Analysis of Factors Affecting Financial Sustainability Ratio in Banking Industry
DOI:
https://doi.org/10.52655/khg.v7i2.95Keywords:
Financial Sustainability, Financial Performance, ROA, CAR, LDR, Company Size, OEOIAbstract
The Financial Sustainability Ratio (FSR) has an important role in describing a company`s financial capabilities and the potential for sustainable development in the future. In this research, the assessment of bank financial ratios involves Return On Assets, Capital Adequacy Ratio, company size, Operating Expenses to Operating Income, and Loan To Deposit Ratio. This research used a literature review method by analyzing more than 70 relevant articles. The results of the analysis show that all of these variables have a significant influence on FSR. These results are in line with signaling theory, which shows that financial ratios can be used as signals or indicators of company performance which may influence stakeholder perceptions. This research makes an important contribution to the understanding of the factors that influence FSR and confirms the important role of financial ratios in describing a company's financial sustainability. The practical implication of this research is that companies and stakeholders can use these financial ratios as a tool to understand and measure sustainable financial performance.
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