Interest Coverage Research Articles

Decoding Financial Performance: The Role of Leverage and Market Risk in Indonesia's LQ45

This study examines the determinants of financial performance in LQ45 Index companies from 2018–2022. It focuses on factors such as equity multiplier, interest coverage, financial leverage, fixed charge coverage, debt to EBITDA, capitalization ratio, and market risk. Control variables include company age, sales growth, and firm size. Using multiple regression analysis on data from 48 companies, the study finds that interest coverage, fixed charge coverage, market risk, company age, and sales growth positively impact financial performance, while financial leverage, debt to EBITDA, capitalization ratio, and firm size have a negative effect. The equity multiplier shows no significant influence. The findings suggest maintaining high interest and fixed charge coverage ratios and effective risk management to enhance financial performance. Careful management of high debt to EBITDA levels is necessary to prevent negative impacts. Investors should consider these factors when assessing a company's financial health.

Pengaruh Leverage dan Sales Growth Terhadap Financial Distress dengan Profitabilitas Sebagai Moderasi

The transportation sector in Indonesia is one of the important sectors supporting the national economy. This sector consists of a variety of companies and has great potential for development. This research is based on the problem of decreasing demand due to restrictions on mobility and economic activity due to the pandemic. Causing a decrease in revenue and profits for transportation companies which can increase the risk of financial distress. This research uses financial leverage ratio calculations with DER (Debt Equity Ratio) and Sales growth to determine the effect on financial distress calculated using ICR and the role of profitability with ROA (Return On Assets) as moderation. The method used in this research is descriptive methods with a quantitative approach. Research on the transportation sector listed on the BEI in 2022. The research population was 49 companies with a sample of 41 companies. The financial distress method used is to calculate the ICR ratio (Interest Coverage Ratio) which is symbolized by a dummy. Data analysis uses multiple linear analysis and Moderating Regression Analysis (MRA) with the SPSS 26 application. Based on the research and discussion that has been carried out, the research results can be concluded that leverage has an effect but is not significant on financial distress. Sales growth has an effect but is not significant on financial distress. Profitability is able to moderate the relationship between leverage and financial distress and sales growth with financial distress.

ASSERING THE IMPACT OF MACROECONOMIC INDICATORS ON CORPORATE FINANCIAL PERFORMANCE: AN EMPIRICAL ANALYSIS IN ASIA

This study investigates the impact of macroeconomic indicators, specifically GDP growth and inflation, on corporate financial performance in selected ASEAN countries (Indonesia, Malaysia, the Philippines, Singapore, and Vietnam) from 2010 to 2022. Using data sourced from the OSIRIS database and the World Bank's World Development Indicators, the analysis focuses on three key financial metrics: Return on Assets (ROA), Net Profit Margin (NPM), and Market Capitalization (MC). Employing the Generalized Least Squares (GLS) method, the study addresses heteroskedasticity and autocorrelation in panel data, incorporating control variables such as Total Assets, Current Ratio, and Interest Coverage. Results indicate that GDP growth positively correlates with ROA and NPM, underscoring the importance of economic expansion for corporate efficiency and profitability. However, GDP growth does not significantly impact Market Capitalization, highlighting potential differences in market valuation dynamics. Inflation positively affects ROA and NPM, suggesting firms effectively manage inflationary pressures but does not significantly affect Market Capitalization. The findings provide actionable insights for financial managers, investors, and policymakers. Companies should integrate macroeconomic forecasts into business planning and adopt strategies to mitigate inflationary impacts. Future research directions include sector-specific analyses, longitudinal studies, and the incorporation of additional macroeconomic variables to deepen the understanding of these relationships.

