Financial Performance and Its Impact on Stock Price Volatility

Available online at www.rajournals.in RA JOURNAL OF APPLIED RESEARCH ISSN: 2394-6709 DOI:10.47191/rajar/v11i11.03 Volume: 11 Issue: 11 November 2025 International Open Access Impact Factor8.553 Page no.- 978-987 978 Rina Tresnawati1, RAJAR Volume 11 Issue 11 November 2025 Financial Performance and Its Impact on Stock Price Volatility Rina Tresnawati1, Mirna Dianita2, Kartika Wulandari3 1,2,3Faculty of Economics and Business, Widyatama University, Indonesia ARTICLE INFO ABSTRACT Published Online: 06 November 2025 Corresponding Author: Rina Tresnawati The purpose of the study is to assess how PT Adhi Karya (Persero) Tbk.'s stock price is impacted by its financial performance using quarterly data from 2013 to 2023. This study employs a quantitative methodology grounded in signaling theory and utilizes secondary data derived from the company's financial statements. The sample consists of 44 quarterly observations selected using a census approach. In this model, the stock price serves as the dependent variable, while the debt-to-equity ratio (DER), return on assets (ROA), current ratio (CR), and total asset turnover (TATO) serve as the independent variables. This study's ten-year observation period and assessment of financial performance during and after the COVID-19 pandemic are key contributions. Because of its notable stock price decrease, PT. Adhi Karya (Persero) Tbk. was chosen as the research object. The circumstances made it a pertinent case to investigate how financial indicators operate as market signals in the face of economic uncertainty. We anticipate that the results will provide empirical evidence of the extent to which financial performance influences stock price movements. These insights have the potential to assist business managers in making more informed financial decisions, investors in developing data-driven strategies, and policymakers in enhancing market resilience. KEYWORDS: TATO, DER, CR, ROA, and Stock Price 1. INTRODUCTION In economic systems, capital markets play a crucial role as a venue for public investment as well as a conduit for corporate capital raising (Evbuomwan & Oramulu, 2024). With equities serving as a crucial gauge of company success and hopes for the future, changes in stock prices are commonly considered indications of the state of the national economy (Zuhri & Suskim Riantani, 2020). In addition to internal factors like firm performance, external factors like legislative actions and economic situations can affect stock prices (Vatsa et al., 2024). Financial performance measured by measures of profitability, liquidity, solvency, and activity serves as an objective depiction of a company's state and potential and is a crucial foundation for investment decision making (Pramudito, 2023). Figure 1. Stock Price of PT. Adhi Karya (Persero) Tbk., 2013–2023 Source: Indonesia Stock Exchange (IDX) The stock price of PT Adhi Karya (Persero) Tbk. fluctuated significantly between 2013 and 2023, as shown in Figure 1 Large-scale projects and optimistic feelings in the construction industry were probably the main causes of the dramatic surge in 2013–2014. However, a significant drop took place in 2015–2016 as a result of worsening economic and performance circumstances. Price volatility characterized the 2017–2019 era, and the COVID-19 pandemic in 2020– 2021 made the fall even worse. The stock price kept falling even when the economy started to improve in 2022–2023, suggesting that the company's recovery was still not at its best. Changes in financial ratios like ROA, CR, DER, and TATO are in line with this trend (Satoto et al., 2023). Figure 2. The ROA of PT Adhi Karya (Persero) Tbk. from 2013 to 2023 Source: adhi.co.id (processed by the author) “Financial Performance and Its Impact on Stock Price Volatility” 979 Rina Tresnawati1, RAJAR Volume 11 Issue 11 November 2025 PT Adhi Karya (Persero) Tbk.'s ROA decreased from 2013 to 2014, as seen in Figure 2, indicating less effective asset usage. The decreasing trend continued, reaching its lowest point in 2017, despite