Hasanuddin Journal of Applied Business and Entrepreneurship (HJABE) Vol. 4 No.

4, 2021
e-issn: 2598-0890 p-issn: 2598-0882

FINANCIAL PERFORMANCE ON COMPANY VALUE WITH FINANCIAL

DISTRESS AS VARIABLE INTERVENING IN RETAIL TRADING COMPANIES
LISTED ON IDX

Ina Fitriani1, Muhammad Toaha2, Muhammad Sobarsyah3,

1
Training Center for Development and Public Management Studies of LAN;
nafitriani938@gmail.com
2
Faculty of Economics and Business, Hasanuddin University;
muhammadtoaha1960@gmail.com
3
Faculty of Economics and Business, Hasanuddin University; msobarsyah@gmail.com

ABSTRACT
This study aims to analyze the effect of financial ratio analysis on firm value with financial
distress as an intervening variable in manufacturing companies listed on the Indonesia Stock
Exchange from 2017 to 2020. This type of research is causal comparative. Sampling using
proportional random sampling method, obtained a sample of 17 companies from 25 company
populations with a total of 68 units of observation of analysis. Secondary data collection uses
the technique of documenting the annual financial statements of IDX manufacturing
companies published on the website www.idx.co.id. Methods of data analysis through
classical assumption test, multiple linear regression test and mediation test with path analysis
using Sobel test. The results showed that liquidity, solvency, profitability and financial
distresss simultaneously and partially have an effect directly significant to the value of retail
trading companies listed on the IDX liquidity, solvency and profitability variables have a
significant effect on firm value retail trade listed on the IDX through financial distress as an
intervening variable.

Keywords: Liquidity; Solvency; Profitability; Financial Distress; Firm Value

INTRODUCTION
The development of the world economy today has led to very tight business
competition, including retail trading companies. The competition is getting tougher with the
presence of new competitors with online methods in marketing, innovation in the business
sector really needs to be done for convenience for consumers. The phenomenon of rising and
falling stock prices in the capital market is an interesting thing to observe at this time. For
example, in the global economic crisis in 2008 which resulted in a significant impact on the
capital market in Indonesia, which was reflected in the decline in stock prices by 40-60%
from the initial position in 2008 (Source: Kompas, 25 November 2008). Other than that, the
economic crisis in 2020 due to The global pandemic has caused the pace of economic growth
to stall these conditions are far more critical even when compared to the financial market
crisis conditions in 2008.
In this condition, every company needs to improve the quality of company
performance in order to increase competitiveness. This competition demands that companies
can improve and maintain financial performance to get higher profits. Thus, it will attract
investors and will indirectly increase the shares, so that the value of the company will
increase. If a company continues to decline, then several companiesCompanies in the retail
sector can be threatened with bankruptcy. Financial distress is an important issue and must be
considered by the company, because if the company really experiences financial distress, the
company will be at risk of going bankrupt. Financial distress also affects firm value. The

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occurrence of financial distress causes the value of the company to decrease, thereby
reducing the prosperity of the owner.

LITERATURE REVIEW
Income
Company value is a certain condition that has been achieved by a company as an illustration
of public trust in the company after going through a process of activities for several years,
namely since the company was founded until now.
Price to Book Value (PBV) is a ratio that shows how far a company is able to create
company value relative to the amount of capital invested. For companies that are doing well,
this ratio generally reaches above one, which indicates that the market value of the stock is
greater than its book value. The greater the PBV ratio, the higher the company is assessed by
investors relative to the funds that have been invested in the company. The formula used to
measure Price to Book Value (PBV) is as follows:
Market Price per Share
PBV =
Book Value per Share
Financial performance
Financial performance is an analysis carried out to see how far a company has
implemented using financial implementation rules properly and correctly (Nining, 2012). The
company's financial performance was analyzed using the analysis of financial ratios, namely,
liquidity ratios, profitability ratios, and profitability ratios. Assessment of financial
performance is one way that can be done by the management in order to fulfill its obligations
to funders and also to achieve the goals set by the company.
Liquidity Ratio (Current Ratio)
It is the ratio between current assets and current liabilities. Current assets consist of
cash, marketable securities, receivables and inventories. Meanwhile, current liabilities consist
of accounts payable, notes payable, taxes payable, wages payable, and other short-term
payables. A high current ratio indicates a good guarantee for short-term creditors in the sense
that at any time the company has the ability to pay off its short-term financial obligations.
𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙
𝐶𝐶𝐶𝐶 = × 100%
𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾 𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿
Solvency Ratio (Total Debt to Assets Ratio)
This ratio is used to measure the company's ability to generate profits during a certain
period. This ratio is used to measure the company's ability to guarantee its debts with a
number of assets it has. The higher the total debt, the greater the amount of loan capital used
in generating profits for the company.
𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾𝐾
Debt to Total Assets Ratio = × 100%
𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴

