Jurnal Ecodemica : Jurnal Ekonomi Manajemen dan Bisnis
Vol 6, No 2 (2022): Ecodemica: Jurnal Ekonomi, Manajemen dan Bisnis

The Effect of Profitability, Liquidity, and Solvency on Financial Distress of Textile and Garment Companies in Indonesia

Nathaniel Maximillian (Universitas Ciputra Surabaya)
Fanny Septina (Universitas Ciputra Surabaya)



Article Info

Publish Date
28 Aug 2022

Abstract

Indonesia's manufacturing GDP growth experienced a downward trend from 2015-2020. All manufacturing companies experienced a decline, including textile and garment sub-sector companies. There are 4 textile and garment sub-sector companies that have suffered consecutive losses and high raw material costs caused indications of financial distress in textile and garment sub-sector companies. This study aims to determine the effect of profitability, liquidity, and solvency on financial distress in textile and garment sub-sector companies for the period 2015-2020. Profitability is measured by Return On Asset (ROA), liquidity is measured by Current Asset (CR), solvency is measured by Debt to Asset (DAR), and financial distress is measured by Altman Z-score. This study sample used 15 textile and garment sub-sector companies listed on the Indonesia Stock Exchange. This study uses a quantitative approach. Data analysis method using Pooled Least Square. The results showed that profitability and liquidity had a positive and significant effect on financial distress. Solvency has a negative and significant effect on financial distress.

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Journal Info

Abbrev

ecodemica

Publisher

Subject

Economics, Econometrics & Finance

Description

The first ECODEMICA journal was published in 2013, with ISSN registration from LIPI Indonesia. ECODEMICA is a journal of scientific research results in the fields of Economics, Management, and Business. With articles that have not been published online or in ...