THE INFLUENCE OF FINANCIAL RATIO AND FIRM SIZE TOWARD FINANCIAL DISTRESS CONDITION ON FOOD AND BEVERAGE MANUFACTURING INDUSTRY

Abstract

The research aimed to examine the influence of financial ratio and firm size on predicting the financial distress condition. Population of this research is the food and beverage manufacturing industry and took 11 samples of companies in period of 2012 until 2019 annually. Altman Z Score model used to support depict of financial failure potential. Quantitative approach used as a method, which means using secondary data by collecting the observation data from IDX and the company’s officially website, the instrument using EViews 10. The technique analysis used multiple linear regression on panel data is random effect model. Among 6 variables being tested, debt to asset ratio, current ratio, return on asset and firm size have a significant influence and total asset turnover and debt to equity ratio have insignificant influence to predict financial distress. Simultaneously, the coefficient determination of all independent variable have a significant influence in predicting financial distress which is indicate by the value of 50.9266%. Altman’s model result shows that 6 out 11 food and beverage were experienced financial distress.