Jurnal Impresi Indonesia (JII)

Vol. 2, No. 2, Februar1 2023

p-ISSN: 2828-1284 e-ISSN: 2810-062x
website: https: //rivierapublishing.id/JII/index.php / jii / index

THE EFFECT OF CASH FLOW, PROFITABILITY, AND LEVERAGE ON

FINANCIAL DISTRESS IN LISTED CONSUMPTION GOODS COMPANIES

Silvia Oktari1, Mohammad Fany Alfarisi2, Rida Rahim3

Universitas Andalas, Padang, Indonesia
[email protected], [email protected], [email protected]

Abstract
Received: 30-12-2022 Introduction: Financial distress is a condition where a
accepted: 18-01-2023 company experiences problems with its finances so that the
Published: 01-02-2023 company is threatened with bankruptcy. Purpose: This
study aims to determine and analyze the effect of cash flow,
Keywords: cash flows; profitability, and leverage variables partially on financial
profitability; distress, as well as to determine which variable has the most
leverage; financial dominant effect on financial distress in manufacturing
distress companies in the consumer goods sector. The data processed
is secondary data from the annual reports of 46
manufacturing companies in the consumer goods sector listed
on the IDX for 2018-2021 taken through purposive sampling.
The method used in this study is panel data regression
analysis using Eviews version 10. The results of this study
indicate that: cash flow has a significant positive effect on
financial distress, profitability has a significant negative
effect on financial distress, and leverage has a significant
positive effect on financial distress. Methods: This study
used a purposive sampling technique with a sample of 46
manufacturing companies in the consumer goods sector.
Results: This study found that cash flow had a significant
positive effect on financial distress, profitability had a
significant negative effect on financial distress, and leverage
had a significant positive effect on financial distress.
Conclusion: It can be concluded that in this study cash flow
and profitability have no significant effect on financial
distress while leverage has a negative and significant effect
on financial distress in manufacturing companies listed on
the Indonesia Stock Exchange in 2018-2021.
Corresponding Author: Silvia Oktari
E-mail: [email protected]

INTRODUCTION
With over time, then the more there are many competing companies for the
interesting attention of consumer. Various innovations and stuff new start popping up. As
gallop in sophistication technology, food or drink contemporary, increasingly trendy fashion,
and so forth. However with the more height number competition, then no few companies
have experienced this condition decline financial and even experience bankruptcy because
no capable to anticipate progress over time and interest more and more customers increase.
Development economy in the world today raises competition very tight business, especially
in an increasingly modern era like now this. The company was sued for being capable
compete with the advantage alone. Trading free not only compete in the domestic market,
but also compete with another company. Circumstances economy a country can influence
circumstances environment company, because company established for reach biggest goal.
According to (Syuhada et al., 2020) growth economy in many year last, the world has grown
very rapidly. However, no one could determine is something the company will permanently

Doi: 10.58344/jii.v2i2.2076 101

Silvia Oktari , Mohammad Fany Alfarisi , Rida Rahim
Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

