THE EFFECT OF BUSINESS CAPITAL ON PROFITS IN THE SOURCE OF INCOME BUSINESS OF THE BANANA GARDEN VILLAGE TAPANULI TENGAH REGENCY

Abstract

This study aims to determine the effect of business capital on profits at Sumber Rezeki Business in Kebun Pisang Village, Central Tapanuli Regency. The background of this study is based on the importance of business capital as a major factor in supporting the smooth running of business activities, from the provision of raw materials to operational costs, as well as its role in increasing profits. However, limited capital often becomes an obstacle in business development and achieving optimal profits. This study uses a quantitative approach with a causal-comparative research type. Data were obtained through documentation (financial reports for the 2020–2024 period), interviews with business owners/managers, and direct observation of the production and sales processes. The sampling technique used was purposive sampling. Data analysis was performed using simple linear regression. The results showed that business capital had a positive and significant effect on profits, with a t-value of 6.391 and a significance level of 0.008 (<0.05). The resulting regression equation is Y = 175,632.649 + 0.756X, indicating that every one-unit increase in business capital will increase profits by 0.756 units. The Pearson correlation value of 0.965 indicates a very strong positive relationship, while the R-square value of 0.932 indicates that 93.2% of the profit variation can be explained by business capital. Thus, it can be concluded that business capital has a significant influence on increasing profits at Sumber Rezeki.