industry Miscellaneous Industry Consumer Goods 

2012 526,551 1.336,52 1.565,88 
2013 480,744 1.205,01 1.782,09 
2014 543,674 1.307,07 2.042,25 
2015 407,839 1.057,28 2.064,91 
2015 538,189 1.370,63 2.324,28 

Average 499,40 1.255,30 1.955,88 

 
From Table 1. It can be seen that the Consumer Goods sub-sector has the highest average stock price index 

compared to the stock price index of other manufacturing sub-sectors, namely Rp.1,955.88. Meanwhile, the lowest 
in the Basic Industry sub-sector. However, when viewed from Figure 1, the manufacturing sector experienced 
fluctuating data and experienced a significant decline in 2015 and again rose in 2015. 

To strengthen the growth of the business world, one of which is in manufacturing companies. Sources of 
funding for the development of the business sector that can be sought from internal funds and external funds, with 
limited internal funds, companies can seek additional alternatives to external funds, namely through loans and 
selling securities through the capital market. Therefore, the existence of the capital market is very profitable. for 
the company. A capital market is a meeting place for those who have funds and those who need funds. The capital 
market has various choices of sources of funds for investors as well as increasing investment. 

Investing in shares in the capital market is very profitable for investors. By investing in the capital market, 
investors will get benefits in the form of dividends and capital gains. The amount of dividend distribution is 
strongly influenced by the number of earnings per share or earnings per share. An investor will invest their funds 
because they are interested in the company's performance. For this reason, investors need to carry out fundamental 
analysis, namely analysis that focuses on financial ratios and events that directly or indirectly affect the company's 
financial performance  (Tandelilin, 2010). Financial ratios that can be used include Earning Per Share (EPS), Debt 
to Equity Ratio (DER), Return on Assets (ROA), and Price to Book Value (PBV). 

Earning Per Share is one of the things that attracts investors to decide on investing their funds for the 
company. If the profit generated by each share in circulation is so good, then the welfare of shareholders can be 
guaranteed by looking at dividend payments at the end of each year the company operates. A company can be said 
to have maximized company value if the earnings per share (EPS) obtained continue to experience a high increase 
in EPS, then the company's performance will be better and can show investors about the company's prospects 
better (Kukuh, 2015) which states that earnings per share (EPS) affects firm value. 

Debt policy is a company policy on how far a company uses debt financing. With debt, the higher the 
proportion of debt, the higher the share price of the company (Mardiyanti, 2012). Debt policy needs to be managed 
because too high can reduce the company's value (Perdana, 2012). The debt policy itself is measured by the Debt to 
Equity Ratio (DER). However, at a certain point, an increase in debt will reduce the value of the company because 
the benefits obtained from the use of debt are smaller than the costs incurred. 

One of the ratios used to measure profitability is ROA (Return on Assets). ROA is used to measure the 
company's ability to generate profits by utilizing its assets. ROA is the ratio between net income after tax and total 
assets. The reason for using the ROA variable in this study is because ROA has many advantages. One of them is 
that ROA can measure the overall efficiency of the use of capital, which is sensitive to everything that affects the 
condition of the company (Mardiasari, 2012). 

Company value is one of the most important things that investors should pay attention to when making 
investment decisions in a company. High company value is the desire of company owners because a high value 
indicates the prosperity of shareholders is also high. This is what investors want in investing their funds in a 
company. 

The company's investment opportunity can be proxied by the Price to Book Value ratio. The price ratio or 
book value is a valuation ratio that investors use to compare the price per share with its book value (shareholder's 
equity). The Price to Book Value can be a determining indicator of the high and low investment opportunities of a 
company. Companies usually tend to buy stocks when the Price to Book Value is low in the hope that the stock 
price can increase at any time. While companies tend to hold cash in small amounts when the Price to Book Value 
is high because the company's stock price is already high or reaches a maximum amount, then the investment 
opportunity is low. 

Based on the PBV ratio, it can be seen that the company value is good when the PBV value is above one, that is, 



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the market value is greater than the company's book value. The higher the PBV value, the better the company 
value. Conversely, if PBV is below one, it reflects the company's value is not good. So that investors' perceptions of 
the company are also not good, because the PBV value below one illustrates the company's selling price is lower 
than the company's book value. 

 
Table-2. Value of DER, ROA, EPS, and PBV in 2012-2016 the five largest manufacturing companies in Indonesia. 