a minor rebound in 2016. In 2018–2020, there was another significant decline, which was mostly caused by the COVID-19 pandemic. Although ROA started to improve in 2021–2023, it hasn't yet reached its pre-decline level, indicating that more efficient asset management techniques are required to optimize profitability (Arwani et al., 2024). Figure 3. Trend of the Current Ratio of PT Adhi Karya (Persero) Tbk. over the 2013–2023 Period Source: adhi.co.id (processed by the author) Figure 3 shows that PT Adhi Karya (Persero) Tbk.'s current ratio increased from 2013 to 2015 but then steadily declined from 2016 to 2019 after peaking, indicating poorer short-term liquidity. The current ratio hit its lowest point in 2020–2021, indicating a serious liquidity issue. Despite a rise in 2022, the ratio declined in 2023, indicating incomplete resolution of the company's liquidity issues (Archanskaia et al., 2023). Figure 4. The Debt-To-Equity Ratio of PT Adhi Karya (Persero) Tbk., from 2013 to 2023 Source: adhi.co.id (processed by the author) The Debt-to-Equity Ratio (DER) remained relatively high for PT Adhi Karya (Persero) Tbk. from 2013 to 2015, indicating that debt was more than equity (Figure 4). Either a decrease in debt or a gain in equity was the cause of the steep drop in 2015. Nonetheless, the DER steadily rose from 2016 to 2020, peaking at that time, indicating an increase in debt financing. The DER then saw a notable drop in 2022 and stayed comparatively steady in 2023, suggesting that the company's capital structure had improved due to a decrease in debt or equity expansion (Deviyanti et al., 2023). Figure 5. PT Adhi Karya (Persero) Tbk.’s Total Asset Turnover during 2013–2023 Source: adhi.co.id, processed by the author The Total Asset Turnover (TATO) of PT Adhi Karya (Persero) Tbk. decreased significantly between 2013 and 2016, as shown in Figure 5, indicating a fall in the efficiency of asset usage for revenue generation. TATO stayed largely constant from 2016 to 2022, suggesting that operating efficiency changed very little. Although the value increased slightly in 2022–2023, it was still quite low, indicating that asset utilization efficiency has not yet reached its ideal level (Alarussi, 2021). Prior studies have shown that ROA has an effect on stock prices (Harisda et al., 2025); (Widyakto et al., 2023); (Septriawan et al., 2025); (Septiano et al., 2024); (Ramadhan et al., 2024); (Sinurat et al., 2025); (Setiawan et al., 2022); (Choiriyah et al., 2021); (Melinda & Berliani, 2024); (Ramadhani & Ratnasari, 2022); and (Ilyas et al., 2023). But research by (Krisdayanti, 2021); (Mottoh & Supriyanto, 2024), and (Maulana & Rochayatun, 2023) came to the opposite conclusion: there is no correlation between ROA and stock prices. Previous studies have shown that ROA has an effect on stock prices (Harisda et al., 2025); (Widyakto et al., 2023); (Septriawan et al., 2025); (Septiano et al., 2024); (Ramadhan et al., 2024); (Sinurat et al., 2025); (Setiawan et al., 2022); (Melinda & Berliani, 2024); (Ramadhani & Ratnasari, 2022); and (Ilyas et al., 2023). However, research by (Krisdayanti, 2021); (Mottoh & Supriyanto, 2024); and (Maulana & Rochayatun, 2023) did not find a strong correlation between ROA and stock prices. Based on studies conducted by various researchers, including (Baharuddin et al., 2022); (Nanang Suryana & Sri Dewi Anggadini, 2020); (Musneh et al., 2021); (Şanlı, 2024); (Harinurdin, 2022); (Nurmayasari et al., 2021); (Ahmed et al., 2023); (Sar & Panigrahi, 2025); and (Zandi et al., 2021). (Muslikin & Alim, 2023); (Sitorus & Elinarty, 2017); (Ardiansyah et al., 2020); (Nurwulandari & Wahid, 2024); (Silver et al., 2023); (Khoiriah, 2022); and (Zacky, 2021). They found that this ratio did not significantly alter things. Previous studies find no evidence that DER influences stock price fluctuations (Natalia et al., 2020); (Nurhikmawaty et al., 2020); (El-Masry et al., 2024); (Hocky et al., 2023); (Shikumo & Matanda, 2020); (Aharon & Yagil, 2019); (Aymanns & Farmer, 2015); (Albulescu, 2022); (Guasoni & Mayerhofer, 2019). (Oebit et “Financial