Integrating Capital Structure, Financial and Non-Financial Performance: Distress Prediction of SMEs

Farida Titik Kristanti ()
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Farida Titik Kristanti: Faculty of Economics and Business, Telkom University, Indonesia Author-2-Name: Sri Rahayu Author-2-Workplace-Name: Telkom University, Jl Telekomunikasi, Terusan Buah Batu, Bandung, 40257, West Java, Indonesia Author-3-Name: Deannes Isynuwardhana Author-3-Workplace-Name: Telkom University, Jl Telekomunikasi, Terusan Buah Batu, Bandung, 40257, West Java, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:

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Abstract: Objective - The growth of SMEs in Indonesia is rising from year to year. As an anticipation of bankruptcy, predictions can be made in an integrated means from the perspective of capital structure, financial, and non-financial performance. Methodology/Technique - A sample of 39 companies were selected using purposive sampling during the research period of 2013-2017. The results of the statistical logistic regression show that profitability is an important factor in predicting financial distress of the SMEs in Indonesia. Finding - The operating income to total assets has a negative and significant effect on SMEs financial distress. Meanwhile, retained earnings to total assets have a positive impact. Indonesian SMEs must be efficient in their operational costs to avoid financial distress. Novelty - In addition, sales are also important. If the company's sales are high, and the operational cost efficiency is maintained, the retained earnings will increase. This means that the company will be safe and able to avoid financial distress. Type of Paper - Empirical.

Keywords: Capital Structure; Financial; Distress; Non-Financial; Performance. (search for similar items in EconPapers)
JEL-codes: G32 G33 G34 (search for similar items in EconPapers)
Pages: 7
Date: 2019-07-15
New Economics Papers: this item is included in nep-cfn, nep-eff and nep-sea
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Published in Accounting and Finance Review, Volume 4, Issue 2

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