“Company value analysis: Sales, assets, growth opportunities and leverage in LQ-45 companies (Indonesia Stock Exchange)”

Company value plays a significant role in investment decisions, company performance assessment, and risk analysis. In addition, there is uncertainty or inconsistency in the relationship between factors such as sales, assets, and leverage that can affect company value. The study aims to analyze the effect of sales growth, asset growth, and leverage on company value in companies listed on the Indonesia Stock Exchange, especially in the LQ-45 index during the 2021–2022 period. The research method uses a quantitative approach with statistical tools and hypothesis testing. Regression analysis through path analysis models is used to test the proposed hypothesis. The results showed asset growth of 15.42%, debt-equity ratio of 1.7797, and high Price to Book Value (36.2721). Nonetheless, leverage does not act as a mediator in the relationship between asset growth and company value, defying the Modigliani-Miller theory. The finding highlights the complexity of such factors in the context of LQ-45 companies, emphasizing the need for prudent asset management and debt policy to enhance competitiveness. The findings have important implications for financial management and business strategy in a dynamic and competitive environment.


INTRODUCTION
Capital markets are an integral element in determining company value on the stock exchange, significantly impacting company performance.In this context, evaluating the role and impact of capital market policies on company value and company performance on the stock exchange is important.
Capital market policies promote transparency in corporate financial reporting, allowing investors to make informed investment decisions based on accurate data.
Capital market policies related to sales, assets, and leverage represent how the rules and regulations in the capital market affect these aspects of a company's operations.Sales refer to the revenue generated by a company through the sale of products or services to customers.Capital market policies can affect a company's sales through their effect on market liquidity and investor sentiment.Assets include all company-owned resources, including property, land, inventory, and investments.Capital market policies can affect a company's assets

