The Effect of Operating Cash Flow, Sales Growth, and Operating Capacity on Financial Distress

This study aims to examine the effect of Operating Capacity, Sales Growth, and Operating Cash Flow on Financial Distress in Service Companies in the Infrastructure, Utilities, and Transportation sectors listed on IDX period 2018-2020. The technique used in this study is purposive sampling which produced 40 samples companies in a period of 3 years. The analytical method used is multiple linier regression. The result of this study indicate that Operating Capacity and Operating Cash Flow affect Financial Distress, Sales Growth has no effect in Financial Distress. Implications for manager can realize facing financial distress like operating capacity, sales growth and operating cash flow and focus to maintain operating cash flow generating enough to drive the operating capacity needs of the business. There is also a clear implication for managers of firms as paying most of one attention to one aspect of financial performance appears to increase financial distress like operating capacity, sales growth and operating cash flows and managing operating cash flow according to the company’s capabilities. Investors and creditors also need to consider fundamental aspects such as the company’s financial ratios providing a better understanding of the performance of the the firmas operating capacity, sales growth, and operating cash flows to prediction of financial distress. Keywords: financial distress, operating capacity, cash flow, sales growth, IDX

This study aims to examine the effect of operating cash flow, operating capacity, and sales growth on financial distress. The population in this study is all properties & real estate sector companies. The samples in this study were obtained as many as 10 company samples with 5 years of research so that as many 50 research data were obtained. The analysis method used is multiple linear regression using SPSS software version 26. The results showed that operating cash flow has no effect on financial distress, operating capacity has a positive effect on financial distress, and sales growth has no effect on financial distress. Operating cash flow and sales growth do not affect financial distress because the company’s operating cash flow and sales growth tend to be small, while operating capacity has a positive effect on financial distress tends to be high because the company’s operating capacity tends to be high.

This study examines the effect of operating capacity, sales growth, and operating cash flow on company value with financial distress as an intervening variable in transportation companies listed on the Indonesia Stock Exchange (IDX) for 2017-2021. This type of research is quantitative research. The sample population for this study are 12 transportation companies listed on the Indonesia Stock Exchange in 2017-2021 which have minus profits or have suffered losses for 2 (two) consecutive years. The method used in this research is Partial Least Square (PLS) version 4.0.9.3. The results of the study show that operating capacity has no significant effect on financial distress; operating capacity has a significant effect on firm value; sales growth has no significant effect on financial distress; sales growth has a significant effect on company value; operating cash flow has no significant effect on financial distress; operating cash flow has no significant effect on firm value; financial distress has no significant effect on firm value; financial distress is not able to moderate operating capacity on company value; financial distress is not able to moderate sales growth on company value; and financial distress is not able to moderate operating cash flow on firm value.

This research examines the influence of operating capacity, sales growth, operating cash flow, and leverage on the financial distress conditions of companies in the consumer goods industry sector listed on the Indonesia Stock Exchange for the period 2020-2022. This study uses a purposive sampling method for sampling with a sample size of 57 companies. The analysis technique used is binary logistic regression using SPSS version 26. The results of this study indicate that operating capacity and leverage have a significant effect on the company's financial distress, while sales growth and operating cash flow have no significant effect on the company's financial distress.

This study aims to investigate the impact of leverage, liquidity, activity, operating cash flow, and sales growth on financial distress, as well as to examine whether profitability as a moderating variable can weaken or strengthen these effects. This quantitative study utilizes secondary data from 11 companies in the infrastructure, transportation, and logistics sectors that are listed on the Indonesia Stock Exchange from 2021 to 2023. This study uses Moderated Regression Analysis (MRA) with IBM SPSS Statistics version 25. The results indicate that leverage has a negative influence on financial distress, while liquidity has a positive impact. Additionally, activity has no significant effect, and operating cash flow and sales growth both have a negative impact on financial distress. Profitability is not effective in moderating the relationship between leverage, liquidity, and activity in terms of financial distress. Still, it can strengthen the negative effect of operating cash flow and sales growth on financial distress. This study implies that signaling theory is reinforced by the presence of high operating cash flows and consistent sales growth, which can signal a firm's ability to overcome financial distress. Building on this insight, this research aims to provide stakeholders with a foundation for informed decision-making and proactive corrective actions.

Financial distress is a condition where the company faces financial difficulties. Financial distress has a close relationship with bankruptcy in a company because financial distress is the stage where the company's financial condition has decreased before the bankruptcy. The purpose of this study was to find out empirical evidence about the effect of firm size, leverage, sales growth and operating capacity on financial distress. The population of this study is Real Estate and Property Companies Listed on the Indonesia Stock Exchange in 2017-2019. The sample in this study is 100 companies that have been selected by the purposive sampling method. The analysis method uses multiple linear regression analysis techniques. The results show that leverage has an effect on Financial Distress while Company Size, Sales Growth and Operating Capacity have no effect on financial distress.