safe and endure in market competition. Every company established to look for profit could
endure or develop in a long time without liquidation .
Company aims to earn profit for support activity its operations. Condition stable
finances needed to use smoothness operational and development company. However,
companies are also faced with competition between increasingly competitors tight, so the
new strategy is always needed for survive and gain profit as big size. Companies that don't
capable endure will experience a loss that results in fatal condition finance. Failure to
produce source of funds and not exists handling seriously possible happening bankruptcy or
liquidation (Amanda & Tasman, 2019) . The amount of growing company from time to time
resulted company being capable compete rigorous and innovative in the product so that his
company could endure from other companies and earn profit.
Lots old companies look for ideas to get rivals such as other companies making
products new, innovating in the product or expand the business. For expand a business ,
management company is very important in carrying out the expansion process in order to be
able to walk with smoothly. If the management company is not smart in manage finance and
expansion process the business does no walk smooth, then company is naturally faced with
bankruptcy or the term "Financial Distress" accounting. because to expand business no one
can depend on treasure, but must do loan. Definition of Financial Distress / decline
condition finance is something circumstances where a company no could continue the
activity the business because no could pay obligations at that time determined. Besides that
Financial Distress can be interpreted as circumstances where something effort experience
crisis finance. Financial Distress usually caused by the failed entity paying debt debtor
because the entity run out the funds for forward operational entity ( Sitorus et al, 2022).
Analysis Report Finance is one method for learning the circumstances finance
business. When report finance company show reduction, management and observer outside
could anticipating and anticipate possibility of difficulty finance. Analysis ratio finance is one
of the most important tool for analyze report finance. With the use of analysis ratio finances,
position finance and performance management company rated with compare numbers in
report his finances. Besides that, the future potential company could predict with the use
analysis ratio finance. Analysis ratio could utilize to anticipate difficulty finance something
company. The condition is called Financial Distress is condition where something effort faces
problem in finance until potentially experiencing bankruptcy. As shown in the table below
this , a lot of companies listed on the Indonesia Stock Exchange (IDX). Face difficulty finance
until the end year 2021.

Development of the Number of Companies

Experiencing Financial Distress and Gray
Conditions in Consumer Goods Companies in the
2018-2020 Period.
50

40

30

20

10

0
2018 2019 2020 2021
Fiinacial ditress Grey area

Image 1.
Development Number of Affected Companies Financial Distress and Gray Conditions in
Goods Companies consumption Period 2018-2020

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Silvia Oktari , Mohammad Fany Alfarisi , Rida Rahim
Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

Based on the picture above, shows that every the year always companies are
experiencing financial distress in consumption, each the year ie from From 2018 to 2021,
companies will always experience financial distress increase every year his. And deep
company the gray condition always decrease every the year. Condition this because
competition growing company tight and moment it's also power buy inclined society decline.
The growth of the goods industry existing consumption in Indonesia currently experience a
slowdown in a number of the year last. Some factor to be the reason for the slowdown among
them is competition between growing company tight and heated involving local brands as
well import then, recovery power buy slowing society as well as shift choice consumer from
FMGC products to non FMGC products are also increasing slow down the growth of the
industry and not stable economy people in the era of covid 19 can also be one reason for
lower consumption society.
Financial Distress is also influenced by several factors ie cash flow, a company said if
cash flow and profit fail fulfill its obligation, then will experiencing financial distress. Cash
flow can made as an indicator for investors and creditors for know condition finance
company . The small cash flow causes investors and creditors to lose trust to the company so
that could interesting the whole the funds . (Halim, 2016) through his research show that
cash flow and profit influential significant in predict financial distress, and also influenced by
profitability, Luh Desi Damayanti et al., (2017) said that, profitability is ability company for
produce profit from assets and equity. According to performance company considered
satisfying when own level high profitability because could produce a lot of money from its
operational. According to Fajri and Dewi, (2018), profitability is total the profit that can be
obtained company of share capital, rate sales, and assets (assets) owned company. Increased
profitability something company show success company in produce profit. In other words,
profitability is reflecting ratio profit company. This could used as size for determine
generated profit During period certain.
Besides cash flow and profitability, situation debt companies can too be one _ reason
problem financials that appear in known companies with term leverage. Leverage ratio that
can be influence Financial Distress conditions. Leverage ratio is According to Prihadi,
(2008), the leverage ratio is ratio showing that company capable fulfil whole obligation
financially, fine period short nor period long .
Firm size, which is measured with equity and value asset company , is other
contributing factors to difficulty finance ( Nurmada et al., 2018). Total asset value company
represented by its size. Company will more easy do diversification with more assets many,
that will make it easy company for fulfil future debts and have score positive for creditors
(Santoso, 2015).
Financial Distress can too influenced by growth sales (sales growth), sales growth
describes how percentage sale company from year to year. Increased sales growth ratio
shows that company capable Execute and achieve company targets because the percentage
increased sales from year to year.

