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Journal : International Journal of Artificial Intelligence Research

DETERMINANT OF FINANCIAL DISTRESS IN MANUFACTURING COMPANIES Hermiyetti, Hermiyetti -; Dharmawan, Donny; Mulatsih, Listiana Sri; Alfiana, Alfiana; Anantadjaya, Samuel PD
International Journal of Artificial Intelligence Research Vol 8, No 1.1 (2024)
Publisher : STMIK Dharma Wacana

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.29099/ijair.v8i1.1.1304

Abstract

Financial distress is a picture of a continuous decline in a company's financial performance that needs to be predicted and minimized. The occurrence of financial distress begins with a decline in the company's financial condition which begins with the company's inability to meet its short-term obligations. The purpose of this study is to determine and evaluate the effect of Return on Assets (ROA), company size and also Debt to Equity Ratio (DER) on financial distress. Regression analysis and quantitative methods are used in the research process. Manufacturing companies that consistently release their financial reports during 2019-2022 and are listed on the Indonesia Stock Exchange are examples. The sampling method used in this study was purposive sampling and succeeded in obtaining 40 samples from 10 companies. Data were analyzed using Partial Least Squares-Structural Equation Modeling (PLS-SEM). The results of this study indicate that ROA has a significant effect on financial distress. Meanwhile, company size and DER do not affect financial distress in manufacturing companies in the 2019-2022 period. The implications of the results of this study for manufacturing company management can be an indicator of corrective actions before the company experiences financial distress or has the potential to go bankrupt.
Investigation of Determinants of Financial Distress in Manufacturing Companies Mulatsih, Listiana Sri; Dharmawan, Donny; Tumiwa, Ramon Arthur Ferry; Judijanto, Loso; Alfiana, Alfiana
International Journal of Artificial Intelligence Research Vol 8, No 1.1 (2024)
Publisher : STMIK Dharma Wacana

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.29099/ijair.v8i1.1.1323

Abstract

Financial distress refers to a continuous decline in a company's financial performance, necessitating prediction and mitigation. It typically begins with the company’s inability to meet its short-term obligations, signaling a deterioration in financial condition. This study aims to examine the effects of Return on Assets (ROA), Current Ratio (CR), and Debt to Equity Ratio (DER) on financial distress, with company size serving as a moderating variable. The research employs regression analysis and quantitative methods, focusing on manufacturing firms listed on the Indonesia Stock Exchange that consistently published financial reports from 2020 to 2023. Using purposive sampling, the study selected 40 samples from 10 companies, with data analyzed through Partial Least Squares-Structural Equation Modeling (PLS-SEM). The findings reveal that ROA significantly impacts financial distress, while CR and DER have no such effect during the observed period. Furthermore, company size moderates the relationship between ROA and CR with financial distress but does not moderate the influence of DER on financial distress. These results provide managerial implications, serving as indicators for corrective actions to prevent financial distress or potential bankruptcy in manufacturing companies