TREND AND PEARSON CORRELATION ANALYSIS OF FINANCIAL LEVERAGE, FINANCIAL SLACK, AND FINANCIAL PERFORMANCE OF BANK IN INDONESIA
DOI:
https://doi.org/10.15575/jim.v7i1.59847Keywords:
Financial Leverage, Financial Slack, Financial Performance, Banking Sector.Abstract
This study aims to analyze the trends and relationships between financial leverage, financial slack, and financial performance at PT Bank Rakyat Indonesia (Persero) Tbk during the period 2020-2025. The research employed a quantitative approach using secondary data obtained from the company's financial statements. Financial leverage was measured using the Debt to Equity Ratio (DER) and Debt Ratio (DR), financial slack was measured using the Current Ratio (CR) and Liquid Assets to Deposits and Short-Term Funding (LADST), while financial performance was assessed through Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). Data analysis was conducted using trend analysis and Pearson correlation analysis with the assistance of the Statistical Package for the Social Sciences (SPSS). The trend analysis revealed that DER, CR, and LADST tended to decline during the observation period, whereas ROA, ROE, and NPM increased until 2023 before experiencing slight decreases in the following years. The correlation results indicated that financial leverage had no significant relationship with financial performance. In contrast, financial slack, represented by the Current Ratio, showed a very strong and significant positive relationship with ROA and a very strong and significant negative relationship with ROE. These findings suggest that effective liquidity management plays a more important role in improving financial performance than leverage utilization. Therefore, financial slack can be considered a strategic factor in supporting profitability and sustaining corporate financial performance.
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