LITERATURE REVIEW AND HYPOTHESES
In the ever-changing and competitive world of capital markets, financial managers face the complex and strategic task of managing a company's assets, sales, and leverage.In addition to making investment decisions that are essential for business growth, financial managers must also carefully consider optimal capital structure policies and dividend arrangements.These decisions form the foundation for companies to improve operations and strengthen their position in the face of intensifying competition in the market.Capital structure, which is the composition of different types of funding such as debt and equity, significantly impacts a company's financial health and the obligations it must fulfil.Capital structure ratios, such as debt to total assets, equity to total assets, and debt to equity, are key in analyzing a company's financial stability and efficiency (Moeinaddin et al., 2013).However, as stated by Myers (1984), there is no one-size-fits-all approach in determining the optimal capital structure, and companies often have to consider various factors when making decisions regarding their funding.One of the most debated topics in contemporary corporate finance is the philosophy of modern capital structure.In the 1960s, Modigliani and Merton Miller, jointly referred to as MM, were the first to propose the hypothesis.Nonetheless, the theory has been controversial and disputed throughout time, especially in the context of its interaction with elements such as sales, assets, and leverage.
O'Brien's research from 2003, which found discrepancies between MM theory and some empirical data, was responsible for one of the objections raised against MM theory.In response to the criticism, MM changed the basic premises of his theory by considering the impact of taxes associated with corporate earnings.Therefore, MM concluded that using debt can increase business value in situations involving corporate income tax.Since debt interest is considered a cost that lowers the company's tax liability, using debt can provide tax savings and increase the company's value.This is because debt interest is considered a cost that lowers corporate tax liabilities.
In addition, an increase in the level of debt potentially increases risk for shareholders, but it can also result in a higher return on equity, as shown in previous research (Hamouri et al., 2018).This finding supports Modigliani and Miller's theory, which argues that companies with leverage will be valued higher.Company value has implications for the funding structure through debt (Restianti & Agustina, 2018).In this context, Modigliani and Miller found that the existence of corporate income tax will positively impact company value because debt interest can reduce the amount of tax payments that must be paid.The role of leverage in determining company value is also supported by studies such as those conducted by Bernardin and Tifani (2019) and Wilyaka (2021).However, these findings contradict the results of the study by Sugiharto, Putri, et al. (2021), which concluded that the use of debt reduces company value.
Corporate strategy and decision-making also have a central role in driving company performance, as stated by Akhtar et al. (2022).Management needs to adopt a strategic approach to spur growth and make competitive business decisions.This strategic aspect includes factors such as sales growth, opportunities, and asset growth (Sumantri et al., 2022).In some situations, achieving company growth also requires a significant level of leverage in the form of debt.
Pecking Order Theory, as one of the views in financial decision-making, shows that companies tend to use more internal funds than debt if sales growth increases (Mafridah & Ernandi, 2023).The success of maintaining stable sales growth allows for higher debt levels (Sugiharto et al., 2021).However, the relationship between sales growth and financial leverage is inconsistent (Kartikasari & Merianti, 2016).In this case, the role of creditors can impact the debt-to-equity level (Umar et al., 2021).Asset growth also has an influence on the debt ratio (Handayani, 2021).However, there is a view that asset growth has a negative effect on capital structure (Fauzan et al., 2019).Along with asset growth, debt and reinvestment levels also tend to increase (Munfaqiroh et al., 2023).In this context, research conducted by Fediansyah and Faisal (2020) found a positive relationship between leverage and growth opportunities, while research conducted by Kurniawan et al. (2021) did not find a similar relationship.
Sales growth is considered an indicator of operational success and a predictor of future growth (Putri & Lusy, 2021).This also has an impact on the assessment of company value (Jao et al., 2020).
Companies with promising sales growth potential tend to get higher valuations from investors.Therefore, sales growth has a positive impact on company value (Anggraini & Tanjung, 2020).
In addition to asset and sales growth, considering growth opportunities also has relevance (Lee, 2019).This growth opportunity factor has a direct impact on company value (Wafiyudin et al., 2020), although Joshi's (2018) findings do not always support the same impact.Assets and operational performance also contribute to building investor confidence (Bondarenko et al., 2020).The growth of company assets has an impact on dividend distribution and higher yield levels (Yuniningsih et al., 2019).Growing companies are often an attractive choice for investors (Kiziltoprak & Aksoy, 2018).
Asset growth also has a positive correlation with company value, as stated by Yadav et al. (2020).
However, Bernardo and Welch's (2013) study has a different view, which concludes that asset growth has no significant effect on company value.In the context of these uncertainties, as well as complexities related to financial aspects, growth strategies, and the use of leverage in Indonesian companies, further research is considered very important to gain a deeper understanding and clearer implications in a company's efforts to increase company value.
The impact of income on company value is the focus of research that looks at how increasing company value can provide benefits for owners (Mulya, 2019).Company valuation is closely related to the company's performance and its share price, which is influenced by a number of factors in the capital market as well as public perception (Ahmed et al., 2018).One of the main measures used to evaluate a company's financial structure is the leverage ratio, which shows the level of debt relative to equity (Akben-Selcuk, 2016).Sales growth, as another important factor, is of concern to management, investors, and creditors because it can reflect the productivity of the company (Das, 2021).Sales growth has an impact on debt policy (Arhinful & Radmehr, 2023), capital structure (Lehenchuk et al., 2023), and the use of financial leverage (Lindemanis et al., 2022).
Sales growth, growth opportunities and asset growth have a noticeable influence on the level of leverage, with total asset growth showing annual growth (Dwi et al., 2021).However, leverage levels can vary significantly between companies and sectors (Faisal, 2021).Studies of manufacturing companies in Germany show a correlation between asset growth, profitability, and company size and leverage, while in the UK, factors such as asset growth, company size, non-debt tax shelter, profitability, and liquidity also play a role (Anton, 2019).Studies looking at capital structure in different countries consider factors such as asset growth, company size, earnings volatility, and inventory (Kuong, 2021).Asset growth also has a significant impact on capital structure (Clayton & Reisel, 2013) and the use of financial leverage (Ngatemin et al., 2018).
The relationship between growth and leverage is also reflected in the signals received from the market, where companies with a high ratio of market equity compared to book value often indicate growth potential (Bian et al., 2017).
Although some capital structure theories suggest that debt can inhibit growth, companies with high growth potential tend to maintain lower debt levels because they are careful in managing the risk of loss reserves (Septyanto & Nugraha, 2021).
This study aims to provide an in-depth understanding of how financial factors (Sales, assets, growth opportunities and leverage) interact and affect firm value in the Indonesian stock market, with the aim of increasing our understanding of the financial dynamics of companies in the LQ-45 index.Thus, the research hypotheses can be formulated as follows: H1: Sales growth affects company value.
H2: Asset growth affects company value.
H3: Growth opportunities affect company value.

