Liquidity, Leverage, Profitability, and Financial Distress: Firm Size as a Moderating Variable
-
Ellysabeth Sherly
*
Universitas Widya Dharma Pontianak, Pontianak,
Indonesia
- Hartono Hartono Universitas Widya Dharma Pontianak, Pontianak, Indonesia (*) Corresponding Author
Abstract
This study examines the effects of liquidity, leverage, and profitability on financial distress and tests firm size as a moderating variable in property and real estate companies listed on the Indonesia Stock Exchange (IDX) during 2021–2025. Using an associative quantitative design, 55 companies were selected through purposive sampling, yielding 275 firm-year observations obtained from financial statements published on the official IDX website. Financial distress was measured with the Zmijewski X-score, liquidity with the current ratio (CR), leverage with the debt-to-equity ratio (DER), profitability with return on assets (ROA), and firm size with the natural logarithm of total assets. The data were analysed using descriptive statistics, classical assumption tests, multiple linear regression, and moderated regression analysis (MRA) in EViews 13. The results show that liquidity has a significant negative effect on financial distress (β = −0.004; p < 0.05), leverage has a significant positive effect (β = 5.700; p < 0.05), and profitability has a significant negative effect (β = −4.500; p < 0.05). Firm size significantly moderates the effects of liquidity (β = −0.0002; p = 0.016), leverage (β = 0.207; p < 0.001), and profitability (β = −0.195; p < 0.001) on financial distress and strengthens each relationship. The novelty of this study lies in testing firm size as a moderator of three financial ratios simultaneously in the post-pandemic property sector. The findings provide an early-warning basis for managers, creditors, and investors, while future research is suggested to add non-financial variables, other sectors, and a longer observation period.
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