THE EFFECT OF LIQUIDITY, PROFITABILITY AND SOLVENCY RATIO ON FINANCIAL DISTRESS: A STUDY ON REAL ESTATE COMPANIES IN BEI PERIOD 2019 – 2022

Abstract

This study aims to analyze the influence of liquidity, profitability, and solvency ratios on financial distress in Real estate companies listed on the Indonesia Stock Exchange (IDX) for the period 2019-2022. The dependent variable in this research is financial distress, while the independent variables include profitability measured by Return on assets (ROA), liquidity measured by current ratio (CR), and solvency measured by Debt to asset ratio (DAR). Secondary data was collected from idx.com, with the population consisting of all Real estate companies listed on the IDX during the period, and a total sample of 228 companies. The analysis methods used were the Altman Z-score and logistic regression using EVIEWS12. The results of the study indicate that Return on assets (ROA) and current ratio (CR) have a significant negative effect on financial distress, while Debt to asset ratio (DAR) does not have a significant effect on financial distress. The implication of this study is the importance for Real estate companies to improve their profitability and liquidity to reduce the risk of experiencing financial distress.