RESEARCH METHODS
(Sekaran & Bougie, 2017) put forward that design study is planned in collection,
measurement, and analysis of data based on statement study study researcher uses method
study quantitative research quantitative interpreted as method-based research to philosophy
positivity, this used for researching populations or samples particular, deep retrieval
technique samples in general conducted in a manner random, data collection using research
instruments, data analysis is quantitative or statistics, with a purpose for test for test
hypothesis that has set (Yani, nd).
Study this use approach deductive that is, test hypothesis Among variable
independent and dependent. Current cash, profitability, and leverage constitute variable
independent of research. Control variables consist from firm size and sales growth while
variable dependent namely financial distress with the Almant Z Score model. this model is
capable of predicting financial distress in companies goods manufacturing sub-sector

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Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

registered consumption on the stock exchange Indonesian effect . Study this using the data
obtained from report finance each company 's annual report for the 2018-2021 period.

Table 1
Withdrawal sample
No Criteria sample Total
Population : Industrial Company Goods Consumption listed on the IDX for the 2018-
1 2021 period 74
Taking samples based on criteria ( purposive sampling ):
2 Companies that don't registered on the IDX consecutive from 2018-2021 years -24
3 Companies that don't report finance period 2018-2021 years -4
4 Sample Study 46
5 Total Sample (nx periods research ) (46x 4 years ) 184

The corresponding outlined table, then obtained a sample for studying as many as 46
companies in the sub-sector sector goods consumption .

Table 2
Variable Definition Measurement Source
Something is the stage at
which the business
Financial 𝑍 = 6,56X1 + 3,26X2 + 6,72X3 ( Hotchikiss,
experience difficulty finance
Distress + 1,05X4 2019)
before submitting
bankruptcy.
Cash flow is what it contains
about cash receipts, cash Total Cash Flow = Total (J. Weygant , Paul
disbursements , and balances Operating Cash Flow + Total D. Kimmel,
cash flow
net cash generated _ from Investment Cash Flow + Funding Donald E. Kieso
activity operations, activities Cash Flow 2013)
investment, and activity
funding on a period certain.
𝐸𝐴𝑇
Is the return on assets used _ 𝑅𝑂𝐴 = (Hanafi & Halim,
Profitability 𝑇𝑂𝑇𝐴𝐿 𝐴𝑆𝑆𝐸𝑇
for producing income clean 2016)
company
leverage is a ratio used
(Brigham and
leverage for _ measure to what extent
𝑇𝑂𝑇𝐴𝐿 𝐿𝐼𝐴𝐵𝐼𝐿𝐼𝑇𝐼𝐸𝑆 Houston 2012)
assets the company financed
𝐸𝑅 =
by debt. 𝑇𝑂𝑇𝐴𝐿 𝐸𝑄𝑈𝐼𝑇𝑌
( Rahmy , 2015),
(Widhiari &
Growth sale are counted with
growth 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 𝑡 − 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 𝑡 − 1 Merkusiwati,
the formula: sales period now
sales 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 𝑡 − 1 2015) , and
- the period before: sales
(Amanda &
period before.
Tasman, 2019)

Size company be measured

Size = Ln total assets
firm size with the natural log of total Nasser et al., 2006
assets company

Analysis this panel data regression used for test influence Partial variable
independent to variable dependent. If value > value, and or probability significance smaller
than 0.05 then rejected and hypothesized stated alternative _ that variable independent
individually affect _ variable dependent be accepted or rejected . The panel data equation is
as follows:
FDit = 𝑎 + 𝖰 1 𝐴𝑟𝑢𝑠. 𝐾𝑎𝑠 i 𝑡 + 𝖰 2 𝑃𝑟𝑜𝑓 i 𝑡𝑎𝑏 i 𝑙 i 𝑡𝑎𝑠 i 𝑡 + 𝖰 3 𝐿𝑒𝑣𝑒𝑟𝑎𝑔𝑒 i + _

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Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

Description :
FDit = FDit = Financial Distress of the company I at time t, α = Constant, β =
Coefficient Regression, Cash Flow = Cash flow of company i at time t, Profitability =
Profitability company I at time t, Leverageit = Leverage of the company i at time t, e =
Standard error.

