The Effect of Financial Ratio on Financial Distress (Case Study on Manufacturing Company registered on the Indonesian Stock Exchange)

Abstract

This research aims to determine and analyze the potential for bankruptcy in food and beverage sub-sector companies listed on the Indonesia Stock Exchange for the 2020-2022 period and to find out which financial ratios are most significant in predicting financial distress conditions in food and beverage sub-sector companies in the 2020 period. – 2022. This research uses quantitative methods, with the data used being secondary data. The population studied was 33 companies, sampling used a purposive sampling method, so that a sample of 21 companies was obtained in the 2020-2022 period. So the sample used in this research was 63 samples. Analysis was carried out using classical assumption tests, multiple linear regression, hypothesis testing, and coefficients. The results of the T test show that profitability, level of marketing and liquidity have a significant impact on financial distress, indicated by the t-count value which is higher than the t-table. The decline in these three variables also increases the risk of bankruptcy. All internal variables influence the internal variables, especially the level level which shows a significant impact on the potential for bankruptcy.