Predicting financial distress: The roles of liquidity, leverage, and sales growth in Indonesian Food and Beverage Companies
DOI:
https://doi.org/10.26905/afr.v8i3.17880Keywords:
Financial Distress, Leverage, Liquidity, Sales GrowthAbstract
This study examines the effects of liquidity and leverage on financial distress in Indonesian food and beverage companies and the moderating role of sales growth. The sample comprises 26 companies listed on the Indonesia Stock Exchange, yielding 104 observations. Data were analyzed using logistic regression and Moderated Regression Analysis (MRA). The results show that liquidity negatively affects financial distress, whereas leverage has a positive effect. Sales growth moderates both relationships, suggesting that companies with higher sales growth may be better positioned to meet their short-term and long-term obligations through increased revenues and financial resources. These findings highlight the importance of maintaining adequate liquidity and managing leverage effectively to mitigate financial distress. Sales growth may further strengthen companies’ capacity to manage financial obligations and withstand financial pressure. This study contributes to the financial distress literature by examining sales growth as a moderating variable in the relationship between liquidity, leverage, and financial distress. The focus on Indonesia’s food and beverage industry is relevant because its products are essential to society, making the financial sustainability of firms in this sector economically important. The inclusion of sales growth as a moderating factor provides an additional perspective on how internal financial conditions and business performance jointly influence financial distress risk.
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