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

DOI

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/).

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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  - 10.2991/aebmr.k.200331.014
ID  - Lumbantobing2020
ER  -