Jurnal Perspektif Pembiayaan dan Pembangunan Daerah
Vol. 11 No. 3 (2023): Jurnal Perspektif Pembiayaan dan Pembangunan Daerah

How liquidity, profitability, and leverage ratios influence financial distress: A study on Indonesian mining firms

Arifuddin Arifuddin (Department of Accounting, Faculty of Economics and Business, Universitas Halu Oleo, Indonesia)
Erwin Hadisantoso (Department of Accounting, Faculty of Economics and Business, Universitas Halu Oleo, Indonesia)
Ika Maya Sari (Department of Accounting, Faculty of Economics and Business, Universitas Halu Oleo, Indonesia)
Annisa Fitrah Yulianti (Department of Accounting, Faculty of Economics and Business, Universitas Halu Oleo, Indonesia)



Article Info

Publish Date
30 Aug 2023

Abstract

This study investigates the impact of liquidity, profitability, and leverage ratios on financial distress in mining companies listed on the Indonesia Stock Exchange. It posits that higher liquidity in a company correlates with reduced financial distress. The research encompasses eight mining companies observed from 2016 to 2020. Purposive sampling was employed to select a sample of eight companies meeting specific criteria. The study utilizes multiple linear regression analysis as its analytical approach. The findings, significant at the 5% level, reveal that liquidity, profitability, and leverage ratios collectively exert a substantial influence on financial distress, accounting for 85.3% of the variance in the dependent variable. Specifically, the study concludes that: 1) Liquidity has a significant negative effect on financial distress, 2) Profitability also demonstrates a significant negative impact on financial distress, and 3) Leverage exhibits a significant positive effect on financial distress.

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Journal Info

Abbrev

JES

Publisher

Subject

Economics, Econometrics & Finance

Description

Jurnal Perspektif Pembiayaan dan Pembangunan Daerah (The Journal of Perspectives on Financing and Regional Development) is an open-access, peer-reviewed international forum for scientists involved in research to publish high quality and refereed papers. Jurnal Perspektif Pembiayaan focuses on ...