Proceedings of the International Colloquium on Business and Economics (ICBE 2022)

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Using Financial Ratio for Financial Distress Detection: Evidence from Transportation Industry

Authors
Fauji Sanusi1, Lintang Fidia1, Intan Purbasari1, *
1Management Department, Faculty of Economics and Business, Universitas Sultan Ageng Tirtayasa, Serang, Indonesia
*Corresponding author. Email: intanpurbasari@untirta.ac.id
Corresponding Author
Intan Purbasari
Available Online 26 December 2022.
DOI
10.2991/978-94-6463-066-4_11How to use a DOI?
Keywords
Liquidity (CR); Leverage (DER); Profitability (ROA); Growth (SG); Financial Distress (Z-Score)
Abstract

This study examines how financial indicators including liquidity (X1), leverage (X2), profitability (X3), and growth (X4) affect the ability of enterprises in the transportation sector to predict financial distress (Y) and list their stocks on the Indonesia Stock Exchange (IDX). The sample for the study consisted of transportation-related companies that were listed on the Indonesia Stock Exchange between 2013 and 2018. The sample for the study consisted of 15 companies. The data analysis technique used in this study is multiple regression analysis. The results of the study show that (1) a measure of liquidity called the current ratio (CR) has a significant and favorable effect on anticipating financial distress situations, and (2) a measure of leverage called the debt-to-equity ratio (DER) is not relevant for doing the same. (3) The chance of financial difficulties is positively and strongly connected with the profitability ratio as indicated by Return on Assets (ROA). (4) Sales Growth (SG)-based growth ratios are not effective at forecasting the development of financial problems.

Copyright
© 2022 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the International Colloquium on Business and Economics (ICBE 2022)
Series
Advances in Economics, Business and Management Research
Publication Date
26 December 2022
ISBN
10.2991/978-94-6463-066-4_11
ISSN
2352-5428
DOI
10.2991/978-94-6463-066-4_11How to use a DOI?
Copyright
© 2022 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Fauji Sanusi
AU  - Lintang Fidia
AU  - Intan Purbasari
PY  - 2022
DA  - 2022/12/26
TI  - Using Financial Ratio for Financial Distress Detection: Evidence from Transportation Industry
BT  - Proceedings of the International Colloquium on Business and Economics (ICBE 2022)
PB  - Atlantis Press
SP  - 98
EP  - 113
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-066-4_11
DO  - 10.2991/978-94-6463-066-4_11
ID  - Sanusi2022
ER  -