Prediction of financial distress in transportation and logistics companies before, during and after the Covid-19 pandemic listed on the Indonesia Stock Exchange

https://doi.org/10.35912/gabs.v1i2.3576
Published: Oct 16, 2024

Abstract:

Purpose: This study aims to predict financial distress in transportation and logistics companies before, during, and after the Covid-19 pandemic.

Research Methodology: A total of 23 transportation and logistics companies were selected as the research sample using purposive sampling method. Secondary data from audited financial statements for 2019–2023 were analyzed. Three financial ratios—Current Ratio (CR), Return on Assets (ROA), and Debt-to-Asset Ratio (DAR)—were used as input variables. An Artificial Neural Network (ANN) with a multilayer perceptron backpropagation algorithm was employed to train and test the prediction models. The best architecture was identified by comparing the model performance across variations in hidden neurons.

Results: The results reveal that companies reported as financially distressed have lower average values for the three ratios than companies not experiencing financial distress, making them suitable input variables. The best artificial neural network architecture in this study included an input layer with 60 neurons, a hidden layer with 15 neurons, and an output layer with a single neuron. This architecture achieved a training performance mean square error (MSE) of 0.125004 and an R-value of 50.00%. The study's findings suggest that 12 companies are likely to experience financial distress.

Conclusions: Financial ratios are effective indicators of distress, and ANN models can predict potential bankruptcy with a reasonable accuracy.

Limitations: This study is limited to three financial ratios and a single sector, which may not fully capture the broader determinants of financial distress.

Contribution: This study contributes to the financial distress prediction literature by applying ANN to transportation and logistics firms in Indonesia and offers practical tools for stakeholders to anticipate risks and design preventive strategies.

Keywords:
1. Artificial Neural Network
2. Financial Distress
3. Financial Ratio
Authors:
1 . Sinta Dewi
Telkom University, Indonesia
2 . Brady Rikumahu
Telkom University, Indonesia
View PDF
How to Cite
Dewi, S. ., & Rikumahu, B. (2024). Prediction of financial distress in transportation and logistics companies before, during and after the Covid-19 pandemic listed on the Indonesia Stock Exchange . Global Academy of Business Studies, 1(2), 115–134. https://doi.org/10.35912/gabs.v1i2.3576
Download Citation
  1. Endnote/Zotero/Mendeley (RIS)
  2. BibTeX

Downloads

Download data is not yet available.
Issue & Section
Vol. 1 No. 2 (2024): October
Articles
References

    Akter, S. (2021). Companies' vision, mission, and core values focus on human resource management. International Journal of Financial, Accounting, and Management, 2(4), 343-355. doi:https://doi.org/10.35912/ijfam.v2i4.412

    Amiram, D., Bozanic, Z., & Rouen, E. (2015). Financial statement errors: evidence from the distributional properties of financial statement numbers. Review of Accounting Studies, 20(4), 1540-1593. doi:https://doi.org/10.1007/s11142-015-9333-z

    Asyha, A. F., Astuti, Y., Subandi, S., Syarifudin, E., & Makbuloh, D. (2023). Analysis of power organization and political theory: The dynamics of complexity in the era of digital transformation. Journal of Multidisciplinary Academic Business Studies, 1(4), 271-284. doi:https://doi.org/10.35912/jomabs.v1i4.3399

    Babafemi, I. D. (2015). Corporate strategy, planning and performance evaluation: A survey of literature. Journal of Management Policies and Practices, 3(1), 43-49. doi:http://dx.doi.org/10.15640/jmpp.v3n1a6

    Bans-Akutey, A., & Ebem, D. (2022). E-leadership and adaptation to technological development of telecommunication businesses in Ghana. Annals of Management and Organization Research, 3(4), 259-269. doi:https://doi.org/10.35912/amor.v3i4.1464

    Barauskaite, G., & Streimikiene, D. (2021). Corporate social responsibility and financial performance of companies: The puzzle of concepts, definitions and assessment methods. Corporate Social Responsibility and Environmental Management, 28(1), 278-287. doi:https://doi.org/10.1002/csr.2048

    Chiu, I. H. Y., Kokkinis, A., & Miglionico, A. (2022). Addressing the challenges of post-pandemic debt management in the consumer and SME sectors: a proposal for the roles of UK financial regulators. Journal of Banking Regulation, 23(4), 439-457. doi:https://doi.org/10.1057/s41261-021-00180-2

    Citterio, A., & King, T. (2023). The role of Environmental, Social, and Governance (ESG) in predicting bank financial distress.