Hypothesis study could be stated be accepted if score PValues < 0.05. hypothesis
study this is as following :
H1: Cash flow matters positive and significant to Difficulty Finance.
H2 : Profitability influential negative and significant against Financial Distress
H3: Leverage matters positively and significant against Financial Distress.

RESULTS AND DISCUSSION

A. Research Results Characteristics of Respondents
1. Chow Test or Likelihood Test

Table 3
Chow-Test Test Results
Redundant Fixed Effects Tests
Test cross-section fixed effects
Effect Test Statistics d,f, Prob,
Cross-section F 30,688 -43,127 0.000
Chi-square cross-sections 428,168 43,000 0.000
Source : Results of Processed Data Using Eviews 10

Based on Chow Test test results with the use Eviews 10, got a probability of
0.000. Because of value probability smaller of the significant level (α = 0.05), so could
concluded that hypothesis accepted , so more estimate _ good used in this model is a
fixed effect model. So testing next with the Hausmann test .
2. Hausman test
Testing this comparing the fixed effect model with the random effect in
determine the best model for used as a panel data regression model . The Hausman
test uses a similar program with the Chow test , namely the Eviews program . The
results of the Hausman Test can be obtained seen from the processed hausman test
output results with use Eviews 10 on the table following this :

Table 4
Hausman-Test Test Results
Correlated Random Effects - Hausman Test
Test cross-section random effects
Test Summary Chi-Sq. Statistics Chi-Sq. df Prob
Random cross-sections 55.32134 5,000 0.000
Source : Results of Processed Data Using Eviews 10

Based on hausman test results with use Eviews , obtained a probability of

0.000. More probability value small from the significant level (α = 0.05), then
hypothesis for this model received good model worn is a fixed effect. So testing next
with panel data regression test .
3. Analysis Panel Regression

Table 5
Estimation Results Fixed Effect Panel Regression
Dependent Variable: FD

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Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

Variables coefficient std. Error t-Statistics Prob

C 14,841 1,985 7,478 0.000
AK 0.023 0.028 0.817 0.415
homework -0.001 0.001 -0.819 0.415
LV -0.049 0.015 -3,238 0.002
SIZE -0.484 0.070 -6,940 0.000
GROWTH 0.401 0.046 8,779 0.000
R-squared 0.923
Adjusted R-squared 0.893
F-statistics 31,577
Prob(F-statistic) 0.000
Source : Processed panel data regression results Eviews 10

from processing use Eviews 10 above , then obtained equality the regression as
following :
Y = 14.841 + 0.023 (X1) - 0.001 (X2) - 0.049 (X3) – 0.484 (Z1) + 0.401 (Z2) + e

From the equation panel regression can concluded that :

a. From the analysis test results panel regression is visible that score constant of -
14.841, that is Cash Flow (X1), Profitability (X2), Leverage (X3) and Size company
(Z1) as well Growth sales (Z2) of worth zero or permanent then the value of financial
distress is of 14,841.
b. Variable Cash flow (X1) has coefficient regression of 0.023. It means if variable Cash
flow (X1) increases as big one unit with assumption Profitability (X2), Leverage (X3)
and Size company (Z1) as well Growth sales (Z2) value zero or permanent then
financial distress will experience enhancement of 0.023. Coefficient worth positive,
meaning there is connection positive Among cash flow against financial distress.
increasing cash flow then will increasing financial distress in the company.
c. Variable Profitability (X2) has coefficient regression of -0.001. It means if Leverage
variable increases as big one unit weight with assumption Cash Flow (X1), Leverage
(X3) and Size company (Z1) as well Growth sales (Z2) value zero or permanent then
financial distress will experience decline of 0.001. Coefficient worth negative,
meaning there is connection negative Among Profitability against financial distress.
increasing Profitability so will reduce financial distress in the company.
d. Leverage variable (X3) has coefficient regression of -0.049. It means if Leverage
variable increases as big one unit weight with assumption Cash Flow (X1),
Profitability (X2) and Size company (Z1) as well Growth sales (Z2) value zero or
permanent then financial distress will experience decline of 0.049. Coefficient
worth negative, meaning there is connection negative between Leverage and
financial distress. Increased Leverage then will reduce financial distress in the
company.
e. Variable Size company (Z1) has coefficient regression of -0.484. It means if variable
Size company increase as big one unit weight with assumption Cash Flow (X1),
Profitability (X2) and Leverage (X3) as well Growth sales (Z2) value zero or
permanent then financial distress will experience decline of 0.484. Coefficient
worth negative, meaning there is connection negative Among Size company against
financial distress. increasing Size company so will reduce financial distress in the
company.
f. Variable Growth sales (Z2) have coefficient regression of 0.401. It means if variable
Size company increase as big one unit weight with assumption Cash Flow (X1),
Profitability (X2) and Leverage (X3) as well Size company (Z1) is worth zero or

