Abstract
The purpose of this study was to determine the effect of earnings, cash flow, and firm size on the financial distress of manufacturing companies in the consumer goods industry sector listed on the Indonesia Stock Exchange in 2016-2018. This type of research is quantitative research. The type of data in this study is secondary data. Data analysis techniques used multiple linear regression analysis. This study uses a purposive sampling technique to get samples according to specified criteria. The number of samples selected based on the criteria in this study is 32 companies with a population of 38 manufacturing companies in the consumer goods industry sector, which are listed on the Indonesia Stock Exchange in 2016-2018. The results showed that profits measured using a return on assets affect financial distress
Highlights
In the current era of globalization, business competition is becoming tougher, coupled with investors who are more careful in choosing and making decisions where they will invest
The cash flow statement is used by creditors to see a company's ability to pay off its debts
All variables used include earnings, cash flow, and company size have a tolerance value ≥ 0.10, and a VIF value ≤ (Variance Inflation Factor) ≤ 10 means that the three variables do not occur multicollinearity, which means that all of these variables can be used as variables which are mutually independent
Summary
In the current era of globalization, business competition is becoming tougher, coupled with investors who are more careful in choosing and making decisions where they will invest. Not all companies are able to compete, and there are some companies that experience conditions of financial difficulty due to increasingly fierce business competition. One problem that must be watched by all companies is Financial Distress. According to Atmaja (2008: 258) in Rahayu and Sopian (2016) states that financial distress is a condition in which a company is experiencing financial difficulties and is threatened with bankruptcy. Manufacturing companies in the consumer goods industry sector are companies engaged in food and beverage, cosmetics, pharmaceuticals, cigarettes, and household appliances. Companies engaged in the consumer goods industry sector have high operating activities, causing the company to be able to manage each of its activities in order to optimize its resources to generate profits so as to minimize the risk of financial distress in the company
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