This document discusses factors that influence stock prices of industrial companies listed on the Indonesia Stock Exchange. It presents a literature review on debt ratio, price-earnings ratio, earnings per share, company size, and company value as independent variables that may predict stock price as the dependent variable. The document then describes the research methodology, which uses a quantitative multiple linear regression analysis of secondary data from 114 industrial companies to determine the relationship between the independent and dependent variables. The results of the analysis show that all four independent variables (debt ratio, price-earnings ratio, earnings per share, size) have a significant influence on stock price both simultaneously and partially, with earnings per share having the strongest influence. Conclusions are that companies should manage these

1. Background
Every company must manage their financial condition in order to maximize company value. For
company who issue shares in stock market, shares price as indicator value will be affected with a few
fundamental and technical variable that forming market power and affect shares transaction. One of
fundamental information that provided in stock market id financial report, where investor can know any
internal information about company financial work that will be used by investor to decide alternative
choice for buying shared. Fundamental information is an internal factor that comes from financial report
which form like financial ratios, like : Debt Ratio, Price Earning Ratio, EPS, Company size.
All fourth ratio as variable that can predicting industrial shares price changing, because of growth
in non oil and gas industry in 2011 increase at 6.83% from previous year. Like Industrial Minister
statement, this growth is the highest growth since 2005. Contribution from industrial sector in non oil and
gas industry with total national Product Domestic gross incomes attain 20,92 % and the highest compared
with others sector. Industrial company have characteristic relationship with DR, PER, EPS and size with
Industry shares price.
Theoretical Aspect
1. Debt Ratio
To predict shares price with measuring how much company assets that paid by creditor. Bigger DR
will give bigger risk that made by company because show that bigger asset cost to guarantee debt,
uninterested to acquisition.
2. Price to earning Ratio
As indicator of how much money that investor spent to get profit. PER can affect shares prices,
smaller PER will get smaller Shares Price. Amount on PER Value that can be used by investor as
indicator and main point in order to make decision related with investing that highly expected Shares
return income.
3. Earning Per Share
Ability of company to produce net profit from every sheet which owned by company shares owner.
For Investor, EPS is information that can be fundamentally thought and useful because it can
describe future prospect of company. EPS is independent Variable that dominant that others
independent variable that affect shares Price.

2. The portion of a company's profit allocated to each outstanding share of common stock. Earnings per
share serves as an indicator of a company's profitability. When calculating, it is more accurate to use
a weighted average number of shares outstanding over the reporting term, because the number of
shares outstanding can change over time. However, data sources sometimes simplify the calculation
by using the number of shares outstanding at the end of the period.
4. Size
Amount of asset owned by company. Size variable depend on company size, bigger company will get
easier chance to get loan because of big assets value that can become a guarantee and credibility
indicator butt small company only have supporting factor to producing goods in limited amount. This
thing show that firm size effect to shares prospect is insignificant. Size use book value from total
asset or assets total as size proxy.
5. Company Value
Is successful management measurement in past prospect and future prospect to ensure shares
holder. Company value can show from Shares Market Price. A few quantity variable to predict
company value are : 1) Book value per share. Measure shareholder value of all shares. BVS =
shareholder equity/jumlah saham yg beredar 2) Appraisal value. Related with placing cost.
Individual activa value have small realtionship with general company ability in producing earning
and going concern value from a company. 3) Stock market value. Other approaching to predict
net value of business that frequently change. There was three kind of measuring approached
related with shares : Book value (shares value depend on emiten book/record), market value
(recorded shares value in stock market), and intrinsic value (real value of shares). 4) Chop-shop
value. This approaching conceptualized stress practice to buy active or asset in below placing
price. 5) Cash flow value, To estimated net cash flow provided for company which providing as
merger/acquisition result. This value can be maximum amount that have to be paid by targeted
company.
6. Shares
Is one of new fund resource come from company that derivative from capital owner in consequence
company have to give dividend. Shares form like a piece of paper that show paper ownership. There
were 2 factor to influence is Macro (give impact to all shares that enlisted in stock market) & micro
(give impact only to few kind of shares). Other factor : 1) fundamental emiten condition; Direct
relationship factor with emiten performance. Size depend on risk that investor freeposted affected by
emiten fundamental condition (financial condition, emiten company business strategy, produced
goods and management). 2) supply and demand law. As shares price fluctuative stipulation,
increasing shares price because of too much demand or less supply 3) interest rate. Increasing if
interest rate will attract investor to invested because have smaller risk and affect company financial

