IPTEK Journal of Proceedings Series No. (1) (2020), ISSN (2354-6026) The 1 st International Conference on Business and Engineering Management (IConBEM 2020) February 1 st 2020, Institut Teknologi Sepuluh Nopember, Surabaya, Indonesia 349 The Effect of Financial Ratio in Financial Distress with Firm Size as Moderated Variables (Empirical Study of Manufacturing Sector Companies Listed on The Indonesia Stock Exchange for The 2014-2018 Period) Suharti, Yunita Purnamasari, Ardhyayuda Patria Mahari, Menik Puji Astutik, and Suci Pawiati Master of Management Faculty of Economics and Business, Universitas Diponegoro, Semarang e-mail: yunitapurnamasari993@yahoo.com Abstract―This study aims to obtain empirical evidence and analyze the effect of financial ratios on financial distress with firm size as a moderating variable. The financial ratios include liquidity ratios that are proxied by Current Ratio, solvency ratios proxied by Debt Asset Ratio, profitability ratios proxied by Return on Assets and Firm Size proxied by the natural logarithm of Total Sales. The population in this study were manufacturing companies listed on the Indonesia Stock Exchange in 2014 - 2018. The total sample used in this study were 85 companies based on established criteria. Data analysis was performed by binary logistic regression and Moderated Regression Analysis. The results of the analysis of this study indicate that the Current Ratio, Debt Asset Ratio and Return on Assets have a significant negative effect on financial distress. The results of the Moderated Regression Analysis reveal that firm size has a significant moderation effect on the relationship between the three independent variables and financial distress in manufacturing companies. Keywords―Financial Ratios, Firm Size, Financial Distress. I. INTRODUCTION OMPANY conditions experiencing difficult times before the company went bankrupt company is Financial Distress. For that vigilance is required to be prepared by management based on the company to not occur in conditions of Financial Distress. The use of financial ratio is the most appropriate measure in penilaian performance of the company and are often used to provide a snapshot of a company the company is healthy or not. To assess whether or not a company's healthy what is commonly used ratio is the ratio liquidity, solvency, profitability and firm size. Liquidity is the company's ability to pay short-term debt. Companies are more liquid will be spared from experiencing the threat of Financial Distress. Several studies have shown to have obtained different results, Hamid Waqas et al (2018) and Keter Kipkemboi Jackson et al (2018) found that the current ratio of significant positive effect on financial distress while Saleha Azam et al (2017) and Mesak Dance et al (2019) found negative results. Leverage is the ability of companies how to pay off current liabilities and long term debt. This ratio can assess a company is able to finance by using debt. There are differences in the results of keeping research earlier about the influence Leverage against financial distress such as the study of Deden Edwar Yokue Bernadin (2019) and Saleha Azam et al (2017) found that the Debt to Asset Ratio significant positive effect on financial distress while renty Rismawati et al (2017 ) found negative results. Profitability shows how a company's ability to earn a profit from sales-related revenue, assets and capital based on specific measurements. Previous studies such as that carried out Hazeem B et al[1] and Eunice Wangare Mburu (2018) obtained results that Return On Assset positive effect on the financial distress while Nurhayati et al (2017) and Mesak Dance et al (2019) found that Return On Assseta significant negative effect on the financial distress. In addition to using financial ratios, financial distress can also be seen by the size of the company with the aim to screen companies can be said to a large or small a number of ways such as by asset sales, the value of the stock market, the average level of sales. In this study, a proxy for firm size using the natural logarithm of total sales according to research from Fredrick Ikpesu (2019) and Praise inten Rianti found positive results between firm size on financial distress while Reta Eminingtyas (2017) stated that the results were different. Ellouni and Gueyie[2] states that if the company experienced financial distress then associate with the basics seperti has earnings per share were negative. As explained that the information on the show by EPS is considered useful information for a company. Because the EPS information can explain bagaimana prospects for corporate earnings in the future. If a company has Earning Per Share is continuously generating positive in each period will have good growth in the future. II. LITERATURE REVIEW Empirical literature review on how big the size of the company's financial difficulties influence has yield mixed results and is therefore not clear. While some studies show that larger companies are more likely to suffer financial distress because of their high appetite for debt financing and inefficiency, other studies have postulated that it is a small company vulnerable to financial distress because of their inability to access credit. Furthermore, it has been argued that factors such as economies of scale can reduce the financial C