Liquidity Ratio, Solvability Ratio and Profitability Ratio Towards Financial Distress Using Altman Z-Score Method

Authors

  • Dede Hertina, Hotman Sagala, Velly Listiya Anggriasari

Abstract

 

The purpose of this research is to analyze the liquidity ratio proxied by the Current Ratio, the solvency ratio proxied by the Debt to Asset Ratio and the profitability ratio proxied by the Net Profit Margin against financial distress in textile and garment companies listed on the Indonesia Stock Exchange for the 2014-2018 period using Altman Z-Score method. The method used in this research is descriptive and verification methods, with the unit of analysis at textile and garment companies listed on the Indonesia Stock Exchange for the period 2014-2018. The results of the research simultaneously show that the liquidity ratio, solvency ratio and profitability ratio have an effect on financial distress. The results of this research partially show that the liquidity ratio (Current Ratio) and the Solvency ratio (Debt to Asset Ratio) have a significant effect on financial distress while the profitability ratio (Net Profit Margin) has no significant effect on financial distress.

Published

2020-12-10

Issue

Section

Articles