3. performance as bank director 4) foreign exchange/currency. Bigger foreign fund invested in indonesia
stock market will show indonesia’s investation condition already condusive. Where economic growth
nothing more negative and indirectly will attract emiten ability to provide good profit. 5) IHSG.
Calculation of transaction that occure on sock market in certain period that used as main point in
reviewing economic conditionand country investation 6) News and Rumor. With both of this thing,
investor can predict condisively.
There were three kind of information that give impact to shares prices like : 1) fundamental, idustry
general condition and company future prospect. 2) technically, economic trading condition, currency
fluctuation and transaction volume, volume and frequence and market power, 3) environment,
economic condition, politic and security, inflation and monetarry right.
Conceptual Model
Hypothetical Model
Methodology
Types of Research
Types of research used in this research is explanatory research with quantitative analysis approach.
Explanatory research is a type of research that explains or clarifies the relationship between two or
more aspects of the situation and phenomena. According Sugiyono (2010:7) that a study using a
quantitative approach to research if the data in the form of figures and statistical analyzes using.
The data used are secondary data
data collection techniques with methods of documentation
Financial Ratio Firm Value

4. • Method of data analysis used in this study is a method of multiple linear regression statistical
analysis and hypothesis testing. Multiple linear regression analysis was used to determine the
strength of the influence of independent variables to the variable bound together.
• The purpose of hypothesis testing to determine whether there is any correlation between the
independent variables and the dependent variable. Testing hypotheses include the F test and t
test
F test: to see the effect of all independent variables to the dependent variable.
T test: to test the partial coefficient of determination of the independent variable dependent
variable.
Research Sites
This study took place in the Indonesia Stock Exchange Corner in the Faculty of Economics, University of
Brawijaya Malang.
Variables and Measurement
Independent variable is also called the free variable is a variable that affects or is the cause of the
change or the emergence of bound variable (dependent). Independent variables defined in: 1) Debt
Ratio as X1 2) price to earning ratio as X2. 3) Earning per share X3. 4) size as X4.
the dependent variable is the firm's stock price is measured or peroxide by the closing share price (Y) in
units of dollars.
Analysis and Interpretation Data
table test result of multiple linear regression
Variable
Unstandardized
Coefficients (B)
t - Calculate Sig. Explanation
constant 1.059
DR -0,015 -6,313 0,000 significant
PER 0,024 9,945 0,000 significant
EPS 0,864 22,250 0,000 significant

5. Size 0,156 2,777 0,000 significant
R = 0,938
R Square = 0,879
Adjusted R square = 198,671
F - Calculate = 6,39
F - Table = 0,000
α = 0,05
NB : Total Data : 114
t - table value : 1,671
Variable Dependent : harga saham
from table test result of multiple linear regression can be concluded that :
1. Taken together the variable of DR (X1), PER (X2), EPS (X3), and Size (X4) give influential
significant on the stock price variable (Y). it can be seen from the calculated F value
showed a value of 198,671 (significant F = 0,000). So calculated F > table F (198,671 >
6,39) or sig F < 5% (0,000 < 0,05).
2. As partially can be known that DR variable have a significant influence on the stock price is
equal to -6,313 for t-test, t-table value as big as 1,671. With amount of t-calculate of variable debt
ratio as -6,313 and the probability of 0,000. So t-calculate > t table (6,313 > 1,671) or sig. t < 5%
(0,000 < 0,005)
3. As partially can be known that PER variable have a significant influence on the stock price is
equal to 9,945 for t-test, t-table value as big as 1,671. With amount of t-calculate of variable debt
ratio as 9,945 and the probability of 0,000. So t-calculate > t table (9,945 > 1,671) or sig. t < 5%
(0,000 < 0,005)
4. As partially can be known that EPS variable have a significant influence on the stock price is
equal to 22,250 for t-test, t-table value as big as 1,671. With amount of t-calculate of variable
debt ratio as -6,313 and the probability of 0,000. So t-calculate > t table (22,250 > 1,671) or sig. t
< 5% (0,000 < 0,005)
5. As partially can be known that DR variable have a significant influence on the stock price is
equal to 2,777 for t-test, t-table value as big as 1,671. With amount of t-calculate of variable debt
ratio as 2,777 and the probability of 0,000. So t-calculate > t table (2,777 > 1,671) or sig. t < 5%
(0,000 < 0,005)