From the Everyday to the Extraordinary: Economic Evidence for Queenship in the Chamber Books

ABSTRACT The Tudor Chamber Books (1485–1521) are a useful, underexplored source for examining queenship. In addition to the two queen consorts, Elizabeth of York and her daughter in law, Catherine of Aragon, there is interesting coverage of Margaret and Mary Tudor who became respectively Queen of Scots and Queen of France, as well as the early years of Mary I. This article demonstrates how financial records can shed new light on pivotal moments in a royal woman's life, including childhood, betrothals and weddings, widowhood, joys such as coronation ceremonies and stresses of childbirth and infant (or even maternal) loss. It demonstrates the utility of the Chamber Books themselves and of wider financial sources in charting the lives of royal women and understanding more deeply the rhythms and responsibilities of queenship. This article is part of a research cluster in this issue on the economic power of medieval queens.

Advancing financial analytics: Integrating XGBoost, LSTM, and Random Forest Algorithms for precision forecasting of corporate financial distress

This study thoroughly examined the use of different machine learning models to predict financial distress in Indonesian companies by utilizing the Financial Ratio dataset collected from the Indonesia Stock Exchange (IDX), which includes financial indicators from various companies across multiple industries spanning a decade. By partitioning the data into training and test sets and utilizing SMOTE and RUS approaches, the issue of class imbalances was effectively managed, guaranteeing the dependability and impartiality of the model’s training and assessment. Creating first models was crucial in establishing a benchmark for performance measurements. Various models, including Decision Trees, XGBoost, Random Forest, LSTM, and Support Vector Machine (SVM) were assessed. The ensemble models, including XGBoost and Random Forest, showed better performance when combined with SMOTE. The findings of this research validate the efficacy of ensemble methods in forecasting financial distress. Specifically, the XGBClassifier and Random Forest Classifier demonstrate dependable and resilient performance. The feature importance analysis revealed the significance of financial indicators. Interest_coverage and operating_margin, for instance, were crucial for the predictive capabilities of the models. Both companies and regulators can utilize the findings of this investigation. To forecast financial distress, the XGB classifier and the Random Forest classifier could be employed. In addition, it is important for them to take into account the interest coverage ratio and operating margin ratio, as these finansial ratios play a critical role in assessing their performance. The findings of this research confirm the effectiveness of ensemble methods in financial distress prediction. The XGBClassifier and RandomForestClassifier demonstrate reliable and robust performance. Feature importance analysis highlights the significance of financial indicators, such as interest coverage ratio and operating margin ratio, which are crucial to the predictive ability of the models. These findings can be utilized by companies and regulators to predict financial distress.

A Financial Analysis and Valuation of First Solar, Inc.

First Solar is an American company specializing in thin-film photovoltaic solar solutions using Cadmium Telluride (CdTe) technology. This technology offers environmental protection and sustainability advantages. The company maintains market competitiveness through continuous technological improvements, enhanced efficiency and durability, and expanded production capacity. First Solar holds significant market share in the United States and India, aided by government incentives like the U.S. Inflation Reduction Act and Indias Production-Linked Incentive Program. The company is expanding globally through acquisitions and long-term agreements, with plans to build new factories in both countries to boost production. Financially, First Solar performs well in liquidity, solvency, and profitability, ranking in the upper-middle tier among industry competitors. Its healthy short-term debt solvency is indicated by strong current and quick ratios, while its low debt ratio and high interest coverage ratio highlight robust long-term debt solvency. The companys gross and net profit margins are stable and expected to grow. First Solars earnings per share (EPS) and revenue growth rates surpass those of its peers, and its price-to-earnings (P/E) and earnings growth (PEG) ratios suggest lower relative future earnings growth, enhancing investment appeal. In summary, First Solar demonstrates strong market competitiveness and growth potential with its advanced technology, sustainable business model, and solid financial performance, positioning it as a leader in the solar energy industry.

