What makes this research interesting is its focus on profitability as a mediating
variable between sales growth, capital structure, company size, and company value.
While previous studies often look at these factors in isolation, this study offers a
more comprehensive view by examining how profitability influences the relationship
between these variables and company value. This distinction provides deeper
insights into how businesses can optimize growth, capital, and size to increase their
market value, making it both theoretically and practically significant.
In this research, profitability is the critical intermediary that links the independent
variables (sales growth, capital structure, and company size) to the outcome of
company value. The hypothesis is that these factors influence profitability, and
profitability, in turn, has a significant effect on the company^s value. Understanding
this mediation can help companies focus on improving profitability as a pathway to
increase their overall value.
In accordance with signaling theory, a company that is getting bigger is a positive
signal for shareholders, thereby increasing trust and attracting investors to the
company. An investor^s confidence in their capital investment will make the value of
a company higher. Several measures to determine company level include:
1. Manpower, is the number of permanent and honorary employees who are
registered or working in the company during a certain period.
2. Sales level, is the sales volume of a company in a certain period.
3. Debt level, is the amount of company debt in a certain period.
4. Total assets, are all assets owned by the company in a certain period.
