The Impact of COVID-19 Pandemic on the Financial Performance of Firms on the Indonesia Stock Exchange

Abstract

The COVID-19 pandemic has harmed the national economy and caused a decline in various businesses' financial performance. This study aims to examine the impact of the COVID-19 pandemic on firms' financial performance listed on the Indonesia Stock Exchange. The research samples included 214 companies, which were divided proportionally into nine sectors or 49 sub-sectors. Data analysis used was the Wilcoxon Signed Rank Test. The results show an increase in the leverage ratio and short-term activity ratio but a decrease in the public companies' liquidity ratio and profitability ratio during the COVID-19 pandemic. There was no significant difference in the liquidity ratio and leverage ratio. However, the public companies' profitability ratio and short-term activity ratio differed significantly between before and during the COVID-19 pandemic. The sector that experienced an increase in liquidity ratio, profitability ratio, and short-term activity ratio but a decrease in the leverage ratio was the consumer goods sector. In contrast, the sectors experiencing a decrease in the liquidity and profitability ratios were property, real estate and building construction, finance, trade, services, and investment sectors.

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Journal of Economics, Business, and Accountancy Ventura Vol. 23, No. 2, August – November 2020, pages 226 – 242
226
The Impact of COVID-19 Pandemic on the Financial
Performance of Firms on the Indonesia Stock Exchange
Sunitha Devi*, Ni Made Sindy Warasniasih, Putu Riesty Masdiantini, Lucy Sri Musmini
Universitas Pendidikan Ganesha, Bali, Indonesia.
ARTICLE INFO
Article history:
Received 23 August 2020
Revised 21 October 2020
Accepted 13 November 2020
JEL Classification:
I18, L21, L25
Key words:
Current Ratio, DER, ROA, Receivable
Turnover
DOI:
10.14414/jebav.v23i2.2313
ABSTRACT
The COVID
-19 pandemic has
harmed the national economy and caused a decline in
various businesses' financial performance. This study aims to examine the impact of
the COVID
-
19 pandemic on firms' financial performance listed on the Indonesia
Stock Exchange. The research samples included 214 companies, which were divided
proportionally into nine sectors or 49 sub
-
sectors. Data analysis used was the
Wilcoxon Signed Rank Test. The results show an increase in the leverage ratio and
short
-term activity ratio but a decrease in the public co
mpanies' liquidity ratio and
profitability ratio during the COVID
-
19 pandemic. There was no significant
difference in the liquidity ratio and leverage ratio. However, the public companies'
profitability ratio and short
-term activity ratio differed signific
antly between before
and during the COVID
-
19 pandemic. The sector that experienced an increase in
liquidity ratio, profitability ratio, and short
-
term activity ratio but a decrease in the
leverage ratio was the consumer goods sector. In contrast, the sectors experiencing a
decrease in the liquidity and profitability ratios were property, real estate and
building construction, finance, trade, services, and investment sectors.
ABSTRAK
Pandemi COVID 19 berdampak negatif terhadap ekonomi nasional dan menyebabkan
penurunan kinerja keuangan berbagai jenis usaha. Penelitian ini bertujuan untuk
mengkaji dampak pandemi COVID
-
19 pada kinerja keuangan perusahaan yang tercatat
di Bursa Efek Indonesia. Sampel penilitian mencakup 214 perusahaan yang terbagi
secara proporsional kedalam sembilan sektor atau 49 subsektor. Analisis data
menggunakan Wilcoxon Signed Rank Test. Hasil penelitian menunjukkan bahwa
terjadi peningkatan rasio leverage dan rasio aktivitas jangka pendek, namun terjadi
penurunan rasio likuiditas dan rasio profitabilitas perusahaan publik selama pandemi
COVID
-
19. Tidak terdapat perbedaan yang signifikan pada rasio likuiditas dan rasio
leverage, namun terdapat perbedaan yang signifikan pada rasio profitabilitas dan rasio
aktivitas jangka pendek pada perusahaan publik antara sebelum dan selama pandemi
COVID
-
19. Sektor yang mengalami peningkatan rasio likuiditas, rasio profitabilitas,
dan rasio aktivitas jangka pendek namun penurunan rasio leverage adalah sektor barang
konsumsi, sedangkan sektor yang
mengalami penurunan rasio likuiditas dan rasio
profitabilitas adalah sektor properti, riil. perkebunan dan konstruksi bangunan,
keuangan, perdagangan, jasa, dan investasi.
1. INTRODUCTION
The COVID-19 pandemic has a profound impact on
the economy, not only in Indonesia but also
throughout the world. One of the impacts of the
COVID-19 pandemic on Indonesia's economy is the
decrease in the tax revenue budget, the largest
source of state revenue, from 1,865.7 trillion to
1,462.6 trillion (Ministry of Finance, 2020). Tax
revenue is the primary source of state revenue, or
84.4% (1,332.06 trillion) in 2019 (Ministry of Finance,
2020). The decrease in the 2020 target of state
revenue originating from the provision of tax
incentives for taxpayers and business actors as
regulated in the Minister of Finance Regulation No.
44 PMK 03/2020 concerning Tax Incentives for
Taxpayers Affected by the Corona Virus Disease
2019 (COVID-19) Pandemic which was issued on
April 27, 2020. The government has analyzed that
the economic crisis due to the COVID-19 pandemic
will undoubtedly impact decreasing profits and
* Corresponding author, email address: sunitha.devi@undiksha.ac.id