Company Name Years Pbv (X) Der (X) Eps (Rp) Roa (%) 

PT. Gudang Garam, Tbk 

2012 4,07 0,56 2086,06 9,8 
2013 2,75 0,73 2249,76 8,63 
2014 3,66 0,75 2790,76 9,27 
2015 2,78 0,67 3344,78 10,16 
2016 3,27 0,59 3470,26 10,6 

PT. Indofood Sukses Makmur, Tbk 

2012 1,50 0,74 371,41 8,06 
2013 1,51 1,04 285,16 4,38 
2014 1,45 1,08 442,50 5,99 
2015 1,05 1,13 338,02 4,04 
2016 1,55 0,87 472,02 6,41 

PT. Kalbe Farma, Tbk 

2012 7,30 0,28 28,45 18,85 
2013 6,89 0,33 37,80 17,41 
2014 9,30 0,27 44,05 17,07 
2015 5,66 0,25 42,76 15,02 
2016 6,01 0,22 49,06 15,44 

PT. Semen Indonesia (Persero), Tbk 

2012 5,18 0,46 817,20 18,54 
2013 3,85 0,41 905,37 17,39 
2014 4,09 0,37 938,35 16,24 
2015 2,46 0,39 762,28 11,86 
2016 1,91 0,45 762,30 10,25 

PT. Unilever Indonesia, Tbk 

2012 40,09 2,02 634,24 40,38 
2013 46,63 2,14 701,52 71,51 
2014 45,03 2,11 752,10 40,18 
2015 58,48 2,26 766,95 37,2 
2016 46,67 2,56 837,57 38,16 

 
When viewed from Table 2, at PT Gudang Garam, Tbk. PBV has increased and decreased fluctuating while 

DER has decreased in 2015 by 0.08, ROA has decreased in 2013 and then increased again until 2016. EPS has 
increased from 2012 to 2015. At PT Indofood Sukses Makmur, Tbk, PBV has decreased in 2014 by 0.06 and 2015 
by 0.4, while DER has decreased in 2015 by 0.26, ROA, and EPS have fluctuated increases and decreases. At PT 
Kalbe Farma, Tbk, PBV has fluctuated increases and decreases, while DER continues to decline from 2014 to 2015, 
ROA has decreased each year, EPS has decreased in 2015 by 1.29. At PT Semen Indonesia (Persero), Tbk PBV 
there has been a fluctuating increase and decrease while DER has decreased from 2013 to 2015 and increased again 
until 2015, ROA has decreased every year, EPS has decreased from 2015. At PT Unilever Indonesia, Tbk, PBV and 
DER have fluctuated increases and decreases, ROA has increased in 2013 then decreased again until 2016, while 
EPS has increased from 2012 to 2015. 

Substantially, a high EPS indicates that ROA is high as well as firm value. ROA is an important indicator in 
determining earnings growth. On the other hand, the higher use of debt will cause lower EPS and corporate value. 
The higher the debt, the higher the interest expense borne by the company and can reduce EPS. However, based 
on the observations that the author has made on certain manufacturing companies that have gone public, which are 
listed in Table 1 and 2, there is a phenomenon that is somewhat different from its substance. This phenomenon 
illustrates that in certain companies, an increase in DER and a decrease in ROA increases EPS and vice versa, a 
decrease in DER and an increase in ROA decreases EPS. Meanwhile, in other companies, when the DER decreases, 
EPS tends to be constant and in other companies too, when ROA tends to be constant, EPS fluctuates instead. 
 

2. Literature Review 
2.1. Financial Ratios 

Company performance is a description of the financial condition of a company which is analyzed with financial 
analysis so that it can be seen about the good and bad financial condition of a company that reflects work 
performance in a certain period (Fahmi, 2015). A company can be said to be successful if it has achieved the 
standards and goals that have been set. Many financial performance measurement techniques can be used for 
financial statement analysis and in comparison with other companies. Financial performance is often measured 
through financial ratios with a focus on measuring different indicators. Types of financial ratios according to 
(Fahmi, 2015) financial ratios can be grouped into six types, namely: 
a. Liquidity ratio, namely the ability of a company to meet its short-term obligations promptly. This ratio is 

divided into the current ratio, quick ratio (acid test ratio), net working capital ratio, cash flow liquidity ratio. 
b. The leverage ratio is a measure of how much the company is financed by debt. Financial managers are required 

to manage the leverage ratio properly so that they can balance high returns with low levels of risk. The size of 
this ratio depends on the loans the company has, in addition to its assets (capital). In general, there are eight 
Leverage ratios (Kasmir, 2016) namely Debt to Total Assets, Debt to Equity Ratio, Times Interest Earned, 
Cash Flow Coverage, Long-Term Debt to Total Capitalization, Fixed Charge Coverage, and Cash Flow 
Adequacy. 

c. The activity ratio is a ratio that describes the extent to which a company uses its resources to support the 
company's activities, where the use of this activity is carried out maximally to obtain maximum results. In 
general, there are four activity ratios (Kasmir, 2016) namely Inventory Turnover, Day Sales Outstanding, 
Fixed Assets Turnover, Total Assets Turnover, Long Term Assets Turnover. 



