Profitability Ratio Comparison Before and After Acquisition: A Study of PT Elang Mahkota Teknologi Tbk

Abstract

PT Elang Mahkota Teknologi Tbk (EMTEK) acquired a majority stake in PT Sarana Meditama Metropolitan Tbk (SAME) in 2020, raising the question of how its profitability changed afterwards. This study compares EMTEK's Return on Assets (ROA), Return on Equity (ROE), Net Profit Margin (NPM), and Gross Profit Margin (GPM) before and after the acquisition using a quantitative comparative design and audited annual financial statements for 2016–2019 (pre-acquisition) and 2021–2024 (post-acquisition); 2020, the transaction year, is excluded. Because each period has only four observations, the primary tests are Welch's t-test and the exact Mann–Whitney U test, supported by Hedges' g and confidence intervals; a Paired Sample t-Test is reported as a supplementary specification. Mean ROA fell from 3.59% to 1.71% and mean ROE from 4.74% to 1.95%, large declines relative to within-period variability, but neither was significant under Welch's test (Sig. = 0.181 and 0.128) or the Mann–Whitney test (Sig. = 0.200 for both); only the paired test, whose year-by-year pairing has no substantive basis, was significant (Sig. = 0.005 and 0.008). NPM (8.61% to 5.92%) and GPM (34.37% to 31.70%) showed no significant difference under any test. The ROA and ROE declines are therefore suggestive rather than conclusive. Because the design is a single-firm before–after comparison, the results describe association and cannot separate the acquisition from the COVID-19 shock or from changes in portfolio composition. Management and investors should judge an acquisition by how quickly the enlarged asset and equity base becomes productive, and should not read stable gross margins as proof of value creation.