The Effect of Net Profit Margin (NPM) and Total Asset Turnover (TATO) on Return on Capital Employed (ROCE) at PT Sinar Mas Agro Resources and Technology TBK for the Period 2015 – 2025

Abstract

The company's financial performance needs to be considered to determine the company's ability to generate returns on capital used. This study aims to determine the effect of Net Profit Margin (NPM) and Total Asset Turnover (TATO) on Return on Capital Employed (ROCE) at PT Sinar Mas Agro Resources and Technology Tbk for the period 2015 to 2025. The study uses a quantitative approach with secondary data in the form of annual financial reports. The population and sample of the study consist of the company's annual financial reports for 11 years with a total sampling technique. Data were collected through documentation, literature studies, and internet research, then analyzed using SPSS version 25 through the classical assumption test, multiple linear regression, coefficient of determination, as well as the t-test and F-test. The results of the study show that NPM has a positive and significant effect on ROCE, while TATO has no significant effect on ROCE. Simultaneously, NPM and TATO have no significant effect on ROCE. In conclusion, the ability to generate net profit from sales is a more influential factor on ROCE than asset turnover in the study period.