This study explored the implementation of the integrated production system program established by PT. HM Sampoerna Tbk Indonesia, a leading Indonesian tobacco company, and examined its potential and constraints. The program was intended to develop cooperation between the company and its tobacco suppliers to get a sustainable supply of tobacco from farmers with quantity, quality and price set according to the company’s standards. This study employed an interpretive research design, following a post-positivist paradigm. The data were collected by means of in-depth interviews, observation and document study and were analyzed using the key tenet of Martin Heidegger’s interpretive phenomenology. The interpretive process was achieved through hermeneutic circle to understand how individuals involved in the program interpreted the program including their own experiences as well as their interactions with other parties. The results of the study indicated that the created contract farming partnership was capable of providing the company with a sustainable supply of tobacco and increasing its production volume. Nevertheless, it was unable to improve the quality of the farmers’ lives as it was chiefly intended to meet the company’s commercial needs. The results from the study have direct relevance to policy makers in Indonesia, especially those that have been implemented contract farming and to agribusiness companies seeking contractual relationships for commodity production.
The goal of this study is to examine financial ratios to predict financial distress in small and medium-sized enterprises (SMEs) in the city of Malang. The financial ratios used as vector predictors are Liquidity Ratio proxied by Current Ratio (CR), Leverage Ratio proxied by Debt to Asset Ratio (DAR) and Profitability Ratio proxied by Return on Asset (ROA). Based on the results of multiple regression analysis with a significance level of 5%, the results of the study concluded that the model is fit and can be used to predict financial distress of SMEs in Malang city. Result of the study shows that: (1) profitability has a negative and significant effect in predicting financial distress of SMEs in Malang city with a wald test value is positive amounted to 7.167 and 0.007 significance value <0.05, (2) liquidity has no effect in predicting financial distress with a wald test value is positive amounted to 2.374 and 0.123 significance value >0.05, (3) leverage has a positive and significant effect in predicting financial distress of SMEs in Malang city with a wald test value is positive amounted to 17.995 and 0.000 significance value <0.05. On the basis of the above findings, it is suggested that: (1) for small and medium-sized companies, it may be used as a consideration for taking corrective action before it evolves into serious financial distress and leads to bankruptcy; (2) for academics and researchers, knowledge of the effect of profitability, liquidity and leverage in predicting financial distress, which may increase empirical and scientific evidence, may be used as a basis for predicting financial distress, (3) For the investor, it can be used as a consideration in making the right investment decisions.
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