The Effect Of Total Asset Turnover And Operating Expense Ratio On Return On Expense In Technology Sector Companies Listed On The Idx From 2023 To 2025

Abstract

Return on Equity (ROE) is an important indicator of a company’s financial performance that reflects its ability to generate profits for shareholders from its equity. In the technology sector, maintaining an efficient level of asset turnover is essential to support operational growth, while controlling operating expenses is considered a critical factor that directly influences profitability. This study aims to examine the effect of Total Asset Turnover (TATO) and Operating Expense Ratio (OER) on Return on Equity (ROE) in technology companies listed on the Indonesia Stock Exchange (IDX) during the 2023–2025 period. This study employed a quantitative approach using secondary data obtained from audited annual financial statements published on the IDX website and the official websites of the respective companies. The sample consisted of 111 firm-year observations from 37 companies, selected using purposive sampling. Panel data regression analysis was conducted, and the Common Effect Model (CEM) was selected based on the Chow and Lagrange Multiplier tests. The results indicate that the Operating Expense Ratio has a negative and statistically significant effect on Return on Equity, suggesting that controlling operating expenses enhances a company’s ability to generate returns on equity. Conversely, Total Asset Turnover does not have a significant effect on Return on Equity, indicating that a higher asset turnover rate does not necessarily improve equity returns. These findings imply that effective expense management plays a more crucial role in enhancing Return on Equity than asset turnover in Indonesia’s technology sector.