Ratio Analyses Estimating Financial Risk: Econometric Study Retail Companies the Indonesia Stock Exchange 2020-2023

Abstract

Aims: This study analyses the effect of activity ratios, sales growth, profitability, and company size on the financial distress of retail companies on the Indonesia Stock Exchange from 2020 to 2023. Study Design: The study uses data on activity ratios, sales growth, profitability, and company size as independent variables and financial distress as the dependent variable. Place and Duration of Study: The research was conducted in retail companies listed on the Indonesia Stock Exchange with a population of retail company subsectors and using purposive sampling criteria. The research data used financial reports published in 2020-2023. Methodology: This type of research is quantitative. The research was tested with SPSS 25 using logistic regression. The total population in the study was 32 types of companies in the retail subsector with several types of companies such as drug retail & distributors, food retail & distributors, supermarkets & convenience stores (minimarkets), department stores, apparel & textile, automotive retail, and electronic retail. Purposive sampling obtained 108 unbalance data for 4 years of observation listed on the Indonesia Stock Exchange in 2020-2023 financial distress was tested with the Altman Z-Score method through logistic regression test. Result: Utilizing logistic regression and the Altman Z-Score, the study reveals that activity ratios and profitability significantly negatively affect financial distress, while sales growth and company size do not have a significant impact. Conclusion: These findings provide valuable insights for stakeholders, emphasizing the importance of optimizing asset efficiency and profitability to mitigate financial distress.