The Effects of Profitability, Leverage, and Liquidity on Financial Distress on Retail Companies Listed on Indonesian Stock Exchange

The study aims to find out the influence of profitability variables (Return On Assets), Leverage (Debt To Asset Ratio) and liquidity (Current Ratio) on Financial Distress on retail companies listed on the 20142018 period Indonesian Stock Exchange. The population of this study is the entire company contained on the Indonesian Stock Exchange listed retail company of the period 2014-2018. The research sample consists of 21 companies used by purposive sampling methods and taken that meet with criteria from predetermined research samples. The data analysis method used is panel data regression analysis (Random Effect) with a significance level of 5 percent. Based on the results of the research that has been conducted led to that, simultaneously Profitability, Leverage and Liquidity variables have an effect on Financial Distress. Partially variable Profitability has a significant positive effect on Financial Distress, Leverage variables have a significant positive effect on Financial Distress, and negatively significant negatively influential Liquidity variables on Financial Distress. The magnitude of the influence of Profitability, Leverage, and Liquidity on Financial Distress amounted to 98.87 percent, while the rest amounted to 1.13 percent was affected by other variables outside of research.


INTRODUCTION
The pace of growth of the world's economic conditions is undergoing considerable progress each year, various ways businesspeople do to maintain and develop competitive advantages with their competitors (Horne, J.C. dan Wachowicz, 2007;Mulyanti, 2016). The company's competition of one with the other is getting tighter and tighter, thus causing the costs incurred by the company to also get bigger. Factors that can make the company maintain its business activities continuity also need to be noticed by understanding about business failures, as businesses always have the disadvantage of having difficulty even financial failures (Rengifurwarin et al., 2018).
The company constitutes an organization founded with the goal of earning a huge profit. In addition the company also focused on the company's survival to continue going concern. The assumption of going concern used a business entity in running its efforts. With the existence of a going concern an entity is considered capable of sustaining its efforts in the long run and will not be liquidated in the short term (Prabowo & Wibowo, 2017). Management capabilities within a company in order to maintain the company's condition to continue going concern will spare the company from the occurrence of financial difficulties (financial distress) which could cause business bankruptcy to be brought to a later date. The initial stage of business bankruptcy that occurs within the company is usually prefixed with the occurrence of financial difficulties (Opler & Titman, 1994;Outecheva, 2007).
The shift of community shopping style to a signalized electronic trading platform coinfluenced the sales of fast moving consumer goods (FMCG) in modern retail. However, in general the development of modern retail ventures in Indonesia, seen from the magnitude of consumption of FMCG products, during April 2018-April 2019 still grew positive by 1.8% with modern retail growth of 6.6%. Nevertheless, modern retail businesses will still record growth in Indonesia. (economics.bisnis.com).
Methods for predicting financial distress have been done enough as well as providing different results each of his researches, a wide variety of bankruptcy prediction methods have been developed by some experts, among others the (Miller & Springate, 1978) and (Zmijewski, 1984) methods. (Huda et al., 2019)) stated that for the Zmijewski model it can be inferred is the best model because it has the lowest error rate than both the altman and springate methods. According to BAPEPAM in (Setiawati, 2017) states that the Zmijewski method combines various financial ratios together, then there exists a ratio of pre-interest and tax to total assets of incomes the best indicator of knowing the occurrence of bankruptcy and providing suitable coefficients to combine variables-independent variables. That would make the proportions that would be judged more valid for predicting financial distress. The following are described financial distress conditions occurring in the retail sector listed in the 2014-2018 period BEI as follows: From the chart it can be seen that financial distress conditions on the retail sector listed in the 2014-2018 period BEI tend to experience increases. In the period 2014-2015 saw a last increase in the period 2015-2016 in decline and in the period 2016-2018 experienced a fairly significant re-ascension. Based on the calculation of zmijewski the company underwent financial distress when the value of zmijewski was more than 0 and it can be seen that the value of zmijewski showed a value of more than 0 meaning the period 2013-2018 on the retail sector company was predicted to be financial distressed. Then, the trendline can be seen that in the 2014-2018 period showed a fairly significant increase in each year.
The swindling conditions of retail businesses in Indonesia are strongly related to financial distress where many retail companies are already in the financial distress zone but can remain to date. One cause of financial distress is the existence of mismanagement, poor financial decisions whereas effective management planning can help delay the decline and failure (Andersen et al., 2013;Saunders & Cornett, 2014;Wong, 2006) Profitability is a ratio that measures the ability of a company to generate profits (Anderson et al., 1994;Olalere et al., 2017;Ponsian, 2014). According to (Brigham & Houston, 2012)) to measure financial performance, the ratio used that is the profitability ratio because this ratio has covered debt ratio, activity ratio as well as liquidity ratio. The profitability ratio consists of ROA (Return On Assets) which is the ratio showing the ability of the entire assets that exist and are used to make Return on Assets (ROA) profits is the result of comparisons between EBIT and total assets, which in the retail company it shows that in Indonesia in recent years there have been several companies that closed their outlets based on the assets it has and ROA are also able to measure the ability of the company to generate profits in the past years projected in the foreseeable future.
The leverage ratio according to (Hery, 2015) represents the ratio used to measure the extent to which the company's assets are financed with debt. That is, the leverage ratio is a ratio used to measure how large the debt burden a company should bear in the order of asset fulfillment. The commonly used leverage ratio on research is debt asset ratio. Debt asset ratio is calculated by the way total debt is divided by total asset, viewed from the development of the retail company that the asset owned is dwindling and total debt is getting higher which can get some companies to close its business outlets.
The liquidity ratio is a ratio that measures the ability of a company to meet its short-term obligations. One of the liquidity ratios is current ratio where it describes the company's ability in paying off short-term liabilities by utilizing its smooth assets. According to (Munawir, 2005) current ratio is a ratio that indicates the safety level (margin of safety) of short-term creditors, or the ability of the company to pay those debts. Current ratio is a comparison of the smooth assets with the smooth debt, whereby an asset within this retail company has increasingly shrinking value and an increasingly high debt that can get some companies to close its business outlets.

