Analysis Of Financial Ratio That Affects Financial Distress Risk

The purpose of this study is to investigate further the relationship between financial crisis and profitability, leverage, and liquidity. This article uses literature review technique as its methodology. The researcher takes secondary data sources, namely ten papers taken from Google Scholar. Financial distress can be affected in good and bad ways by liquidity, profitability, and leverage, according to the conclusion of the study. If a company has negative liquidity, it means it cannot pay its bills with its assets; if it has negative profitability, it means it cannot generate money from its operations, which can lead to worse financial conditions or even bankruptcy; and if it has negative leverage, it means it uses more of its own capital than debt to avoid problems.