Determinant Financial Distress: Evidence Manufacture Company in Indonesia Stock Exchange 2018 – 2022

Abstract

This study aims to examines six financial ratios on the manufacture companies. The six financial ratios are profitability (ROA and ROE), liquidity ratio (CR and QR), solvency ratio (DAR and DER), activity ratio (TATO), sales growth (SG) and market value (EPS and MBV). Variable Y are used binary. To determine the binary variable, the researcher uses a proxy where the company is experiencing financial distress if 1) the company has negative equity for two consecutive years, 2) the company experienced negative net income for two consecutive years (Luu Thu, 2023). The sample selection is based on the purposive sampling method, in order to obtain a sample of 147 companies. The analytical method used in this research is logistic analysis. The software in this study uses STATA17. The 33% of manufacturing companies studied were companies that experienced financial distress. This result of this study concludes that: 1) ROA_X1, ROE_X2, QR_X4, and TATO_X7 variables have a significant negative effect on financial distress. 2) The variables DAR_X5, and MBV_X10 have a significant positive effect on financial distress. 3) CR_X3, DER_X6, SG_X8 and EPS_X9 have no significant relationship with financial distress.

The Influence of Financial Ratio on Firm Value in Chemical Sub Sector Companies Listed on Idx (2020-2022)the Influence of Financial Ratio on Firm Value in Chemical Sub Sector Companies Listed on Idx (2020-2022)

“…The smoother the company is in managing debt, the greater the company will get investor confidence (Amin, Amirah and Faizal, 2022). However, good debt management is still needed so as not to cause financial risks in the future (Fatmayuni, Sri Dwi Ari Ambarwati and Hendro Widjanarko, 2024) (2019).…”