PENGARUH RASIO LIKUIDITAS, SOLVABILITAS, DAN OPERATING CAPACITY TERHADAP FINANCIAL DISTRESS

Abstract

This research aimed to examine (1) the effect of liquidity ratio on financial distress, (2) the effect of solvability on financial distress, and (3) the effect of operating capacity on financial distress. Moreover, the liquidity ratio was referred to as Current Ratio (CR), solvability was referred to as Debt to Asset Ratio (DAR), and operating capacity was referred to as Total Asset Turnover (TATO). Furthermore, the research was quantitative. The data collection technique used purposive sampling i.e., a sample selection with determined criteria. In line with that, there were 60 data samples from 12 companies. Additionally, the population was Transportation companies listed on the Indonesia Stock Exchange (IDX) during 2017-2021. In addition, the data analysis technique used multiple linear regression. The research result concluded that (1) liquidity ratio did not affect financial distress. It meant that the companies were able to meet their short-term obligations; (2) Solvability did not affect the financial distress. This meant that the companies’ high level of debt could meet the assets’ cost and operational needs; (3) Operating capacity affected financial distress. In other words, the companies were not able to manage their assets for operational purposes.