Sunitha Devi, The Impact of COVID-19 Pandemic on the Financial Performance …
227
financial performance in various business types.
Therefore, implementing tax incentives is the
government's first step to carry out an economic
rescue that touches the most affected sectors,
especially the real sector, which absorbs much labor.
It is expected that the sector will be able to survive
amid the economic crises due to the COVID-19
pandemic. Tax incentives are not only given to the
MSMEs but also large-scale public companies. The
provision of tax incentives is also a rescue effort
made by the government so that companies do not
terminate working relationship with employees as a
result of corporate financial difficulties, such as in
Australia during the economic crisis in 2008, which
caused an increase in unemployment (Jetter et al.,
2020).
The economic crisis can impact decreasing sales
of products produced by companies (Wijayangka,
2014). The decline in total sales will undoubtedly
have an impact on the company's financial
performance. Some companies have even been
liquidated due to financial difficulties (Bintang et al.,
2019). Yudanto and Santoso (2003) stated that the
monetary crisis in 1998 did not affect the real sector's
financial performance. The pharmaceutical sub-
sector experienced only a slight decrease in the
current ratio's average value and quick ratio. The
same thing also applied to the cigarette sub-sector,
which did not significantly decrease the average
value of the current ratio, considering that cigarettes
have already been an addictive item. Their sales
were not affected by the crisis. Meanwhile, the
financial performance in the consumer goods
industry sector was affected by the monetary crisis
when viewed from the value of the debt to equity
ratio (DER), indicating a decline in debt repayment
capacity. Increased DER can also be caused by
increased total debt but with fixed or decreased total
equity.
The global economic crisis in 2008 also caused
the manufacturing sector to experience financial
difficulties to its lowest point. Data from the Central
Statistics Agency recorded that nearly 13% of the
manufacturing sector experienced bankruptcy amid
the economic crisis in 2008. The only sectors that
experienced growth were transportation and
communication, gas, electricity and clean water, and
agriculture (Ramadhani & Lukviarman, 2009). The
global economic crisis in 2008 rocked the financial
condition of companies not only in Indonesia but
also in developed countries such as the United
States. For example, Bear Stearns, a brokerage
company that acted as intermediaries for buying
and selling securities, almost defaulted, and Lehman
Brothers went bankrupt shortly after Merrill Lynch
was acquired. These companies' balance sheets
experienced shocks, including in the level of
leverage, and there was a decrease in asset value
(Armansyah & Effendi, 2017; Carlson &
Macchiavelli, 2020). This is different from the
phenomenon of the economic crisis due to the
current COVID-19 pandemic.
The work from home (WFH) policy during the
COVID-19 pandemic has resulted in a decrease in
the number of flights, but sales of cosmetics and
household appliances included in the
manufacturing sector continued to increase over the
past three months from February to April 2020
(Ministry of Finance, 2020). Sales of food and
beverage products also continued to increase during
the COVID-19 pandemic. Shen et al. (2020) showed
that the COVID-19 pandemic had a significant
negative impact on the performance of listed
Chinese companies due to a decrease in the value of
total revenue, which also affected the decrease in
ROA. The research also proved that industries that
were significantly affected in the first quarter of 2020
included tourism, catering, and transportation. The
COVID-19 pandemic hurts the production,
operations, and sales of the industry. Company
managers are expected to pay attention to
environmental changes outside, make adjustments
to the business, establish strategies to make
production, and carry out operational activities that
meet consumption trends during the COVID-19
pandemic to assist business recovery.
The differential impact of the COVID-19
pandemic in 2020 on the industrial sales or financial
conditions needs to be examined quantitatively
based on financial reports released on the Indonesia
Stock Exchange (IDX). The performance of public
companies is the basis for making investment
decisions for investors and creditors. Therefore, this
research is critical to provide relevant information to
potential investors amid the country's financial
difficulties during the current COVID 19 pandemic.
Research related to company performance
during the COVID 19 pandemic was also carried out
by Hadiwardoyo (2020) using a qualitative
phenomenological approach. The results show that
the most affected business sectors rely on crowds,
such as tourism and tourism supporting businesses
including mass transportation, hotels, and tertiary
product businesses whose sales depend on public
savings funds, property, and credit-giving
institutions. The energy sector is also under
tremendous pressure due to drastically shrinking
business activities, except for PLN (State Electricity

