Capital Structure Challenges: Strategic Insights from Indonesia's Energy Sector

Abstract

This study examines the factors influencing the capital structure of energy sector companies in Indonesia using panel data analysis. The sample consists of 35 companies over a specified period. The results indicate that Return on Assets, Sales Growth, Asset Utilization Ratio, and Asset Structure significantly affect the capital structure, including short-term debt (STD), long-term debt (LTD), and total debt (TD). These findings align with the pecking order theory, suggesting that companies prefer internal financing over external sources, particularly when profitability is high. The managerial implication is that energy sector companies should carefully consider these variables in their capital structure decisions to enhance sustainability and optimize financial performance.