THE EFFECT OF FREE CASH FLOW, PROFITABILITY, AND LEVERAGE ON DIVIDEND POLICY

Abstract

The purpose of this study is to analyze free cash flow, profitability, and leverage to dividend policy. This study uses secondary data sources derived from the company's annual report on 39 selected companies from consumer non-cyclical sector listed on the indonesia stock exchange in 2020-2022 using purposive sampling techniques. The analysis technique used is regression analysis of panel data using econometric views 13 (eviews) software, this study found that fcf and profitability (measured by net profit margin) have a negative and significant effect on dividend policy. This finding indicates that, in the context of the COVID-19 pandemic, companies tend to withhold dividend distribution despite having high free cash flow and profitability, prioritizing the strengthening of internal liquidity and operational resilience. Conversely, leverage (measured by debt to equity ratio) showed no significant effect on dividend policy, suggesting that the level of debt was not a primary determinant in dividend decisions during the crisis period. These results highlight a shift in corporate financial policy priorities during a crisis, where classical financial indicators do not always drive profit distribution but can instead trigger profit retention strategies for corporate resilience.