Proceedings of The International Conference on Environmental and Technology of Law, Business and Education on Post Covid 19, ICETLAWBE 2020, 26 September 2020, Bandar Lampung, Indonesia

Research Article

Predicting Financial Distress of Manufacturing Sectors in Indonesia Using Logistic Regression

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  • @INPROCEEDINGS{10.4108/eai.26-9-2020.2302739,
        author={Ifan Wicaksana Siregar and Eka  Yulianti},
        title={Predicting Financial Distress of Manufacturing Sectors in Indonesia Using Logistic Regression},
        proceedings={Proceedings of The International Conference on Environmental and Technology of Law, Business and Education on Post Covid 19, ICETLAWBE 2020, 26 September 2020, Bandar Lampung, Indonesia},
        publisher={EAI},
        proceedings_a={ICETLAWBE},
        year={2020},
        month={12},
        keywords={profitability leverage financial distress binary logit},
        doi={10.4108/eai.26-9-2020.2302739}
    }
    
  • Ifan Wicaksana Siregar
    Eka Yulianti
    Year: 2020
    Predicting Financial Distress of Manufacturing Sectors in Indonesia Using Logistic Regression
    ICETLAWBE
    EAI
    DOI: 10.4108/eai.26-9-2020.2302739
Ifan Wicaksana Siregar1,*, Eka Yulianti1
  • 1: Faculty of Economics and Business, Jenderal Achmad Yani University, Indonesia
*Contact email: ifan.wicaksana.s@lecture.unjani.ac.id

Abstract

In this era of globalization, the manufacturing sector has developed rapidly in line with the number of customers growing, but the growth has been unmatched by an increase in operating income. Therefore, it is important to analyze the financial distress of manufacturing companies to avoid bankruptcy. This study aims to determine the effect of financial ratios to predict the probability of financial distress. Financial ratio indicators use profitability ratios and leverage ratios. The population in this study are manufacturing companies listed on the Indonesia Stock Exchange 2014-2019. Based on the purposive sampling method, the financial distress criteria in this study were measured using a negative profit balance, while the statistical analysis used logistic regression with a significance level of 5%. The result is the profitability ratio and the leverage ratio have a significant positive value for predicting financial difficulties.