Determination of Financial Performance on Prediction Financial Distress

Abstract

Aims: This study aims to empirically test ieffect of Current Ratio (CR), Debt to Equity Ratio (DER), Total Assets Turnover (TATO) and Return on Assets (ROA) on Financial Distress using the Altman Z-Score method. This analysis uses independent variables, there are CR, DER, TATO and ROA with dependent variable is Financial Distress (FD).
 Study Design: Design study is quantitative research and using statistical analysis.
 Place and duration of Study: The research population and sample used is a public company iin the property and real estate sub sector on the Indonesia Stock Exchange for the 2016-2020 period which was taken through the iwebsite www.idx.co.id
 Methodology: iThe sample was conducted using purposive sampling method, amount 38 companies. The statistical method used is imultiple linear regression analysis with it test hypothesis testing.
 Result: iThe results of this study indicate that the total asset on turn over ratio and return on asset have a positive, current ratio has a negative effect on financial distress and significant effect and debt equit ratio has no effect on Financial distress (FD).
 Contribution: This study contribute for Investors can find out information about the company's financial condition as a consideration in making investment decisions and bankruptcy theory analysis helps companies to be better prepared and more quickly detect potential financial difficulties that they may face. In this way, a solution can be found immediately.

The Influence of Current Ratio, Debt to Equity Ratio, Net Profit Margin, and Sales Growth on Financial Distress Conditions

“…Sinyal ini berupa informasi mengenai keberhasilan dan kegagalan manajemen dalam menjalankan kinerja perusahaan. Hal ini adalah sebuah petunjuk kepada investor mengenai manajemen perusahaan dalam memandang kemajuan dan tujuan perusahaan (Laksmiwati et al, 2021).…”

The Indonesia Stock Exchange Companies: The Existence of Institutional Ownership as a Moderating Variable of the Influence of Financial Ratio on Financial Distress

“…High profitability shows that the company can generate profits that can be used to fund the company's operations or pay its obligations so as to make the company survive and avoid the threat of financial distress (Carolina et al, 2018;Indriaty et al, 2019). However, the results of research conducted by Destriwanti et al, (2022) and Laksmiwati et al, (2021) provide different results, where the level of profitability ratio will be followed by an increasing threat of companies experiencing financial distress. The two research results that showed differences in the influence of profitability were also contrary to research conducted by Setyobudi et al, (2017), which found that the level of profitability ratios had no influence on the possibility of financial distress.…”

“…A good level of liquidity indicates that the company has a good ability to meet its short-term obligations at maturity (Kasmir, 2008). Conversely, when the company has a low liquidity ratio, it means that the company's finances are in a bad state and are said to be in an illiquid position (Laksmiwati et al, 2021). A result study conducted by Hastiarto (2021) in manufacturing companies in Indonesia showed that companies would experience lower risks if they had a high percentage level of liquidity, this result is also in line with research by Mesak (2019) and Susdaryo et al, (2021) which showed that liquidity ratios have a significant negative influence on financial distress.…”