Revealing the Probability of Financial Distress Risks through Financial Ratios in Publicly Listed Heavy Construction Sector Companies from 2018 to 2023 Slamet Trisno Haryono (1)*, Gunawan Nusanto (2), Agus Sukarno (3), Ida Ayu Fatmayuni (4), Sri Dwi Ari Ambarwati (5), Aina Nur Salsabilla (6)
(123456) Universitas Pembangunan Nasional Veteran Yogyaakarta
Abstract
This study investigates the impact of financial ratios on the probability of financial distress among heavy construction companies listed on the Indonesia Stock Exchange from 2018 to 2022. Utilizing logistic regression. The study analyzed 22 companies selected through purposive sampling using STATA. The results indicate retun on equity significantly negatively affects probability financial distress- a higher retun on equity reduces the risk, while a lower retun on equity increases it, as observed in WSKT. Quick ratio significantly positively probability financial distress- lower Quick ratio raises the risk, as seen with MTPS. Debt to assets ratio also significantly increases probability financial distress- a higher Debt to assets ratio is associated with greater risk, exemplified by ASCT. Total assets turnover taio is positively related to probability financial distress as demonstrated by TAMA. This study underscores the importance of monitoring these financial ratios to assess a company^s financial stability and distress risk.
Keywords: financial distress, financial ratio, logistic regression, proxy, STATA