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d. Profitability Ratios measure the effectiveness of management as a whole aimed at the size of the level of profits 
obtained concerning sales or investment. The better the profitability ratio, the better it describes the company's 
high profitability. In general, there are four profitability ratios (Kasmir, 2016) namely Gross Profit Margin, 
Net Profit Margin, Return On Investment, and Return On Equity. 

e. Growth Ratio, which is a ratio that measures how much the company's ability to maintain its position in the 
industry and general economic development. This growth ratio is commonly seen from various aspects, namely 
in terms of sales, Earning after Tax (EAT), earnings per share, dividends per share, and market price per share. 

f. Market Value Ratio, namely the ratio that describes the conditions that occur in the market. This ratio can 
provide an understanding of the management of the company on the conditions of implementation that will be 
implemented and its impact in the future. 

 

2.2. Earning per Share 
According to Fahmi (2011) Earning per share or income per share is a form of giving benefits to shareholders 

from each share they own. Earning per share (EPS) is a ratio that reflects the company's ability to generate profits 
for each share outstanding (Watung & Ilat, 2015). Earnings per Share (EPS) or income per share is a form of 
giving profits to shareholders from each share they own (Fahmi, 2011). Meanwhile, according to Tandelilin (2010) 
EPS is net income that is ready to be distributed to shareholders divided by the number of company shares. 
According to Darmadji and Fakhruddin (2012) defines Earning Per Share (EPS) as follows: "Earning Per Share 
(EPS) is a ratio that reflects the company's ability to generate profits for each outstanding share." According to 
Kasmir (2014) EPS is also known as the book value ratio, which is a ratio to measure the success of management in 
achieving benefits for shareholders. EPS describes the amount of rupiah obtained for each common share or net 
income per share of common stock (Retnowati, 2012). 

Earnings per Share (EPS) is usually a concern of shareholders in general or prospective shareholders and 
management. EPS shows the amount of money generated (return) from each share. The greater the EPS value, the 
greater the profit received by shareholders. An investor buys and maintains stock in a company in the hope of 
obtaining dividends or capital gains. Profit is usually the basis for determining future dividend payments and stock 
price increases. Therefore, shareholders are usually interested in the EPS figures that companies report. 

According to Brigham and Houston (2010) the factors that cause the increase and decrease in Earning Per 
Share (EPS) are: 
1. Factors causing an increase in Earning Per Share (EPS): 

• Net income increased and the number of ordinary shares outstanding remained constant. 

• Fixed net income and the number of ordinary shares outstanding decreased. 

• Net income increases and the number of ordinary shares outstanding decreases. 

• The percentage increase in net income is greater than the percentage increase in the number of 
ordinary shares outstanding. 

• The percentage decrease in the number of ordinary shares outstanding is greater than the percentage 
decrease in net income. 

2. While the decline in Earning Per Share (EPS) can be caused by: 

• Fixed net income and the number of ordinary shares outstanding increased 

• Net income decreased and the number of ordinary shares outstanding remained constant. 

• Net income decreased and the number of ordinary shares outstanding increased. 

• The percentage decrease in net income is greater than the percentage decrease in the number of 
ordinary shares outstanding. 

• The percentage increase in the number of ordinary shares outstanding is greater than the percentage 
increase in net income. 

So for a company, the value of earnings per share will increase if the percentage increase in net income is 
greater than the percentage increase in the number of ordinary shares outstanding, and vice versa. 
 

2.3. Debt to Equity Ratio 
Debt to Equity Ratio (DER) is a measure used in analyzing financial statements to show the amount of 

collateral available to creditors (Fahmi, 2015). Debt to Equity Ratio (DER) is one of the ratios included in the 
leverage ratio. The leverage ratio describes the company's ability to meet all liabilities with the assets it owns. 
Given that the leverage ratio describes the company's liabilities, the greater the leverage ratio of a company, the 
greater the company's burden to pay the principal debt and interest costs, which means the greater the risk faced 
by the company (Simatupang, 2010). 

The definition of Debt to equity ratio according to Darsono and Ashari (2010) namely: Debt to Equity Ratio 
(DER) is one of the leverage or solvency ratios. The solvency ratio is the ratio to determine the company's ability 
to pay its obligations if the company is liquidated. This ratio is also known as the leverage ratio, which assesses the 
company's limits on borrowing money. According to Sugiyono (2009) states that: This ratio shows the ratio of debt 
and capital. This ratio is one of the important ratios because it relates to the problem of trading on equity, which 
can have a positive and negative impact on the profitability of the company's capital.  