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Silvia Oktari , Mohammad Fany Alfarisi , Rida Rahim
Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

permanent then financial distress will experience enhancement of 0.401. Coefficient

worth positive it means there is connection positive Among Growth sale against
financial distress. increasing Growth sale so will increasing financial distress in the
company.

B. NORMALITY TEST
24
Series: Standardized Residuals
Sample 2018 2021
20
Observations 184

16 Mean -2.75e-17
Median -0.043228
Maximum 1.193439
12
Minimum -1.041209
Std. Dev. 0.442618
8 Skewness 0.443341
Kurtosis 2.776062
4
Jarque-Bera 6.412054
Probability 0.040517
0
-1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2
Figure 2
Jarque¬- Bera Test Results Before Outliers
Source : Results of Processed Data Using Eviews 10

From picture 2 above could seen that the residual data already which is normally
distributed score jarque falla 6.412054 and probability 0.040517 or small from level
probability ie 0.05 so not yet considered worthy for perform a panel regression test.
After got results that the data is distributed not normal then outlier test is performed,
the outlier test is performed with use microsoft excel with method look absolute
standardized value. If the absolute standardize value < 3 then the data is not oulier , if
absolute standardize > 3 then data said outlier. Based on oulier test results, author
eliminating 2 samples namely Pharmaceutical Chemistry Tbk (KAEF) and Multi Bintang
Indonesia Tbk (MLBI) because own absolute standardized value > 3.
- Normality test results after removal of outliers
24
Series: Standardized Residuals
Sample 2018 2021
20
Observations 176

16 Mean -5.68e-18
Median -0.038301
Maximum 1.064541
12
Minimum -1.177954
Std. Dev. 0.441741
8 Skewness 0.246585
Kurtosis 2.739011
4
Jarque-Bera 2.283102
Probability 0.319323
0
-1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0
Figure 3
Source : Results of Processed Data Using Eviews 10

From figure 3 above could seen that the residual data already which is normally
distributed score jarque falla 2.283102 and probability 0.319323 or big from level
probability ie 0.05 so sudaj considered worthy for perform a panel regression test .

- Hypothesis Test
Table 6
Test Results hypothesis Study

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Silvia Oktari , Mohammad Fany Alfarisi , Rida Rahim
Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

hypothesis Statement Prob Comparison Decision

Cash flow matters positive and significant
H1 0.415 0.05 Rejected
against Financial Distress
Negative and significant profitability to
H2 0.415 0.05 Rejected
Financial distress
Leverage matters positive and significant Be
H3 0.002 0.05
against financial distress accepted

- Results of Structural Model Analysis

Before variable research in analysis with do testing formula statistics Eviews 10,
data from each variable study described especially first, this meant to be give description
about each variable studied. Research data that becomes variable Dependent (Y)
Financial distress , while being variable independent is Cash flow (X1), Profitability (X2),
Leverage (X3) with variable control that is Size company (Z1) as well Growth sales (Z2).
kindly concise statistics descriptive served in table as following:

Table 7
Statistics Descriptive
AK
FD homework LV SIZE GROWTH
( In Millions of Rupiah)
Means 1.025 235587 7,953 0.990 28,603 0.074
Maximum 2,293 12055390 92,100 13,550 32,820 2,473
Minimum 0.035 -5239728 -21,400 -2,130 25,361 -0.855
Std,Dev , 0.466 1584859 14,953 1.255 1,619 0.294
Observations 184 184 184 184 184 184
Source : Results of Processed Data Using Eviews 10

Based on table 7 above, obtained information that total sample consists of the 46
samples and the amount of data entered in testing this of 184 observational data.
Financial distress variable (Y) as variable proximate dependent _ with almant z-score has
score Lowest of 0.035 that is owned by Earth Technoculture Superior Tbk (BTEK) in
2021. Meaning During 2018-2021 Earth year Technoculture Superior Tbk own trend for
experience bankruptcy, this because score almant z-core owned by Earth Technoculture
Superior Tbk is score Lowest if compared with other samples studied. Top rated financial
distress variable namely of 2,293 owned by Hanjaya Mandala Sampoerna Tbk (HMSP) in
2018. Meaning that in the 2018-2021 period , Hanjaya Mandala Sampoerna Tbk (HMSP)
has level tendency to be more distressed low from sample other because have score More
Almant Z-Score tall if compared with company other. The mean value of financial distress
is 1.025 During period observations started from in 2018-2021 the level of distress from
company sample is of 1.025. Value of standard deviation of 0.466 which is where data
distribution can categorized as small because score standard deviation more small if
compared with the average value (mean).
Variable independent in study this that is Cash flow (X1) has score Lowest of -
5,239,728 owned by Indofood Sukses Makmur Tbk (INDF) in 2018. This indicate that
level rotation cash flow from Indofood Sukses Makmur Tbk ( INDF) during period study
more low compared company another sample because own negative cash flow. Top rated
cash flow of 38,252,000 at a variable average The cash flows are 2,567,464 as well with
standard deviation of 5,642,628 owned by Indofood Sukses Makmur Tbk (INDF) in 2021.
This means During period study namely 2018-2021 Indofood Sukses Makmur Tbk
(INDF) to be highest company rotation current the cash because own high cash flow
compared with sample other. The average cash flow value of 1.025 means During period
observations started _ from in 2018-2021 the level of distress from company sample is of
235,587. It means that rotation cash flow from company sample tend stable because
worth positive of 235,587. Value of standard deviation of 1,584,859 which data
distribution for variable cash flow can categorized as big because score standard deviation
more big compared with the average value (mean).

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Silvia Oktari , Mohammad Fany Alfarisi , Rida Rahim
Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

