Article Sidebar

Download
Download Article

Main Article Content

Abstract

This study examines the effect of profitability, liquidity, and leverage on the probability of financial distress in property and real estate companies listed on the Indonesia Stock Exchange (IDX) for the period 2022–2024. Employing a quantitative approach with a causal design, this study uses secondary data drawn from annual and financial reports of 75 companies, yielding 225 panel observations. Financial distress is measured using the modified Altman Z-Score, transformed into a binary dummy variable, while profitability is proxied by Return on Assets (ROA), liquidity by the Current Ratio (CR), and leverage by the Debt-to-Assets Ratio (DAR). The data are analysed using binary logistic regression with panel data, estimated via EViews 10. The results reveal that profitability has a significant negative effect on financial distress, confirming that higher asset returns reduce distress risk. Liquidity also exerts a significant negative effect, indicating that adequate current assets protect companies from short-term payment failure. In contrast, leverage has a significant positive effect, demonstrating that a greater reliance on external debt amplifies financial vulnerability. Collectively, the three variables explain 55.96% of the variation in financial distress probability, with an overall model prediction accuracy of 87.56%. These findings provide practical guidance for management, investors, and regulators in assessing financial health risks within Indonesia's property and real estate sector.

Keywords

Financial Distress Profitability Liquidity Leverage Property Sector

Article Details

Creative Commons License

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

How to Cite
Azzahra, A., & Ekadjaja, A. (2026). The Effect of Profitability, Liquidity, and Leverage on Financial Distress in Property and Real Estate Companies Listed on the IDX. Golden Ratio of Auditing Research, 6(2), 865–874. https://doi.org/10.52970/grar.v6i2.2390
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Afgani, K. F., Rivanda, A. K., Purbayati, R., & Marzuki, M. M. (2023). The effect of liquidity, leverage, operating capacity, profitability, and sales growth as predictors of financial distress: Property, real estate, and construction services companies listed on the IDX. Journal Integration of Management Studies, 1(1), 13–21. https://doi.org/10.58229/jims.v1i1.15
  2. Altman, E. I., Iwanicz-Drozdowska, M., Laitinen, E. K., & Suvas, A. (2017). Financial distress prediction in an international context: A review and empirical analysis of Altman's Z-score model. Journal of International Financial Management & Accounting, 28(2), 131–171. https://doi.org/10.1111/jifm.12053
  3. Bank Indonesia. (2022). BI 7-day reverse repo rate tetap 3,50%: Arah bauran kebijakan Bank Indonesia tahun 2022 untuk menjaga stabilitas dan memperkuat pemulihan ekonomi nasional. https://www.bi.go.id/id/publikasi/ruang-media/news-release/Pages/sp_241522.aspx
  4. Bank Indonesia. (2024). BI-rate naik 25 bps menjadi 6,25%: Memperkuat stabilitas dan menjaga pertumbuhan dari dampak rambatan global. https://www.bi.go.id/id/publikasi/ruang-media/news-release/Pages/sp_268024.aspx
  5. Dwiantari, R. A., & Artini, L. G. S. (2021). The effect of liquidity, leverage, and profitability on financial distress: Case study of property and real estate companies on the IDX 2017–2019. American Journal of Humanities and Social Sciences Research, 5(1), 367–373.
  6. Ghozali, I. (2018). Aplikasi analisis multivariate dengan program IBM SPSS 25 (9th ed.). Badan Penerbit Universitas Diponegoro.
  7. Ghozali, I. (2020). Analisis multivariat dan ekonometrika: Teori, konsep, dan aplikasi dengan EViews 10 (2nd ed.). Badan Penerbit Universitas Diponegoro.
  8. Ghozali, I., & Ratmono, D. (2017). Analisis multivariat dan ekonometrika dengan EViews 10. Badan Penerbit Universitas Diponegoro.
  9. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
  10. Kementerian Koordinator Bidang Perekonomian Republik Indonesia. (2023). Menko Airlangga: Indonesia telah menjadi tujuan investasi properti terbaik di dunia. https://ekon.go.id/publikasi/detail/5385/menko-airlangga-indonesia-telah-menjadi-tujuan-investasi-properti-terbaik-di-dunia
  11. Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2018). Intermediate accounting: IFRS edition (3rd ed.). Wiley.
  12. Nityakanti, P. (2024). BI kerek suku bunga, begini dampaknya ke emiten properti. https://investasi.kontan.co.id/news/bi-kerek-suku-bunga-begini-dampaknya-ke-emiten-properti
  13. Otoritas Jasa Keuangan. (2023). Statistik pasar modal semester I-2023. https://ojk.go.id/id/kanal/pasar-modal/data-dan-statistik/statistik-pasar-modal/Documents/STATISTIK%20PASAR%20MODAL%20SEMESTER%20I-2023.pdf
  14. Pratiwi, E. Y., & Sudiyatno, B. (2022). Pengaruh likuiditas dan profitabilitas terhadap financial distress. Fair Value: Jurnal Ilmiah Akuntansi dan Keuangan, 5(3), 1324–1332. https://doi.org/10.32670/fairvalue.v5i3.2459
  15. Purwanti, D., & Sari, R. U. (2023). Prediction of financial distress in property and real estate companies in Indonesia: Liquidity ratio, leverage ratio, activity ratio, profitability ratio, growth ratio. International Journal of Accounting, Management, Economics and Social Sciences (IJAMESC), 1(2), 110–117. https://doi.org/10.61990/ijamesc.v1i2.10
  16. Runis, A., Samsul Arifin, D., Masud, A., & Kalsum, U. (2021). The influence of liquidity, leverage, company size, and profitability on financial distress. International Journal of Business and Social Science Research, 2(6), 11–17. https://doi.org/10.47742/ijbssr.v2n6p2
  17. Sanjaya, I., & Wijaya, H. (2024). Internal factors and external factors to predict financial distress. International Journal of Application on Economics and Business, 2(3), 349–356. https://doi.org/10.24912/ijaeb.v2i3.349-356
  18. Savery, Y. I., Haninun, H., & Riswan, R. (2024). Financial performance to determine financial distress conditions. Marginal Journal of Management, Accounting, General Finance and International Economic Issues, 3(2), 598–611. https://doi.org/10.55047/marginal.v3i2.1077
  19. Setyawati, A., Fidhyanti, F. S., Sungangga, A., & Rahman, I. (2025). Effects of financial ratios on financial distress in property and real estate companies. International Journal of Management Research and Economics, 1(3), 13–30. https://doi.org/10.54066/ijmre-itb.v1i3.656
  20. Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374. https://doi.org/10.2307/1882010
  21. Sugiyono. (2023). Metode penelitian kuantitatif, kualitatif, dan R&D (Sutopo, Ed.). Alfabeta.
  22. Sukarno, A., Yacobus, A., & Satmoko, A. (2023). Financial ratio analysis in predicting financial distress at tourism companies, restaurants, and hotels listed on the Indonesia Stock Exchange (IDX) 2021. Jurnal Ilmu Keuangan dan Perbankan (JIKA), 12(2), 191–202. https://doi.org/10.34010/jika.v12i2.8994
  23. Wijaya, F. D., Andy Lasmana, & Magdalena Melani, M. (2024). The effect of liquidity, profitability, leverage, and activity on financial distress. Jurnal Ilmiah Manajemen Kesatuan, 12(4), 1377–1388. https://doi.org/10.37641/jimkes.v12i4.2550