Analysis of Profitability Ratios and Solvency Ratios on Financial Performance at PT Bank Negara Indonesia Tbk Listed on the Indonesia Stock Exchange (BEI) 2018-2022

Financial performance is one of the important factors in assessing a company's success, especially for public companies. PT Bank Negara Indonesia Tbk is one of the registered banking companies in the Indonesia Stock Exchange and has significant financial performance in the capital market. This study aims to analyze the profitability ratios and solvency ratios on the financial performance of PT Bank Negara Indonesia Tbk that is listed on the Indonesia Stock Exchange (BEI) for the period of 2018-2022. The data used in this research are the financial statements of PT Bank Negara Indonesia Tbk for the same period. The analysis methods that are used in this study are quantitative analysis. The research findings show that the profitability ratios, consisting of Return on Assets (ROA), Profit Margin, and Return on Equity (ROE), have a positive and significant effect on the financial performance of PT Bank Negara Indonesia Tbk. Meanwhile, the solvency ratios, consisting of Debt to Assets Ratio (DAR), Debt to Equity Ratio (DER), and Interest Coverage Ratio (ICR), have a negative and significant effect on financial performance. Based on the results, it can be concluded that PT Bank Negara Indonesia Tbk needs to pay attention to the profitability ratios and solvency ratios in maintaining its good financial performance. In terms of this, the company needs to maximize the use of its assets to increase its profitability and reduce its dependency on debt financing sources to uphold its healthy solvency.

Effects of Interest Coverage Ratio before and after the Change of Construction Capacity Evaluation on Real Activities Earnings Management in Construction Industry

Effects of Interest Coverage Ratio before and after the Change of Construction Capacity Evaluation on Real Activities Earnings Management in Construction Industry

Financial and Efficiency Performance before and after Mergers and Acquisitions in the Indonesian Infrastructure Industry

This study examines the differences in the financial and efficiency performance of several companies before and after Mergers and Acquisitions (M&A). It specifically evaluates the impacts of M&A on infrastructure industry companies listed on the Indonesia Stock Exchange by comparing their performance three years before and three years after M&A. The analysis employs non-parametric statistics, including the Wilcoxon Signed Rank Test, and Data Envelopment Analysis (DEA). The companies’ financial performance is assessed using various financial ratios: Current Ratio (CR), Debt to Equity Ratio (DER), Cash Ratio (CR), Interest Coverage Ratio (ICR), Fixed Asset Turnover (FAT), Total Asset Turnover (TATO), Return on Asset (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). The data used is secondary data obtained from the Indonesia Competition Commission (ICC/KPPU), the IDX database, and the financial reports of the companies involved. The findings reveal that, overall, the financial and efficiency performance of the five companies did not improve after the M&A. Surprisingly, only one company, i.e., Adhi Karya, successfully increased its efficiency score following the M&A.

ANALISIS FINANCIAL, NON-FINANCIAL INDICATORS, DAN CORPORATE GOVERNANCE TERHADAP PREDIKSI FINANCIAL DISTRESS (PERUSAHAAN SEKTOR TRANSPORTASI YANG TERDAFTAR DI BURSA EFEK INDONESIA TAHUN 2016-2020)

Financial distress is a condition where the company experience a deteriorating stage of the financial situation before bankruptcy. This study aimed to prove the influence of financial, non-financial and corporate governance indicators on financial distress in transportation sector listed on the Indonesian Stock Exchange periods 2016-2020. This study used the Springate method (S-score) to measure the level of financial distress. The sample was obtained by purposive sampling method in obtain 21 companies in transportation sector. The data used is secondary data in the form of annual reports from the publication of Indonesia Stock Exchange. Data analysis technique used in this study is multiple linear analysis panel data which is processed using Eviews 10 software. The hypothesis is obtained from previous research and various theories from other sources. The results of this study indicate that interest coverage ratio has a positive influence on financial distress and going concern opinion has a negative influence on financial distress. Meanwhile, long-term debt to equity ratio, age of company, independent board of commissioners, and institutional ownership did not has a influence on financial distress.