Performance and Its Impact on Stock Price Volatility” 980 Rina Tresnawati1, RAJAR Volume 11 Issue 11 November 2025 al., 2023); (Alghifari et al., 2022); (Mukhtar et al., 2022); (Lestari & Mareta, 2024); (Taherinia et al., 2024); (Satyanarayana & Rao, 2023); and (Malahayati et al., 2022) all discovered favorable correlations between DER and stock prices. Several studies have demonstrated that TATO does not significantly affect stock price changes. These studies include (Albart et al., 2023); (Atthahiry et al., 2024); (Nurwulandari & Wahid, 2024); and (Putri Z & Akbar, 2024). The stock price behavior can be significantly affected by, among other things, (Arismutia, 2024); (Satoto et al., 2023); (Burky & Suriawinata, 2020); and (Argyanezar & Damayanti, 2024). These data don't add up, which means the correlation between financial metrics and stock prices isn't linear. Also, most of the previous studies just looked at one company for short periods of time and didn't analyze it thoroughly. This research looks at the impact of ROA, CR, DER, and TATO on PT. Adhi Karya (Persero) Tbk. stock prices from 2013 to 2023. In light of the importance of financial metrics in shaping investor sentiment, this study intends to offer comprehensive empirical evidence on the link between a national construction company's financial performance and stock valuation. 2. LITERATURE REVIEW Financial ratio analysis, which typically evaluates a company's financial performance, fundamentally influences how stock prices change (Ma et al., 2018). Financial ratios supply analysts and investors information about a company's profitability, liquidity, leverage, and efficiency, among other areas. Investors can make better decisions about the possible risks and returns of investing in a specific company by analyzing these ratios (Muller et al., 2022). Current Ratio (CR), Total Asset Turnover (TATO), Debt to Equity Ratio (DER), and Return on Assets (ROA) are four key financial metrics that are often examined in relation to stock prices. ROA is an important profitability indicator that measures a company's efficiency in leveraging its assets to generate revenue (Pham et al., 2025). An elevated ROA shows superior operational efficiency and the ability to maximize asset productivity, which often boosts investor confidence and positively influences stock prices (Sari et al., 2024). A falling ROA may suggest inefficiency, reduce investor trust, and put downward pressure on corporate pricing (Azzahra & Andriana, 2025). External factors, such as market conditions, economic policies, and investor expectations, may also have an impact on the relationship between ROA and stock prices. (Widyakto et al., 2023); (Septriawan et al., 2025); (Ilyas et al., 2023); (Ramadhani & Ratnasari, 2022); (Melinda & Berliani, 2024); (Choiriyah et al., 2021); (Setiawan et al., 2022); (Sinurat et al., 2025); and (Septiano et al., 2024) present empirical evidence indicating that ROA has a significant impact on stock prices, demonstrating that increased asset productivity increases a company's investment appeal. H1: ROA has a substantial impact on stock prices. One measure of liquidity is the CR, which is used to assess a company's ability to pay its short-term obligations with its current assets (Kosztyán et al., 2022). If the current ratio is high, it means that liquidity is strong, which is good news for investors because it means that default is less likely. An ascending current ratio may signify proficient liquidity management, thus bolstering investor confidence and facilitating stock price growth (Wahyuningtiyas et al., 2024). Nonetheless, an extremely elevated CR may indicate unused assets, thereby diminishing investment attractiveness. A low CR may signify liquidity risk, thus harming market perception. To gain a more holistic view of a company's financial situation, the CR should be analyzed alongside other financial measures such as ROA, DER, and TATO (Handayani & Sopian, 2025). Research by (Baharuddin et al., 2022); (Nanang Suryana & Sri Dewi Anggadini, 2020); (Musneh et al., 2021); (Şanlı, 2024); (Harinurdin, 