    Cooper, D., & Schindler, P. (2013). Business Research Methods: 12th Edition.

    Evangelatos, G., Bamias, G., Kitas, G. D., Kollias, G., & Sfikakis, P. P. (2022). The second decade of anti-TNF-a therapy in clinical practice: new lessons and future directions in the COVID-19 era. Rheumatology International, 42(9), 1493-1511. doi:https://doi.org/10.1007/s00296-022-05136-x

    Fuertes, G., Alfaro, M., Vargas, M., Gutierrez, S., Ternero, R., & Sabattin, J. (2020). Conceptual framework for the strategic management: a literature review—descriptive. Journal of engineering, 2020(1). doi:https://doi.org/10.1155/2020/6253013

    Ghapar, F., Osman, M. F., Sundram, V. P. K., Rashid, W. E. W., Lian, C. L., & Wahab, S. N. (2023). Top Challenges in Warehouse Management: A Supply Chain Perspective. European Proceedings of Social and Behavioural Sciences.

    Hery. (2015). Analisis Kinerja Manajemen.

    Hossain, A., Khatun, M., & Shanjabin, S. (2023). Impact of person-job fit and person-organization fit on employee engagement: Moderating role of supervisor support. Annals of Human Resource Management Research, 3(2), 97-114. doi:https://doi.org/10.35912/ahrmr.v3i2.1885

    Howdon, D., Hinde, S., Lomas, J., & Franklin, M. (2022). Economic Evaluation Evidence for Resource-Allocation Decision Making: Bridging the Gap for Local Decision Makers Using English Case Studies. Applied Health Economics and Health Policy, 20(6), 783-792. doi:https://doi.org/10.1007/s40258-022-00756-7

    Ibrahim, A. E. A., Hussainey, K., Nawaz, T., Ntim, C., & Elamer, A. (2022). A systematic literature review on risk disclosure research: State-of-the-art and future research agenda. International Review of Financial Analysis, 82. doi:https://doi.org/10.1016/j.irfa.2022.102217

    Kanoujiya, J., Rastogi, S., Abraham, R., & Bhimavarapu, V. M. (2023). Does Competition Affect Financial Distress of Non-Financial Firms in India: A Comparison Using the Lerner Index and Boone Indicator. Journal of Risk and Financial Management, 16(7), 340. doi:https://doi.org/10.3390/jrfm16070340

    Kekeocha, M. E., Anoke, A. F., Chukwuemeka-Onuzulike, N., & Ngozi, N. H. (2023). Work-life balance and employees’ commitment in plastics manufacturing firms in Anambra State, Nigeria. Annals of Human Resource Management Research, 3(2), 141-154.

    Kristianto, H., & Rikumahu, B. (2019). A Cross Model Telco Industry Financial Distress Prediction in Indonesia: Multiple Discriminant Analysis, Logit and Artificial Neural Network.

    Kusa, N. D., & Danladi, N. Y. (2023). Entrepreneurial passion on the success of SME’s in Plateau State, Nigeria: The role of entrepreneurial skills. Journal of Sustainable Tourism and Entrepreneurship, 5(1), 57-74.

    Lanori, T., & Supriyanto, B. H. (2023). Problems of the Impact of Modernization of Indonesia's Public Transportation Equipment System. International Journal of Social Science, 2(5), 2163-2176. doi:https://doi.org/10.53625/ijss.v2i5.4929

    Matthew, U. J., & Onwuzor, O. A. (2023). Perception of violence and food security in Emohua Local Government Area of Rivers State, Nigeria. Journal of Social, Humanity, and Education, 4(1), 35-47.

