Prediction on Financial Distress of Mining Companies Listed in BEI using Financial Variables and Non-Financial Variables

Abstract

This research was conducted to examine if financial variables and non-financial variables can be used to predict the condition of financial distress in public mining companies listed in Bursa Efek Indonesia during period 2008-2009. Based on seven variables used in this research, financial variables used were current ratio, cash ratio, debt ratio, ROA, day sales in receivables ratio while non-financial variables were managerial and institutional ownership variables. The research population was all public mining companies listed in Bursa Efek Indonesia and they do not have delisting during research period (2008-2010). Based on the criteria, there were 13 companies as research population. This research used saturated sampling technique. The research sources were financial report published by Bursa Efek Indonesia in 2008-2010 or during 3 years, while analysis model on this research was logistic regression. The research finding revealed that financial ratios have some significant effects toward the prediction on financial distress in mining company such as (1) current ratio (2) cash ratio and (3) debt ratio have significant effect on negative correlation coefficient, in predicting financial distress of companies while non-financial ratios which are managerial and institutional ownership do not give significant effect.

Keywords: Financial distress, current ratio, cash ratio, debt ratio, ROA, day sales in receivables ratio, managerial ownership, institutional ownership.