2022); (Ahmed et al., 2023); (Zandi et al., 2021); and (Nurmayasari et al., 2021) suggests that the CR has a partial but significant impact on stock prices, with improved short-term solvency boosting investor sentiment and market valuation. H2: The Current Ratio (CR) substantially influences stock prices. One financial leverage measure that sheds light on a firm's capital structure is the Debt to Equity Ratio (DER), which compares the total debt of the company to the equity of its shareholders (Ramadanti et al., 2024). If investors see a high DER as excessive, it could lead to a decline in stock price because of the increased financial risk associated with the company's reliance on debt (Maringka, 2024). The increase in DER is frequently linked to elevated interest liabilities and default risk, especially in the absence of sufficient profitability (Zhou & Lok, 2024). If capital-intensive businesses effectively manage their debt and generate adequate returns, they may justify a high DER. A low DER indicates a cautious capital structure that minimizes risk exposure, although it may constrain growth potential due to diminished financial leverage (Deng, 2024). (Oebit et al., 2023); (Alghifari et al., 2022); (Mukhtar et al., 2022); (Lestari & Mareta, 2024); (Taherinia et al., 2024); (Satyanarayana & Rao, 2023); and (Malahayati et al., 2022) demonstrate that DER significantly impacts stock prices, as sustaining an optimal DER bolsters investor confidence and facilitates stock price appreciation. H3: The Debt to Equity Ratio (DER) substantially influences stock values. The efficiency ratio known as Total Asset Turnover (TATO) measures how well a business turns its total assets into revenue (Purwanto et al., 2021). A high TATO signifies effective asset usage, which is typically seen positively by investors, as it demonstrates robust operational performance and revenue-generating potential (Bama et al., 2021). Enhancing TATO is frequently associated with profit expansion and heightened investor confidence, potentially “Financial Performance and Its Impact on Stock Price Volatility” 981 Rina Tresnawati1, RAJAR Volume 11 Issue 11 November 2025 propelling stock prices upward. A low TATO indicates asset underutilization and operational inefficiency, which may raise issues regarding future financial performance (Layli Meutia, 2025). Nevertheless, TATO must be evaluated in relation to industry features, as efficiency benchmarks differ throughout industries (Patin et al., 2020). (Arismutia, 2024); (Satoto et al., 2023); (Burky & Suriawinata, 2020); and (Argyanezar & Damayanti, 2024) discovered that TATO strongly influences stock prices, indicating that effective asset management improves a company's market valuation. H4: The TATO ratio is a major factor that affects stock prices. 3. RESEARCH METHODOLOGY This research utilizes a quantitative methodology with an associative descriptive framework. This methodology elucidates the correlation between financial performance metrics and stock prices. Utilizing secondary quantitative data collected from PT Adhi Karya (Persero) Tbk's (IDXlisted) financial statements and stock price variations from 2013 to 2023, this study examines the company's performance. The financial statements of PT Adhi Karya (Persero) Tbk for each quarter from Q1 2013 to Q4 2023 make up the study's population. The 44 reports including the financial accounts were obtained from the official website of the corporation, which may be found at www.adhi.co.id. This study employs the complete population as the sample, resulting in the analysis of 44 quarterly financial statements during an 11-year period. The dependent variable is the one that changes as a result of changes in the independent variables; this definition is given by Sahir (2022). This study uses the closing stock price of PT Adhi Karya (Persero) Tbk from 2013 to 2023 as its dependent variable. The closing price is established by the interplay of supply and demand in the stock market and is documented at the conclusion of the normal trading session. We calculate the stock return using