    Ningrum, M. P., Fachrudin, F., & Ngaliman, N. (2024). The effect of service quality, utilisation of management information systems, and communication on participant satisfaction with trust as an intervening variable on Taspen pension participants in the Tanjungpinang City. Journal of Multidisciplinary Academic Business Studies, 1(3), 221-236. doi:https://doi.org/10.35912/jomabs.v1i3.2423

    Puspitasari, E., Sudiyatno, B., Hartoto, W. E., & Widati, L. W. (2021). Net interest margin and return on assets: A Case Study in Indonesia. The Journal of Asian Finance, Economics and Business, 8(4), 727-734. doi:doi:10.13106/jafeb.2021.vol8.no4.0727

    Rashid, C. A. (2021). The efficiency of financial ratios analysis to evaluate company’s profitability. Journal of Global Economics and Business, 2(4), 119-132.

    Tharu, N. K., & Shrestha, Y. M. (2019). The influence of bank size on profitability: An application of statistics. International Journal of Financial, Accounting, and Management, 1(2), 81-89. doi:https://doi.org/10.35912/ijfam.v1i2.82

    Welin, E., Kase, P., & Nursalam, N. (2021). Analysis of the implementation of policies on the development of Indonesian migrant workers’ families in the field of economic empowerment in Kupang city. Dynamics of Politics and Democracy, 1(1), 49-61. doi:https://doi.org/10.35912/dpd.v1i1.756

    Widowati, D., & Nugroho, H. (2022). Differences In The Financial Performance Of Transportation Companies On The Indonesia Stock Exchange During The Covid-19 Pandemic. Paper presented at the Proceedings of Universitas Muhammadiyah Yogyakarta Graduate Conference.

    Widyawati, N. L., & Ningtyas, M. N. (2022). Analysis of Financial Performance and Share Performance Before and After the Covid-19 Pandemic on the Idx. Jurnal Ilmiah Bisnis dan Ekonomi Asia, 16(2), 292-307. doi:https://doi.org/10.32815/jibeka.v16i2.1029

    Woo, S.-H., Kwon, M.-S., & Yuen, K. F. (2021). Financial determinants of credit risk in the logistics and shipping industries. Maritime Economics & Logistics, 23(2), 268-290. doi:https://doi.org/10.1057/s41278-020-00157-4

    Yang, Y., Lu, X., Chen, J., & Li, N. (2022). Factor mobility, transportation network and green economic growth of the urban agglomeration. Scientific Reports, 12(1). doi:https://doi.org/10.1038/s41598-022-24624-5

    Yenni, Y., Arifin, A., Gunawan, E., Pakpahan, L., & Siregar, H. (2021). The impact of solvency and working capital on profitability. Journal of Industrial Engineering & Management Research, 2(4), 15-38. doi:https://doi.org/10.7777/jiemar.v2i4.158

    Zulfa, M. D., Raharjo, E., & Shafira, M. (2022). Policy formulation crime contempt of court based on the national criminal code. Dynamics of Politics and Democracy, 2(1), 37-48. doi:https://doi.org/10.35912/dpd.v2i1.1969

