Abstract
The pulp and paper industry contributes to the Indonesian economy, especially to the non-oil and gas processing industry. Empirical research shows that pulp and paper companies listed on the Indonesia Stock Exchange (IDX) indicated financial distress. This study aims to find the effect of liquidity, leverage, profitability, and efficiency on pulp & paper companies' financial distress listed on the IDX. Using the Altman Z-score as a measure of financial distress, it was found that profitability, efficiency, and liquidity had a significant adverse effect on financial distress. In contrast, leverage had a significant positive effect on financial distress. Profitability has the greatest influence on financial distress, so it needs the primary intention of management. Keywords: financial distress, liquidity, profitability, leverage, efficiency
Highlights
The pulp and paper industry contributes to the Indonesian economy, with 17.6% and 6,3% shares to the non-oil and gas processing industry sector and the national processing industry sector, respectively
This study aims to find the effect of liquidity, leverage, profitability, and efficiency on pulp & paper companies' financial distress listed on the Indonesia Stock Exchange (IDX)
This study shows that company management needs to pay more attention to generating profits than liquidity, leverage, and efficiency
Summary
The pulp and paper industry contributes to the Indonesian economy, with 17.6% and 6,3% shares to the non-oil and gas processing industry sector and the national processing industry sector, respectively. In 2018, the pulp and paper industry's GDP grew 1.1% (yoy) and BPS (government bureau of statistics) records in 2019 the paper industry, including paper goods and printing industry, contributed 3.95% to the non-oil and gas processing industry with a growth of 8.14% (Marjudin, 2020). The pulp and paper industry is expected to grow by 5% in 2019. The Indonesian Pulp and Paper Association (APKI) assesses that global and domestic demand is still increasing at 2% (yoy). In 2019 Indonesia’s pulp & paper industry was among the top 10 largest producers in the world. In the Asia region, Indonesia is the thirdlargest producer for the pulp industry and fourth for the paper industry (Rini, 2019)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
