The International Journal of Business & Management

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This research is an explanatory research by using secondary data in the form of annual financial statements that have been audited period 2012-2016 at 25 manufacturing companies LQ45 Indonesia Stock Exchange and taken a sample of 9 companies. The goal is to know the strength, direction and significance of the relationship between financial leverage variables namely Debt Ratio (DR) and Debt Equity Ratio (DER) with profitability variable that is Return on Asset (ROA) and Return on Equity (ROE). The results of the association test proved a strong, positive, and significant relationship between DR (0.596) Sig (0.000) and DER (0.620) Sig (0.000) with ROA. There is a strong, positive and significant relationship between the DR (0.655) Sig (0.000) and ROE variables and there is a very strong, positive, and significant relationship between the DER variable (0.824) Sig (0.000) and ROE. Information on strong or very strong, positive, and significant relationship between financial leverage and profitability of manufacturing companies at LQ45 on the Indonesia Stock Exchange reflects funding decisions with leverage there is a trade-off of high risk and also high returns.
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