METHOD
This study uses quantitative data collected from LQ-45 companies listed on the Indonesia Stock Exchange (IDX) for the 2021-2022 period (see Table 1).
The source of these data and information comes from the annual financial statements that have been audited by the Indonesia Stock Exchange.The limitations required for the purpose of analysis are used to select the sample.The variables used in this study are leverage, assets, and sales compared to business value.This study uses the path analysis method; before the path analysis is carried out, first look at the description of the research data through descriptive statistical analysis.Descriptive analysis in this study, Based on the relationship between variables conceptually, the research model framework can be modelled as a path diagram (see Figure 1).
Based on the model in Figure 1, there are two path analysis structural equations, namely: 1) Structural equation 1, where α -constant, 1 x -sales growth, 2 x -asset growth, 3 x -growth opportunities, Y -leverage, Z -company value, and ρ -path coefficient (path coefficient).

RESULTS AND DISCUSSION
This study uses a two-stage path analysis.First, a direct test of multiple regression analysis was con-ducted.Second, a Sobel-based path analysis was conducted.Tables 2 and 3 show the results of the multiple regression analysis.
Table 2 shows that Sales Growth (X1) has a significant negative effect on Leverage (Y).Asset Growth (X2) has a significant positive effect of 0.013 on Leverage (Y).The Growth Opportunity variable (X3) has no significant effect on the Leverage variable (Y).The Model Summary table obtained an Adjusted R Square of 0.139, which indicates that Sales Growth (X1), Asset Growth (X2), and Growth Opportunity (X3) together affect Leverage (Y) by 13.9%.Leverage (Y) decreases Company Value (Z) significantly, as shown in Table 3.With a significance value of 0.832, Sales Growth (X1) positively affects Company Value (Z).Asset Growth (X2) has a positive effect of 0.061 on Company Value (Z).Growth Opportunities (X3) positively affect Company Value (Z) with a significance value of 0.000.In the Model Summary table, the Adjusted R Square of 0.678 shows that Leverage (Y), Sales Growth (X1), Asset Growth (X2), and Growth Opportunity (X3) together contribute 67.8% to Company Value (Z). Figure 2 shows the path analysis diagram for regression analysis.
H1: The significance value (Sig.)X1-Y of 0.832 is greater than 0.05.Therefore, it can be concluded that sales growth does not increase company value.During the study period, the average asset growth of LQ-45 companies was 15.42%.This indicates an expansion of operations and an increase in assets that can impact operating results.The average PBV ratio of LQ-45 companies during the study period was 36.2721.The higher PBV ratio indicates that the share price of LQ-45 companies is relatively expensive because the price-to-book value (PBV) ratio exceeds 1.

