CHABACHIB, Mochammad and KUSMANINGRUM, Renny Hapsari and HERSUGONDO, Hersugondo (2019) Financial Distress Prediction in Indonesia. WSEAS TRANSACTIONS on BUSINESS and ECONOMICS, 16. pp. 251-260. ISSN 2224-2899

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Abstract

Altman in 1968 specified that there were five ratios of company difficulties, namely Working Capital to Total Assets (WCTA), Retained Earning to Total Assets (RETA), Earning Before Interest and Tax to Total Assets (EBITTA), Market Value of Total Liabilities (MVETL), Sales to Total Assets (STA). The purpose of this study was to analyze the effect of WCTA, RETA, EBITTA, MVETL, and STA on predictions of the occurrence of Financial Distress conditions. The population of this study is the annual report of Manufacturing companies listed on the Indonesia Stock Exchange during 2012-2016 with a purposive sampling method resulting in 40 total samples. Using Logistic regression analysis with SPSS 21.0 proves that Market Value of Equity to Total Liabilities (MVETL) and Sales to Total Assets (STA) have a significant negative effect on prediction of Financial Distress. Working Capital to Total Assets (WCTA), Retained Earning to Total Assets (RETA) and Earning Before Interest and Tax to Total Assets (EBITTA) have no effect on financial distress predictions.

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