Provitability Ratio (Return on Equity)

This ratio is used to measure the effectiveness of management in using the resources
owned by the company. Return on Equity is the company's ability to generate profits
available to the company's shareholders. So ratio analysis is a financial statement analysis
technique to explain or describe the relationship of various items in the financial statements
to assist and interpret the financial position of a company. For this reason, the analysis must
be able to adjust the factors that exist in this period or time with future periods that may affect
the company's financial position or results of operations.
Surplus/(Defisit)
𝑅𝑅𝑅𝑅𝑅𝑅 = × 100%
𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆

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Financial Distress
Financial distress is an early indication or signal of a company going bankrupt.
Financial distress is a decrease in the financial condition of a company so not all companies
experiencing financial distress will experience bankruptcy, depending on how the
management handles this. Financial distress can be described from two extreme points,
namely short-term liquidity difficulties to insolvency(Putra., 2017).
Therefore, companies must prevent or minimize the occurrence of financial distress
by monitoring financial statements and conducting financial distress analysis. To detect a
difficulty in the company's finances can use financial ratio analysis. In general, ratios such as
profitability, liquidity, leverage and cash flow coverage act as the most significant indicators
in predicting financial difficulties and the occurrence of bankruptcy. There are several models
that have been developed to analyze financial distress, including the Altman Z-Score, Grover,
Springate, and Smizewski models. The method used by researchers at this time is the Altman
Z-Score model.
Altman (1968) used a step-wise multivariate discriminant analysis (MDA) model in
his research. Like logistic regression, this statistical technique is also commonly used to
create models where the dependent variable is a qualitative variable. The output of the MDA
technique is a linear equation that can distinguish between the two dependent variable states.
There are five ratios used by Altman to be included in the MDA analysis and produce the
following model:
Z= 0.717A + 0.874B + 3.107C + 0.420D + 0.998E
Where:
A = Working capital/total assets
B = Retained earnings/total assets
C = EBIT/total assets
D = Market value of equity/total liabilities
E = Sales/total assets

Altman used cutoff values of 2.675 and 1.81. This means that if the Z value obtained
is more than 2.675, the company is predicted not to experience Financial Distress in the
future. A company whose Z value is between 1.81 and 2.675 means that the company is in
the gray area, that is, the company is experiencing financial problems.

Conceptual framework

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Figure 1. The Conceptual Model

The hypotheses tested in this study are as follows:
H1: Liquidity Ratio has an effect on firm value simultaneously and partially
H2: Solvency Ratio has an effect on firm value simultaneously and partially
H3: Profitability Ratios affect the firm value simultaneously and partially
H4: Financial distress has no direct effect on firm value
H5: Liquidity Ratio, Solvency and Profitability have an indirect effect on firm value through
financial distress as an intervening variable

RESEARCH METHOD
Location and Research Design
In this study using a comparative causal research method (causal relationship). The
purpose of this study is to analyze possible causal relationships based on observations of
existing effects and to look for factors that may be the cause through certain data. This study
aims to examine the effect of liquidity, solvency and profitability on firm value with financial
distress intervening variables. This research was conducted on the Indonesia Stock Exchange
(IDX) in retail trading companies through the website www.idx.co.id and on their respective
company websites.
Population or Samples
In this study, the population that will be observed is all retail trading companies listed
on the Indonesia Stock Exchange (IDX), as many as 25 companies. In this study, the
sampling technique was carried out by purposive sampling method, namely a technique with
certain criteria and considerations. Based on the criteria obtained 17 companies that meet the
requirements. The criteria used in determining the sample are as follows:
1. Retail trading company listed on IDX in 2017-2020
2. Retail trading company that publishes financial statements that have been
audited by independent auditors in the 2017-2020 period.
3. Companies whose financial statements cut off are on December 31.

