Solvency, Debt and Operating Performance (Case Study on 23 Districts/Cities in Aceh Province, Indonesia in 2014-2015)

Abstract

This study aims to investigate the financial performance of local governments before and after the enactment of Law No. 71 year 2010 on accrual-based government accounting standards in all districts/cities of Aceh Province, Indonesia based on Liquidity Ratios, Solvency, Debt, and Operating Performance. The data used is secondary data in the form of local government financial reports published on the website of the Financial Supervisory Body (BPK) in 2014 and 2015. This research is quantitative descriptive research, uses purposive sampling method. The objects of this study are 23 districts/cities in Aceh Province. The method of analysis is Paired Sample T-Test. The results of this study indicate that the liquidity ratio is significantly different between the years before and after the enactment of Law No. 71 year 2010 about accrual accounting standards, while the solvency ratio and the operating performance ratios are not significantly different between the years before and after the enactment of the aforementioned law.

Keywords: Financial Performance of Local Governments, Liquidity, Solvency, Debt and Operating Performance