Predicting the Financial Distress of Public Companies Listed at the Indonesian Stock Exchange

Abstract

The aim of this research is to analyze the influence of various macroeconomic variables and financial performance collectively or partially against the probability of the financial distress of public companies listed at the Indonesian Stock Exchange three, two and year before it actually happens. This research employs the method of survey of 355 public companies listed at Indonesian Stock Exchange that experienced financial distress and financial health during the period 2004-2014. The sample collecting technique used was the purposive sampling method. The research data were analyzed using the logistic regression. The result of research shows that variables of the most to the least partially significant influence on the probability of financial distress one year before it happening are respectively rupiah exchange rate, rupiah exchange rate, cash ratio, return on investment, and growth earning per shares, two years before it happening are respectively rupiah exchange rate, current ratio, inventory turnover, gross profit margin, price earning ratio, growth sales and growth earning per shares, and three years before it happening are respectively asset turn over, gross profit margin.