The Effect of Debt to Equity Ratio (DER) and Debt to Asset Ratio (DAR) on Return on Assets (ROA) in Banking Companies Listed on the Indonesia Stock Exchange (IDX) Period 2020-2024

This study aims to analyze the effect of Debt to Equity Ratio (DER) and Debt to Asset Ratio (DAR) on Return on Assets (ROA) in banking companies listed on the Indonesia Stock Exchange (IDX) for the 2020–2024 period. The research method used is descriptive verifiable with a quantitative approach. The research sample consisted of 21 banking companies selected using purposive sampling techniques with a total of 105 observation data. The results showed that partially DER had a negative and significant effect on ROA, while DAR did not have a significant effect on ROA. However, simultaneously DER and DAR have been shown to have a significant effect on ROA. The value of the determination coefficient shows that the ability of the DER and DAR variables to explain the variation in ROA is still relatively small, so there are other factors outside the model that also affect banking profitability. Although the contribution of these two variables to ROA is relatively small, this result confirms that the overall funding structure policy still has a role in influencing the profitability performance of banking companies. This research is expected to provide additional empirical evidence on the influence of capital structure on banking profitability, especially during the pandemic period and economic recovery, as well as be considered for management and investors in making funding decisions.

Keywords: Debt to Equity Ratio, Debt to Asset Ratio, Return on Assets, Profitability, Banking