Proceedings of the 6th Annual International Conference on Management Research (AICMaR 2019)

The Effect of Financial Ratios on the Possibility of Financial Distress in Selected Manufacturing Companies Which Listed in Indonesia Stock Exchange

Authors
Rudolf Lumbantobing
Corresponding Author
Rudolf Lumbantobing
Available Online 6 April 2020.
DOI
https://doi.org/10.2991/aebmr.k.200331.014How to use a DOI?
Keywords
debt ratio, liquidity, earning, activity, possibility of financial distress
Abstract

This study purposed to confirm the influence of financial ratios toward the possibility of financial distress in the listed manufacturing companies in the Indonesia Stock Exchange. Using a selected sample consist of 30 emitens with 90 units of analysis, the relationship between financial ratios and financial distress during the period of 2015-2017 was tested. The results revealed that the ratios of activity are not significantly affect the possibility of financial distress. Liquidity ratios significant negatively affect the possibility of financial distress. Furthermore, debt ratios and earnings ratios significant positively affect the possibility of financial distress. The research recommends that liquidity ratios and debt ratios are the best ratios that can be used to predict financial distress. The study also recommends that the earnings ratios associated with liquidity ratios be provided in financial statements in order for users to make informed decisions in case of financial distress conditions.

Copyright
© 2020, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Download article (PDF)

Volume Title
Proceedings of the 6th Annual International Conference on Management Research (AICMaR 2019)
Series
Advances in Economics, Business and Management Research
Publication Date
6 April 2020
ISBN
978-94-6252-948-9
ISSN
2352-5428
DOI
https://doi.org/10.2991/aebmr.k.200331.014How to use a DOI?
Copyright
© 2020, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Rudolf Lumbantobing
PY  - 2020
DA  - 2020/04/06
TI  - The Effect of Financial Ratios on the Possibility of Financial Distress in Selected Manufacturing Companies Which Listed in Indonesia Stock Exchange
BT  - Proceedings of the 6th Annual International Conference on Management Research (AICMaR 2019)
PB  - Atlantis Press
SP  - 60
EP  - 63
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.200331.014
DO  - https://doi.org/10.2991/aebmr.k.200331.014
ID  - Lumbantobing2020
ER  -