Forecasting Financial Distress of Airline Company: The Impact of Financal Performance

Desiana Rachmawati; Adipura Danang Maulana

doi:10.32535/jicp.v5i4.1923

Forecasting Financial Distress of Airline Company: The Impact of Financal Performance

Desiana Rachmawati, Adipura Danang Maulana

Abstract

This study aims to predict the financial distress of airline companies which is influenced by the ratio of liquidity, solvency, profitability, activity and investment. This research is inferential research with a quantitative approach. This research used financial statements of airline companies listed on the Indonesia Stock Exchange in 2018-2021 as the data. Data analysis was performed using multiple linear regression. The results showed that the liquidity ratio (Current Ratio) and solvency ratio (Debt to Equity Ratio) partially had no effect on the prediction of financial distress as measured using Springate model. Profitability ratio (Return on Assets), activity ratio (Total Assets Turnover) and investment ratio (Price Erning Ratio) partially have a positive effect on the prediction of financial distress. The profitability ratio has an influence of 81%, the activity ratio has 27.8% and the investment ratio has 7.6% on the prediction of financial distress. The prediction result of financial distress are not solely influenced by the company's ability to pay debts, both short term and long term. Conditions related to asset performance, such as Return on Assets and Total Asset Turnover actually affect the prediction results of financial distress.

Full Text:

PDF

References

Amoa-Gyarteng, K. (2021). Corporate financial distress: the impact of profitability, liquidity, asset productivity, activity and solvency. Journal of Accounting, Business and Management (JABM), 28(2), 104. https://doi.org/10.31966/jabminternational.v28i2.447

Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management fifteenth edition. Cengage Learning.

Daoud, J. I. (2017). Multicollinearity and regression analysis. Journal of Physics: Conference Series, 1–6. https://doi.org/10.1088/1742-6596/949/1/012009

Destriwanti, O., Sintha, L., Bertuah, E., & Munandar, A. (2022). Analyzing the impact of good corporate governance and financial performance on predicting financial distress using the modified Altman Z-Score model. American International Journal of Business Management (AIJBM), 5(02), 27–36. https://www.aijbm.com/volume-5-issue-02/

Dewi, M., Foanto, G. N., & Christiawan, Y. J. (2021). Profitability, liquidity, and firm value: Does financial distress have a mediating effect? Proceedings of the 6th International Conference on Tourism, Economics, Accounting, Management, and Social Science (TEAMS 2021), 197(Teams), 437–445. https://doi.org/10.2991/aebmr.k.211124.062

Dirman, A. (2020). Financial distress: The impacts of profitability, liquidity, leverage, firm size, and free cash flow. International Journal of Business, Economics and Law, 22(1), 17–25.

Etaga, O. H., Ndubisi, R. C., & Oluebube, N. L. (2021). Effect of multicollinearity on variable selection in multiple regression. Science Journal of Applied Mathematics and Statistics, 9(6), 153. https://doi.org/10.11648/J.SJAMS.20210906.12

Hungan, A. G. D., & Sawitri, N. N. (2018). Analysis of financial distress with springate and method of grover in coal in BEI 2012 - 2016. International Business and Accounting Research Journal, 2(2), 52–60. https://doi.org/10.15294/ibarj.v2i2.39

Indriaty, N., Setiawan, D., & Pravasanti, Y. A. (2019). The effects of financial ratio, local size and local status on financial distress. International Journal of Economics, Business and Accounting Research (IJEBAR), 3(1), 38–42. https://doi.org/10.29040/ijebar.v3i01.381

Kamaluddin, A., Ishak, N., & Mohammed, N. F. (2019). Financial distress prediction through cash flow ratios analysis. International Journal of Financial Research, 10(3), 63–76. https://doi.org/10.5430/ijfr.v10n3p63

Keter, J., Bogonko, J., & Kimutai, G. (2018). Effectiveness of market ratios in predicting financial distress. Evidence from Kenya. International Journal of Finance, Accounting and Economics (IJFAE), 1(2), 12–24. www.oircjournal.org

Khatun, N. (2021). Applications of normality test in statistical analysis. Open Journal of Statistics, 11(1), 113–122. https://doi.org/10.4236/OJS.2021.111006