  1. Akter, S. (2021). Companies' vision, mission, and core values focus on human resource management. International Journal of Financial, Accounting, and Management, 2(4), 343-355. doi:https://doi.org/10.35912/ijfam.v2i4.412
  2. Amiram, D., Bozanic, Z., & Rouen, E. (2015). Financial statement errors: evidence from the distributional properties of financial statement numbers. Review of Accounting Studies, 20(4), 1540-1593. doi:https://doi.org/10.1007/s11142-015-9333-z
  3. Asyha, A. F., Astuti, Y., Subandi, S., Syarifudin, E., & Makbuloh, D. (2023). Analysis of power organization and political theory: The dynamics of complexity in the era of digital transformation. Journal of Multidisciplinary Academic Business Studies, 1(4), 271-284. doi:https://doi.org/10.35912/jomabs.v1i4.3399
  4. Babafemi, I. D. (2015). Corporate strategy, planning and performance evaluation: A survey of literature. Journal of Management Policies and Practices, 3(1), 43-49. doi:http://dx.doi.org/10.15640/jmpp.v3n1a6
  5. Bans-Akutey, A., & Ebem, D. (2022). E-leadership and adaptation to technological development of telecommunication businesses in Ghana. Annals of Management and Organization Research, 3(4), 259-269. doi:https://doi.org/10.35912/amor.v3i4.1464
  6. Barauskaite, G., & Streimikiene, D. (2021). Corporate social responsibility and financial performance of companies: The puzzle of concepts, definitions and assessment methods. Corporate Social Responsibility and Environmental Management, 28(1), 278-287. doi:https://doi.org/10.1002/csr.2048
  7. Chiu, I. H. Y., Kokkinis, A., & Miglionico, A. (2022). Addressing the challenges of post-pandemic debt management in the consumer and SME sectors: a proposal for the roles of UK financial regulators. Journal of Banking Regulation, 23(4), 439-457. doi:https://doi.org/10.1057/s41261-021-00180-2
  8. Citterio, A., & King, T. (2023). The role of Environmental, Social, and Governance (ESG) in predicting bank financial distress.
  9. Cooper, D., & Schindler, P. (2013). Business Research Methods: 12th Edition.
  10. Evangelatos, G., Bamias, G., Kitas, G. D., Kollias, G., & Sfikakis, P. P. (2022). The second decade of anti-TNF-a therapy in clinical practice: new lessons and future directions in the COVID-19 era. Rheumatology International, 42(9), 1493-1511. doi:https://doi.org/10.1007/s00296-022-05136-x
  11. Fuertes, G., Alfaro, M., Vargas, M., Gutierrez, S., Ternero, R., & Sabattin, J. (2020). Conceptual framework for the strategic management: a literature review—descriptive. Journal of engineering, 2020(1). doi:https://doi.org/10.1155/2020/6253013
  12. Ghapar, F., Osman, M. F., Sundram, V. P. K., Rashid, W. E. W., Lian, C. L., & Wahab, S. N. (2023). Top Challenges in Warehouse Management: A Supply Chain Perspective. European Proceedings of Social and Behavioural Sciences.
  13. Hery. (2015). Analisis Kinerja Manajemen.
  14. Hossain, A., Khatun, M., & Shanjabin, S. (2023). Impact of person-job fit and person-organization fit on employee engagement: Moderating role of supervisor support. Annals of Human Resource Management Research, 3(2), 97-114. doi:https://doi.org/10.35912/ahrmr.v3i2.1885
  15. Howdon, D., Hinde, S., Lomas, J., & Franklin, M. (2022). Economic Evaluation Evidence for Resource-Allocation Decision Making: Bridging the Gap for Local Decision Makers Using English Case Studies. Applied Health Economics and Health Policy, 20(6), 783-792. doi:https://doi.org/10.1007/s40258-022-00756-7
  16. Ibrahim, A. E. A., Hussainey, K., Nawaz, T., Ntim, C., & Elamer, A. (2022). A systematic literature review on risk disclosure research: State-of-the-art and future research agenda. International Review of Financial Analysis, 82. doi:https://doi.org/10.1016/j.irfa.2022.102217
  17. Kanoujiya, J., Rastogi, S., Abraham, R., & Bhimavarapu, V. M. (2023). Does Competition Affect Financial Distress of Non-Financial Firms in India: A Comparison Using the Lerner Index and Boone Indicator. Journal of Risk and Financial Management, 16(7), 340. doi:https://doi.org/10.3390/jrfm16070340