METHOD
According to (sugiyono, 2014) the object of research is an attribute or trait that has certain variations set by researchers to study and then draw conclusions. The research object the author applied according to the one to be researched is financial distress retail companies with Profitability, leverage and liquidity ratios that are proxyed with ROA, DAR and CR on retail companies listed on the Indonesian Stock Exchange (BEI) period 2014-2018. The analysis unit is something to do with the focus studied. Analysis units can be objects, individuals, groups, regions and specific times according to the research focus. The study used a company or organizational analysis unit, namely the retail company listed on the Indonesian Stock Exchange (BEI) period 2014-2018.

Jurnal Ilmiah Ilmu Administrasi Publik: Jurnal Pemikiran dan Penelitian Administrasi Publik
Volume 10 Number 1, January-june 2020. Page 45-52 The population in the study was a company listed on the Indonesian Stock Exchange (BEI) period 2014-2018. The number of populations in this study was 25 companies. Samples in this study used non-probability sampling methods, namely non-random sample retrieval methods with purposive sampling selection techniques The method of data analysis in this study was panel data regression analysis. Panel data is a composite of cross section data and time series (time series) which are a number of observation variables over a number of categories and collected within a given period of time. This panel data regression test is used to know the relationship between independent variables with dependent variables. Testing will be done through the following stages: classical assumption testing, multiple linear regression analysis, determination coefficient, simultaneous and partial hypothesis testing. The testing was conducted with the help of Eviews 10 software. Multiple liniear regression is used to test the influence of two or more independent variables on a single dependent variable and is generally expressed in the equation as follows: Adhes = a + __(1) X_1 + _(2) X_2 + _(3) X_3 + μ The research's liniear aggression uses a panel data regression model with independent variables namely Profitability, Leverage and Liquidity to Financial Distress, whereby such regression models are described through the equation as follows: a + _1 ROA_it + _2 DAR_it + _3 CR_it

RESULT AND DISCUSSION
The liquidity ratio is a ratio that measures the ability of a company to meet its short-term obligations. To be able to fulfill its obligations, then the company must have tools to pay which are smooth assets whose amounts must be far greater than those obligations to be paid by the company. When the company is able to fund and pay off its short-term obligations well then the company's potential to experience financial distress will get smaller. In contrast, if the company is unable to pay off its short-term obligations then the more likely the financial distress is.
Random Effect Model is used as an estimation of panel data leading to the conclusion that independent variables of profitability, leverage, and liquidity jointly affect Financial Distress. Results of regression parameter estimation using the random effect cross-section model approach:

CONCLUSION
Affirmative Development of profitability, leverage and liquidity to financial distress on retail companies listed on the 2014-2018 period Indonesian Stock Exchange is as follows: Affirmative Development of profitability, leverage and liquidity to financial distress in Indonesian Stock Exchange listed retail companies of 2014-2018 period is fluctuating. Profitability is experiencing an increase. Whereas leverage and liquidity tend to decrease. Influence of profitability, leverage and liquidity to financial distress on retail companies listed on the 2014-2018 period Indonesian Stock Exchange is as follows: Profitability, leverage and liquidity were joinly significant influential to financial distress on retail companies listed on the 2014-2018 period Indonesian Stock Exchange. Profitability was partially influential significant on financial distress in Indonesian Stock Exchange listed retail companies of 2014-2018 period, leverage partially influential significant on financial distress in Indonesian Stock Exchange listed retail companies of 2014-2018 period, and liquidity partially influential significant on financial distress on retail companies listed on Indonesian Stock Exchange of 2014-2018 period.