Komarudin, Syafnita, & Ilmiani, A. (2019). Analisis komparasi prediksi financial distress metode grover, altman, springate, zmijewski, dan ohlson pada perusahaan pertambangan di BEI. Jurnal Ekonomi Dan Bisnis, 22(2), 36–44. https://doi.org/http://dx.doi.org/10.31941/jebi.v22i2.991

Kristanti, F. T., Effendi, N., Herwany, A., & Febrian, E. (2016). Does corporate governance affect the financial distress of Indonesian company? A survival analysis using cox hazard model with time-dependent covariates. Advanced Science Letters, 22(12), 4326–4329. https://doi.org/10.1166/asl.2016.8138

Kristanti, F. T., Rahayu, S., & Huda, A. N. (2015). The determinant of financial distress on indonesian family firm. 3rd Global Conference on Business and Social Science-2015, December, 1–8.

Kumendong, F. F., & Hutabarat, F. (2019). Analysis factor of financial distress: An evidence of cable sub sector in Indonesia from year 2016-2017. Abstract Proceedings International Scholars Conference, 7(1), 964–976. https://doi.org/10.35974/isc.v7i1.811

Lestari, R. M. E., Situmorang, M., & Pratama, M. I. P. (2021). Financial distress analysis using altman (Z-score), Springate (S-score), Zmijewski (X-score), and Grover (G-score) models in the tourism, hospitality and restaurant subsectors listed on the Indonesia Stock Exchange period. Proceedings of the 11th Annual International Conference on Industrial Engineering and Operations Management Singapore, 4249–4259.

Lumbantobing, R. (2019). The effect of financial ratios on the possibility of financial distress in selected manufacturing companies which listed in Indonesia Stock Exchange. 6th Annual International Conference on Management Research (AICMaR 2019) The, 132, 60–63. https://doi.org/10.2991/aebmr.k.200331.014

Masdupi, E., Tasman, A., & Davista, A. (2018). The influence of liquidity, leverage and profitability on financial distress of listed manufacturing companies in Indonesia. 1st International Conference On Economics Education, Economics, Business and Management, Accounting and Entrepreneurship (PICEEBA 2018), 57, 223–228. https://doi.org/10.2991/piceeba-18.2018.51

Mbona, R. M., & Yusheng, K. (2019). Financial statement analysis: Principal component analysis (PCA) approach case study on China telecoms industry. Asian Journal of Accounting Research, 4(2), 233–245. https://doi.org/10.1108/AJAR-05-2019-0037/FULL/PDF

Mishra, P., Pandey, C. M., Singh, U., Gupta, A., Sahu, C., & Keshri, A. (2019). Descriptive statistics and normality tests for statistical data. Annals of Cardiac Anaesthesia, 22(1), 72. https://doi.org/10.4103/ACA.ACA_157_18

Moch, R., Prihatni, R., & Buchdadi, A. D. (2019). The effect of liquidity, profitability and solvability to the financial distress of manucatured companies listed on The Indonesia Stock Exchange (IDX) period of year 2015-2017. Academy of Accounting and Financial Studies Journal, 23(6), 1–16.

Mukherjee, A. K., & Laha, M. (2019). Problem of autocorrelation in linear regression detection and remedies. International Journal of Multidisciplinary Research and Modern Education (IJMRME), 5(1), 105–110.

Nurhayati, Mufidah, A., & Kholidah, A. N. (2017). The determinants of financial distress of basic industry and chemical companies listed in Indonesia Stock Exchange. Review Of Management And Entrepreneurship, 1(2), 19–26.

Oktaria, M., Yanida, M., Alexandro, R., Tonich, & Putri, W. U. (2021). The effect of liquidity, firm size and leverage on financial distress. Proceedings of the 6th International Conference on Tourism, Economics, Accounting, Management, and Social Science (TEAMS 2021), 197, 484–489. https://doi.org/10.2991/AEBMR.K.211124.068

Oyenuga, & Favour, I. (2022). Investigating the power of heteroscedasticity in constant elasticity of substitution production function. IOSR Journal of Mathematics, 18(2), 7. https://doi.org/10.9790/5728-1802040107

Pandis, N. (2016). Multiple linear regression analysis. American Journal of Orthodontics and Dentofacial Orthopedics, 149(4), 581. https://doi.org/10.1016/j.ajodo.2016.01.012

Permana, A. A. N. B. A., & Rahyuda, H. (2018). Pengaruh profitabilitas, solvabilitas,likuiditas, dan inflasi terhadap nilai perusahaan. E-Jurnal Manajemen Universitas Udayana, 8(3), 1577. https://doi.org/10.24843/ejmunud.2019.v08.i03.p15