the following formula: 𝑅𝑖𝑡+1 = 𝑃𝑖𝑡+1 − 𝑃𝑖𝑡 𝑃𝑖𝑡 where: • 𝑅𝑖𝑡+1 = stock return, • 𝑃𝑖𝑡+1 = stock price in the following period, • 𝑃𝑖𝑡 = The stock price represents the current period. Independent variables are those that affect other variables and act as causal agents for alterations in the dependent variable. In the structural model, these factors are designated as exogenous variables. This study identifies the independent variables as financial performance indicators, quantified using the following ratios (Sewa et al., 2025): 1) Return on Assets (Variable X1) ROA = Net Income Total Assets x 100% 2) Current Ratio (CR) (Variable X2) CR = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 x 100% 3) Debt to Equity Ratio (DER) (Variable X3) DER = 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝐸𝑞𝑢𝑖𝑡𝑦 x 100% 4) Total Asset Turnover (TATO) (Variable X4) TATO = 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 x 100% 4. RESULT Descriptive Statistics In order to provide a synopsis of the data, descriptive statistics were used. You can see the minimum, maximum, mean, and standard deviation of all the variables in Table 1. Table 1 Descriptive Statistics Variable N Minimum Maximum Mean Std. Deviation ROA 44 0.0002 0.0420 0.0077 0.0093 CR 44 1.0152 1.5605 1.2846 0.1347 DER 44 2.1887 6.3209 4.4979 1.3014 TATO 44 0.0564 1.0081 0.3032 0.2074 Stock Price 44 2.49 3.43 3.0725 0.2542 Source: Processed Data using SPSS 26.0 The usual metrics indicate that PT Adhi Karya (Persero) Tbk consistently maintains a strong Current Ratio (CR), a relatively high Debt to Equity Ratio (DER), and notably lower Return on Assets (ROA) and Total Asset Turnover (TATO) levels. Multiple Regression Analysis Multiple linear regression was employed to assess the influence of financial performance indicators on stock prices. The resultant regression equation is as follows: SP = 0.619 - 1.923ROA + 1.675CR + 0.066DER + 0.068TATO + ε According to the analysis: The Current Ratio (CR) has a remarkable positive impact on stock price (β = 1.675; p < 0.001). The Debt to Equity Ratio (DER) has a remarkable positive impact (β = 0.066; p = 0.014). Return on Assets (ROA) and Total Asset Turnover (TATO) have little to no impact on stock price (p > 0.05). Tests of Classical Assumptions • Normality: A Kolmogorov–Smirnov significance of 0.200, which exceeds 0.05, suggests normal residuals. • Autocorrelation: The Durbin–Watson statistic of 1.910 falls within the permissible range, indicating the absence of autocorrelation. • Heteroscedasticity: Absence of heteroscedasticity (p > 0.05). • Multicollinearity: Tolerance values exceed 0.1, and VIF is below 10, signifying the absence of multicollinearity. “Financial Performance and Its Impact on Stock Price Volatility” 982 Rina Tresnawati1, RAJAR Volume 11 Issue 11 November 2025 Partial Hypothesis Testing (t-test) Table 2 Partial Test Results (t-test) Variable Coefficient (B) t-value Sig. Decision ROA -1.923 -0.230 0.819 Not significant CR 1.675 6.020 0.000 Significant DER 0.066 2.586 0.014 Significant TATO 0.068 0.193 0.848 Not significant Source: SPSS 26.0 output Coefficient of Determination (R²) Adjusted R² = 0.508, indicating that 50.8% of stock price variation is accounted for by ROA, CR, DER, and TATO, with the remaining 49.2% shaped by other influences. 5. DISCUSSION This study analyzes the influence of Return on Assets (ROA), Current Ratio (CR), Debt to Equity Ratio (DER), and Total Asset Turnover (TATO) on the stock price of PT Adhi Karya (Persero) Tbk. The findings, derived from descriptive statistics, multiple regression, and classical assumption tests, elucidate the relationship between these variables and stock price fluctuations during the study period. Using Return on Assets (ROA) to Determine Stock Value The analysis reveals that ROA does not significantly influence PT Adhi Karya's stock price, as shown by a t-value of -0.230 and a significance level of 0.819 (> 0.05). Although ROA showcases a company's ability to generate profits from its assets, it doesn't take center stage for investors when evaluating stock prices. Throughout the