ANALYSIS OF FINANCIAL DISTRESS BASED ON PROFITABILITY, LIQUIDITY, AND CAPITAL STRUCTURE IN TEXTILE AND GARMENT COMPANIES LISTED ON THE IDX FOR THE PERIOD 2020-2024

Abstract

The textile and apparel industries are under intense pressure, which is affecting their financial stability, which is what spurred this study. This study aims to examine how financial hardship affects capital structure, profitability, and liquidity. Using quantitative techniques, secondary data in the form of business financial reports were utilized. Purposive sampling was the method used. Multiple linear regression analysis and traditional assumption testing were used to process the data using SPSS. The primary conclusions showed that all three factors considerably affect financial distress at the same time; however, capital structure has a negative and large impact while profitability and liquidity have no meaningful effect. This suggests that capital structure has a greater impact on the company's financial difficulties. Therefore, capital structure needs to be managed effectively to minimize the risk of financial distress, it should be a consideration for management in managing debt and for investors in making investment decisions.

Keywords: Financial Distress, Profitability, Liquidity, and Capital Structure