Analysis The Effect of Financial Ratios in Predicting Changes in Profit

ABSTRACT: Textile companies is one of the major types of industries in Indonesia whose development isprioritized to make a significant contribution to the national economy. This study aims to analyzed the effect offinancial ratios on earnings changes by estimated parameters using panel data regression analysis. In paneldata regression, there are three estimation models, namely CEM, FEM, and REM. These three models will beselected the bes model using Chow Test and Haussman Test. The result of this study, best panel data regressionmodel is using Fixed Effect Model (FEM) with individual effect. Variables that have a significant effect onearnings changes are Return on Equity, Return on Asset, Net Profit Margin.

Keywords: Data Panel Regression, Financial ratio, Profit.