research period, despite a significant 163.43% rise in net profit from IDR 81.24 billion in 2022 to IDR 214.01 billion in 2023, the stock price experienced a drop. This indicates that external factors, such as macroeconomic conditions, market mood, and long-term investor confidence, exert a more significant influence. The 1.26% increase in assets (IDR 505.61 billion), mostly from receivables associated with the LRT Jabodebek project and enhanced fixed asset valuation, did not directly affect the stock price. These findings align with the studies of (Maulana & Rochayatun, 2023); (Mottoh & Supriyanto, 2024) and (Krisdayanti, 2021) all of which reported no significant correlation between ROA and stock prices. Present Value's Effect on Stock Value The fact that CR has a significant beneficial impact on stock prices is supported by a t-value of 6.020 and a significance level of 0.000 (< 0.05). This suggests that firms exhibiting greater liquidity, as quantified by the current ratio, are likely to possess elevated stock prices. Investors perceive a high current ratio as an indicator of financial stability and operational efficiency, implying that the company can fulfill its short-term obligations. This outcome corroborates the findings of (Oebit et al., 2023); (Alghifari et al., 2022); (Mukhtar et al., 2022); (Lestari & Mareta, 2024); (Taherinia et al., 2024); (Satyanarayana & Rao, 2023) and (Malahayati et al., 2022) all of whom documented a strong beneficial influence of corporate responsibility on stock prices. How the Debt-to-Equity Ratio (DER) Affects Stock Value According to the test results, which show a t-value of 2.586 and a significance level of 0.014 (< 0.05), DER has a significant beneficial impact on stock prices. Investors see a high DER as a potential signal of higher debt financing, which could spur expansion in the company through the use of external financing. The market perceives the rise in DER for PT Adhi Karya positively, since the company adeptly employs debt to fund significant projects, including the LRT Jabodebek, anticipated to yield future revenue. These findings are consistent with the conclusions of (Arismutia, 2024); (Satoto et al., 2023); (Burky & Suriawinata, 2020); and (Argyanezar & Damayanti, 2024) all of whom determined that DER positively influences stock prices. Conclusions on the Effect of TATO on Stock Price Results showing a t-value of 0.193 and a significance level of 0.848 (> 0.05) indicate that TATO does not have a strong impact on stock prices. During the research period, investors did not view TATO as a critical metric, despite its assessment of asset efficiency in sales generation. The completion of significant projects resulted in efficiency improvements, but the stock price did not reflect their immediate impact on asset turnover. This finding aligns with the studies of (Albart et al., 2023); (Atthahiry et al., 2024); (Nurwulandari & Wahid, 2024); and (Putri Z & Akbar, 2024) which reported no significant effect of TATO on stock prices within the construction sector. 6. CONCLUSSION The purpose of this research is to investigate the effects of Return on Assets (ROA), Current Ratio (CR), Debt to Equity Ratio (DER), and Total Asset Turnover (TATO) on the stock price of PT Adhi Karya (Persero) Tbk. The findings of the investigation indicate that the stock price of the company is significantly and positively influenced by CR and DER. Investors see good debt financing techniques and liquidity favorably, which results in increases in the prices of stocks. On the other side, stock prices are not significantly impacted by ROA or TATO within the time frame of the study. Despite the fact that asset efficiency and net profit have increased, external factors such as market mood and macroeconomic conditions have a greater influence on swings in stock prices. The results of these studies are in agreement with prior research, which has also found that ROA and TATO are not the primary factors that influence variations in stock prices within the construction industry. 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