The phenomenon of financial distress of manufacturing companies in Indonesia during the Covid-19 Pandemic

Abstract

The purpose of this study is to examine the differences in the value of the financial distress of manufacturing companies before and after the Covid-19 pandemic, as well as to examine the determinants that affect the financial distress of manufacturing companies before and after the Covid-19 pandemic. This study is a quantitative study with the population in this study namely manufacturing companies in Indonesia. The sample is 1005 Firm Years in manufacturing companies in Indonesia. These Manufacturing Companies were taken from 2016-2021, but we divided the sample into 2 categories, namely 2016-2019, namely in the pre-pandemic period as many as 653 firm years, and during the pandemic as many as 352 firm years. The dependent variable used in this study is financial distress, measured by the O-Score Model. Furthermore, the independent variables are profitability using ROA, liquidity using the current ratio, and leverage using the Debt to Assets Ratio. The test results show no difference between the financial distress of manufacturing companies in Indonesia before and during the pandemic. During the pandemic, financial ratios became more considered in predicting financial distress than before the pandemic. The role of profitability is a factor that impacts financial distress is more impactful in the pre-pandemic period. The role of liquidity being a factor that impacts financial distress is more impactful during the pandemic. Leverage can also be a good indicator in predicting financial distress both in the pre-pandemic and during the pandemic.

Keywords: {'name': 'Financial Distress'}, {'name': 'Manufacturing'}, {'name': 'Financial Ratios'}, {'name': 'Pandemic'}

Authors & affiliations

Puji Handayati
Affiliation not supplied

Tomy Rizky Izzalqurny
Affiliation not supplied

Slamet Fauzan
Affiliation not supplied

Nurus Shobah
Affiliation not supplied

Deposited references

Supplied references, not a list of publications citing this article.

DOI: 10.35143/jakb.v13i1.3607

DOI: 10.28932/jam.v13i1.3197

DOI: 10.28932/jam.v9i2.481

DOI: 10.13189/ujaf.2021.090325

DOI: 10.1007/s11156-018-0716-7

DOI: 10.31258/ijesh.2.2.127-133

Dwiantari, R. A., & Artini, L. G. S. (2021). The Effect of Liquidity, Leverage, and Profitability on Financial Distress (Case Study of Property and Real Estate Companies on the IDX 2017-2019). American Journal of Humanities and Social Sciences Research (AJHSSR), 5(1), 367-373.

Gerber, D. (2020). An evaluation of financial distress prediction measures for listed companies in South Africa (Doctoral dissertation, North-West University (South Africa)).

DOI: 10.2991/aer.k.210121.016

DOI: 10.5897/JAT2019.0333

DOI: 10.31539/budgeting.v1i2.786

DOI: 10.5430/ijfr.v10n3p63

DOI: 10.3390/su14010479

DOI: 10.23960/jbm.v18i2.397

DOI: 10.46799/jst.v2i6.293

DOI: 10.2991/aebmr.k.210831.027

Prayuningsih, I. G. A., Endiana, I. D. M., Pramesti, I. G. A. A., & Mariati, N. P. A. M. (2021). Pengaruh Profitabilitas, Likuiditas, Leverage, Rasio Aktivitas Dan Pertumbuhan Penjualan Untuk Memprediksi Kondisi Financial Distress. KARMA (Karya Riset Mahasiswa Akuntansi), 1(1),137-147.

DOI: 10.33369/j.akuntansi.9.3.173-186

DOI: 10.34203/jimfe.v6i1.2031

Rafatnia, A. A., Suresh, A., Ramakrishnan, L., Abdullah, D. F. B., Nodeh, F. M., & Farajnezhad, M. (2020). Financial distress prediction across firms. Journal of Environmental Treatment Techniques, 8(2), 646-651.

Restianti, T., & Agustina, L. (2018). The effect of financial ratios on financial distress conditions in sub industrial sector company. Accounting Analysis Journal, 7(1), 25-33.

Saputri, L., & Asrori, A. (2019). The Effect of Leverage, Liquidity and Profitability on Financial Distress with the Effectiveness of the Audit Committee as a Moderating Variable. Accounting Analysis Journal, 8(1), 38-44.

Saputri, N. A., & Effendi, Y. (2021). Analisis Financial Distress Pada Perusahaan Agribisnis Dalam Menghadapi Covid-19. Jurnal Akuntansi Indonesia, 17(1), 45–51.

Tahu, G. P. (2019). Predicting financial distress of construction companies in Indonesia: a comparison of Altman Z-score and Springate methods. International Journal of Sustainability, education, and Global Creative Economic (IJSEGCE), 2(2), 7-12.

DOI: 10.55583/invest.v2i2.182