ABSTRACT: In this era of globalization, the manufacturing sector has developed rapidly in line with the
number of customers growing, but the growth has been unmatched by an increase in operating income.
Therefore, it is important to analyze the financial distress of manufacturing companies to avoid bankruptcy. This
study aims to determine the effect of financial ratios to predict the probability of financial distress. Financial
ratio indicators use profitability ratios and leverage ratios. The population in this study are manufacturing
companies listed on the Indonesia Stock Exchange 2014-2019. Based on the purposive sampling method, the
financial distress criteria in this study were measured using a negative profit balance, while the statistical
analysis used logistic regression with a significance level of 5%. The result is the profitability ratio and the
leverage ratio have a significant positive value for predicting financial difficulties.

KEYWORDS – Profitability, Leverage, Financial Distress, Binary Logit