From the definition of DER above, it is concluded that DER is a ratio used to measure a company's ability to 
finance its short-term and long-term debt. This ratio is sought by comparing all debt, including current debt, and 
total equity. The use of the Debt to Equity Ratio (DER) is to find out every rupiah of own capital that is used as 
collateral for a debt. So, it can be concluded that the Debt to Equity Ratio (DER) shows how the company's ability 
to use existing capital to fulfill its obligations. 
 
2.4. Return on Assets 

Return On Asset (ROA) analysis or often translated into Indonesian as Economic Profitability measures a 
company's ability to generate profits in the past. This analysis can then be projected into the future to see the 
company's ability to generate profits in the future. According to Kasmir (2012) the definition of Return On Assets 



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(ROA) is as follows: "ROA is a ratio that shows the results (return) on the total assets used in the company. Also, 
ROA provides a better measure of the company's profitability because it shows the effectiveness of management in 
using assets to generate income. Meanwhile, according to Fahmi (2012) ROA is a ratio used to see to what extent 
the investment that has been invested can provide returns after expected returns based on assets owned.  

This ratio is used to measure the ability of company management to gain overall profit (profit). So, seen from 
the above definitions, it can be concluded that Return On Assets (ROA) is a measurement tool used to measure 
management's ability to generate profits using company assets. ROA is the ratio that companies use in calculating 
returns on the use of several assets by the company (Horne & Wachowicz, 2012). According to Kasmir (2016) 
Return On Assets (ROA) is a ratio that shows the return on the total assets used by the company.  
 

2.5. The Value of the Company 
Price to Book Value (PBV) will be used in this study as a proxy for firm value. The ratio of the stock price to 

the company's book value or Price to Book Value (PBV), shows the level of the company's ability to create value 
relative to the amount of invested capital. A high PBV reflects a high share price compared to book value per share. 
The market price ratio to book value  is the division of the market price per share by the book value per share. This 
ratio compares the market value of the investment in the company with its costs. A value of less than 1 means that 
the company fails to create value for its shareholders (Rahardjo, 2009). 

 

3. Research Methods 
3.1. Time and Location of Research 

In conducting this research, the research location chosen by the researcher was in various Industry Sub-Sector 
Manufacturing companies that were listed on the Indonesia Stock Exchange (IDX) during the period 2016-2018.  
 

3.2. Research Design 
The research design used in this research is descriptive analysis and verification methods. Descriptive analysis 

is carried out to obtain a description or information about the variables studied and observed based on the 
statistical data obtained. The descriptive method in this study is intended to determine the development of Debt to 
Equity Ratio and Return on Assets to Earning per Share with Firm Value as the moderating variable. Meanwhile, 
verification analysis is carried out to test the hypothesis using a statistical test tool, namely the multiple regression 
method. The verification method in this study aims to determine the effect of Debt to Equity Ratio and Return on 
Assets on Earning per Share with Firm Value as a moderating variable. 

This phenomenon can be designed through the following mathematical functions: 
 

3.2.1. Model 1 
The role of the variable X1 Debt to Equity Ratio (DER), to the variable Y Earning press Share (EPS) with 

Firm Value (PBV) as the moderating variable X3 can be formulated by:1) EPS = α + β1DER + e 

2) EPS = α + β1DER +β2NP + β3DER.NP 
This analysis can be described as follows: 
 

 
Figure-2. Regression relationship model with the first moderating variable. 

Source: Processing results, 2020. 
 

3.2.2. Model 2 
The role between the variable X2 Return on Assets (ROA), on the variable Y Earning press Share (EPS) with 

Firm Value (PBV) as the moderating variable X3 can be formulated by:1) EPS = α + β1ROA + e 

2) EPS = α + β1ROA +β2NP + β3ROA.NP 
This analysis can be described as follows: 

 

 
Figure-3. Regression relationship model with the second moderating variable. 

 

 
3.3. Population and Sample 

Sugiyono (2009) states that the population is a generalization area consisting of objects/subjects that have 
certain qualities and characteristics that are determined by the researcher to be studied and then draw conclusions. 



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The population in this study was 45 companies in various industrial sub-sectors listed on the Indonesia Stock 
Exchange (BEI) during the 2016 - 2018 period. The sample is part of the number and characteristics of the 
population. The sampling technique is a sampling technique (Sugiyono, 2009). The sampling technique used in this 
research was purposive sampling. The data analysis technique used path analysis. 
 

4. Research Results and Discussion 
4.1. Moderated Regression Analysis Equations 

Moderated Regression Analysis Equation is used to predict and test the changes that occur in Earning Per 
Share (EPS) which can be explained by two independent variables and reinforced or amplified by one moderating 
variable. 
 
