IMPACT OF FINANCIAL RATIO ON FINANCIAL DISTRESS IN INDONESIA MANUFACTURING COMPANIES

Abstract

This research is a quantitative research which aims to determine the effect of Current ratio, Return on Assets and Sales Growth on Financial Distress. The analysis in this study uses logistic regression method. Logistic regression is one of the statistical analysis methods used to analyse the relationship of independent variables to the dependent variable with nominal / ordinal data. The data used in this study are secondary data derived from annual reports of manufacturing companies listed on the IDX (Indonesia Stock Exchange) and ICMD (Indonesia Capital Market Directory) for the period of 2013-2016. The results showed that the logistic regression match test was significant, this showed that logistic regression was able to predict financial distress of manufacturing companies in the study period. Hypothesis test results indicate that the variables that influence the company's financial distress are the Current ratio and Return on assets. The results of the classification accuracy of the model is 88.14%, this shows that the model is able to predict precisely the financial distress of manufacturing companies in this study period of 92, 81% or 297 of 320 manufacturing companies