Do profitability and liquidity drive market valuations? A study based on Tobin Q in LQ45 Firms (Q1 2021 – Q3 2024)

Aditya Wardana; Rolan Mart Sasongko; Hafidh Rifky Adiyatna; Ryan Setya Budi; Ida Ayu Fatmayuni

doi:10.55942/pssj.v5i9.587

Authors

Aditya Wardana Universitas Pembangunan Nasional "Veteran" Yogyakarta https://orcid.org/0009-0009-5325-6441
Rolan Mart Sasongko Universitas Pembangunan Nasional "Veteran" Yogyakarta https://orcid.org/0000-0003-0914-6797
Hafidh Rifky Adiyatna Universitas Pembangunan Nasional "Veteran" Yogyakarta https://orcid.org/0009-0002-0836-8910
Ryan Setya Budi Universitas Pembangunan Nasional "Veteran" Yogyakarta https://orcid.org/0009-0009-4444-6243
Ida Ayu Fatmayuni Universitas Slamet Riyadi Surakarta https://orcid.org/0009-0007-6408-3158

DOI:

https://doi.org/10.55942/pssj.v5i9.587

Keywords:

Tobin’s Q analysis, financial performance, corporate valuation, firm value

Abstract

This study aims to evaluate the effect of return on assets and current ratio on firm value in LQ45 indexed companies from Q1 2021 until Q3 2024. Quantitative causal-comparative design used and a census sampling of 45 companies (675 observations), This study employs Tobin’s Q as an indicator of firm value. The analysis reveals that ROA positively and significantly influences firm value, indicating that higher profitability improves investor valuation. In contrast, there is no statistically significant relationship between CR and firm value, suggesting that liquidity is not a primary driver of market valuation. Recommendations include focusing on profitability and asset efficiency to increase firm value, while future research should explore additional variables such as firm size or leverage. The limitations of this study relate to the use of Tobin's Q as a measure of firm value, whereas other methods can also be used.

Author Biographies

Aditya Wardana, Universitas Pembangunan Nasional "Veteran" Yogyakarta

Aditya Wardana is affiliated with Universitas Pembangunan Nasional “Veteran” Yogyakarta, Indonesia, where he is pursuing a Master’s degree in Management with a concentration in Finance. His research interests focus on financial decision-making, viewed both from the perspective of investors and from the perspective of corporations. In particular, he is interested in issues related to investment decisions and corporate bankruptcy, aiming to contribute insights that strengthen financial resilience and sustainable growth in dynamic business environments.

Rolan Mart Sasongko, Universitas Pembangunan Nasional "Veteran" Yogyakarta

Rolan Mart Sasongko is an Assistant Professor at Universitas Pembangunan Nasional “Veteran” Yogyakarta, Indonesia, specializing in Marketing Management. His research interests focus on consumer behavior, digital transformation, and sustainable business performance, with particular attention to the role of social norms, product attributes, and the phenomenon of Fear of Missing Out (FOMO) in shaping consumer decisions. He has published works on counterfeit product consumption, marketing communication strategies, and the interplay between patriotism and product choice in Indonesian context.

Hafidh Rifky Adiyatna, Universitas Pembangunan Nasional "Veteran" Yogyakarta

Hafidh Rifky Adiyatna is an Assistant Professor at Universitas Pembangunan Nasional “Veteran” Yogyakarta, Indonesia, with expertise in Strategic Management. He teaches courses on Industry Analysis, Entrepreneurship, SPSS Application, International Strategy, and Start-up Business Tools. His research focuses on business strategy formulation and entrepreneurial development, particularly in the context of non-formal education and post-pandemic recovery. He has published works on blue ocean strategy in the education sector and business development strategies for SMEs.

Ryan Setya Budi, Universitas Pembangunan Nasional "Veteran" Yogyakarta

Ryan Setya Budi is an Assistant Professor at Universitas Pembangunan Nasional “Veteran” Yogyakarta, Indonesia, with expertise in Asset and Property Valuation. He holds a doctoral degree in accounting and has research interests in real estate economics, macroeconomic analysis, and property valuation. His recent work explores the long- and short-term relationships between macroeconomic variables and housing prices across different property types in Indonesia.

Ida Ayu Fatmayuni, Universitas Slamet Riyadi Surakarta

Ida Ayu Fatmayuni is a lecturer at the Faculty of Economics and Business, Universitas Slamet Riyadi Surakarta, Indonesia. Her academic and research interests cover financial management, corporate financial distress, and business management. She has published studies examining the determinants of financial distress across different industries, the survival and longevity of real estate firms in relation to macroeconomic factors, and the role of financial ratios in predicting corporate distress. In addition, she has contributed as a co-author to textbooks on accounting and management, reflecting her commitment to bridging theory and practice in higher education.

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