Model
In contrast to the findings of (Jati, 2019), this study found that asset growth has no significant effect on company value.However, according to Salgado et al. (2017), asset growth has a significant effect on PBV and subsequently on company value.Public trust in the company's performance over time contributes to its value.Effective asset management is crucial in determining company value.Every company aims to maximize its value as stakeholder value is essential for long-term sustainability.Public companies seek to increase their value to benefit their owners.Investment, financing, and asset management impact the stock price (Guo & Hawkes, 2019).
PBV is a measure widely used by analysts to predict stock prices, which shows the relationship between the stock market performance of a company and its price to book value ratio.Companies with a high Return on Equity (ROE) often trade at multiples of their book value, thus creating confidence among investors (Prasetya et al., 2021).The PBV ratio can influence investor sentiment and positively impact stock prices.
Asset growth is a metric that compares a company's total assets between different periods.Asset growth contributes to improved company performance, and when assets and operational results improve, this fosters trust and confidence among external stakeholders (Prasetya et al., 2021).Investors are likely to exhibit a preference for such companies, potentially resulting in an increase in share prices and overall corporate value.However, this study reveals that investors negatively perceive asset growth.This finding suggests that asset growth does not affect company value, and increasing assets without matching operational results leads to a lack of trust among external stakeholders (Apriani et al., 2021).
In the context of LQ-45 companies, growth opportunities in the study period were quite significant, as indicated by the average Price/Earnings Ratio (PER) of 18.5092.High growth indicates an attractive Net Present Value (NPV) investment, while low growth indicates a scarcity of profitable investment projects.The PBV ratio of LQ-45 companies in the study period was relatively high, with an average of 36.2721, which indicates that the share prices of these companies were relatively high compared to their book value (Garin et al., 2023).
The findings of this study support the notion that growth opportunities impact company value, in line with previous research (Utami, 2020).Investors assess company value based on stock prices, and investment decisions contribute to overall company value (Susanti et al., 2022).Therefore, growth prospects are important in attracting investors and driving company value.
High-growth companies require large financial resources.Creditors, investors, and employees are often attracted to companies with high growth potential, as increased productivity contributes to the company's overall growth.Highgrowing companies may rely more on debt financing to support growth, as it is often cheaper than issuing additional equity (Harsanti & Mulyani, 2021).
However, taking on debt exposes companies and managers to financial risks.Managers can avoid projects with low NPV and prioritize high-growth investments to prevent underinvestment.This strategy allows the company to utilize its resources effectively and avoid missed opportunities (Nwuba et al., 2020).Growth opportunities and financial management decisions influence a company's capital structure.
Growth opportunities can improve a company's capital structure, allowing management to utilize excess free cash flow.Investors generally view debt favorably because it allows companies to optimize their capital structure and increase shareholder value (Hamshari et al., 2020).
During the study period, LQ-45 companies had an average Debt-to-Equity Ratio (DER) of 1.7797, which indicates a significant dependence on debt financing.The high PBV ratio observed during the study period indicates that the share price of LQ-45 companies is relatively high because the PBV ratio exceeds 1 (Ravindran & Kengatharan, 2021).
The level of leverage of a company has a significant impact on its value.Several studies (Lugo,  Companies use internal and external sources to raise funds, including retained earnings, depreciation, debt, securities, issuance of new shares, purchase discounts, and funding from suppliers and creditors.Trade-off theory states that increased debt financing exposes the company to financial risk due to fixed interest payments, thus impacting net income under uncertain conditions (Senani et al., 2022).
Sales growth is an important factor in predicting company performance.It reflects the company's demand and competition (Migliaccio & Tucci, 2020).Maintaining and increasing sales contributes to profitability and investor attractiveness, which has the potential to have a positive effect on stock prices.However, sales growth did not have a significant effect in this study according to the hypothesis test.Companies with high debt can lower corporate taxes and boost stock prices in accordance with the trade-off theory (Anggraini & Tanjung, 2020).
As observed in LQ-45 companies during the study period, asset growth indicates operational expansion and increased assets.Assets play an im-portant role in improving company operations.However, this study's relationship between asset growth and leverage is not significant.This finding contradicts some previous studies' expectations (Jao et al., 2020).
A company's capital structure is influenced by various factors, including sales stability, asset structure, growth rate, profitability, tax, control, management attitude, operating leverage, lender and company credibility, market conditions, and internal conditions.Financial managers aim to balance these factors to determine the optimal capital structure that maximizes company value and minimizes funding costs (Munfaqiroh, S. et al., 2023).
Growth opportunities may not directly impact leverage due to the availability of internal funding sources and the potential benefits of external funding.The lack of observed relationship between growth opportunities and leverage in LQ-45 companies can be attributed to the influence of other factors or internal funding limitations alone (Fauzan et al., 2019).
The findings of this study highlight the complex relationship between growth opportunities, asset growth, leverage, and company value.When determining company value, investors consider various factors, including stock price, growth prospects, and capital structure.High-growth companies often rely on debt financing to support their expansion, but managers should carefully weigh the risks and benefits associated with debt and equity financing to optimize company value.

Analyzing the role of leverage as a mediator between asset growth and company value
During the research period covering a specific time span, the performance analysis of LQ-45 companies showed an average asset growth of 15.42%.The percentage change in assets from the previous year indicates the expansion of operational assets, which is expected to contribute to the improvement of operational performance.In addition, during this period, LQ-45 companies showed an average debt-to-equity ratio of 1.7797, which signifies the proportion of capital used to fulfil their financial obligations.A higher debt-to-equity ratio indicates a greater capacity to fulfil debt obligations, indicating a stronger financial position for these companies.In addition, the average priceto-book value (PBV) of LQ-45 companies during the study period reached 36.2721.This large PBV value indicates that the share prices of these companies are considered expensive compared to their book value, exceeding the set threshold of 1.
Hypothesis testing in this study aims to determine whether leverage plays a role in mediating the relationship between asset growth and company value in LQ-45 companies.Surprisingly, the results of this analysis show that leverage does not act as a mediator in this context.Moreover, further examination reveals an important observation -as the average debt-to-equity ratio increases (as depicted in Figure 3), interest expense also shows an increasing trend.This finding suggests that debt favors lenders more than shareholders, thus highlighting the potential impact of debt-related financial decisions on stakeholders in LQ-45 companies.
The results of this study contradict the theory of debt value proposed by Modigliani and Miller, which states that leverage increases company value.Instead, this finding suggests that for LQ-45 companies, leverage alone may not be a determining factor in driving company value, as the financial benefits of debt tend to favor lenders over shareholders.
This study has significant practical implications for financial management in LQ-45 companies and can inform decision making regarding the use of leverage and its impact on overall company value.Understanding the relationship between asset growth, leverage, and company value is crucial for these companies to optimize their financial structure and improve their competitiveness in the market.
The large asset growth observed over the study period underscores the importance of managing operational assets efficiently and effectively.The growth of operational assets can significantly impact a company's overall financial performance and position.Financial managers and executives should carefully analyze and formulate asset man-agement strategies to capitalize on the potential operational performance improvements resulting from asset growth.
In addition, the observed correlation between debt-to-equity ratio and interest expense warrants careful financial decision-making regarding debt financing.While a higher debt-to-equity ratio may provide advantages in meeting debt obligations, it also incurs higher interest expenses, which may affect overall financial stability.Financial managers should strike a balance between debt and equity financing, considering the interests of lenders and shareholders, to optimize the financial structure and achieve sustainable growth.

