Impact of Liquidity, Leverage, and Operating Cash Flow on Financial Distress with Firm Size Moderation

Nabila Sukma Dewi; Mayang Sari Edastami

doi:10.37641/jimkes.v13i4.3352

Authors

Nabila Sukma Dewi Universitas Esa Unggul, Indonesia
Mayang Sari Edastami Universitas Esa Unggul, Indonesia

DOI:

https://doi.org/10.37641/jimkes.v13i4.3352

Keywords:

Financial Distress, Firm Size, Liquidity, Leverage, Operating Cash Flow

Abstract

This research is to determine the function of company size as a moderating variable in transportation companies listed on the Indonesia Stock Exchange from 2019 to 2023, as well as the influence of liquidity, leverage and operating cash flow on financial distress. Secondary data in the form of annual financial reports of transportation companies listed on the IDX was used in this research. Structural Equation Modeling is analysis technique used, while SmartPLS is used as a bootstrapping method to examine the correlations between the model's variables. The findings show that leverage has a major impact on business size, with a higher level of leverage leading to a smaller firm. Financial distress is significantly influenced by operating cash flow as well; a positive correlation indicates that businesses are under financial strain. In the suggested model, financial distress is not directly influenced by business size, liquidity, leverage, or operating cash flow, as these relationships do not demonstrate substantial effects. Liquidity and operating cash flow also have little influence on business size, suggesting that these factors are not the main factors influencing firm size in the sample.

Downloads

Download data is not yet available.

References

Abdullah, M., Gulzar, I., Chaudhary, A., Tabash, M. I., Rashid, U., Naaz, I., & Ali, A. (2023). Dynamics of speed of leverage adjustment and financial distress in the Indian steel industry. Journal of Open Innovation: Technology, Market, and Complexity, 9(4), 100-122.

Ahemed, A. M., Iqbal, U., & Atif, M. M. (2025). Asymmetric cost behavior and financial distress. Economics Letters, 247(2), 112-121.

Amanda, Y., & Tasman, A. (2022). Pengaruh likuiditas, sales growth dan ukuran perusahaan terhadap financial distress. Digital Bisnis: Jurnal Publikasi Ilmu Manajemen Dan E-Commerce, 1(3), 70–80.

Asmarani, S. A., & Purbawati, D. (2020). Analisis pengaruh likuiditas, leverage dan profitabilitas terhadap financial distress (studi pada perusahaan manufaktur sektor industri barang konsumsi yang terdaftar di BEI pada periode tahun 2014-2018). Jurnal Ilmu Administrasi Bisnis, 9(3), 369–379.

Baek, C., Baek, S., & Glambosky, M. (2024). Macroeconomic impact and stock returns’ vulnerability by size, solvency, and financial distress. Finance Research Letters, 59(1), 104-118.

Bimantio, M. A., & Nur, D. I. (2023). Financial distress with firm size as a moderating variable in the construction sub sector on the Indonesian Stock Exchange. Journal of Economics, Finance and Management Studies, 06(11), 5689–5696.

Choi, J. (2025). Financial flexibility or financial constraints? Zero-leverage firms during the COVID-19 pandemic. Research in International Business and Finance, 74(1), 102-123.

Dainelli, F., Bet, G., & Fabrizi, E. (2024). The financial health of a company and the risk of its default: Back to the future. International Review of Financial Analysis, 95(1), 103-129.

De Silva, C., Del Gaudio, B. L., Gervasoni, A., & Lertora, M. (2025). Private equity and financial distress: A bibliometric literature review. Research in International Business and Finance, 74(1), 102-124.

Dewangga, R. W., & Nugroho, S. P. (2024). The effect of product knowledge and market orientation on business performance in MSMEs. Jurnal Ilmiah Manajemen Kesatuan, 12(1), 163–174.

Dewi, silvia; sofia prima. (2022). Pengaruh profitabilitas, leverage, ukuran perusahaan, dan likuiditas terhadap nilai perusahaan. 4(1), 310–317.

Fattouh, B., Pisicoli, B., & Scaramozzino, P. (2024). Debt and financial fragility: Italian non-financial companies after the pandemic. Economic Modelling, 131(12), 6610-6628.

Fecht, F., Reitz, S., & Weber, P. (2024). A dealer’s funding liquidity risk and its money market trades in the 2007/08 crisis. Journal of Financial Stability, 75(1), 101-127.

Geng, H., Zhu, H., Lau, W. T., Nor, N. M., & Razak, N. H. A. (2025). How does investment efficiency affect financial distress risk? Evidence from China. Journal of Behavioral and Experimental Finance, 45(1), 101-124.

Giarto, R. V. D., & Fachrurrozie, F. (2020). The effect of leverage, sales growth, cash flow on financial distress with corporate governance as a moderating variable. Accounting Analysis Journal, 9(1), 15–21.

Glover, K. (2024). A comment on the relationship between operating leverage and financial leverage. Finance Research Letters, 67(1), 105-122.