6. So, we can get the regression equation that Y = 1,059 – 0,015 X1 + 0,024X2 + 0,864X3 + 0,156X4
Conclusion and Recommendation
Purpose of this research is to understand effect of DR, PER, EPS, Size stimultaneously with
shares prices in industrial company that enlisted in BEI and knowing dominant variable who give impact
on shares prices to indusrial company that enlisted at BEI. With the research result, we can conclude that:
1) Test of F where F count show value 198,671 significant F=0,000. So F count > F table
(198,671>6,39)or Sig F < 5% (0,000 < 0,05). The influence of the four independent variables
simultaneously with stock price can be seen in Adjusted R square as 0,875 means that together with
other four variable to give the impact 87,5 % for stock prices. From the experiment result, 1st
hypothetic stated that DR variable, PER, EPS and size simultaneously give significant impact to stock
market, can be accepted.
2) Experiment result that have done partially can be seen that Earning Per Share (EPS) variable has
biggest impact that other four independent variable that give impact to stoch prices. Those statement
proven with amount of one count value EPS variable as much as 22,250 that have the biggest vallue
other than three variables and smallest probability value 0,000. From experiment, hypothetic that
stated that all four independent variables, variable EPS have dominan impact to stock price.
Suggestion
With the conclution of this research, suggestions that we given are :
1) Industrial companyy have to increase financial management withincreasing financials ratio like PER,
EPS, Size and DR so the company stock prices in stock market increase. Research result shor=w that
PER, EPS and high DR that lower will responded nicely by investor in stock market so this thing can
change stock price in stock market increase.
2) For the investor or investor candidate suggested to carefully undersand fundamental factor or
companies finacial ratios before decide to investing in those company. Research result show that
fundamental factor that can be measurement before investing in Industrial company that enlisted in
BEI is DR, PER, EPS and size.
3) For researcher, we suggested that to increase amount of research year to be more than three years so
the shares fluctuation based on fundamental factor impact like DR, PER, EPS and size can describe
the real condition.

7. Additional info :
1. Financial ratios are categorized according to the financial aspect of the business which the ratio
measures. Liquidity ratios measure the availability of cash to pay debt.[2] Activity ratios measure
how quickly a firm converts non-cash assets to cash assets.[3] Debt ratios measure the firm's
ability to repay long-term debt.[4] Profitability ratios measure the firm's use of its assets and
control of its expenses to generate an acceptable rate of return.[5] Market ratios measure investor
response to owning a company's stock and also the cost of issuing stock.
2.Saham Preference : Saham yang memberikan hak lebih di atas saham biasa, seperti hak prioritas
atas pengembalian modal jika perusahaan dilikwidasi, hak prioritas atas pembagian deviden, serta
hak prioritas untuk mengajukan usul dalam rapat umum pemegang saham untuk pencalonan
direksi dan komisaris.
3.Analisis regresi linier berganda adalah hubungan secara linear antara dua atau lebih variabel
independen (X1, X2,….Xn) dengan variabel dependen (Y). Analisis ini untuk mengetahui arah
hubungan antara variabel independen dengan variabel dependen apakah masing-masing variabel
independen berhubungan positif atau negatif dan untuk memprediksi nilai dari variabel dependen
apabila nilai variabel independen mengalami kenaikan atau penurunan. Data yang digunakan
biasanya berskala interval atau rasio.
Persamaan regresi linear berganda sebagai berikut: Y’ = a + b1X1+ b2X2+…..+ bnXn
Y’ = Variabel dependen (nilai yang diprediksikan)
X1 dan X2 = Variabel independen
a = Konstanta (nilai Y’ apabila X1, X2…..Xn = 0)
b = Koefisien regresi (nilai peningkatan ataupun penurunan)
4. Share : The stock of a corporation is partitioned into shares, the total of which are stated at the
time of business formation. Additional shares may subsequently be authorized by the existing
shareholders and issued by the company. In some jurisdictions, each share of stock has a certain
declared par value, which is a nominal accounting value used to represent the equity on the
balance sheet of the corporation. In other jurisdictions, however, shares of stock may be issued
without associated par value.
Shares represent a fraction of ownership in a business. A business may declare different types
(classes) of shares, each having distinctive ownership rules, privileges, or share values.
Ownership of shares may be documented by issuance of a stock certificate. A stock certificate is a
legal document that specifies the amount of shares owned by the shareholder, and other specifics
of the shares, such as the par value, if any, or the class of the shares.