4.1.1. Moderated Regression Analysis Equations for DER (X1), PBV (X3), and EPS (Y) 

To determine the effect of Debt to Equity Ratio (DER) on Earning Per Share (EPS) which is moderated by 
Firm Value (PBV), analysis calculations using Moderated Regression Analysis (MRA) are performed. The results 
of calculations using SPSS obtained regression coefficients and constant values as in the following table: 
 

Table-3. Regression coefficient results DER (X1), PBV (X3), and EPS (Y). 

Model Unstandardized Coefficients Standardized Coefficients t Sig. 

B Std. Error Beta 

1 

(Constant) 169.070 212.329  .796 .432 
DER 2.876 61.535 .013 .047 .963 
PBV 16.460 43.738 .113 .376 .709 

DER*PBV 11.079 15.490 .255 .715 .480 
Note: a. Dependent Variable: EARNING PER SHARE (EPS) (Y). 

 
The regression equation that explains the effect of Debt to Equity Ratio (DER) on Earning Per Share (EPS) 

moderated by Firm Value (PBV) is: 
Y = 169,070 + 2,876 X1 + 16,460 X3 + 11,079 X1.X3 

The Debt to Equity Ratio (DER) variable regression coefficient of 169,070 explains the magnitude of the 
change in the score of Earning Per Share (EPS) because of the effect of Debt to Equity Ratio (DER) on Earning 
Per Share (EPS). A positive sign indicates the direction of the relationship is directly proportional (inline). So when 
there is an increase in the score of the Debt to Equity Ratio (DER) variable, the Earning Per Share (EPS) score will 
increase by 169,070, assuming that other factors are constant (unchanged). So the more appropriate the Debt to 
Equity Ratio (DER), the EPS will increase (better). The variable regression coefficient (X3) of 2,876 shows the 
magnitude of the change in Earning Per Share (EPS) due to the influence of the variable Firm Value (PBV) on 
Earning Per Share (EPS). A positive sign indicates the direction of the relationship that is directly proportional 
(inline). So every time there is an increase in one unit variable score (X3), the EPS will increase by 2,876 assuming 
the other factors are constant (unchanged). So the higher (X3), the Earning Per Share (EPS) will increase (better). 
The regression coefficient of the moderating variable X1X3 (interaction X1X3) which is the interaction between 
the Debt to Equity Ratio (DER) and PBV is obtained as positive. So it can be explained that PBV strengthens the 
effect of Debt to Equity Ratio (DER) on Earning Per Share (EPS). 

 

4.1.2. Equation of Moderated Regression Analysis of ROA (X2), PBV (X3), and EPS (Y) 
To determine the effect of Return On Asset (ROA) and Firm Value (PBV) on Earning Per Share (EPS), which 

is moderated by Firm Value (PBV), analysis is calculated using Moderated Regression Analysis (MRA). The 
results of calculations using SPSS obtained regression coefficients and constant values as in the following table: 

 
Table-4. Regression Coefficient Results ROA (X2), PBV (X3), and EPS (Y). 

Model Unstandardized Coefficients Standardized Coefficients T Sig. 

B Std. Error Beta 

1 

(Constant) 160.338 139.370  1.150 .259 
ROA 41.772 21.743 .754 1.921 .064 
PBV 23.441 26.552 .160 .883 .384 

ROA*PBV -2.367 2.372 -.408 -.998 .326 
Note: a. Dependent Variable: EPS (Y). 

 
The regression equation that explains the effect of Return On Assets (ROA) and Firm Value (PBV) on Earning 

Per Share (EPS) is moderated by Firm Value (PBV): 
Y = 160,338 + 41,772 X2 + 23,441 X3 + -2,367 X2.X3 

The regression coefficient of the Return On Asset (ROA) (X2) variable of 160,338 explains the magnitude of 
the change in the score of Earning Per Share (EPS) because of the effect of Return On Asset (ROA) on Earning Per 
Share (EPS). A positive sign indicates the direction of the relationship is directly proportional. So when there is an 
increase in Return On Asset (ROA), the score of Earning Per Share (EPS) will increase by 160,338 assuming the 
other factors are constant (unchanged). So the higher the Return On Asset (ROA), the better the Earning Per 
Share (EPS).  