Gosain, N., Kashiramka, S., & Chaudhry, N. (2025). Signaling vs. agency theory: What drives dividends of promoter-owned firms during a crisis? Research in International Business and Finance, 73(1), 102-120.

Graña-Alvarez, R., Gomez-Conde, J., Lopez-Valeiras, E., & González-Loureiro, M. (2024). Management control systems, business financial literacy and financial leverage in business-incubated start-ups. British Accounting Review, 56(6), 566-585.

Hartono, J. (2017). Teori portofolio dan analisis investasi. Yogyakarta: BPFE.

Hery. (2019). Manajemen Kinerja. Jakarta: PT Grasindo.

Hu, W., Li, K., & Zhang, X. (2024). Financial constraints, cash flow timing patterns, and asset prices. Journal of Financial Economics, 157(1), 103-125.

Isdina, S. H., & Putri, W. W. R. (2021). Pengaruh laba dan arus kas terhadap kondisi financial distress. Jurnal Ilmiah Akuntansi Kesatuan, 9(1), 147–158.

Jia, H., Gao, N., Ahmad, F., Farooq, A., & Javed, A. (2024). Investment and financing maturity mismatch: Moderating role of financialization in regulatory context for A-share listed Chinese companies. Heliyon, 10(14), 4463-4488.

Kamaluddin, A., Ishak, N., & Mohammed, N. F. (2019). Financial distress prediction through cash flow ratios analysis. International Journal of Financial Research, 10(3), 63-76.

Kasmir. (2019). Analisis Laporan Keuangan. Jakarta: PT Raja Grafindo Persada.

Kurniadi, A. (2021). Analisis rasio keuangan untuk memprediksi financial distress perusahaan manufaktur di BEI. Jurnal Ilmiah Manajemen Kesatuan, 9(3), 495–508.

Latif, R., Usmany, P., & Sososutiksno, C. (2024). The effect of leverage and political connections on the performance of State-Owned Enterprises. Jurnal Ilmiah Manajemen Kesatuan, 12(5), 2073–2084.

Laurena, J., & Ramantha, I. W. (2022). Firm size moderates the effect of institutional ownership, and financial indicators on financial distress. International Journal of Business Management and Economic Review, 05(04), 118–130.

Liu, X., Zhang, Y., Tian, M., & Chao, Y. (2023). Financial distress and jump tail risk: Evidence from China’s listed companies. International Review of Economics & Finance, 85(2), 316–336.

Melani, A. (2021). Pendapatan blue bird merosot 49,43 persen pada 2020. Liputan6.com. Retrieved, 31, maret 2021 from https://www.liputan6.com/saham/read/4519767/pendapatan-blue-bird-merosot-4943-persen-pada-2020

Phan, T. D., Hoang, T. T., & Tran, N. M. (2022). Cash flow and financial distress of private listed enterprises on the Vietnam stock market: A quantile regression approach. Cogent Business and Management, 9(1), 1–13.

Ramadani, A. W., & Ratmono, D. (2023). Financial distress prediction: the role of financial ratio and firm size. Jurnal Riset Akuntansi Kontemporer, 15(1), 19–26.

Ramadhani, A. L., & Nisa, K. (2019). Pengaruh operating capacity, sales growth dan arus kas operasi terhadap financial distress. Jurnal Riset Keuangan Dan Akuntansi, 5(1), 75–82.

Runis, A., Arifin, D. S., Masud, A., & Kalsum, U. (2021). The influence of liquidity, leverage, company size and profitability on financial distress. International Journal of Business and Social Science Research, 2(6), 11-17.

Simorangkir, C., & Mauli, R. T. (2020). Effect of profitability, leverage, liquidity, audit committee on financial distress. Saudi Journal of Economics and Finance, 4(8), 377–383.

Subhani, B. H., Zunhuan, S., & Khan, M. A. (2025). Finance for a Greener future: Evolving the financial sector for ESG and sustainable corporate debt management. Borsa Istanbul Review, 25(2), 337-349.

Subramanyam. (2017). Analisis laporan keuangan. Jakarta: Salemba Empat.

Sugiana, N. A., & Hidayat, W. W. (2023). The effect of operating cash flow, operating capacity and sales growth on financial distress. Indonesian Journal Of Business Analytics, 3(3), 785-802.

Taruvinga, R., & Sakarombe, U. (2024). Financial literacy, informality, and small business operational performance in Zimbabwe. Jurnal Ekonomi Dan Bisnis Airlangga, 34(1), 165–182.

Waqas, H., & Md-Rus, R. (2018). Predicting financial distress: Importance of accounting and firm-specific market variables for Pakistan’s listed firms. Cogent Economics & Finance, 6(1), 154-173.

Xie, L., Liu, Y., & Jiang, T. (2024). Executives with business education background and cost of debt financing: Evidence from China. International Review of Economics & Finance, 90(2), 283–296.