Variable Profitability (X3) proxied with ROA have score Lowest of -21,400 owned
by Bentoel International invest Tbk (RMBA) in 2020. Meaning During period study
Bentoel International invest Tbk produce more losses big compared with other samples
are inclined produce profit. Top rated of 92,100 owned by Merck Indonesia Tbk (MERK).
It means that During period 2018-2021 Merck Indonesia Tbk Becomes the biggest
company produce profit clean if compared with sample other. The average value of
profitability of 7.953 means During period observations started from 2018-2021 company
year sample tend experience profit compared loss because has a positive average profit.
Value of standard deviation of 14,953 which data distribution for variable profitability
could categorized as big because score standard deviation more big compared with the
average value (mean).
proxied Leverage Variable (X3). with DER have score Lowest of -2,130 owned by
Tiga Pilar Sejahtera Food Tbk (AISA) in 2020. This means During period observation
namely 2018-2021 Tiga Pilar Sejahtera Food Tbk Becomes hardest company pay off his
obligations compared another sample because own the lowest and negative DER value.
The highest leverage value of 13,550 is owned by Prasidha Aneka Niaga Tbk (PSDN) in
2020. Meaning that During period 2018-2021 Prasidha Aneka Niaga Tbk is most capable
company ensure level debt through owned capital though company. The average leverage
value is 0.990 During period observation from 2018-2021 by 99% of the company sample
capable ensure obligations owned by the company through existing capital in company.
Value of standard deviation of 1.255 which where data distribution for leverage variable
can categorized as big because score standard deviation more big compared with the
average value (mean).
Variable Size company (Z1) proxied with LN Total Assets own score Lowest of
25,361 owned by Prima Cakrawala Abadi Tbk (PCAR) in 2020. This means During period
2018-2020 Prima Cakrawala Abadi Tbk is company with lowest asset compared with
sample other. Top rated of 32,820 owned by Indofood Sukses Makmur Tbk (INDF) in
2021. This means that Indofood Sukses Makmur Tbk have more total assets big compared
with company others in 2018-2021. Size average value company of 28.603 means During
period observation from 2018-2021 company year sample own relative asset _ big . Value
of standard deviation of 1.619 which data distribution for leverage variable can
categorized as small because score standard deviation more small compared with the
average value (mean).
Variable Growth proxied sales (Z2). with sales growth have score Lowest of 0.885
which belongs to the Earth Technoculture Superior Tbk (BTEk) in 2021. Meaning During
2018-2020 Earth period Technoculture Superior Tbk (BTEK) is company with level
decline highest sales compared another sample in 2018-2021. Top rated of 32,820 owned
by Prima Cakrawala Abadi Tbk (PCAR) in 2021. This means that Prima Cakrawala Abadi
Tbk Becomes company with enhancement highest sales from previously if compared with
sample other. Growth average value sale of 0.074 means During period observation from
2018-2021 company year sample tend experience enhancement sales. Value of standard
deviation of 0.294 which is where data distribution for leverage variable can categorized
as big because score standard deviation more big compared with the average value
(mean).

Framework conceptual

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Silvia Oktari , Mohammad Fany Alfarisi , Rida Rahim
Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

C. Discussion
- Influence Cash Flow Against Financial Distress
If value high cash flow so the Financial Distress value is also high so much tall
value of Financial Distress then indicate condition company the good or healthy.
(Halim, 2016) find that company manufacturers listed on the IDX in 2013 and 2014
had difficulties finance could predicted use cash flow, which has impact significant.
Analysis of Financial Distress in the company subsector property and real estate on the
Indonesia Stock Exchange from 2011 to with in 2015 seen by (Komala & Laksmita,
2017) . Based on findings research, cash flows are measured with using the total cash
flow is as following : influenced by operating cash flow, investment cash flow, and
funding cash flow.According study (Gaol & Indriani, 2019) ratio cash flow from activity
operation, ratio cash flow from activity investment, and ratio cash flow from activity
funding everything impact on predictions Financial Distress conditions in the company
service sector finance finance. subsector institution. Research (Zhafirah & Majidah,
2019) prove that the current ratio has an effect positive on Financial Distress in the
company textiles and garments. If obligation period short company could resolved and
correct time, company will spared from Financial Distress. In line with Research
conducted by ( Christine et al., 2019) about influence profitability, leverage, total cash
flow and size company against Financial Distress stated that the total cash flow matters
against Financial Distress.
Research conducted by ( Setiawan et al., 2013) , (Hariyanto, 2019) and
(Ayuningtiyas & Suryono, 2019) that no cash flow own influence against Financial
Distress because of this possibility because company that owns low cash flow still
capable for manage owned cash flow for operational company so that company still
capable for pay his obligations.
H1: Cash flow matters positive and significant against Financial Distress
- Influence Profitability Against Financial Distress
Ratio this used as size ability company for obtain profit from every dollar of
sales generated . Profitability is results clean from various policies and decisions .
Profitability company be measured from how much succeed or nope company the from
time to time. profitability is size level effectiveness organization and refers to its
capacity for chase profit. Conversely, profitability, as defined by ( Susanto et al., 2022)
, is capacity company for produce profit in a manner whole with change sale Becomes
profit and cash flow . Notice level consistent profitability that is, yield adequate profit
(return). Compared with possible risk arise is standard where business could endure in
the operation. Return On Assets (ROA) is used in study this for measure profitability.
Companies tend no experience difficulty finance if the ROA more high. Rather, likely
business experience difficulty finance will the more big if ROA decreases.

