FINANCIAL PERFORMANCE IMPLICATIONS ON BUM DESA INVESTMENT DIVERSIFICATION

BUM Desa in Banten Province has not been maximized in improving the economy of the Village community as shown by the many inactive BUM Desa. BUM Desa has not been able to create business diversification that comes from financial performance in this study, namely Return on Investment (ROI). A total of 80 BUM Desa were studied as a result of purposive sampling from a population of 688 BUM Desa in Banten Province. The criteria for selecting samples were (1) registered BUM Desa (2) BUM Desa is active, and (3) active Village BUM that has capital ≥ Rp. 30,000,000. This study uses explanatory and descriptive methods using data analysis tools Partial Least Square Structural Equation Model (PLS-SEM). The results showed that financial performance had a positive effect on the Village-Owned Enterprise Diversification stage with t-value = 4.527, p-value = 0.000 <0.05, meaning that Ha was not enough data to accept Ho and data supporting Ho was rejected. Based on the description of the results and the study shows that good financial performance means being able to generate profits from sales and total assets, as well as capital. Meanwhile, diversification can be created if the turnover of working capital occurs quickly. The faster the working capital rotates, the better the BUM Desas financial performance will be. Therefore, BUM Desa has high financial performance can diversify investment.