An Analysis of Effect of Free Cash Flow And Profitability on Leverage Companies With Investment Opportunity Set As Variable Moderating on Trade, Services & Investment Sectors Listed on BEI

Abstract

Abstract. The decline in the purchasing power of the public, as seen from the decline
in the growth of Trade, Services and Investment sector in the retail sector subsector
Retail sub-sector condition has been 2.5 years underperformance This study aims to test
whether the influence of Investment Opportunity Set (IOS) free cash flow and
profitability to leverage. Population in this research is Trade Company, Services &
Investment, retail subsector, which is listed on BEI. period 2014-2016, ie as many as
23 Companies. Using the technique of porposive sampling, the sample in this study
were 15 companies. Data analysis technique that is regersion analysis by using
moderating variable. From the test results, showed that the Free cash flow has a
significant effect on leverage, which is indicated from the significance value> 0.05 is
0.018. Profitability has a significant effect on firm leverage which is shown from
significance value> 0.05 ie 0.000. IOS does not affect the relationship between free
cash flow and leverage, as indicated by the significance value of IOS interaction with
free cash flow <0.05 is 0.053. And IOS Set affects the relationship between Profitability
with leverage shown from the significance value of IOS interaction with Profitability>
0.05 is 0.044.