ANALISIS ARUS KAS UNTUK PENGAMBILAN KEPUTUSAN PADA CV ELSA MANDIRI ABADI

The cash flow report is a very important part of a company which describes the amount of cash receipts and expenditures. The cash flow report consists of operating activities, investment activities, and financing activities. To maintain the continuity of the company, a cash flow is very necessary and the company can read the cash flow calculations for decision making. The research aims to find out whether information on cash flow from operating activities is a step in making company management decisions. The research was carried out at CV Elsa Mandiri Abadi, located on Jalan Setia Budi, Klegen Madiun. The type of research is descriptive qualitative. The results of the research are the adequacy of the company's operating cash flow to meet all its needs is quite good. The results of the overall ratio calculation are an analysis of the ratio of operating cash flow to current debt, the ratio of operating cash flow to total debt, the interest coverage ratio the ratio of cash flow to net profit, and the quality ratio. sales for 3 periods in the company that cash flow can be used as a management decision-making tool because the results are positive. Management decision-making includes: 1) Consider purchasing fixed assets; 2) Fixed assets that are not useful should be sold to be realized as cash; and 3) Companies need to reduce expenditure items and make efficiencies to increase profit margins

Ultra-high spatio-temporal resolution imaging with parallel acquisition-readout structured illumination microscopy (PAR-SIM)

Structured illumination microscopy (SIM) has emerged as a promising super-resolution fluorescence imaging technique, offering diverse configurations and computational strategies to mitigate phototoxicity during real-time imaging of biological specimens. Traditional efforts to enhance system frame rates have concentrated on processing algorithms, like rolling reconstruction or reduced frame reconstruction, or on investments in costly sCMOS cameras with accelerated row readout rates. In this article, we introduce an approach to elevate SIM frame rates and region of interest (ROI) coverage at the hardware level, without necessitating an upsurge in camera expenses or intricate algorithms. Here, parallel acquisition-readout SIM (PAR-SIM) achieves the highest imaging speed for fluorescence imaging at currently available detector sensitivity. By using the full frame-width of the detector through synchronizing the pattern generation and image exposure-readout process, we have achieved a fundamentally stupendous information spatial-temporal flux of 132.9 MPixels · s−1, 9.6-fold that of the latest techniques, with the lowest SNR of −2.11 dB and 100 nm resolution. PAR-SIM demonstrates its proficiency in successfully reconstructing diverse cellular organelles in dual excitations, even under conditions of low signal due to ultra-short exposure times. Notably, mitochondrial dynamic tubulation and ongoing membrane fusion processes have been captured in live COS-7 cell, recorded with PAR-SIM at an impressive 408 Hz. We posit that this novel parallel exposure-readout mode not only augments SIM pattern modulation for superior frame rates but also holds the potential to benefit other complex imaging systems with a strategic controlling approach.

Solvency and Liquidity Analysis of Selected Pharmaceutical Companies in Indian: A Comparative Study

This study delves into the solvency and liquidity positions of prominent pharmaceutical companies in India, aiming to provide insights into their financial robustness and ability to meet short-term obligations. Utilizing key financial metrics such as current ratio, quick ratio, and interest coverage ratio, the analysis focuses on Arubinda Pharma, Lupin Ltd., Cipla Ltd., Dr. Reddy's Laboratories, Sun Pharma, and Torrent Pharma. The findings reveal that Arubinda Pharma consistently exhibits strong liquidity positions, supported by high current and quick ratios. Lupin Ltd., Cipla Ltd., and Dr. Reddy's Laboratories showcase moderate to high liquidity levels, accompanied by consistently robust interest coverage ratios, indicative of sound debt servicing capabilities. However, Sun Pharma and Torrent Pharma display moderate interest coverage ratios, with Sun Pharma experiencing some fluctuation over time. Overall, the selected pharmaceutical companies demonstrate solid liquidity and solvency positions, with occasional deviations, emphasizing their overall financial health in the industry. Keyword: Pharmaceutical Industry, Financial Ratios, India.

The Impact of Value Creation (Tobin’s Q), Total Shareholder Return (TSR), and Survival (Altman’s Z) on Credit Ratings

This research explores the impact of financial indicators on the credit ratings of companies listed on the S&P 500, employing a Sys-GMM model to address endogeneity concerns. Three independent variables categorized as market and survival factors alongside seven control variables sourced from leverage, liquidity, interest coverage, profitability, market, survival, and macroeconomic domains were investigated. The sample consisted of 2398 observations from Capital IQ Pro, spanning nine years (2013 to 2021) and encompassing 240 public companies. The findings suggest that neither Tobin’s Q (TQ) nor Total Shareholder Return (TSR) lack significant correlations with credit ratings, implying that stock market performance and total shareholder return do not directly impact credit ratings. In contrast, the Altman Z-score (AZS) emerged as a significant predictor, indicating its importance in assessing credit risk. These insights enhance the understanding of financial indicators’ impacts on credit ratings, aiding financial institutions and companies in prudent lending and financing decisions.

