Smart Investing with Transparency and Honesty: The Key to Successful Investing in the Capital Market

Jakarta – The Indonesian capital market, especially the Indonesian Stock Exchange (BEI), always emphasizes the principle of openness as one of its main foundations. For public companies that want to be listed on the IDX, transparency is an absolute requirement. This is mainly realized through the periodic publication of financial reports and other material information, which is the main guide for investors in making investment decisions.

Financial reports, a document that contains a company's financial information for a certain period, are usually published quarterly and annually after going through a strict audit process. This document is the main guide for investors in assessing the financial health of a company.

There are several important indicators that investors must pay attention to in financial reports. First, an increase in the company's net profit. For example, issuer ABCD experienced an increase in net profit in the period 30 September 2020 compared to the same period the previous year, indicating good performance.

Second, Return on Equity (ROE) is at least 15%. ROE measures the rate of return on investment, and if ROE is good, chances are other indicators are good too. However, if ROE is below 15%, the company may not be profitable.

Dividends are also an important factor. Companies that pay dividends of 30-40% of net profit show good financial health. Too small or too large a dividend can be a sign of problems or, conversely, that the company has reached a mature stage and it is difficult to grow further.

Corporate debt is another indicator to pay attention to. Liabilities greater than equity can be a red flag, although there are times when this is considered normal. However, companies with small interest debt, such as bank debt or bonds, tend to be healthier because of lower operating expenses.

Positive retained earnings also indicate a company that is growing well, while high asset turn over (ATO) and inventory turn over (ITO) indicate efficient use of assets and fast inventory turnover.

A large current ratio (CR) indicates the company's ability to pay short-term debt, while a high net income margin (NIM) indicates good profitability. A reasonable tax burden, around 25% of business profits, is also a sign that the company is making real profits.

In addition, a cash flow statement that is in line with the income statement indicates healthy company finances. Simple and clear financial reports make it easier for investors to read and understand the company's financial condition.

No less important, the audit opinion from the public accountant. Financial reports that receive the title "Unqualified" demonstrate a high level of reliability and transparency, providing a sense of security for investors.

By paying attention to these various indicators, investors can make wiser and more informed decisions. Openness and transparency are not just rules, but also the key to success in investing in the capital market.