Analysis of financial ratio to predict financial distress: A comparative study by using accrual and cash-based approaches (case study on automotive and component sub-sector)

Zuraidah, Zuraidah Analysis of financial ratio to predict financial distress: A comparative study by using accrual and cash-based approaches (case study on automotive and component sub-sector). Presented at Proceedings International Conference on Islamics and Business (ICONIES), Malang, Indonesia. (Unpublished)

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Abstract

The purpose of this study is to observe whether the analysis of accrual and cash-based financial ratio can be used correctly in predicting financial distress. This study uses samples such as financial reports from each automotives and components sub-sector companies listed on Indonesian Stock Exchange (BEI) in period 2011-2016. The dependent variable is financial distress and the independent variable are accrual and cash-based financial ratio. Data was analyzed by using discriminant analysis on software SPSS assistant. The result of the study showed that the two financial ratios on accrual-based (WCTA, EBITTA, NITA) and cash-based (CFFOTA, CFFOS, IPPEPPE, CHWCTU, RPPETS, DITS, NetdebtTS) can be used to predict financial distress with accuracy percentage of accrual-based 95.6% and cash-based 85.3%. Afterward, the result of another hypothesis tests stated that the model of financial distress prediction from accrual-based financial ratio has more accurate prediction rate than cash-based financial ratio.

Item Type:	Conference (Paper)
Keywords:	Financial Distress; Accrual-based; Cash-based; Grover Model; Cash Flow Ratio
Divisions:	Faculty of Economics > Department of Accounting
Depositing User:	Zuraidah Zuraidah
Date Deposited:	23 Mar 2019 22:03

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