The regression coefficient of Firm Value (PBV) (X3) is 23,441 indicating the magnitude of changes in Earning 
Per Share (EPS) (Y) due to the influence of the Firm Value (PBV) variable on Earning Per Share (EPS). A positive 
sign indicates the direction of the relationship that is directly proportional (inline). So every time there is an 
increase in one unit score of the PBV variable (X3), Earning Per Share (EPS) will increase by 23,441 assuming the 
other factors are constant (unchanged). So the higher (X3), the Earning Per Share (EPS) will increase (better). The 
regression coefficient of the moderating variable X2X3 (interaction X2X3) which is the interaction between Return 



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on Assets (ROA) and PBV is obtained as a negative sign. So it can be explained that PBV does not strengthen the 
effect of Return On Assets (ROA) on Earning Per Share (EPS). 
 

4.2. Hypothesis Test 
4.2.1. Hypothesis Testing the Effect of DER (X1), PBV (X3) on EPS (Y) 

The hypothesis test used to test the presence or absence of influence is the t-test. Determination of test results 
(acceptance/rejection of H0) can be done by comparing t count with t table or can also be seen from its significant 

value. From the t table, the t table value for α = 0.05 and degrees of freedom (DB) = 35-2-1 = 32 on the two-party 
test is 2.036. The t-test results can be seen in the following table: 
 

Table-5. The results of the t-test X1, X3 on Y. 

Model Unstandardized Coefficients Standardized Coefficients t Sig. 

B Std. Error Beta 

1 

(Constant) 169.070 212.329  2.796 .000 
DER 2.876 61.535 .013 3.047 .033 
PBV 16.460 43.738 .113 16.376 .005 

DER, PBV 11.079 15.490 .255 9.715 .044 
Note: a. Dependent Variable: EARNING PER SHARE (EPS) (Y). 

 
Hypothesis testing is used to determine whether or not there is a significant effect of the Debt to Equity Ratio 

(DER) on Earning Per Share (EPS). The hypotheses to be tested are: 
H0: b1 = 0 Debt to Equity Ratio (DER) has no effect on EPS. 
H1: b1 ≠ 0 Debt to Equity Ratio (DER) affects EPS. 
The results of the Debt to Equity Ratio (DER) regression coefficient are 3.047. 

The results of the comparison of t count with t table obtained 3.047 greater than t table 2.036. Because the 
value of t-count> t-table (3.047 > 2.036) then Ho is rejected and the alternative hypothesis is accepted, meaning 
that partially the Debt to Equity Ratio (DER) affects Earning Per Share (EPS), t count is positive meaning that 
DER has a positive effect on Earning Per Share ( EPS).  
 

4.2.2. Testing the Hypothesis of Return on Asset (ROA) on Earning Per Share (EPS) 
The hypothesis test used to test the presence or absence of influence is the t-test. Determination of the test 

results (acceptance/rejection of H0) can be done by comparing the t-count with the t-table or it can also be seen 
from the significant value. From the t-table, the t-table value for alpha = 0.05 and degrees of freedom (DB) = 35-2-
1 = 32 on the two-party test is 2.036. The results of the t-test can be seen in Table 5. 
 

Table-6. Results of t-test X2 X3 on Y. 

Model Unstandardized Coefficients Standardized Coefficients t Sig. 

B Std. Error Beta 

1 

(Constant) 160.338 139.370  1.150 .000 
ROA 41.772 21.743 .754 3.921 .064 
PBV 23.441 26.552 .160 2.883 .003 

ROA, PBV 2.367 2.372 .408 2.998 .001 
Note: a. Dependent Variable: EARNING PER SHARE (EPS) (Y). 

 
Hypothesis testing is used to determine whether or not there is a significant effect of Return On Assets (ROA) 

on Earning Per Share (EPS). The hypotheses to be tested are: 
H0: b1 = 0 Return On Asset (ROA) has no effect on EPS 
H1: b1 ≠ 0 Return On Asset (ROA) affects EPS 
The result of the regression coefficient of Return on Assets (ROA) is 3,921. 
The results of the comparison between t count and t table obtained 3,921 greater than t table 2,036. Because the 
value of t count> t table (3,921> 2,036) then Ho is rejected and the alternative hypothesis is accepted, meaning that 
partially Return on Asset (ROA) affects Earning Per Share (EPS), t count is positive meaning Return on Asset 
(ROA) has a positive effect on Earning Per Share (EPS). 
 
4.2.3. Hypothesis Testing Firm Value (PBV) Moderates the Effect of Debt to Equity Ratio (DER) on Earning Per 
Share (EPS) 

Hypothesis testing is used to determine whether or not there is a moderating effect on the relationship between 
X1 and Y. The hypotheses to be tested are: 
H0: b3 = 0 Firm Value (PBV) does not moderate the effect of Debt to Equity Ratio (DER) on Earning Per Share (EPS). 
H1: b3 ≠ 0 Firm Value (PBV) moderates the effect of Debt to Equity Ratio (DER) on Earning Per Share (EPS). 

