Financial Metrics for Distress Prediction in Indonesia’s Property and Real Estate Sector

DOI

10.2991/978-94-6463-585-0_14How to use a DOI?

Keywords

Financial Distress; Profitability; Liquidity; Leverage; Cash Flow

Abstract

In recent years, the Property and Real Estate sector has faced stagnation and decline attributed to various factors. Dynamic property development regulations and the disruptive presence of Covid-19 have imposed constraints on economic activity, hampering growth within the industry. Businesses in the Property and Real Estate sector are more vulnerable to financial difficulties as a result of this restricted growth. This study’s main goal is to conduct an empirical investigation into the relationship between the occurrence of financial distress and important financial parameters such as profitability, liquidity, leverage, activity, and cash flow. The analysis uses 45 firms that are listed between 2017 and 2021 and are sampled from the Indonesia Stock Exchange. The debt-to-assets ratio (DAR) serves as a proxy for leverage, return on assets (ROA) serves as a proxy for profitability, current ratio (CR) serves as a proxy for liquidity, total asset turnover (TATO) serves as a proxy for activity, and cash flow to total assets (CFO/TA) serves as a proxy for cash flow. The results of this analysis reveal significant findings: ROA, TATO, and CFO/TA exhibit a substantial negative impact on financial distress, while DAR demonstrates a significant positive effect. Surprisingly, the CR variable exhibits no significant influence on financial distress.

Copyright

© 2024 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.

Download article (PDF)

TY  - CONF
AU  - Intan Nurul Awwaliyah
AU  - Roni Widodo
AU  - Marmono Singgih
AU  - Arnis Budi Susanto
AU  - Ema Desia Prajitiasari
PY  - 2024
DA  - 2024/12/11
TI  - Financial Metrics for Distress Prediction in Indonesia’s Property and Real Estate Sector
BT  - Proceedings of the 5th International Conference on Global Innovation and Trends in Economy 2024 (INCOGITE 2024)
PB  - Atlantis Press
SP  - 189
EP  - 202
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-585-0_14
DO  - 10.2991/978-94-6463-585-0_14
ID  - Awwaliyah2024
ER  -