The Influence of Financial Ratios and Macroeconomic Indicators in Predicting Financial Distress (Empirical Study in the Consumer Goods Sector Companies)

Mega Yuliastari, Najmudin Najmudin, Meutia Karunia Dewi

Abstract


The purpose of this research is to analyze and find empirical evidence of the effect of financial ratios that
are proxied by Current asset turnover, Asset turnover, Days sales in receivables, Cash flow to total debt,
Total liabilities to total assets, and macroeconomic indicators that are proxied by inflation and BI interest
rates on financial distress. This study uses an associative causal approach and the data used in the
secondary data. The object used in this study is consumer goods sector companies listed on Indonesia
Stock Exchange during the period 2014-2018. The sample of this study was 36 companies. The data
analysis technique used is logistic regression. The research finding shows that current asset turnover,
asset turnover, and cash flow to total debt have an impact on financial distress. While the day's sales in
receivables, total liabilities to total assets, the sensitivity of inflation, and sensitivity of BI Rates have no
influence on financial distress. Therefore, company management needs to prioritize policies and be able
to use current assets, total assets, and total debt proportionately and control operational costs more
efficiently in order to increase the company's revenue and net profit, and then the company is able to pay
installments and interest costs from the debt.
Keywords: financial distress; financial ratios; macroeconomic indicators; sensitivity of inflation;
sensitivity of BI rates; logistic regression.


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