The Impact of Profitability on Capital Structure Decisions at Palm Oil Companies Listed on the Indonesian Stock Exchange

This study aims to analyze the relationship between profitability and capital structure decisions in the palm oil industry on the Indonesia Stock Exchange from 2021-2024. The study sample consisted of 19 companies selected using purposive sampling, resulting in a total of 76 observations. Profitability is proxied by Return on Assets (ROA), Return on Equity (ROE), Net Profit Margin (NPM), Earnings Before Interest and Tax (EBIT), and EBIT & Depreciation (EBITDA), while capital structure is proxied by the Debt to Equity Ratio (DER). Using the Random Effects Model (REM), this study found that ROA and NPM have a significant negative effect on the DER, while ROE and EBIT have a significant positive effect on the DER. Meanwhile, EBITDA does not have a significant effect on capital structure. The results of this study are useful for determining the optimal capital structure for palm oil companies. The different directions of the relationships among the profitability variables present an interesting avenue for future research.