The t-test results for the interaction regression coefficient of Debt to Equity Ratio (DER) and Firm Value 
(PBV) (X1X4) were 9,715 with a significant of 0.044. 

The results of the comparison between t and t table, it is obtained that the t value of 9.715 is greater than t 
table of 2.036 and the significant value of X1X3 of 0.044 is smaller than alpha = 0.05, so the conclusion is that the 
Ho test is rejected and the alternative hypothesis is accepted. This shows that Firm Value (PBV) moderates the 
relationship between Debt to Equity Ratio (DER) and Earning Per Share (EPS). 
 
 
 



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4.2.4. Hypothesis Testing Firm Value (PBV) Moderates the Effect of Return On Assets (ROA) on Earning Per 
Share (EPS) 

Hypothesis testing is used to determine whether or not there is a moderating effect on the relationship between 
X2 and Y. The hypotheses to be tested are: 
H0: b3 = 0 Firm Value (PBV) does not moderate the effect of Return On Assets (ROA) on Earning Per Share (EPS). 
H1: b3 ≠ 0 Firm Value (PBV) moderates the effect of Return On Assets (ROA) on Earning Per Share (EPS). 

The t-test result for the regression coefficient of the interaction between Return On Asset (ROA) and Firm 
Value (PBV) (X2X3) is 2.998 with a significant of 0.001. 

The results of the comparison between t and t table, it is obtained that the t value of 2.998 is greater than t 
table of 2.036 and the significant value of X2X3 of 0.001 is smaller than alpha = 0.05, so the conclusion is that the 
Ho test is rejected and the alternative hypothesis is accepted. This shows that Firm Value (PBV) moderates the 
relationship between Return On Asset (ROA) and Earning Per Share (EPS). 
 

5. Discussion 
5.1. Effect of Debt to Equity Ratio (DER) on Earning per Share (EPS) 

The first hypothesis results, Debt to Equity Ratio (DER) has a significant effect on Earning Per Share (EPS). 
Then the Debt to Equity Ratio (DER) (X1) regression coefficient also has a positive sign which means that the 
higher the Debt to Equity Ratio (DER), the higher the Earning Per Share (EPS). This is supported by the 
calculation that the t-count value of 2.988 is greater than the t-table of 2.036. Because the value of t-count > t-table 
(3.047> 2.036), Ho is rejected and the alternative hypothesis is accepted, meaning that partially the Debt to Equity 
Ratio (DER) affects Earning Per Share (EPS). T-count is positive means that DER has a positive effect on Earning 
Per Share (EPS). 
 

5.2. The effect of Return on Asset (ROA) on Earning per Share (EPS) 
The second hypothesis test used to test whether there is an effect is a t-test. Determination of the test results 

(acceptance/rejection of H0) can be done by comparing the t-count with the t-table or it can also be seen from the 
significant value. From the t-table, the t-table value for alpha = 0.05 and degrees of freedom (DB) = 35-2-1 = 32 on 
the two-party test is 2.036. The results of the comparison between t count and t table obtained 3,921 greater than t 
table 2,036. Because the value of t-count> t-table (3,921> 2,036), Ho is rejected and the alternative hypothesis is 
accepted, meaning that partially Return On Asset (ROA) affects Earning Per Share (EPS). t count is positive means 
that Return on Assets (ROA) has a positive effect on Earning Per Share (EPS). 
 

5.3. The Effect of Firm Value (PBV) Moderates the Effect of Debt to Equity Ratio (DER) on Earning Per Share 
(EPS) 

The third hypothesis test is used to determine whether or not there is an effect of Moderation on the 
relationship between X1 and Y. The results of the t-test for the interaction regression coefficient of Debt to Equity 
Ratio (DER) and Firm Value (PBV) (X1X4) from table 4.50 are 9,715 with a significant of 0.044. The results of the 
comparison between t and t table, it is obtained that the t value of 9.715 is greater than t table of 2.036 and the 
significant value of X1X3 of 0.044 is smaller than alpha = 0.05, so the conclusion is that the Ho test is rejected and 
the alternative hypothesis is accepted. This shows that Firm Value (PBV) moderates the relationship of Debt to 
Equity Ratio (DER) to Earning Per Share (EPS). 
 

5.4. The Influence of Firm Value (PBV) Moderates the Effect of Return on Assets (ROA) on Earning Per Share 
(EPS) 

Hypothesis testing is used to determine whether or not there is a Moderating effect on the relationship 
between X2 and Y. The results of the comparison between t and t table show that the t value of 2.998 is greater 
than t table of 2.036 and the significant value of X2X3 of 0.001 is smaller than alpha = 0.05, it is obtained the 
conclusion of the Ho test is rejected and the alternative hypothesis is accepted. This shows that Firm Value (PBV) 
moderates the relationship between Return On Asset (ROA) and Earning Per Share (EPS). 
 

