PROFITABILITY, SOLVENCY, AND FINANCIAL DISTRESS OF TRANSPORTATION SECTOR COMPANIES LISTED ON THE IDX 2018-2021

Abstract

This study aims to examine the influence of Profitability and Solvency on Financial Distress in Transportation Sector Companies Listed on the IDX in 2018-2021. This research replicates the research of Dwiantari et al. (2021). This research is different from previous studies because it focuses on the transportation sector, which is the industry most affected by the Covid-19 pandemic due to the availability of large-scale social policies (PSBB) which caused a decrease in transportation use which led to a decline in financial performance. This research uses Return on Assets to measure the level of profitability, Debt to Asset Ratio to measure the level of solvency, and the Ohlson method to measure bankruptcy predictions. The findings of this research are in line with research by Wahyuningtyas and Fatmawati (2021)which found that profitability does not significantly influence Financial Distress. This results in the large profits of a company not requiring large debts or high capital to cover financing. Conversely, solvency significantly influences Financial Distress.

Keywords: Profitability, Solvency, and Financial Distress