Does the COVID-19 epidemic impact on economic sustainability of big agricultural firms in Indonesia?

Abstract

The current research seeks to determine whether the economic sustainability of large agricultural firms in Indonesia be affected by the COVID-19 epidemic. The agricultural sector’s economic sustainability assures the food supply chain, which ultimately maintains the nation’s food security. In the current research, big agricultural companies are represented by those listed on the Indonesia Stock Exchange (IDX) in two consecutive years, 2019 and 2020. Meanwhile, economic sustainability refers to companies’ business performance, which is assessed by some financial ratios, namely the Altman Z-model for forecasting financial difficulties, liquidity, profitability, and leverage. The Altman Z-model is utilized to identify whether the monetary soundness of the business is good, in a precautionary situation, or in bad shape. Surprisingly, our data analysis shows an increase in the sample company’s Z score, liquidity, and profitability from 2019 to 2020. The average Altman Z-score indicates that big agricultural companies are financially healthy. The outcomes of the paired samples t test indicate no disparity in the economic performance of Indonesia’s largest agricultural firms. This study provides evidence that large agricultural companies are resilient in fighting the COVID-19 pandemic.