Data Collection Method

The type of data used in this study is secondary data, while the data collection method
or technique used is documentation technique. Data was obtained from various information,
including annual report data obtained from the website www.idx.co.id and annual report data
from each company.
Data Analysis Method
The data analysis technique used to solve the problem in this research is descriptive
statistical analysis, classical assumption test, coefficient of determination and regression
analysis. This analysis is used to find out and obtain an overview of the effect of financial
ratios on the value of companies with financial distress as an intervening variable in retail
trading companies on the IDX in 2017-2020 with the help of the SPSS (Statistical Product
and Service Solutions) program..

EMPIRICAL RESULTS
Descriptive Statistical Analysis
Characteristics Information
Descriptive statistics provide an overview of the variables of this study. The results of
descriptive statistical calculations in this 2017-2020 study are listed in table 4.1.

Table 4.1

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Descriptive Statistics
Std.
N Range Minimum Maximum Sum mean Deviation
X1 68 7,464 .021 7,485 104,858 1.54204 1.567740
X2 68 90,814 .176 90,990 332,300 4.88676 15.315873
X3 68 5.150 -4.799 .351 -13,119 -.19292 .878251
PBV 68 27,250 -14,720 12,530 148,810 2.18838 3.346645
Zscores 68 60,400 .880 61,280 378,360 5.56412 9.681665
Valid N 68
(listwise)
Source: Data processed, 2021

From the results of the study in the table above, a description of the research data is
obtained as follows: Table 4.1 shows the highest value, lowest value, average and standard
deviation of the variables of liquidity, solvency, profitability, firm value and financial distress
with 68 observations during 2017-2020 . The results of descriptive statistical analysis of firm
value proxied by PBV from 68 observations have a total value of148.810 and an average of
2.18838 with the standard deviation value 3.346645. with the lowest value of-14,720 namely
the company PT Trikomsel Oke Tbk and the highest 12,530 namely the company PT
Matahari Department Store Tbk, where there is a difference in the lowest and highest values
of27,250.

Classic assumption test

Normality test
Normality test is a test conducted to test the normality of a data. A good regression
model is a regression model that is normally distributed. The easiest way to see the normality
of a data is to look at the histogram graph. Apart from using a histogram graph, you can also
use the Normality Probability Plot test. This prediction is used by looking at the plot points. If
the points or data are close to the diagonal line, then the data used can be said to be normally
distributed. In addition to using histogram graphs and the Normality Probability Plot, to make
sure the data is normal, the Kolmogorov Smirnov test is used.
Table 4.2
Normality test
One-Sample Kolmogorov-Smirnov Test
Unstandardized
Residual
N 68
Normal Parameters, b Mean .0000000
Std. Deviation .00709989
Most Extreme Absolute .096
Differences Positive .079
negative -.096
Test Statistics .096
asymp. Sig. (2-tailed) .198c
a. Test distribution is Normal.
b. Calculated from data.
c. Lilliefors Significance Correction.
Source: Data processed, 2021

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Based on table 4.2 the Kolmogorov Smirnoff normality test shows a significance
value of 0.198 > = 0.05, thus it can be concluded that the data is normally distributed.
Multicollinearity Test
According to Priyatno (2008: 29), the multicollinearity test is used to determine
whether or not there is a deviation from the classical assumption of multicollinearity, namely
the existence of a linear relationship between independent variables in the regression model.
If the tolerance value is greater than 0.1 and the VIF value is less than 10, then there is no
multicollinearity in the study. On the other hand, if the tolerance value is less than 0.1 and the
VIF value is greater than 10, then there is multicollinearity (Ghozali, 2006: 92).
Table 4.4
Multicollinearity Test
Coefficientsa
Collinearity Statistics
Model Tolerance VIF
1 (Constant)
X1 .329 3.038
X2 .424 2,358
X3 .051 1.076
Zscore (Z) .054 1.851
a. Dependent Variable: PBV
Source:(Data processed, 2021)
Table 4.3 explains that the independent variables, namely liquidity, solvency,
profitability and financial distress do not occur multicollinearity because the Tolerance value
> 0.10 and VIF < 10

Heteroscedasticity Test
Table 4.3
Heteroscedasticity Test
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) .006 .001 7.838 .000
X1 .000 .000 -.100 -.523 .602
X2 6.4935 .000 .264 .197 .845
X3 .001 .002 .178 .307 .760
Zscores -7.9336 .000 -.020 -.021 .983
a. Dependent Variable: Abs_RES
Source: Data processed, 2021

