Abstract
Financial distress is a condition where the company is experiencing financial difficulties prior to bankruptcy. This study aims to identify and explain the influence of the fundamental variables and macroeconomic variables in predicting the probability of financial distress. Based on the eight variables used, current ratio, debt to assets ratio, return on equity and total asset turnover ratio is a fundamental variable. While the sensitivity of inflation, exchange rate sensitivity and interest rate sensitivity included in macroeconomic variables. The population in this study are all porperti and real estate company listed on the Stock Exchange in 2014-2018. The sample selection using purposive sampling technique, acquired 23 companies in the sample with the five companies in the category of financial distress and 18 companies in the category of non financial distress. The analytical method used is logistic regression and sensitivity analysis. The results showed that the variable current ratio, debt to assets ratio, total asset turnover ratio, inflation sesnitivity, exchange rate sensitivity and interest rate sensitivity did not significantly affect the probability of financial distress. While return on equity significantly negative influence on the company’s financial distress.
Highlights
The financial crisis in 1997 had a significant impact on all aspects of life, whether social, political, and the economy of a nation
This study aimed to determine the effect of the Vendor fundamental variables such as current ratio, debt to assets ratio, return on equity, total assets ratio turnove
The data came from annual report property and real estate companies listed in BEI on 2014 until 2018
Summary
The financial crisis in 1997 had a significant impact on all aspects of life, whether social, political, and the economy of a nation. Companies are listed on the Exchange at the time many of them have conditions insolvent or bankrupt In this monetary crisis, the property and real estate sector experienced a severe enough impact, resulting in a wave of massive layoffs resulting in increased unemployment diangka 20 million inhabitants (BPS, 1998). The property and real estate sector experienced a severe enough impact, resulting in a wave of massive layoffs resulting in increased unemployment diangka 20 million inhabitants (BPS, 1998) Another phenomenon is the significant impact membeikan submarine mortage crisis in 2008. This phenomenon tell us that the company must anticipate and maintain its financial performance so that it remains in a normal condition or does not experience financial difficulties
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