Analysis of the Effect Financial Ratios to Probability Default With the Risk as Moderation in Indonesian Building Construction Sub-Sector Companies
1Syanindita Prameswari, 2SAdler Haymans Manurung
1Doctoral Program Student, Trisakti University Jakarta,
2Professor of Capital Markets and Banking, Bhayangkara Jaya University Jakarta,
https://doi.org/10.47191/jefms/v7-i9-34
ABSTRACT:
The construction and building sector are one of the important sectors for Indonesia development and economy, furthermore it is also being an indicator in assessing the economic development of a country. The development in the sector of construction and building, which is currently facing intense market competition, is encouraging many companies to improve their management fundamentals. A company's inability to anticipate changes can result the decreasing in business volume, which eventually has a negative impact on profits and caused bankruptcy. The aim of this research is to analyze the effect of GPM, NPM, CR, DER, TIE, and TATO by moderating risk on probability default (probability of bankruptcy) in the construction and building companies in Indonesia which registered on the IDX for the 2014-2023 period. The research method used in this research is a panel data model to estimate the coefficient model. The result shows that Total Assets Turnover (TATO) has a positive and significant effect on the probability of bankruptcy. Meanwhile, Gross Profit Margin (GPM), Net Profit Margin (NPM), Current Ratio (CR), Debt Equity Ratio (DER), and Times Interest Earned (TIE), does not have a significant effect on the probability default in the construction and building companies.
KEYWORDS:
Probability Default, Total Assets Turnover, Gross Profit Margin, Net Profit Margin, Current Ratio, Debt Equity Ratio, Times Interest Earned.
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