THE INFLUENCE OF LEVERAGE AND PROFITABILITY IN REDACTING FINANCIAL DISTRESS (Study of Retail Sub Sector Companies Listed on Indonesia Stock Exchange (IDX) Period 2015-2019)
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Date
2020
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Volume Title
Publisher
Solid State Technology Volume: 63 Issue: 4
Abstract
Tight business competition resulted in a decrease in the growth of retail companies in
Indonesia. This is because retail companies are outs efficiently outnumbered by ecommerce
companies, which in 2017 was the most severe slowdown in 10 years. There
is a phenomenon where the company's finances are experiencing various problems
called financial distress. Each company must make financial distress predictions to
know the health of the company, one of which is by analyzing the leverage ratio and
profitability ratio. Leverage ratios show the small amount of corporate debt that leads
to financial difficulties, while the profitability ratio shows the small margin gains that
indicate the company's performance. This research aims to test and analyze the
influence of leverage and profitability on financial distress in retail sub-sector
companies listed on the Indonesia Stock Exchange (IDX) for the period 2015-2019. The
research method uses explanatory research, a data source using secondary data.
Population and research sample of 21 companies over 5 periods. The results showed
that overall, leverage measured using Debt Ratio (DR) and profitability measured using
Return on Assets (ROA) had an effect on financial distress both partially and
simultaneously. Based on the results of the research, it is known that leverage and
profitability have contributed to financial distress in retail sub-sector companies listed
on the Indonesia Stock Exchange (IDX) for the period 2015-2019 by 37%, while the
remaining 63% is influenced by other factors that are not studied.
Description
Keywords
Leverage, Profitability, Financial Distress