Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)

Abstract

The Effect of Liquidity, Profitability and Solvability to the Financial Distress of Manucatured Companies Listed On the Indonesia Stock Exchange (IDX) Period of Year 2015-2017

Author(s): Rusli Moch, Rida Prihatni, Agung Dharmawan Buchdadi

This study aims to examine the effect of liquidity as measured by Current Ratio and Working Capital to Total Assets, profitability as measured by Return On Equity and Return On Assets, and solvency as measured by Debt Asset Ratio, Debt Equity Ratio, and Time Interest Earned in predicting financial distress at manufacturing companies listed on the Indonesia Stock Exchange for the period 2015-2017. The populations in this study were all manufacturing companies listed on the Stock Exchange in 2015 to 2017. While the sample of this study was determined by the nonprobability sampling method so that 101 samples were obtained. The type of data used is secondary data obtained from the Indonesia capital market directory and www.idx.co.id. The statistical methods used for hypothesis testing are the Likelihood Statistic Test (simultaneous) and the z statistical test (partial) obtained from multiple logistic regression analysis with Financial distress (Y) as the dependent variable. This study uses Altman discriminant analyst with version 4 (four) variables to determine the Z-Score value as a prediction classification of companies experiencing financial distress, in vulnerable areas, or healthy. The results of the research partially showed CR liquidity, WCTA had a significant negative effect, ROA profitability, ROE had a significant negative effect and DAR solvency, DER had a significant positive effect on financial distress of manufacturing companies listed on the Indonesia Stock Exchange in the 2015-2017 period. The other ratio is TIE which has no significant effect on financial distress.