THE MODERATION EFFECT OF FREE CASH FLOW ON THE INFLUENCE OF FINANCIAL PERFORMANCE ON STOCK PRICES OF LQ -45 INDEX COMPANIES LISTED ON THE INDONESIAN STOCK EXCHANGE PERIOD 2018-2022

Abstract

This article investigates the impact of free cash flow (FCF) on the relationship between financial performance and stock prices in companies listed on the LQ45 Index of the Indonesia Stock Exchange for the period 2018-2022. The research method used is causal associative research with a quantitative approach. The research sample consists of 15 companies selected using purposive sampling technique. The variables studied include Current Ratio (CR), Debt to Equity Ratio (DER), Return On Equity (ROE), and stock prices, with FCF as a moderating variable. Data analysis was performed using multiple linear regression and Moderated Regression Analysis (MRA). The results show that CR and DER do not significantly affect stock prices, while ROE has a positive and significant effect. FCF does not moderate the effect of CR and ROE on stock prices but does moderate the effect of DER on stock prices. This study underscores the importance of considering moderating factors such as FCF in analyzing the relationship between financial performance and stock prices.

Key Words: Free Cash Flow, Financial Performance, Share Prices