Table 4.3 shows that the significance level of each variable of liquidity, solvency,
profitability and financial distress >α = 0.05, thus it can be concluded that there is no
heteroscedasticity in the data used.
Autocorrelation Test
Table 4.5Model Summaryb
Adjusted R Std. Error of Durbin-
Model R R Square Square the Estimate Watson
1 1,000a 1,000 1,000 .007322 2.294
a. Predictors: (Constant), Zscores, X1, X3, X2

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b. Dependent Variable: PBV

Data source: Data processed, 2021
Table 5.5 shows the DW value for the variables CR, TLTA, ROA and Z-score of
2,294. Based on the DW table with the number of samples n = 68 and a significance of 0.05
for the independent variable 4 (k = 4), the value of du = 1.7335 is obtained. So that du 1.7335
< dw 1.4853 < 2.2665 (4 - du). From these results it can be concluded that there is no
autocorrelation. Hypothesis Test

Hypothesis Testing Results

First Hypothesis Test Results (H1) With Multiple Linear Regression
Multiple linear regression analysis was used to determine the direct effect of the
independent variable on the dependent variable. The stages of multiple linear regression
analysis in this study were the coefficient of determination test, partial test (t test) and
simultaneous test (F test).
Coefficient of Determination Test Results
From the results of the coefficient of determination test in table 5.5, the adjusted R-
square value is 1,000. This means that 1,000% of the dependent variable can be explained by
the independent variables of liquidity, solvency, profitability and financial distress, while the
remaining 99% is explained by variables such as GCG, dividend policy, activity ratio, CSR
and other variables not included in this study.
Simultaneous Hypothesis Test Results (Test F)

Table 4.6
F Uji test
ANOVAa
Sum of
Model Squares df Mean Square F Sig.
1 Regression 750,399 4 187,600 3499405.287 .000b
Residual .003 63 .000
Total 750,402 67
a. Dependent Variable: PBV
b. Predictors: (Constant), Zscores, X1, X3, X2
Data source: Data processed, 2021
Based on the test results in table 5.6, the calculated F value is 3499405.287 > F table
2.12 so that it can be concluded that it simultaneously has a significant effect on = 5% (sig =
0.000 < = 5%). Based on these results, liquidity, solvency, profitability and financial distress
simultaneously have a significant direct effect on firm value, so the decision is that H1 is
simultaneously accepted.
Results of Partial Hypothesis Testing (t-test)
Table 4.7
t test
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) .001 .002 .925 .358
X1 -1,707 .001 -.800 -1944,936 .000
X2 -2017 .001 -9,231 -3210,345 .000
X3 -7,404 .005 -1.943 -1564,299 .000

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Zscores 2,381 .001 6.888 3366,650 .000

a. Dependent Variable: PBV
Data source: Data processed, 2021
Based on the results of statistical calculations as in table 4.7, the following multiple
linear regression equation is obtained.
Y = 0.001 - 1.707 X1 – 2.017 X2 – 7.404 X3 + 2.381 Z
1. Constant
Based on the table and equation, it can be seen that the constant has a regression coefficient
of 0.001 which means that if the variables of liquidity (X1), solvency (X2), profitability (X3)
and financial distress (Z) are zero, it means that there is an increase in firm value of 0.001 in
manufacturing companies. listed on the IDX during 2017-2020.
2. Liquidity (X1)
Liquidity as proxied by the current ratio has a regression coefficient of -1.707, meaning that
every decrease in liquidity is 1, there will be a decrease in firm value of 1.707 with the
assumption that other variables are considered constant. The results show t count -1944.93 > t
table 1.66 and a significance of 0.000 < = 0.05, then partially liquidity has a direct significant
effect on firm value.
3. Solvency (X2)
Solvency as proxied by total liabilities to total assets has a regression coefficient of -2.017,
meaning that for every increase in solvency of 1, there will be a decrease in firm value of
2.017 assuming other variables are held constant. The results show t arithmetic -3210.345 > t
table 1.66 and a significance of 0.000 <α = 0.05, so partially solvency has a direct significant
effect on firm value.
4. Profitability (X3)
Profitability as proxied by return on assets has a regression coefficient of -7.404 meaning that
every increase in profitability of 1, there will be a decrease in firm value of 7.404 assuming
other variables are considered constant. The results show t count -1564,299 > t table 1.66 and
a significance of 0.000 <α = 0.05, then partially profitability has a direct significant effect on
firm value.
5. Financial distress (Z)
Financial distress which is proxied by Z-score has a regression coefficient of 2.381, meaning
that for every increase in financial distress of 1, there will be an increase in firm value of
2.381 with the assumption that other variables are considered constant. The results show t
count 2.381 > t table 1.66 and a significance of 0.000 <α = 0.05, then partially financial
distress has a direct significant effect on firm value.
Based on the results of the t test, liquidity, solvency, profitability and financial distress
partially have a direct significant effect on firm value, the decision is partially accepted H1.

