The Effect of Profitability, Leverage, And Liquidity on Financial Distress

Abstract

This study aims to analyze the effect of profitability, leverage, and liquidity on financial distress in property and real estate sector companies listed on the Indonesia Stock Exchange (IDX) in 2024. A quantitative approach with an associative research design was employed, involving 72 companies as the sample, selected through purposive sampling from a total population of 92 companies. Data analysis was conducted using multiple linear regression with the assistance of SPSS software version 24. Prior to hypothesis testing, classical assumption tests were performed, comprising normality, multicollinearity, and heteroscedasticity tests, all of which were satisfied. The results of the partial test (t-test) show that profitability has a negative and insignificant effect, leverage has a positive and insignificant effect, and liquidity has a positive and insignificant effect on financial distress. Meanwhile, the coefficient of determination (R Square) of 2.4% indicates that profitability, leverage, and liquidity simultaneously explain 2.4% of the variation in financial distress among property and real estate sector companies listed on the IDX in 2024, while the remaining 97.6% is explained by other factors outside this research model.