THE EFFECT OF LIQUIDITY, PROFITABILITY, LEVERAGE, AND COMPANY AGE ON FINANCIAL DISTRESS

Farras Mufadhdhal, Wiwin Juliyanti

Abstract


This study aims to examine the effect of liquidity, profitability, leverage, and company age on financial distress in textile and garment companies listed on the Indonesia Stock Exchange (IDX) for the 2019-2023 period. This study used a quantitative approach with a purposive sampling technique, resulting in 10 companies as research objects. The collected data were analyzed using multiple linear regression accompanied by the classical assumption test, t-test, and F-test. The results showed that liquidity and profitability had a significant negative effect on financial distress, while leverage had a significant positive effect. Company age did not show a significant effect on financial distress. Together, these four variables significantly influenced financial distress. These findings emphasize the importance of good financial management, especially in maintaining profitability and managing leverage, to reduce the risk of financial distress.

 Keywords: financial distress, liquidity, profitability, leverage, firm age


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References


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