The results of testing the second hypothesis with the mediation of financial distress as
an intervening variable
Path analysis in this study is used to see the direct effect of liquidity, solvency and
profitability on firm value and also to see the indirect effect of liquidity, solvency and
profitability on firm value through financial distress as an intervening variable.

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Table 4.8
Path Analysis Results
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) .755 .249 3.026 .004
X1 .914 .105 .148 8,700 .000
X2 .821 .042 1,299 19,350 .000
X3 3.170 .737 .288 4.301 .000
a. Dependent Variable: Zscores
Source: Data processed, 2021
Based on the results of statistical calculations as in table 5.8, the following equation is
obtained.
Z = 0.755 + 0.914 X1 + 0.821 X2 + 3.170 X3
1. Constant
Based on the table and the equation, it can be seen that the constant has a regression
coefficient of 0.755, which means that if the liquidity (X1), solvency (X2) and profitability
(X3) variables are zero, it means that there is an increase in financial distress of 0.755 in
manufacturing companies listed on the IDX during the year. 2017-2020.
2. Liquidity (X1)
Liquidity as proxied by the current ratio has a regression coefficient of 0.914,
meaning that for every increase in liquidity of 1, there will be an increase in financial distress
of 0.914 with the assumption that other variables are held constant. The results show t count
8.700 > t table 1.66 and a significance of 0.000 < = 0.05, then partially liquidity has an effect
on financial distress.
3. Solvency (X2)
Solvency as proxied by total liabilities to total assets has a regression coefficient of
0.821, meaning that for every increase in solvency of 1, there will be an increase in financial
distress of 0.821 assuming other variables are held constant. The results show t count19,350
> t table 1.66 and a significance of 0.000 < = 0.05, then partially solvency has an effect on
financial distress
4. Probability (X3)
Profitability proxied by return on assets has a regression coefficient of 3.170 This
means that for every increase in profitability by 1, there will be an increase in financial
distress of3.170 assuming other variables are held constant. The results show t count4.301 > t
table 1.66 and a significance of 0.000 <α = 0.05, then partially profitability has a significant
effect on financial distress
Table 4.9
Direct, Indirect and Total Effect
Information Influence
Direct Indirect Total
Liquidity to Financial distress (P1) 0.914

Solvency to Financial 0.821

distress (P2)
Profitability to Financial distress 3,170
(P3)

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Financial distress on Value 2,381

company (P7)
Liquidity to Firm Value (P4) -1,707 2.17623 0.46923

Solvency to firm value (P5) -2,017 1.95480 -0.0622

Profitability to Firm Value (P6) -7,404 7.54777 0.14377

According to Ghozali (2013) path analysis test can be done to test the significance of
the indirect effect, it is necessary to calculate the t value of the Sobel test coefficient from
equation ab.

1. Indirect effect of liquidity on firm value by mediating financial distress

𝑎𝑎𝑎𝑎
𝑡𝑡 =
√𝑎𝑎2 𝑠𝑠𝑠𝑠 2 + 𝑏𝑏 2 𝑠𝑠𝑎𝑎2 + 𝑠𝑠𝑎𝑎2 𝑠𝑠𝑏𝑏 2
(0,914)(2,381)
𝑡𝑡 =
�(0,914)2 (0,001)2 + (2,381)2 (0,105)2 + (0,105)2 (0,001)2
2,17623
𝑡𝑡 =
0,25
𝑡𝑡 = 8,70493
The results of the calculation of the t-count value Sobel test 8.70493 > t table 1.66
with a mediation coefficient of 2.17623, it can be concluded that liquidity has a significant
effect on firm value through financial distress as an intervening variable.
2. Indirect effect of solvency on firm value with financial distress mediation
𝑎𝑎𝑎𝑎
𝑡𝑡 =
√𝑎𝑎2 𝑠𝑠𝑠𝑠 2 + 𝑏𝑏 2 𝑠𝑠𝑎𝑎2 + 𝑠𝑠𝑎𝑎2 𝑠𝑠𝑏𝑏 2
(0,821)(2,381)
𝑡𝑡 =
�(0,821)2 (0,001)2 + (2,381)2 (0,042)2 + (0,042)2 (0,001)2
1,954801
𝑡𝑡 =
0,1
𝑡𝑡 = 19,54801
The results of the calculation of the t value of the Sobel test 19.54801 > t table = 1.66
with a mediation coefficient of 1.954801, it can be concluded that solvency has a significant
effect on firm value through financial distress as an intervening variable.
3. The indirect effect of profitability on firm value by mediating financial distress
𝑎𝑎𝑎𝑎
𝑡𝑡 =
√𝑎𝑎2 𝑠𝑠𝑠𝑠 2 + 𝑏𝑏 2 𝑠𝑠𝑎𝑎2 + 𝑠𝑠𝑎𝑎2 𝑠𝑠𝑏𝑏 2
(3,170)(2,381)
𝑡𝑡 =
�(3,170)2 (0,001)2 + (2,381)2 (0,737)2 + (0,737)2 (0,001)2
7,54777
𝑡𝑡 =
1,75
𝑡𝑡 = 4,3012
The results of the calculation of the t value of the Sobel test 4.3012 > t table 1.66 with
a mediation coefficient of 7.54777, it can be concluded that profitability has a significant
effect on firm value through financial distress as an intervening variable.
Based on the Sobel test results from the ab equation above, it can be concluded that
directly liquidity, solvency and profitability have a significant effect on firm value through