Rachmawati, D. (2021). Analisis rasio likuiditas dan solvabilitas untuk mengukur kinerja perusahaan sektor penerbangan sebelum dan saat pandemi Covid-19. Jurnal Akuntansi Bisnis Dan Ekonomi, 7(2), 2013–2028. https://doi.org/10.33197/JABE.VOL7.ISS2.2021.778

Rachmawati, D. (2022). Kinerja profitabilitas sektor penerbangan pada masa pandemi dan dampaknya terhadap nilai perusahaan (Studi pada Garuda Indonesia dan Airasia). Jurnal Manajemen Dirgantara, 15(1), 184–192. https://doi.org/10.56521/MANAJEMEN-DIRGANTARA.V15I1.628

Rachmawati, D., & Maulana, A. D. (2022). Penerapan model altman (z-score) untuk mengukur potensi financial distress perusahaan maskapai penerbangan sebagai dampak pandemi covid-19. Jurnal Manajemen Dirgantara, 15(1), 193–205. https://doi.org/10.56521/MANAJEMEN-DIRGANTARA.V15I1.634

Reschiwati, Sayekti, F., Priharti, R. D. V., & Muhammad, H. A. (2021). The model of financial distress in the pharmaceutical industry. International Journal of Disaster Recovery and Business Continuity, 12(1), 449–461.

Restianti, T., & Agustina, L. (2018). The effect of financial ratios on financial distress conditions in sub industrial sector company. Accounting Analysis Journal, 7(1), 25–33. https://doi.org/10.15294/AAJ.V7I1.18996

Simanjuntak, D., & Hutabarat, F. M. (2019). Solvability, liquidity on financial distress (Case study on cable sub sector on IDX 2016-2017). Proceedings of the First International Conference on Administration Science (ICAS 2019), 46–48. https://doi.org/10.2991/ICAS-19.2019.10

Subiyanto, I. G. S., & Siagian, H. L. (2020). The effect of profitability on financial distress with leverage as a moderating variable in pharmaceutical sub-sector companies listed on the IDX from 2018-2020. Budapest International Research and Critics Institute Journal, 5(2), 9734–9742. https://doi.org/https://doi.org/10.33258/birci.v5i2.4769

Suharti, Purnamasari, Y., Mahari, A. P., Astutik, M. P., & Pawiati, S. (2020). The effect of financial ratio in financial distress with firm size as moderated variables (Empirical study of manufacturing sector companies listed on The Indonesia Stock Exchange for the 2014-2018 period). The 1st International Conference on Business and Engineering Management (IConBEM 2020), 1, 349–352. https://doi.org/10.12962/j23546026.y2020i1.11358

Tsagris, M., & Pandis, N. (2021). Multicollinearity. American Journal of Orthodontics and Dentofacial Orthopedics : Official Publication of the American Association of Orthodontists, Its Constituent Societies, and the American Board of Orthodontics, 159(5), 695–696. https://doi.org/10.1016/j.ajodo.2021.02.005

Uyanto, S. S. (2020). Power comparisons of five most commonly used autocorrelation tests. Pakistan Journal of Statistics and Operation Research, 16(1), 119–130. https://doi.org/10.18187/pjsor.v16i1.2691

Yacobus, A., & KP, H. N. (2021). Analysis of the effect of financial distress conditions on activity/Efficiency ratios in manufacturing companies in Indonesian Stock Exchange during the covid period. RSF Conference Series: Business, Management and Social Sciences, 1(3), 9–22. https://doi.org/10.31098/bmss.v1i3.282

DOI: https://doi.org/10.32535/jicp.v5i4.1923

Refbacks

There are currently no refbacks.

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Published by:

AIBPM Publisher

Editorial Office:

JL. Kahuripan No. 9 Hotel Sahid Montana, Malang, Indonesia
Phone: +62 341 366222
Email: journal.jicp@gmail.com
Website: http://ejournal.aibpmjournals.com/index.php/JICP

Supported by: Association of International Business & Professional Management

If you are interested to get the journal subscription you can contact us at admin@aibpm.org.

ISSN 2622-0989 (Print)
ISSN 2621-993X (Online)

DOI: Prefix 10.32535 by CrossREF

Journal of International Conference Proceedings (JICP) INDEXED: