PENGARUH PROFITABILITAS, LIKUIDITAS, DAN SOLVABILITAS TERHADAP FINANCIAL DISTRESS

Abstract

This research aims to analyze the effect of profitability, liquidity, and solvability on financial distress of Retailer companies listed on the Indonesia Stock Exchange (IDX). Financial distress is a condition where companies have difficulty in fulfilling their financial obligations that can run into bankruptcy. The profitability was measured by Return On Asset (ROA), liquidity was measured by Current Ratio (CR), and solvability was measured by Debt to Equity Ratio (DER). Furthermore, the data used were companies’ financial statements during 2019-2023. Research data in the form of financial statements of retail companies selected through purposive sampling method, resulting in 100 observations. Multiple linear regression analysis is used to test the relationship between the independent and dependent variables.The results showed that profitability has a negative influence on financial distress, indicating that companies with a high level of profitability are better able to avoid the risk of financial difficulties. In contrast, liquidity and solvency have a positive influence on financial distress. High liquidity may reflect the inefficiency of current asset management, while high levels of debt (leverage) worsen the company's ability to meet long-term obligations. These findings provide important insights for retail company management to improve operational efficiency, optimize debt structure, and maintain liquidity balance to mitigate the risk of financial distress. This study also contributes to the literature related to the financial dynamics of the retail sector in Indonesia.