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Silvia Oktari , Mohammad Fany Alfarisi , Rida Rahim
Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

According to study (Wijayanti et al., 2021) , ROA has an impact negative on

Financial Distress, when business retail must continously maintain and improve profit
because importance profitability. Based on study previously about profitability carried
out by (Albulescu, 2015) and (Wibowo & Susetyo, 2020) found that profitability
influential negative and significant against Financial Distress. this in line with findings
research conducted by Research (Princess, 2019) show that ROA has an effect negative
to Financial Distress in which the company retail must always maintain and improve
profit because profitability is very significant. However different with study (Christine
et al., 2019) which shows that profitability in a manner significant reduce the company
's Financial Distress.
According to (Permatasari, 2016) , profitability is most common ratio for
predict Financial Distress and have influential significant to Financial Distress
conditions. Besides that is, research (Simanjuntak et al., 2017) as well as Nurhayati et
al., (2021) stated that Financial Distress is not influenced by profitability.Meanwhile
that, Mahmud's research (2021) reveals that ROA is not own influence against
Financial Distress. The relationship with difficulty finance is the more high ROA, will
the more profitable company, too performance company, and increasingly spared from
Financial Distress.
H2: Negative and significant profitability against Financial Distress.
- Effect of Leverage on Financial Distress
Leverage ratio shows ability company for pay off obligations ( good period short
nor period length ). Leverage ratio emphasized how much big proportion debt used in
fund asset company. Besides it, deep theory agency, continuity life company is in hand
agent. is agent decide for do funding from party third or no. However if proportion
owed company too big, then need questioned is there is error in taking decision by
agent in manage company or agent on purpose do something just attach importance
himself alone, because it's a decision agent about funding asset company be very
important, because if agent too many using party funds third as funding then will arise
more obligations big on then day, and p this will resulted company Becomes
susceptible to finance, difficulty or difficulty finance (Oktaviani & Yanthi, 2022) . The
more the greater the leverage, the more big possibility company experience financial
distress.
In study Hastuti , (2014) shows that influential leverage ratio significant against
Financial Distress. Besides that there is study from (Permatasari, 2016) which also
uses leverage ratio and own influential results significant on Financial Distress.
Research previously has studied by Faldiansyah et al., (2020) and Marfungatun, (2015)
proved that leverage has an effect positive significant against Financial Distress.
However research conducted by Tran, (2020) who found that leverage has a significant
negative effect on Financial Distress. Dalam study Hastuti, (2014) shows that
influential leverage ratio significant against Financial Distress. Besides that there is
study from (Permatasari, 2016) which also uses leverage ratio and own influential
results significant against Financial Distress. And research done by Younas et al.,
(2021) that leverage ratio has a negative effect on the company 's Financial Distress
manufacturing and also variable leverage is not influential significant against Financial
Distress Ayu et al. (2017). The hypothesis used in study this is as follows:
H3: Leverage matters positive and significant against Financial Distress

CONCLUSION
Study this produce expected implications Becomes instruction for study next. Based
on results analysis found that Leverage has an effect negative to financial distress can
interpreted if leverage increases so level Almant Z-Score as increasingly proxies for financial
distress decreased, so company could the more away from financial distress. Inside company
obtain source of funds will choose risky source of funds small so that will increase
management finance. With little risk company will get high profits so that company capable
pay debts and expenses flowers and more small possibility company experiencing financial

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Silvia Oktari , Mohammad Fany Alfarisi , Rida Rahim
Influence Cash Flow, Profitability, and Leverage Against Financial Distress in Goods Companies
Registered Consumption

distress. So from that company must increase leverage ratio with method obtain source of
company funds from loan with small risk and level low interest for lower level of deep
financial distress company.

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