Pustaka Ilmiah Universitas Padjadjaran

Abstrak

Testing Indicators Determinants Of Financial Distress On Manufacturing Companies In Indonesia

The financial distress condition happen before bankruptcy. There is abundant researches describing prediction models of firm’s bankruptcy, but only few researches have sought to predict firm’s financial distress. Several researchers found the financial distress can be an indicator of the company would be insolvent. On the other side, some researchers also found that the company which have fulfilling their financial commitments does not always lead to bankruptcy. The purpose of this research is to examine the factors that affect financial distress condition of a firm. The tested factors on this research are liquidity variable, activity variable, financing variable, profitability variable and ownership variable. The factors are adjusted by the ratio of relatively industry. Based on the selected indicators were then designed a model to predict the Financial Distress as Early Warning Tools bankruptcy. The sample of this research consist of manufacturing companies from 2005 through 2014. Moreover, it is chosen by purposive sampling. This research using discriminant analysis to find indicators which distinguishes financial distress condition and did not financial distress condition. The results show that company policy in making investment over the assets and liquidity factor can be indicators the condition financial distress. When the factors are adjusted by the ratio of relatively industry, can be seen that funding policy, dividend polcy and ownership can be determiner the condition of financial distress. This study also findings that the financial ratio of the company feature prediction financial distress more precise than relatively the financial industry.