ANALISA KELAYAKAN RENCANA PEMBELANJAAN MODAL (CAPEX) PT UNITED TRACTORS TBK (UNTR) DALAM RANGKA MENGANTISIPASI PROYEKSI PERTUMBUHAN BISNIS PERUSAHAAN

The purpose of this study is to determine the performance of PT United Tractors Tbk through cash flow analysis that can be used as a decision-making tool by company and investors. Research approach to be used is quantitative descriptive, data used for analysis is secondary data, which is cash flow reports collected from the website of PT United Tractors Tbk. Data were analyzed using 8 cash flow ratios, namely: ration of operating cash flow, cash flow coverage ratio, interest coverage ratio of the cash, the cash coverage ratio of current liabilities, capital expenditure ratio, the ratio of total debt, the ration of net cash flow and free cash flow adequacy ratio. The results of the analysis indicate that the company's financial performance from 2017 to 2021 ratio generated tends to be deprived, where it seen from 5 ratios are on low average

The determinants of debt renegotiation: Evidence from Brazil

We investigate factors that affect debt renegotiation in an emerging economy, focusing on Brazil's publicly-listed non-financial firms. We manually collect novel data from more than three thousand notes to financial statements. The results show that the deterioration in the financial condition of companies - marked by declining profitability and increasing leverage - increases the probability of debt renegotiations. Furthermore, our findings reveal that the impairment in a firm's payment capacity, such as reduced profitability, cash flow, and interest coverage heighten the chances of renegotiations incorporating debtholder compensation mechanisms. Our results expand the knowledge about renegotiation to a context that has been scarcely addressed in previous studies: emerging markets. Additionally, it provides novel insights into the use of compensation mechanisms during renegotiations — an aspect little explored in the literature, although very present in renegotiations. We also innovate by addressing renegotiations with bondholders, an aspect largely overlooked in extant literature.

Examining determinants of book-tax difference: Insights from Malaysian multinational corporations

This research investigates the factors affecting the book-tax differences of multinational corporations (MNCs) operating in Malaysia. The sample for this study consists of MNCs with subsidiaries in tax haven countries listed on the Financial Times Stock Exchange (FTSE) Bursa Malaysia Kuala Lumpur Composite Index (KLCI) and FTSE Bursa Malaysia Mid 70 Index. About 67 MNCs were selected after eliminating 32 companies with inadequate data and one with extreme outliers. A secondary data approach was employed, utilising multiple regression analysis. Selected corporate characteristics, including deferred tax liabilities and assets, taxable income, interest coverage ratio, return on assets, and effective tax rate, were used as independent variables. Descriptive analysis revealed evidence that corporations with a high return on assets (ROA) typically benefit from very high levels of book-tax differences (BTDs). Furthermore, the results indicate that a high interest coverage ratio may partly explain the outcomes leading to an increase in differences recorded between book income and taxable income. Thus, this supports the idea that a positive relationship exists between the interest coverage ratio and BTD. Hence, this study contributes to the tax literature and informs policymakers on factors influencing BTD, especially MNCs with subsidiaries in tax haven countries. The study aims to contribute to the existing body of knowledge by offering insights into the factors influencing MNCs' strategic tax planning decisions in the Malaysian context. Policymakers should address the unfair allocation of the worldwide tax base, where a reasonable portion of the earnings made by MNCs doing business in a nation should be subject to taxation in that nation.