6. Conclusions and Suggestion 
6.1. Conclusion 

This research was conducted to determine the effect of Debt To Equity Ratio and Return On Assets on 
Earning Per Share with Firm Value as a Moderation Variable. Several conclusions can be drawn in this study, 
namely:  
1. Debt To Equity Ratio (DER) has a significant effect on Earning Per Share. This is supported by the calculation 

that the t-count value of 2.988 is greater than the t-table of 2.036. Because the value of t-count> t-table (3.047> 
2.036), Ho is rejected and the alternative hypothesis is accepted, meaning that partially the Debt to Equity 
Ratio (DER) affects Earning Per Share (EPS). T-count is positive means that DER has a positive effect on 
Earning Per Share (EPS). 

2. Return On Asset (ROA) affects Earning Per Share (EPS). It can be seen that the results of the comparison 
between t-count and t-table obtained 3,921 greater than t-table 2,036. Because the value of t-count> t-table 
(3,921> 2,036), Ho is rejected and the alternative hypothesis is accepted, meaning that partially Return On 
Asset (ROA) affects Earning Per Share (EPS). T-count is positive means that Return on Assets (ROA) has a 
positive effect on Earning Per Share (EPS). 

3. Price to Book Value (PBV) as a moderating variable is proven to be able to strengthen the effect of Debt to 
Equity Ratio (DER) on Earning Per Share. This effect can be seen from the results of the t-test where the t-
count value of 9.715 is greater than t-table 2.036 and the significant value of X1X3 is 0.044 less than alpha = 
0.05, so the conclusion is that the Ho test is rejected and the alternative hypothesis is accepted. This shows that 



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Price to Book Value (PBV) moderates the relationship of Debt to Equity Ratio (DER) to Earning Per Share 
(EPS). 

4. Price to Book Value (PBV) as a moderating variable is proven to be able to strengthen the effect of Return On 
Assets (ROA) on Earning Per Share (EPS). This influence can be seen by the results of the comparison of t-
count with t table, it is obtained that the t value of 2.998 is greater than t table of 2.036 and the significant 
value of X2X3 of 0.001 is smaller than alpha = 0.05, so the conclusion is that the Ho test is rejected and the 
alternative hypothesis is accepted. This shows that Price to Book Value (PBV) moderates the relationship 
between Return on Asset (ROA) and Earning per Share (EPS). 

 

6.2. Suggestion 
Based on the description above, the suggestions that the author can put forth here are as follows: 

1. Investors in making decisions to buy shares in the capital market should pay more attention to fundamental 
variables, especially the Debt To Equity Ratio (DER) and Return On Asset (ROA) variables because these 
variables have a significant effect on Earning Per Share (EPS). Apart from that, investors should also consider 
external factors such as exchange rates, because this will indirectly affect the profits earned in investing. 

2. Companies listed on the Indonesia Stock Exchange (IDX) are expected to improve company performance each 
year and provide real and complete financial reports to attract investors, thereby making it easier to obtain 
capital from outside the company. 

3. For further researchers, it is better to use a broader object, not only for various industrial sub-sector 
manufacturing companies that are listed on the Indonesia Stock Exchange but also in other companies. Further 
researchers also need to add a longer research period and add one or two variables that affect Earning Per 
Share so that the results can be more precise and accurate. 
 

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Citation Citra Larasati; Abdul Rivai; Suharto (2020). Effect of Debt 
to Equity Ratio and Return on Assets on Earnings per Share with 
Firm Value as a Moderating Variable in Various Industrial Sub-
Sector Manufacturing Companies Indonesia. Asian Business 
Research Journal, 5: 39-47. 
History:  
Received: 3 August 2020 
Revised: 9 September 2020 
Accepted: 24 September 2020 
Published: 5 October 2020 
Licensed: This work is licensed under a Creative Commons 

Attribution 3.0 License  
Publisher:  Eastern Centre of Science and Education 
 

Acknowledgement: All authors contributed equally to the conception and 
design of the study. 
Funding: This study received no specific financial support.    
Competing Interests: The authors declare that they have no competing 
interests. 
Transparency: The authors confirm that the manuscript is an honest, 
accurate, and transparent account of the study was reported; that no vital 
features of the study have been omitted; and that any discrepancies from the 
study as planned have been explained. 
Ethical: This study follows all ethical practices during writing.  
 

Eastern Centre of Science and Education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use 
of the content. Any queries should be directed to the corresponding author of the article. 

 

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