Liquidity Ratio Analysis, Profitability Ratio, Leverage Ratio, And Cash Flow Operations To Predict The Financial Distress In Manufacturing Companies Listed In Indonesia Stock Exchange (2015-2018)

Rahmawati, Ika Yustina; Pandansari, Tiara; Khasanah, Fanny Lafyfatun

doi:10.4108/eai.5-8-2020.2301126

Cited by 4 publications

(4 citation statements)

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“…Rahmawati, Pandansari, and Khasanah [31] investigated the role of liquidity parameters, profitability ratios, leverage ratios, and operational cash flow in forecasting financial distress in Indonesia Stock Exchange-listed manufacturing enterprises (2015-2018). The independent variables in this study were liquidity ratios, profitability ratios, leverage ratios, and operational cash flow, whereas financial hardship was the independent variable.…”

Section: Empirical Reviewmentioning

confidence: 99%

Effect of Liquidity and Life Cycle on Biological Assets of Quoted Firms in Nigeria Agricultural Sector

Nnajieze

2023

AJEBA

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This study examined the effect of liquidity and life cycle on biological assets of quoted firms in Nigeria's agricultural sector. The specific objectives were to examine the effect of liquidity, firm size, and firm age on the biological assets of quoted Agricultural firms in Nigeria. An ex-post facto research design was adopted in the study. The study made use of secondary panel data drawn from annual reports and accounts of the sampled agricultural firms for a period of Ten (10) years, 2011-2020. Panel least squares multiple regression was used to test the hypotheses. The result of the analysis showed that leverage has a statistically significant effect on the biological assets of quoted agricultural firms in Nigeria. The implication is that none of the three variables can predict the increase or decrease in biological assets of agricultural firms in Nigeria. The authors recommend that agricultural firms should look for other sources of finance to fund their business activities. Firms should maintain a good liquid condition. Continuous firm growth should be made because of the positive link it has with biological assets. Firms are encouraged to perform changes continuously in both assets and other activities that may be affected by the age of the firm.

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Section: Empirical Reviewmentioning

confidence: 99%

Effect of Liquidity and Life Cycle on Biological Assets of Quoted Firms in Nigeria Agricultural Sector

Nnajieze

2023

AJEBA

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“…Poor profitability and declining cash flows can exacerbate financial distress, as they limit a company's ability to generate funds for debt repayment. Economic downturns, industry-specific challenges, and adverse market conditions can also play pivotal roles, impacting a company's overall financial health (Rahmawati et al, 2020). Additionally, inadequate management practices, inefficient operations, and strategic missteps may contribute to financial distress by undermining a firm's competitiveness and sustainability.…”

Section: Review Of Literaturementioning

confidence: 99%

“…The profitability ratio, the solvency ratio (such as the debt-to-equity ratio), and the liquidity ratio (such as the quick ratio and the current ratio) are often highlighted as important performance measures according to research. With the assistance of these ratios, which are often used as early warning indications, it is possible to get a greater understanding of the financial health and flexibility of a firm (Rahmawati et al, 2020). The ability to forecast the occurrence of financial distress in Pakistani companies has been the focus of a significant amount of study, and the factors that put these businesses at risk have been thoroughly explored (Taj et al, 2017).…”

Section: Review Of Literaturementioning

confidence: 99%

Financial Indicators and Corporate Financial Distress Prediction in Context of Pakistan: A Systemic Review.

Muhammad Kamran,

Hassan Mujtaba Nawaz Saleem

2023

ASSAP

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It is feasible to predict the financial distress that a Pakistani company may experience under the current conditions. This study draws attention to key factors influencing financial forecasting and mitigation by integrating the results of several research studies conducted over the last two decades. The literature places a great deal of emphasis on financial variables such as profitability, solvency, and liquidity as indicators. Other factors that may affect prediction models is an increase in inflation, interest rates, or the gross domestic product. Corporate governance, industry dynamics, market indicators, and legal and regulatory frameworks are among the many factors that impact financial distress prediction. As far as methodologies adopted in existing research are concerned, the machine learning methods are replacing statistical methods and are providing best prediction results. Moreover, this study provides a road map for the future research diretions to be employed for financial prediction related studies.

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“…Return on equity increased with bank size. Rahmawati, Pandansari, and Khasanah (2020) examined the effect of liquidity ratios, profitability ratios, leverage ratios, and operating cash flow on financial distress in Indonesia Stock Exchange-listed manufacturing companies (2015)(2016)(2017)(2018). This study's independent variables included financial distress, liquidity ratios, profitability ratios, leverage ratios, and operating cash flow.…”

Section: Empirical Reviewmentioning

confidence: 99%

Untitled

2022

EJAAFR

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The study appraised liquidity management and gross earnings of insurance firms in Nigeria. During the Covid-19 period, insurance firms were faced with the financial responsibility of indemnifying the numerous risks suffered by policy holders. To do so effectively, they need to be liquid enough so as to meet such indemnity demands as at when due. This affects their investment. Hence the study examines liquidity and gross earnings of insurance firms in Nigeria. Current ratio, cash ratio, and operating cash flow ratio is the independent variables of the study, while the dependent variable is profit for the year. The study adopted an ex-post-facto research design, covering the period between 2011 and 2020. Secondary data were extracted from the annual report and accounts of the sampled insurance companies. The correlation technique was used for the data analysis. In line with the specific objectives of the study which was to examine the relationship between current ratio, cash ratio, and operating cash flow ratio and profit for the year of insurance firms in Nigeria, it was revealed that current ratio has a positive and strong relationship with profit for the year of firms in Nigeria insurance subsector. Cash ratio has a negative and weak relationship with profit for the year of firms in Nigeria insurance subsector. The operating cash flow ratio has a positive and weak relationship with profit for the year of firms in the Nigeria insurance subsector. This implies that an increase in current ratio results in a significant increase in profit for the year of insurance firms in Nigeria. It is recommended therefore that insurance firms in Nigeria should strive to improve their current ratio. They can do this by reducing the personal draw on the business and by reducing the personal drawings on the business. They should reduce their propensity to hold cash. They should balance the trade-off between cash holding and profitable investment. They should make profitable investments and ensure that their liabilities are settled on time. Insurance firms should devise strategies to improve the cash they generate from operating activities. They can do this by improving their inventory, introducing electronic payments, etc.

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Liquidity Ratio Analysis, Profitability Ratio, Leverage Ratio, And Cash Flow Operations To Predict The Financial Distress In Manufacturing Companies Listed In Indonesia Stock Exchange (2015-2018)

Cited by 4 publications

References 1 publication

Effect of Liquidity and Life Cycle on Biological Assets of Quoted Firms in Nigeria Agricultural Sector

Effect of Liquidity and Life Cycle on Biological Assets of Quoted Firms in Nigeria Agricultural Sector

Financial Indicators and Corporate Financial Distress Prediction in Context of Pakistan: A Systemic Review.

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