The Effect of Liquidity Ratio, Leverage Ratio, and Cash Flow on Financial Distress

Suhari Suhari
Jurnal Ilmu Manajemen dan Akuntansi Terapan 📅 2025 Vol 16, No 1 🔗 DOI: 10.36694/jimat.v16i1.737
Abstract
This study examines the effect of liquidity, leverage, cash flow, and managerial agency cost on financial distress among manufacturing companies listed on the Indonesia Stock Exchange. Using multiple linear regression analysis, the results show that liquidity and cash flow have a significant negative effect on financial distress, indicating that firms with higher current ratios and stronger operating cash flows are less likely to experience financial difficulties. In contrast, leverage and managerial agency costs have a significant positive effect, suggesting that excessive debt and inefficient managerial spending increase the likelihood of financial distress. The coefficient of determination (R²) of 0.983 indicates that these four variables explain 98.3% of the variation in financial distress. The findings emphasize the importance of maintaining financial efficiency and controlling agency costs to enhance corporate financial stability.
Keywords
liquidity; leverage; cash flow; managerial agency cost; financial distress
How to Cite

Suhari Suhari (2025). The Effect of Liquidity Ratio, Leverage Ratio, and Cash Flow on Financial Distress. Jurnal Ilmu Manajemen dan Akuntansi Terapan, 16(1). https://doi.org/10.36694/jimat.v16i1.737

Suhari Suhari, "The Effect of Liquidity Ratio, Leverage Ratio, and Cash Flow on Financial Distress," Jurnal Ilmu Manajemen dan Akuntansi Terapan, vol. 16, no. 1, 2025.

Suhari Suhari. "The Effect of Liquidity Ratio, Leverage Ratio, and Cash Flow on Financial Distress." Jurnal Ilmu Manajemen dan Akuntansi Terapan, vol. 16, no. 1, 2025.

Suhari Suhari. "The Effect of Liquidity Ratio, Leverage Ratio, and Cash Flow on Financial Distress." Jurnal Ilmu Manajemen dan Akuntansi Terapan 16, no. 1 (2025).

Suhari Suhari (2025) 'The Effect of Liquidity Ratio, Leverage Ratio, and Cash Flow on Financial Distress', Jurnal Ilmu Manajemen dan Akuntansi Terapan, 16(1). doi: 10.36694/jimat.v16i1.737.

Suhari Suhari. The Effect of Liquidity Ratio, Leverage Ratio, and Cash Flow on Financial Distress. Jurnal Ilmu Manajemen dan Akuntansi Terapan. 2025;16(1).

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