ANALYSIS THE EFFECT OF FINANCIAL RATIOS TOWARDS FINANCIAL DISTRESS PREDICTION IN INDONESIA MINING INDUSTRY

Abstract

This study aims to analyze financial ratios' effect on financial distress predictions in the Indonesian mining industry. Adopt quantitative research and have 50 units of observational data from 5 samples from 2010 - 2019. This study's financial ratios are return on assets, interest coverage ratio, current ratio, and total log assets. Meanwhile, the dependent variables are a short-term debt to total equity ratio, and long-term debt to total equity ratio is chosen to be a proxy for predicting the condition of financial distress. In a study using two dependent variables because debt is considered borrowings made by the business from outsiders who are paid a periodic amount of interest on the money borrowed, debt should not be considered homogeneous. Total debt should be analyzed together with short-term and long-term debt. The results showed an R-squared adjustment value between return on assets, interest coverage ratio, current assets ratio, and total asset log of 34.34%, simultaneously affecting financial predictions that emphasize short-term debt to total equity ratio as a Proxy. Meanwhile, the R-squared Adjustment value between return on assets, interest coverage ratio, current assets ratio, and total log assets is 55.94%, simultaneously influencing financial predictions that are stressed against long-term debt to total equity ratio as a Proxy.