Analysis of the Effect of Cash Ratio on Corporate Bankruptcy Risk: Case Study of Manufacturing Companies

https://doi.org/10.47194/orics.v6i2.349

Authors

Keywords:

Cash ratio, bankruptcy risk, empirical analysis, financial sustainability, altman z-score

Abstract

This study aims to explore the relationship between cash ratio and bankruptcy risk using an empirical analysis approach, and relate it to the Altman Z-score model as an indicator of financial sustainability. By analyzing the financial statement data of companies listed on the stock exchange during the period 2019-2023, this study investigates the impact of liquidity measured by cash ratio on bankruptcy potential. Regression method is used to assess the relationship, while Altman Z-score serves as a tool to measure the financial health of the company. The results show that the cash ratio contributes little to reducing the risk of bankruptcy, yet firms with higher liquidity exhibit a better Z-score. These findings highlight the importance of liquidity management as a strategy to ensure the financial sustainability of firms in the face of bankruptcy challenges.

References

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Published

2025-06-30

How to Cite

Tenripada, A. S. Y. ., & Wandira, I. (2025). Analysis of the Effect of Cash Ratio on Corporate Bankruptcy Risk: Case Study of Manufacturing Companies. Operations Research: International Conference Series, 6(2), 57–72. https://doi.org/10.47194/orics.v6i2.349

Issue

Vol. 6 No. 2 (2025): Operations Research International Conference Series (ORICS), June 2025

Section

Articles
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Copyright (c) 2025 Andi Sakinah Yan Tenripada; Ika Wandira

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