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ISSN 2063-5346
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Analysis of Financial Ratios to Measure The Prediction Of Financial Distress In Regency/Municipal PDAM In North Sumatera Province

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Riska Anjani Br Sembiring , Iskandar Muda , Badaruddin
» doi: 10.48047/ecb/2023.12.si8.221

Abstract

This study aims to examine and analyze the effect of profitability, liquidity, and solvency on the prediction of financial distress in BUMD PDAMs in North Sumatera Province for the 2017-2021 financial year. Profitability is measured by the Return on Equity Ratio (ROE), liquidity is measured by the Current Ratio (CR), solvency is measured by the Debt to Total Assets Ratio (DAR), and financial distress is measured by the Grover method. This study uses a causal associative method with a quantitative approach. The population in this study were all PDAM BUMDs in North Sumatera Province. The sampling technique used in this study was a nonprobability sampling technique, namely purposive sampling so that a sample of 16 BUMD PDAMs was obtained. Data were analyzed using Logistic Regression with the help of Eviews 20 software. The results of hypothesis testing showed that profitability had a significant positive effect on financial distress in BUMD PDAM Regency/Municipal in North Sumatera Province. Meanwhile, liquidity and solvency have no significant effect on the condition of financial distress in Regency/Municipal PDAM BUMDs in North Sumatera Province.

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