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financial distress as an intervening variable, so the decision H2 is acceptable.

DISCUSSION
Direct Effect of Liquidity on Firm Value
The partial test results show that the liquidity proxied by CR has a direct significant
effect on firm value. The results of testing the effect of liquidity on firm value obtained t
count -1944.93 > t table 1.66 and significance 0.000 <α = 0.05. Liquidity effect on firm value
is possible because liquidity is a short-term obligation that must be settled immediately. If
liquidity cannot be settled, it will burden the company's debt. This will certainly affect the
value of the company in the future if short-term debt is difficult to settle, it will make
investors not interested in investing in the company. This shows that H1 is accepted.
The Direct Effect of Solvency on Company Value
The partial test results show that the solvency proxied by TLTA has a direct
significant effect on firm value. The results of testing the effect of liquidity on firm value
obtained t count -3210.345 > t table 1.66 and significance 0.000 < = 0.05. The higher the
level of the company's long-term debt, the more burdened the company will be with interest,
moreover, the long-term debt must have a large value. This will certainly make investors
reluctant to invest in the company, so that it will have an impact on the value of the company.
This shows that H2 is accepted.
Direct Effect of Profitability on Firm Value
Partial test results show that profitability as proxied by ROA has a direct significant
effect on firm value. The results of testing the effect of liquidity on firm value obtained t
count -1564,299 > t table 1.66 and significance 0.000 <α = 0.05. The higher the level of profit
earned by the company, the higher the company's ability to pay dividends to shareholders.
This will certainly encourage the desire of investors to invest in the company, so that it will
have an impact on increasing the value of the company. This shows that H3 is accepted.
The Direct Effect of Financial Distress on Firm Value
Partial test results show that financial distress proxied by Z-score has a direct
significant effect on firm value. The results of testing the effect of liquidity on firm value
obtained t count 2.381 > t table 1.99 and significance 0.000 <α = 0.05. The lower the
company's health level, the more risky the company will be in the future, this certainly raises
concerns for investors if the company will go bankrupt. This will certainly make investors
reluctant to invest in the company, so that it will have an impact on the value of the company.
This shows that H4 is accepted.
Direct Effect of Liquidity, Solvency, Profitability on Firm Value through Financial
Distress as Intervening Variable.
The test results show that liquidity, solvency, profitability and financial distress
together have a direct significant effect on firm value. These results support the hypothesis
and indicate that all independent variables as a whole can explain or predict the dependent
variable. This shows that H5 is accepted.

CONCLUSION
Based on the results of calculations in this study it was found that:
1. Simultaneously and partially the variables of liquidity, solvency, profitability and
financial distress have a direct significant effect on the value of retail trading
companies listed on the BEI.
2. The direct effect of liquidity, solvency and profitability variables on firm value is
greater than the indirect effect of liquidity, solvency, and profitability on firm value
through financial distress as an intervening variable, and the t value of Sobel test <
from t table for each liquidity variable, solvency and profitability, then financial

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distress is proven as an intervening variable. Directly the variables of liquidity,

solvency and profitability have a significant effect on the value of retail trading
companies listed on the IDX through financial distress as an intervening variable.

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