Profitability As Determining Factor to Anticipate Company Bankruptcy

This is the authors' abstract. We don't add key points for this paper.

The purpose of this study is to find out the effect of liquidity, leverage, operating capacity on financial distress through profitability as intervening variable. The population of this study is manufacturing companies listed on the IDX over the sampling. Based on the technique purposive sampling, obtained sample of 123 data from 54 manufacturing companies on IDX list from 2016 until 2018. This study uses path analysis using Warp PLS 5.0 software and Sobel test to find significancy of mediating variable. The results of this study indicate that profitability and leverage have a significant effect on the financial distress of manufacturing companies. Meanwhile, liquidity, and operating capacity have no effect on the financial distress of manufacturing companies. The intervening test confirmed that profitability have partial mediation role for relationship between liquidity, leverage, operating capacity with financial distress. Furthermore, the Sobel test also confirmed that profitability can significantly mediate the effect of liquidity, leverage and operating capacity on financial distress.