Academia Open
Vol 8 No 1 (2023): June
Business and Economics

Profitability, Liquidity, and Leverage: Exploring Financial Distress in the Mining Sector
Dampak Profitabilitas, Likuiditas, dan Leverage terhadap Kesulitan Keuangan pada Perusahaan Sektor Pertambangan


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  • Rosita Umamah,
  • Nurasik Nurasik*
Rosita Umamah
Universitas Muhammadiyah Sidoarjo, Indonesia
Nurasik Nurasik
Universitas Muhammadiyah Sidoarjo, Indonesia *

(*) Corresponding Author
Picture in here are illustration from public domain image or provided by the author, as part of their works
DOI: https://doi.org/10.21070/acopen.8.2023.3677
Published June 26, 2023
Keywords
  • Profitability,
  • Liquidity,
  • leverage,
  • financial distress,
  • mining sector
How to Cite
Umamah, R., & Nurasik, N. (2023). Profitability, Liquidity, and Leverage: Exploring Financial Distress in the Mining Sector. Academia Open, 8(1), 10.21070/acopen.8.2023.3677. https://doi.org/10.21070/acopen.8.2023.3677

Copyright (c) 2023 Rosita Umamah, Nurasik Nurasik

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

In the era of the Industrial Revolution 4.0, the competitive landscape among companies is intensifying, necessitating effective business strategies to avoid bankruptcy. This research examines the impact of profitability, liquidity, and leverage on financial distress in mining sector companies listed on the IDX from 2018 to 2020. Using a quantitative approach, the study analyzes data from a population of 41 mining sector companies. The findings reveal that profitability and liquidity, measured through ratios, do not significantly affect financial distress. However, leverage has a significant influence on financial distress. These results provide valuable insights for mining companies in formulating business strategies and managing financial risk to mitigate the potential for distress. The research contributes to the literature on financial distress in the context of the mining sector, addressing the challenges of increased competition and the need for sustainable company performance.

Highlights:

  • Determinants of financial distress: Investigating the impact of profitability, liquidity, and leverage on the occurrence of financial distress in mining sector companies.
  • Empirical analysis: Analyzing the relationship between these variables and financial distress using quantitative research methods and ratios.
  • Implications for mining sector companies: Providing insights for companies in the mining sector to better manage their profitability, liquidity, and leverage in order to mitigate the risk of financial distress and maintain sustainable performance.

Keywords: profitability, liquidity, leverage, financial distress, mining sector

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