Research Article
Predicting Financial Distress of Manufacturing Sectors in Indonesia Using Logistic Regression
@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
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.