This study aims to analyze how much influence operating capacity, sales growth and cash flow have on financial distress in processed foods sub-sector companies listed on the Indonesia Stock Exchange in 2017 - 2021. The independent variables of this study are operating capacity, sales growth and cash flow and the dependent variable in this study, namely financial distress. This type of research is descriptive with a quantitative approach. The sampling technique in this study used purposive sampling. Data collection techniques in this study are secondary data with data collection methods, namely documentation. The research obtained as many as 12 companies, where the research was conducted for 5 years which obtained as many as 60 observations. Of the 60 observations that will be tested, 50 companies are due to the outlier test results. Data management in this study uses the eviews 9 application. The results of the study show that operating capacity and cash flow have an influence on financial distress, while sales growth has no effect on financial distress. This study also shows that operating capacity, sales growth and cash flow simultaneously influence financial distress.

Financial distress is a condition of continuous financial decline in a company caused by incorrect decision-making, management weaknesses, lack of cash flow and inability to pay obligations, which is one indicator of bankruptcy. This study analyzes the effect of real interest rate, operating cash flow, operating capacity, sales growth and institutional ownership on financial distress in primary consumer goods sector companies listed on the Indonesia Stock Exchange for the period 2021-2023. The sampling technique used in this study was purposive sampling. A total of 123 companies have met the criteria as observation units. The analysis method used is multiple linear regression analysis. The results of the study provide empirical evidence that real interest rate, operating cash flow, operating capacity, and institutional ownership have a significant effect on financial distress. Meanwhile, sales growth has no effect on financial distress. These findings provide insight for companies, investors, and regulators in understanding the factors that influence financial distress to maintain the company and be able to compete with competitors.

This study aims to test and obtain empirical evidence of the effect of cash flow and currency exchange rates on financial distress. This research was conducted at trading companies listed on the Indonesia Stock Exchange (IDX) during the 2014-2018 period. This research is a quantitative study using secondary data, namely data obtained from the company's annual financial statements that have been published by the Indonesia Stock Exchange (IDX). The population in this study are trading companies listed on the Indonesia Stock Exchange (IDX) during the 2014-2018 period. Sampling using purposive sampling method and obtained a sample of 51 companies. Data analysis used in this research is descriptive statistical analysis, classical assumption test using normality test, autocorrelation test, multicolonierity test, heteroscedasticity test, multiple linear regression analysis and hypothesis testing using the F test, T test and determination coefficient R² test. Processed with the help of the SPSS version 24 statistical program. The test results using a partial test show that cash flow proxied using operation cash flow is significant against financial distress and currency exchange rates are proxied using between significant profit comparisons to financial distress. Simultaneous test results show cash flow and currency exchange rates have a joint effect on financial distress. The test results using a partial test show that cash flow proxied using operation cash flow is significant against financial distress and currency exchange rates are proxied using between significant profit comparisons to financial distress. Simultaneous test results show cash flow and currency exchange rates have a joint effect on financial distress. The test results using a partial test show that cash flow proxied using operation cash flow is significant against financial distress and currency exchange rates are proxied using between significant profit comparisons to financial distress. Simultaneous test results show cash flow and currency exchange rates have a joint effect on financial distress

Purpose: This research was conducted on manufacturing companies in Indonesia. This study aims to find out how the relationship between sales growth, tax aggressiviness, and operating capacity to the financial distress of manufacturing companies in Indonesia with moderated institutional ownership Methodology/approach: The secondary data collection method is the purposive sampling method. Data will be selected according to the criteria. The data test used Descriptive Analysis of Statistics, Chow, Hausman and LM. The hypothesis test uses panel data regression model test and moderated regression analysis. Findings: Based on the results of the study, it shows that there is an influence of negative sales growth, and tax aggressiveness on financial distress. Institutional ownership is able to moderate sales growth and operating capacity against financial distress. Practical implications: In order for investors to be able to know the latest factors that manage sales growth and operating capacity well and increase institutional ownership supervision of the company's operational activities, can play an important role in reducing financial distress. Originality/value: There is still limited research in Southeast Asian countries on the role of institutional ownership in reducing financial distress as a moderation variation, as well as to complement the existing research shortcomings, by raising the types and effects of the role of institutional ownership as a moderation

This research was conducted the empirically prove the factors that influence Financial Distress by using the variables operating capacity, sales growth, cash flow, and leverage in transportation companies listed on the Indonesia Stock Exchange in 2015–2020. This type of research is quantitative research with sampling technique using purposive sampling method, namely the selection of samples with criteria determined by the researcher. The method used in this study uses multiple linear regression with the help of the SPSS version 25 program. The results in this study indicate that operating capacity has a positive effect on financial distress, which means that a low operating capacity value will cause financial distress. Sales growth and cash flow do not effect financial distress, which means the size of the value of sales growth and cash flow does not affect the occurrence of financial distress. Leverage has a positive effect on financial distress, which means that the high value of debt will cause financial distress.

