Financial Ratio Analysis to Predict Financial Distress of Small and Middle Capitalization Company Listed in Indonesia Stock Exchange

Abstract

Financial ratios are widely used by investors as a consideration in choosing stocks in their investment portfolio. Investors avoid company shares whose financial condition is indicated to be in financial distress because this condition can lead to company bankruptcy. Financial ratio analysis is expected to indicate the existence of financial distress conditions in the company. This research analyzes the financial ratios represented by Debt to Equity Ratio (DER) and Return on Equity (ROE) are able to show financial distress in a company as indicated by a high S-Score using the Springate Model.