The Relationship of Profitability and Stock Return: Operating Cash Flow as a Proxy

Abstract

Investors invest in companies with the aim of getting a return on their investment. Internal factors that can affect stock returns include profitability and operating cash flow. This study aims to determine the effect of profitability (ROA, ROE, NPM) and operating cash flow on stock returns, as well as the effect of moderating operating cash flow on profitability on stock returns. The population in this study are food and beverage companies listed in the Indonesian Stock Exchange 2012-2015. The sampling technique was carried out using purposive sampling method. With the specified criteria obtained 11 sample companies. The data analysis technique used is multiple linear regression and Moderated Regression Analysis (MRA). The results showed that profitability, which was proxied by ROA, ROE and NPM simultaneously had an effect on stock returns. Partially profitability (ROA, ROE, NPM) and operating cash flow also have a significant positive effect on stock returns. And operating cash flow is able to strengthen the relationship between profitability and stock returns.