Increasing debt boosts profits for food and beverage companies, study finds.
The study looked at how liquidity and solvency ratios affect the profitability of food and beverage companies in Indonesia. They found that quick ratio, debt to equity ratio, and debt to asset ratio all have a significant impact on net profit margin. Increasing debt can increase net income, with the debt to equity ratio having the strongest effect on return on equity. Focusing on improving the net income to equity ratio directly can help enhance financial performance for these companies.