The Role of Current Ratio, Operating Cash Flow and Inflation Rate in Predicting Financial Distress: Indonesia Stock Exchange

Setyawati, Irma; Amelia, Rizki

doi:10.15294/jdm.v9i2.14195

Cited by 9 publications

(8 citation statements)

References 17 publications

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“…The results have revealed that the operational cash flow has a negative association with financial distress. These results are in line with the previous studies Setyawati and Amelia (2018), which also prove that the efficient operational cash flow minimizes the financial distress in the business organizations. The results have indicated that there is a negative relationship between the profitability of the organizations and financial distress they may have to face.…”

Section: Discussionsupporting

confidence: 93%

“…This provides banks with little motivation to track borrowers closely, which may contribute to moral hazards and a problem of selection. Others claim that the influence of contagion on competitive economies is more significant since all the banks are prices and solvent banks do not want to help the banks' liquidity (Fahlevi & Marlinah, 2018;Setyawati & Amelia, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

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Banking Industry Specific Determinants of Financial Distress: Empirical Evidence from ASEAN Countries

2020

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Recently, financial distress has become a significant issue, especially for the banking sector, that is considered as the backbone of the economy. Thus, the present study aim is to examine the effects of operating cash flow, profitability, financial leverage, trading activities and liquidity on financial distress of the banking industry of ASEAN countries. The researchers have extracted the data from the central banks of ASEAN countries for the year 2009 to 2018. The random effect model along with generalized method of moment (GMM) approaches have been used to check the predictors such as operating cash flow, profitability, financial leverage, trading activities and liquidity on financial distress of banking industry of ASEAN countries. The results revealed that all the predictors such as operating cash flow, profitability, financial leverage, trading activities and liquidity have a positive association with the financial distress of the banking industry of ASEAN countries. These outcomes provide the guidelines to the regulation-making authorities that they should enhance their focus on the issue of financial distress that could improve the financial position of the banks along with the country.

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Section: Discussionsupporting

confidence: 93%

Section: Literature Reviewmentioning

confidence: 99%

Banking Industry Specific Determinants of Financial Distress: Empirical Evidence from ASEAN Countries

2020

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“…Second, Kholisoh & Dwiarti (2020) define inflation as a condition where there is a general and continuous increase in prices. Moreover, Kholisoh & Dwiarti (2020) and Setyawati & Amelia (2018) reveal that inflation can affect the price of goods to be high and the ability of buyers to decline, thereby reducing the company's sales turnover. This shows that the higher the inflation rate, the higher the possibility of financial distress.…”

Section: Economic Factorsmentioning

confidence: 99%

Do Accounting, Market, and Macroeconomic Factors Affect Financial Distress? Evidence in Indonesia

Taufik

Sugianto

2021

TIJAB

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This paper aims to investigate the effect of accounting, market, and macroeconomic factors on financial distress. The investigations were expanded by constructing seven research models to simulate all factors. The research sample includes companies listed on the IDX from 2016 to 2020 which produce 1.710 data. This paper finds that retained earnings (RETA) and earnings (EBITTA) as part of accounting factors have a role in weakening financial distress and can be consistently tested in several research models. Equity (MVE) as part of the market factor weakens financial distress and is consistently tested. Although solvency (SOLV) was described as the company's ability to maximize debt, it is not consistently tested in several research models. Finally, it was found that deflationary conditions caused financial distress which represented macroeconomic factors. This paper makes a practical contribution to companies and governments to evade financial distress

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“…This fosters investor confidence that the better a company's financial performance, the higher the return they will obtain by investing their capital in that company. Setyawati & Amelia (2018) state that a benchmark for assessing a company's financial performance can be found in the company's financial statements. Financial statements provide information regarding the financial position, performance, and changes in the financial position of the company during a specific period, serving as management's accountability to those in need of the company's financial information (Ratnaningsih & Alawiyah, 2018).…”

Section: Introductionmentioning

confidence: 99%

Board Characteristics and Financial Performance of Companies from the Agency Theory Perspective

Lukman,

Ridloah,

Humaira

2024

JoSS

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This study aims to examine the director size, frequency of director meeting, female director, and independent commissioner on the firm financial performance. The population in this study are companies listed in the LQ45 index for the 2017-2020 period. In this study, purposive sampling selected 27 companies as a sample, with the number of observations as many as 108 observations. This study uses an analytical method that analyzes regression with a fixed-effect model approach and hypothesis testing. The results show that director size positively and significantly affected the firm financial performance. The female director negatively and significantly affected the firm financial performance, the frequency of director meeting and independent commissioner has no significant negative effect on the company's financial performance, while leverage and growth as control variables has no significant positive effect on the firm financial performance. Investors are advised to pay more attention to factors such as director size and female directors to be taken into consideration before investing. This study suggests that future researchers can use other proxies in measuring the firm financial performance, both from a financial perspective such as ROE and a market value perspective such as Tobin's Q. Further researchers are also advised to examine other factors related to the board characteristics.

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The Role of Current Ratio, Operating Cash Flow and Inflation Rate in Predicting Financial Distress: Indonesia Stock Exchange

Cited by 9 publications

References 17 publications

Banking Industry Specific Determinants of Financial Distress: Empirical Evidence from ASEAN Countries

Banking Industry Specific Determinants of Financial Distress: Empirical Evidence from ASEAN Countries

Do Accounting, Market, and Macroeconomic Factors Affect Financial Distress? Evidence in Indonesia

Board Characteristics and Financial Performance of Companies from the Agency Theory Perspective

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