АНАЛИЗ ЛИКВИДНОСТИ И ФИНАНСОВОЙ УСТОЙЧИВОСТИ АО «УЗБЕКИСТОН ТЕМИР ЙУЛЛАРИ»

This work is devoted to the analysis of liquidity and financial stability of Uzbekistan Railways JSC in the context of the modern economic environment. The work examines key aspects and methods of liquidity analysis, such as current and quick liquidity, as well as the main indicators characterizing financial stability, including the coefficients of autonomy, financial dependence and interest coverage. The results of the analysis of liquidity and financial stability are compared to identify connections and interactions between these two aspects of the financial condition of the organization. The work also discusses strategies and methods for managing liquidity and financial stability in order to optimize the financial position of the enterprise and ensure its sustainable development in the long term. This work is of interest to finance specialists, managers and all interested parties involved in the analysis and management of an organization's financial resources.

Debt Sustainability Assessment in the Biogas Sector: Application of Interest Coverage Ratios in a Sample of Agricultural Firms in Italy

The biogas sector in Europe and Italy is attracting growing investment, combining agricultural activity, the circular economy, and renewable energy production. Firms in the sector widely use debt capital and, for this reason, there is a need to evaluate the structure of investments, financing, and debt service capacity calculated by applying interest coverage ratios (ICRs). ICRs are widely used by banks in granting loans, and calculation of ICRs allows managers and policy makers to correctly evaluate firms’ performance in the sector. In this research, based on a sample of 160 observations, the structure of investments and sources of financing of firms in the biogas sector, operating in northern Italy, are analyzed. ICRs are calculated with different approaches to establish which ICRs provide the most reliable results in the application. The research analyzes the correlations and highlights significant differences between ICRs. The research highlights some important findings: (a) the NWC is negative in 109 out of 160 observations and, therefore, constitutes a source of financing in the majority of observations; (b) ICRs based on EBITDA and CF are above the threshold value of “1” in 143 and 145 observations, respectively, while ICRs based on EBIT, OCF, and UFCF are above the threshold value of “1” in 132, 133, and 122 observations, respectively. The research allows the conclusion that the ICRs based on EBITDA and CF tend to overestimate results; ICRs based on EBIT, OCF and UFCF are preferable, and can therefore be applied by managers, banks, and policy makers and be used as debt covenants. For the calculation of the repayment of the NFP, the research has highlighted that ICRs in which the cost of the debt is deducted from the numerator are preferable. The research can thus be usefully applied and expanded to other territories, or by considering a larger sample with the aim of inferring conclusions of general validity.

Analysis of The Effect of Funding Strategy on The Company’s Financial Performance at PT Jasamarga Transjawa Tol


 
 
 This research aims to investigate the implications of funding strategies employed by PT Jasa Marga and its subsidiary PT Jasamarga Transjawa Tol on their financial performance. With the Indonesian government's increased investment in toll road infrastructure, Jasa Marga, a State-Owned Enterprise, has undertaken expansive endeavors, augmenting investments from IDR 24.8 trillion in 2018 to IDR 78.6 trillion by 2022. However, this escalation in investment levels also brings forth heightened liabilities, predominantly stemming from reliance on debt, particularly bank loans, in addition to equity. Such a scenario presents challenges in managing payment obligations and, if not handled adeptly, could imperil Jasa Marga's financial performance. Consequently, strategies aimed at bolstering the company's capital structure are slated for implementation in 2023. This exploration aims to assess how these financial strategies and the debt-equity balance influence company value and financial health, drawing on frameworks like the Pecking Order Theory. It seeks to comprehend the ramifications of internal and external financing on the company's solvency, as measured by ratios such as Debt Equity Ratio (DER), Debt Ratio, and Interest Coverage Ratio (ICR). The literature review delves into various financial strategies such as crowdfunding and Initial Public Offering (IPO), elucidating their motivations and repercussions on companies, with a specific focus on aspects like information asymmetry and changes in post-IPO performance. This research integrates theories, practical strategies, and financial metrics to derive meaningful, data-driven conclusions aimed at optimizing capital structure and enhancing financial stability. It offers valuable insights to stakeholders and facilitates improved financial decision-making processes within the company.