Financial Distress Prediction in Subfrastructure, Utility and Transportation Sub Sector Service in Indonesia

Resa Meita Ary Putri,Intan Nurul Awwaliyah,Hadi Paramu

doi:10.24123/jmb.v19i2.451

Resa Meita Ary Putri, Intan Nurul Awwaliyah + Show 1 more

Open Access

https://doi.org/10.24123/jmb.v19i2.451

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Abstract

The purpose of this study is to examine and analyze whether profitability ratios, liquidity ratios, solvency ratios, cash flow ratios, activity ratios, and cash positions affect the financial distress in service companies in infrastructure, utilities, and transportation sub-sectors in Indonesia. The number of samples of this study are 51 companies and research ranges from 2013-2018. Total observations in this study are 289 out of 306 observations, and the rest are outliers. The method of analysis is using logistic regression analysis. The result shows there are two independent variables ( Cash Flow from Operations to Total Assets and Cash to Current Liabilities ) that have a significant effect on financial distress, while four independent variables ( Return on Equity , Working Capital to Total Assets, Debt Assets Ratio , Sales to Current Assets ) have no significant effect on financial distress.

Highlights

Tension of trade relations and a number of geopolitical risks between the UnitedStates that continues to add pressure to the volume of trade and world economic growth
The Statistics Indonesia (Badan Pusat Statistik- BPS) noted a slowdown in economic growth in the first half of 2019, which amounted to 5.06%
This realization experienced a slowdown from economic growth in the first half of 2018, which amounted to 5.17%

Summary

Introduction

Tension of trade relations and a number of geopolitical risks between the UnitedStates that continues to add pressure to the volume of trade and world economic growth. The weakening of the global economy has an impact on the domestic economy This can be seen from industry data and trade in the global market which tends to weaken. The Statistics Indonesia (Badan Pusat Statistik- BPS) noted a slowdown in economic growth in the first half of 2019, which amounted to 5.06%. This realization experienced a slowdown from economic growth in the first half of 2018, which amounted to 5.17%. Slowing national economic growth has an impact on industrial growth in various sectors in Indonesia. Slowing economic growth and trade competition will lead to tighter competition. This condition becomes concern to investors and creditors to the company's financial condition which can lead to bankruptcy

Objectives

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