  18. Kekeocha, M. E., Anoke, A. F., Chukwuemeka-Onuzulike, N., & Ngozi, N. H. (2023). Work-life balance and employees’ commitment in plastics manufacturing firms in Anambra State, Nigeria. Annals of Human Resource Management Research, 3(2), 141-154.
  19. Kristianto, H., & Rikumahu, B. (2019). A Cross Model Telco Industry Financial Distress Prediction in Indonesia: Multiple Discriminant Analysis, Logit and Artificial Neural Network.
  20. Kusa, N. D., & Danladi, N. Y. (2023). Entrepreneurial passion on the success of SME’s in Plateau State, Nigeria: The role of entrepreneurial skills. Journal of Sustainable Tourism and Entrepreneurship, 5(1), 57-74.
  21. Lanori, T., & Supriyanto, B. H. (2023). Problems of the Impact of Modernization of Indonesia's Public Transportation Equipment System. International Journal of Social Science, 2(5), 2163-2176. doi:https://doi.org/10.53625/ijss.v2i5.4929
  22. Matthew, U. J., & Onwuzor, O. A. (2023). Perception of violence and food security in Emohua Local Government Area of Rivers State, Nigeria. Journal of Social, Humanity, and Education, 4(1), 35-47.
  23. Ningrum, M. P., Fachrudin, F., & Ngaliman, N. (2024). The effect of service quality, utilisation of management information systems, and communication on participant satisfaction with trust as an intervening variable on Taspen pension participants in the Tanjungpinang City. Journal of Multidisciplinary Academic Business Studies, 1(3), 221-236. doi:https://doi.org/10.35912/jomabs.v1i3.2423
  24. Puspitasari, E., Sudiyatno, B., Hartoto, W. E., & Widati, L. W. (2021). Net interest margin and return on assets: A Case Study in Indonesia. The Journal of Asian Finance, Economics and Business, 8(4), 727-734. doi:doi:10.13106/jafeb.2021.vol8.no4.0727
  25. Rashid, C. A. (2021). The efficiency of financial ratios analysis to evaluate company’s profitability. Journal of Global Economics and Business, 2(4), 119-132.
  26. Tharu, N. K., & Shrestha, Y. M. (2019). The influence of bank size on profitability: An application of statistics. International Journal of Financial, Accounting, and Management, 1(2), 81-89. doi:https://doi.org/10.35912/ijfam.v1i2.82
  27. Welin, E., Kase, P., & Nursalam, N. (2021). Analysis of the implementation of policies on the development of Indonesian migrant workers’ families in the field of economic empowerment in Kupang city. Dynamics of Politics and Democracy, 1(1), 49-61. doi:https://doi.org/10.35912/dpd.v1i1.756
  28. Widowati, D., & Nugroho, H. (2022). Differences In The Financial Performance Of Transportation Companies On The Indonesia Stock Exchange During The Covid-19 Pandemic. Paper presented at the Proceedings of Universitas Muhammadiyah Yogyakarta Graduate Conference.
  29. Widyawati, N. L., & Ningtyas, M. N. (2022). Analysis of Financial Performance and Share Performance Before and After the Covid-19 Pandemic on the Idx. Jurnal Ilmiah Bisnis dan Ekonomi Asia, 16(2), 292-307. doi:https://doi.org/10.32815/jibeka.v16i2.1029
  30. Woo, S.-H., Kwon, M.-S., & Yuen, K. F. (2021). Financial determinants of credit risk in the logistics and shipping industries. Maritime Economics & Logistics, 23(2), 268-290. doi:https://doi.org/10.1057/s41278-020-00157-4
  31. Yang, Y., Lu, X., Chen, J., & Li, N. (2022). Factor mobility, transportation network and green economic growth of the urban agglomeration. Scientific Reports, 12(1). doi:https://doi.org/10.1038/s41598-022-24624-5
  32. Yenni, Y., Arifin, A., Gunawan, E., Pakpahan, L., & Siregar, H. (2021). The impact of solvency and working capital on profitability. Journal of Industrial Engineering & Management Research, 2(4), 15-38. doi:https://doi.org/10.7777/jiemar.v2i4.158
  33. Zulfa, M. D., Raharjo, E., & Shafira, M. (2022). Policy formulation crime contempt of court based on the national criminal code. Dynamics of Politics and Democracy, 2(1), 37-48. doi:https://doi.org/10.35912/dpd.v2i1.1969