Analyzing the role of leverage as a mediator between growth opportunities and company value
During the study period, a comprehensive analysis of the LQ-45 companies revealed that their growth opportunities, measured by the Price/Earnings ratio (PER), averaged 18.5092.This large PER value signaled significant growth prospects for these companies, indicating investment projects with high Net Present Value (NPV).In contrast, lower growth companies in the LQ-45 index were found to have fewer profitable investment projects with positive NPV.This finding underlines the important role of growth opportunities in shaping company outlook and market perception.
Throughout the study period, the average Debt-to-Equity Ratio (DER) of LQ-45 companies stood at 1.7797.This metric indicates the financial structure and funding decisions of these companies.
The DER value indicates these companies' efficient use of capital to fulfil all financial obligations, which shows their ability to manage debt and equity financing effectively.
The study further found that the price-to-book value (PBV) of LQ-45 companies averaged 36.2721during the study period.This significant PBV value highlights the perception of a higher share price than its book value.A PBV ratio above 1 indicates that the stock is trading at a premium to its book value, signaling market optimism and higher investor expectations of future growth and profitability.
The hypothesis testing conducted in this study aims to explore the potential mediating role of leverage between growth opportunities and company value in LQ-45 companies.Surprisingly, the results show that leverage does not act as a mediator in this context.Instead, it appears that growth opportunities directly affect leverage, while leverage, in turn, has no significant impact on company value.As the average DER tends to increase, followed by an increase in interest expense (as depicted in Figure 3), this suggests that lenders benefit more from the debt of LQ-45 company compared to shareholders.This finding suggests that leverage alone cannot be the determining factor in driving company value for these companies, challenging the debt theory of value proposed by Modigliani and Miller.

CONCLUSION
The present study aims to analyze the effect of sales growth, asset growth, and leverage on company value in companies listed on the Indonesia Stock Exchange, especially in the LQ-45 index during the 2021-2022 period.
The regression test results show that Sales Growth, Asset Growth, and Growth Opportunity together affect Leverage by 13.9%.While the Leverage, Sales Growth, Asset Growth, and Growth Opportunity factors together contribute 67.8% to Firm Value.Sobel test results show that leverage does not mediate the relationship between sales growth and firm value.In addition, asset growth affects firm value without regard to leverage.The last calculation result shows that leverage cannot mediate the effect of growth opportunity on firm value.The results of hypothesis testing show that sales growth has no significant effect on firm value.This finding is in line with research conducted (Shin & Groth, 2012).In contrast, growth opportunity directly affects leverage, while leverage has no significant impact on firm value.Since the average DER tends to increase, followed by an increase in interest expense, so leverage alone cannot be a determining factor in increasing firm value and this challenges the theory of debt value proposed by Modigliani and Miller.

Table 3 .
Results of regression analysis coefficients Note: a. Dependent Variable: Transf.Z.Investment Management and Financial Innovations, Volume 20, Issue 4, 2023 http://dx.doi.org/10.21511/imfi.20(4).2023.31During the study period, the sales of LQ-45 companies grew by 11.49%, indicating its sales strategy's effectiveness.The average PBV of LQ-45 during the study period was 36%.The share price of LQ-45 companies during the research period was relatively high because the price-book value (PBV) ratio was above 1.leads to a lower share price.It is important to note that a company's main goal is to ensure shareholder wealth.Sales growth is influenced by marketing and competition.It can increase company value Figure 2. Empirical model of path analysis Investment Management and Financial Innovations, Volume 20,Issue 4, 2023 http://dx.doi.org/10.21511/imfi.20(4).2023.31 2020; Okpara et al., 2022; Shrestha et al., 2022) have shown the effect of leverage on company value.Shareholders want an increase in company value and a share price increase, as it directly benefits them (Kiziltoprak & Aksoy, 2018).