Purpose: This research aims to determine the leverage effect measured by debt to asset ratio and debt to equity ratio, liquidity measured by the current ratio, sales growth, operating cash flow on financial distress with profitability measured by return on assets as a moderating variable. Methodology/approach: Research objects were 54 real estate companies registered with S&P Capital IQ 2017 – 2021. Sample selection used purposive sampling method. Data processing method uses Panel Data Regression with Random Effect Model. Findings: This study proves operating cash flow and leverage has a positive effect on financial distress, leverage and liquidity have a negative effect on financial distress. Sales growth does not affect financial distress. Other results, profitability as a moderating variable strengthens the effect of sales growth and operating cash flow on financial distress and profitability weakens effect of debt to asset ratio and liquidity on financial distress. Meanwhile, profitability does not moderate effect of leverage on financial distress. Practical implications: This research contributes to development of literature on factors influence the occurrence of financial difficulties. Practically, it has implications for companies to analyze, maintain financial ratios in a healthy condition to avoid financial difficulties. Originality/value: This study uses profitability that measured by return on assets as a moderating variable

Technology sector companies are known for rapid innovation but also face high uncertainty, which is likely to cause financial distress. In Indonesia, several technology firms publicly traded on the Indonesia Stock Exchange (IDX) experienced declining profitability and negative operating cash flows during the 2021–2023 period. The aim of this research is to examine the influence of profitability and operating cash flow on financial distress, with firm value as an intervening variable. The research addresses inconsistencies in financial indicators—declining profits do not always indicate financial distress, especially when firm value is not taken into account. Using secondary data from annual reports and the Investing website, this study makes use of a quantitative method involving path analysis. A purposive sampling technique resulted in 78 firm-year observations. Data analysis was carried out using SPSS software. It was found that both firm value is positively and significantly affected by profitability and operating cash flow. However, only operating cash flow and firm value have a statistically significant positive relationship with financial distress, unlike profitability. Furthermore, firm value does not mediate the relationship between profitability and financial distress but does mediate the relationship between operating cash flow and financial distress. These findings suggest that operating cash flow is a more reliable indicator than profitability in predicting financial distress and emphasize the mediating role of firm value in financial instability.

This study focuses on examining the interplay of Corporate Governance in the context of financial ratios, including Leverage, Operating Capacity, and Sales Growth, concerning Financial Distress. The theoretical frameworks guiding this research are the pecking order theory and agency theory. To gather data, the study employs a secondary data collection method through documentary analysis. The primary data source consists of the annual reports of manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2018 to 2020. The sample selection process adopts the purposive sampling method, resulting in a dataset comprising 194 data points. The findings of this research reveal that Leverage exerts a significant and positive influence on Financial Distress. Conversely, Operating Capacity and Sales Growth do not exhibit any significant effects on Financial Distress. Furthermore, the Moderating Regression Analysis (MRA) conducted indicates that Corporate Governance can moderate the relationship between Leverage and Operating Capacity concerning Financial Distress. However, Corporate Governance does not have a moderating effect on the relationship between Sales Growth and Financial Distress. These results shed light on the intricate dynamics between financial ratios, Corporate Governance, and Financial Distress, offering valuable insights for practitioners and policymakers in managing and assessing the financial health of manufacturing companies in the stock exchange.

This study investigates the impact of financial ratios—including leverage, liquidity, operational capacity, and operating cash flow—on financial distress while assessing the moderating influence of ESG disclosure. It focuses on 26 energy sector companies listed on the IDX from 2018 to 2022, employing a quantitative approach and purposive sampling method. Nine hypotheses were formulated and tested using multiple and moderated regression analysis. The study found that leverage has a significant negative effect on reducing financial distress. In contrast, liquidity, operating capacity, and operating cash flow ratios were found to impact reducing financial distress positively. This study also confirmed that ESG disclosure could weaken the relationship between liquidity and potential financial distress reduction. However, ESG disclosure does not mediate the relationship between leverage, operating capacity, and operating cash flow to financial distress reduction. This findings lend credence to the applicability of stakeholders theory in explaining the relationship between financial ratios, ESG disclosure and financial distress. It also provides insight for companies on how to prevent and mitigate financial distress. Companies, especially in the Energy Sector, could reduce the potential financial distress by optimizing both financial and non-financial aspects in their annual and sustainability reports.