8. 5.Two classes of corporate stock shares are fundamentally different: common stock and preferred
stock. Here are two basic differences:
Preferred stockholders are promised (but not guaranteed) a certain amount of cash dividends each
year, but the corporation makes no such promises to its common stockholders. Each year, the
board of directors must decide how much, if any, cash dividends to distribute to its common
stockholders.
Common stockholders have the most risk. A business that ends up in deep financial trouble is
obligated to pay off its liabilities first, and then its preferred stockholders. By the time the
common stockholders get their turn, the business may have no money left to pay them.
Neither of these points makes common stock seem too attractive. But consider the following points:
Preferred stock shares usually are promised a fixed (limited) dividend per year and typically don’t
have a claim to any profit beyond the stated amount of dividends. (Some corporations issue
participating preferred stock, which gives the preferred stockholders a contingent right to more than
just their basic amount of dividends.)
Preferred stockholders generally don’t have voting rights, unless they don’t receive dividends for one
period or more. In other words, preferred stock shareholders usually do not participate in electing the
corporation’s board of directors or vote on other critical issues facing the corporation.
The main advantages of common stock, therefore, are the ability to vote in corporation elections and
the unlimited upside potential: After a corporation’s obligations to its preferred stock are satisfied, the
rest of the profit it has earned accrues to the benefit of its common stock.
Taking a closer look at common stock
Here are some important things to understand about common stock shares:
Each stock share is equal to every other stock share in its class. This way, ownership rights are
standardized, and the main difference between two stockholders is how many shares each owns.
The only time a business must return stockholders’ capital to them is when the majority of
stockholders vote to liquidate the business (in part or in total). Other than this, the business’s
managers don’t have to worry about losing the stockholders’ capital.

9. A stockholder can sell his or her shares at any time, without the approval of the other stockholders.
However, the stockholders of a privately owned business may agree to certain restrictions on this
right when they first became stockholders in the business.
Stockholders can put themselves in key management positions, or they may delegate the task of
selecting top managers and officers to the board of directors, a small group of persons selected by
stockholders to set the business’s policies and represent stockholders’ interests.
The all-stocks-are-created-equal aspect of corporations is a practical and simple way to divide
ownership, but its inflexibility can be a hindrance, too. Suppose the stockholders want to delegate to
one individual extraordinary power, or to give one person a share of profit out of proportion to his or
her stock ownership. The business can make special compensation arrangements for key executives
and ask a lawyer for advice on the best way to implement the stockholders’ intentions.
Nevertheless, state corporation laws require that certain voting matters be settled by a majority vote
of stockholders. If enough stockholders oppose a certain arrangement, the other stockholders may
have to buy them out to gain a controlling interest in the business. The limited liability company legal
structure permits more flexibility in these matters.
6. A share is a small part of a company that you can buy for a set price. Share prices can move up or
down in value, depending on the performance of the stock market, the current profitability of the
company and the expected future profitability or potential of the company. The aim is to invest in
shares that increase in value over time. When you buy shares you become a shareholder in that
company.
There are several ways you can invest in the stock market:
You can buy shares in companies that are traded on the stock market.
You can invest in a basket of shares through an exchange traded fund (ETF).
You can invest indirectly in the stock market through certain investments such as pooled
investments where some of your money is invested in shares or indices of shares. Examples of
pooled investments are unit-linked funds.

10. You may also receive a dividend, which is a sum of money paid out of the company's profits to
shareholders. Buying shares involves choosing companies that have the best potential to grow
profits. It also means choosing business sectors that have the best growth potential.
Benefits - you can potentially earn a good return on your investment from selling shares that have
gone up in value since you bought them. You may also benefit from any dividends the company
you have invested in may pay. Remember, you will have to pay tax on both your profits and your
dividends.
Risks - if your shares fall in value you can lose a lot of money when you come to sell them. Share
prices can rise or fall quickly, which makes them more volatile and risky. So, ask yourself if you
can afford to take a risk with all or some of your money.