Abstract
In 2015, the performance of the textile and garment industry declined by 4.79% due to the global economic crisis which caused the textile and garment industry to experience a continuous deficit. This is a sign that the company is experiencing financial distress. Such a condition could have been recognized early if the financial statements and macroeconomic conditions had been carefully analyzed. The purpose of this study is to determine the macroeconomic indicators and financial ratios of companies in predict-ing financial distress. Data sampling in this research was taken from textile and gar-ment industry sector companies listed on the Indonesian Stock Exchange (IDX). Ma-croeconomic indicators used are lending rate, consumer price index, IDX Composite, inflation, and IDR/USD exchange rate. The financial ratios used are debt equity ratio, total asset turnover ratio, current ratio, quick ratio, working capital ratio, net income to total assets ratio, and cash ratio. This research uses logistic regression analysis. The results indicate that current ratio and quick ratio can be used to predict financial dis-tress. The next research can use other sector companies or all sector companies listed on the Indonesia Stock Exchange (IDX).
Highlights
IntroductionAs one of the priority industrial sectors in Indonesia, is the mainstay of the future
Textile and garment industry, as one of the priority industrial sectors in Indonesia, is the mainstay of the future
The first hypothesis proposed in this study is that lending rate has an effect on financial distress
Summary
As one of the priority industrial sectors in Indonesia, is the mainstay of the future. At present the textile and garment industry is ranked third in national exports and absorbs up to 2.79 million workers with production that is able to meet 70% of domestic clothing needs. Throughout 2015, the textile and garment sector contributed 1.22% to the national GDP and an export surplus of USD 4.31 billion. The export value of the textile and garment industry reached USD 12.28 billions or contributed to 8.17% of the total national exports. The textile and garment industry has a large role in contributing to the. It was noted that the textile and garment sector contributed 5.0% of foreign investment and 3.07% of domestic investment (Kementrian Perindustrian Republik Indonesia 2017)
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