Determinant of Financial Distress on The Retail Public Companies: Indonesia Case
Background: The retail sector plays a significant role in the Indonesian economy. According to data from Badan Pusat Statistik (BPS) in 2020, the retail sector contributed 12.93% to Indonesia's total Gross Domestic Product (GDP). However, results from the Retail Sales (SPE) survey by Bank Indon...
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| Format: | Article |
| Language: | Indonesian |
| Published: |
Bogor Agricultural University
2025-01-01
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| Series: | Jurnal Aplikasi Bisnis dan Manajemen |
| Online Access: | https://journal.ipb.ac.id/index.php/jabm/article/view/62147 |
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| _version_ | 1825206640435003392 |
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| author | Audry Arsyila Utomo Noer Azam Achsani Aruddy |
| author_facet | Audry Arsyila Utomo Noer Azam Achsani Aruddy |
| author_sort | Audry Arsyila Utomo |
| collection | DOAJ |
| description | Background: The retail sector plays a significant role in the Indonesian economy. According to data from Badan Pusat Statistik (BPS) in 2020, the retail sector contributed 12.93% to Indonesia's total Gross Domestic Product (GDP). However, results from the Retail Sales (SPE) survey by Bank Indonesia indicated a downward trend in the average annual growth of real sales for retail from 2015 to 2020. A decline in sales can lead to a decrease in income. The company's inability to balance income and costs raises the potential for financial distress.
Purpose: This research aims to study which financial factors may influence financial distress.
Design/Methodology/Approach: The observation period is from 2017 to 2021. This research uses the Debt Service Coverage Ratio (DSCR) as a proxy for financial distress. This research also employs a binary logistic model to identify which financial factors influence financial distress.
Findings/Result: Logistic regression analysis revealed that Return on Equity (ROE) has a negative and significant effect on the DSCR value with a coefficient of -15.066. Equity-to-Total Assets ratio (EQ/TA) also has a negative and significant effect on financial distress with a coefficient of -5.042.
Conclusion: The results emphasize the importance of consistent management of company performance, particularly by monitoring financial ratios that significantly affect the likelihood of financial distress.
Originality/value(State of the art): This research offers new insights into the impact of financial ratios on financial distress, specifically within the context of the retail sector experiencing economic uncertainty during the COVID-19 pandemic. It is focusing on a critical period and a specific sector, thereby providing valuable contributions to stakeholders such as investors, company management, and policy makers.
Keywords: DSCR, financial distress, financial ratios, logistic regression, company management |
| format | Article |
| id | doaj-art-aef4542a3ef24d5d837acaab1ba4c58b |
| institution | Kabale University |
| issn | 2528-5149 2460-7819 |
| language | Indonesian |
| publishDate | 2025-01-01 |
| publisher | Bogor Agricultural University |
| record_format | Article |
| series | Jurnal Aplikasi Bisnis dan Manajemen |
| spelling | doaj-art-aef4542a3ef24d5d837acaab1ba4c58b2025-02-07T08:02:42ZindBogor Agricultural UniversityJurnal Aplikasi Bisnis dan Manajemen2528-51492460-78192025-01-01111353510.17358/jabm.11.1.3562147Determinant of Financial Distress on The Retail Public Companies: Indonesia CaseAudry Arsyila Utomo0Noer Azam Achsani1Aruddy2School of Business, IPB University, IndonesiaSchool of Business, IPB University, IndonesiaSchool of Business, IPB University, IndonesiaBackground: The retail sector plays a significant role in the Indonesian economy. According to data from Badan Pusat Statistik (BPS) in 2020, the retail sector contributed 12.93% to Indonesia's total Gross Domestic Product (GDP). However, results from the Retail Sales (SPE) survey by Bank Indonesia indicated a downward trend in the average annual growth of real sales for retail from 2015 to 2020. A decline in sales can lead to a decrease in income. The company's inability to balance income and costs raises the potential for financial distress. Purpose: This research aims to study which financial factors may influence financial distress. Design/Methodology/Approach: The observation period is from 2017 to 2021. This research uses the Debt Service Coverage Ratio (DSCR) as a proxy for financial distress. This research also employs a binary logistic model to identify which financial factors influence financial distress. Findings/Result: Logistic regression analysis revealed that Return on Equity (ROE) has a negative and significant effect on the DSCR value with a coefficient of -15.066. Equity-to-Total Assets ratio (EQ/TA) also has a negative and significant effect on financial distress with a coefficient of -5.042. Conclusion: The results emphasize the importance of consistent management of company performance, particularly by monitoring financial ratios that significantly affect the likelihood of financial distress. Originality/value(State of the art): This research offers new insights into the impact of financial ratios on financial distress, specifically within the context of the retail sector experiencing economic uncertainty during the COVID-19 pandemic. It is focusing on a critical period and a specific sector, thereby providing valuable contributions to stakeholders such as investors, company management, and policy makers. Keywords: DSCR, financial distress, financial ratios, logistic regression, company managementhttps://journal.ipb.ac.id/index.php/jabm/article/view/62147 |
| spellingShingle | Audry Arsyila Utomo Noer Azam Achsani Aruddy Determinant of Financial Distress on The Retail Public Companies: Indonesia Case Jurnal Aplikasi Bisnis dan Manajemen |
| title | Determinant of Financial Distress on The Retail Public Companies: Indonesia Case |
| title_full | Determinant of Financial Distress on The Retail Public Companies: Indonesia Case |
| title_fullStr | Determinant of Financial Distress on The Retail Public Companies: Indonesia Case |
| title_full_unstemmed | Determinant of Financial Distress on The Retail Public Companies: Indonesia Case |
| title_short | Determinant of Financial Distress on The Retail Public Companies: Indonesia Case |
| title_sort | determinant of financial distress on the retail public companies indonesia case |
| url | https://journal.ipb.ac.id/index.php/jabm/article/view/62147 |
| work_keys_str_mv | AT audryarsyilautomo determinantoffinancialdistressontheretailpubliccompaniesindonesiacase AT noerazamachsani determinantoffinancialdistressontheretailpubliccompaniesindonesiacase AT aruddy determinantoffinancialdistressontheretailpubliccompaniesindonesiacase |