© 2020 |Published by Scholars Middle East Publishers, Dubai, United Arab Emirates 176 Saudi Journal of Economics and Finance Abbreviated Key Title: Saudi J Econ Fin ISSN 2523-9414 (Print) |ISSN 2523-6563 (Online) Scholars Middle East Publishers, Dubai, United Arab Emirates Journal homepage: http://saudijournals.com/sjef/ Original Research Article Fundamental Analysis of Financial Ratios on Stock Prices Deden Tarmidi 1* , Rachmat Pramukty 2 , Taufik Akbar 1 1 Universitas Mercu Buana, Jakarta, Indonesia 2 Universitas Bhayangkara Jakarta Raya, Jakarta, Indonesia DOI: 10.36348/sjef.2020.v04i05.003 | Received: 17.05.2020 | Accepted: 26.05.2020 | Published: 28.05.2020 *Corresponding author: Deden Tarmidi Abstract This study is a follow-up study of research on stock prices that have been conducted by researchers, but this research focuses on the fundamental analysis of the impact of financial ratios before and after being published on stock prices. As in the signal theory that management will always try to give a positive signal to the market to be captured well so as to increase the value of the company which is reflected in the entity's stock price on the exchange, one of which is by publishing financial statements. This study analyzes more deeply the effect of financial ratios including Return On Assets (ROA), Net Profit Margin (NPM) and Debt to Equity Ratio (DER) on stock prices before and after the publication of financial statements. Using panel data with STATA, it was found that the effect of ROA and NPM on stock prices after publication was stronger than before publication, while the effect of DER was found to be the opposite. With these results concluded that financial ratios are still one of the benchmarks used by investors in their transactions in the stock market. Keywords: Stock Prices, ROA, NPM, DER. Copyright @ 2020: This is an open-access article distributed under the terms of the Creative Commons Attribution license which permits unrestricted use, distribution, and reproduction in any medium for non-commercial use (NonCommercial, or CC-BY-NC) provided the original author and source are credited. INTRODUCTION At present, shares are an investment choice for the public or investors because they provide substantial profits. However, behind large profits, there is also a large risk or often known as high risk high return. Every person who invests, must be prepared to accept risk, not only expecting profit. The condition of stock prices on the exchange will not always be stable, the price of these shares will increase or decrease every day or even in a matter of minutes. Investors must also be observant in reading the financial statements published by the company. With the ups and downs of stock prices on the exchange, investors need techniques in choosing companies to invest their shares in these companies. It is very important for market participants to know how to analyze stocks. This stock analysis is needed because in investing investors always deal with the stock market. In analyzing these shares the investor first knows the fundamental aspects of the stock. The fundamental aspects of the stock are related to financial performance, the company's industry, including the company's revenue and sales structure. In addition to taking a fundamental approach, investors can also approach the stock analysis through a technical approach. How to analyze stocks based on fundamental and technical approaches is a capital analysis that many investors do in predicting stock prices on the Indonesia Stock Exchange [1]. Until now, financial ratios are still widely used by investors in analyzing entity stock prices because financial ratios are one of the measuring tools in assessing financial condition and company performance [2]. Some financial ratios that are widely analyzed in assessing stock prices are profitability ratios with Return on Assets (ROA) and Net Profit Margin (NPM) indicators, leverage ratios with Debt to Equity Ratio (DER) indicators. Research on the effect of Return On Assets (ROA) on stock prices has been conducted by Octaviani & Komalasarai [3] and Purnamasari [4] found a positive effect of Return On Assets (ROA) on stock prices. In addition, not a few studies have analyzed the effect of Net Profit Margin (NPM) on stock prices. Dita & Murtaqi [5] found a positive influence on Net Profit Margin (NPM) on stock prices, while Kusmayadi, et al. [6] found a negative effect of NPM on stock returns.