The Influence of Debt to Equity Ratio, Current Ratio, and Firm Age on Financial Distress
DOI:
https://doi.org/10.65440/jaa.v3i1.208Keywords:
Debt to Equity Ratio, Current Ratio, Risk Based Capital, Firm Age, Financial DistressAbstract
Purpose – This study aims to examine the effect of the Debt to Equity Ratio (DER), Current Ratio (CR), and Firm Age on Financial Distress in property & real estate companies listed on the Indonesia Stock Exchange (IDX) during the 2021–2024 period.
Design/methodology/approach – This study employs a quantitative approach using panel data from property & real estate companies listed on the IDX. The sampling criteria retain companies with financial statements available consecutively during 2021–2024 and do not exclude companies solely because they report losses. Financial Distress is measured using the negative Altman Z-score so that a higher value consistently represents greater financial distress. Panel regression is conducted using EViews 9 after data screening and verification of ratio calculations.
Findings – Using the 112 company-year observations contained in the supplied dataset, the revised fixed-effects estimates show that DER is positive but not statistically significant (0.054830; p = 0.886269), while CR is negative and statistically significant (−1.024664; p < 0.001) and Firm Age is negative and statistically significant (−1.646300; p = 0.029772).
Research limitations/implications – This study focuses on property & real estate companies listed on the IDX during 2021–2024 and uses financial statement data. Extreme observations, particularly unusually high Current Ratio values, are verified against the original financial statements before statistical analysis.
JEL : G33, G32, M41, L25
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