Long-Term Debt and Sales Growth Effects on Return on Assets

Abstract

This study examines the effect of Long-Term Debt (LTD) and Sales Growth (SG) on Return on Assets (ROA) in telecommunication sub-sector companies listed on the Indonesia Stock Exchange (IDX) during 2022–2024. A quantitative causal-associative approach was employed using secondary data from 17 telecommunication companies listed on the IDX. After adjusting for lagged data requirements (Sales Growth calculation), the final sample consisted of 34 firm-year observations during 2023–2024. Panel data regression analysis was performed using EViews 12. The Fixed Effect Model (FEM) was selected through the Chow and Hausman tests, followed by the t-test, F-test, and Adjusted R². Long-Term Debt has a significant negative effect on ROA (β = −1.934; p = 0.0010), whereas Sales Growth has a positive but insignificant effect (β = 0.139; p = 0.5694). Simultaneously, Long-Term Debt and Sales Growth do not have a statistically significant joint effect on ROA at the 5% level (Prob (F-statistic) = 0.0553). The model explains 41.34% of the variation in ROA (Adjusted R² = 0.4134). Long-Term Debt plays a more vital role in managing profitability than Sales Growth. However, given the marginally non-significant simultaneous effect, the combined influence of these variables warrants cautious interpretation when formulating broader corporate policies.