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228
Company). Besides, many other sectors have been
affected in a variety of ways. Business sectors that
can benefit from social restrictions during the
COVID-19 pandemic include goods delivery service
providers, cellular operators and internet providers,
emergency credit providers, and health insurance.
The health sector business also can generate profits
for certain types of products such as masks, hand
sanitizers, disinfectants, soaps, and similar
products. Other than print media, the media sector
is also a potentially profitable business with more
advertisements due to restrictions on physical
movement. The food sector is considered a stable
business in crisis times, only experiencing
adjustments in methods, such as ordering, payment,
and delivery of goods.
So far, the information related to the impact of
COVID-19 on the firm performance is limited based
on data collected qualitatively (Hadiwardoyo, 2020).
Therefore, this study is necessary to prove the
results of research conducted by Hadiwardoyo
(2020) using a quantitative approach. This research
is conducted by examining changes in public
companies' performance during the COVID-19
pandemic using a quantitative approach to find out
which sub-sectors of the public industry that are
negatively or positively affected by the COVID-19
pandemic. This research is expected to provide
relevant information for investors in making
investment decisions during the COVID-19
pandemic.
2. THEORETICAL FRAMEWORK AND
HYPOTHESES
Resource-Based Theory
The company's performance will be optimal if the
company has a competitive advantage that is
difficult to imitate and is firmly attached to its
characteristics, as described in the resource-based
theory. According to Sun et al. (2020), to help mining
companies' financial performance in China from
various risky economic situations, it is necessary to
create new competitive advantages for long-term
development. Competitive advantage is obtained by
utilizing, managing, and controlling owned
resources, such as organizational processes and
company strategies, in dealing with various
conditions, including when facing an economic
crisis. Resources that also need to be appropriately
managed include assets, knowledge of technology,
and human resources' ability to manage the
company in various situations and conditions.
Sukma (2018) also states that it is essential to create
a competitive advantage by creating products or
services that have a high economic value that is
difficult to imitate and even replace so that they
become primary needs for society. The company's
performance is highly dependent on management's
ability to produce and manage unique and specific
resources to compete and survive in various
situations. Appreciation for employee performance
is also one of the proven efforts to increase company
productivity (Unger et al., 2020). This increase in
productivity will undoubtedly have an impact on
the ability of competitiveness and improve company
performance.
Financial Reporting Transparency
Transparency is a form of corporate administrative
accountability to the public in realizing good
governance by giving users access to information to
company financial performance (Davici, 2018).
According to Mardiasmo (2002), transparency is
openness in companies' information about resource
management activities for the community or those
who need information. The application of
transparency in financial reports in public sector
organizations is expected to reduce information
asymmetry between internal and external parties
(Davici, 2018). Transparency is a form of disclosure
that is useful in decision making (Gunawan, 2016).
According to Ridha and Basuki (2012), the
implementation of transparency in financial
reporting includes providing information regarding
the success of the predetermined achievements,
providing accurate and timely financial information,
providing access to stakeholders, and disclosing the
information required according to standards
(Financial Accounting Standards), and 5) presenting
an overview of the achievements of financial
performance during the reporting year.
Company’s Financial Performance
The company's financial performance is a form of
corporate achievement in the financial aspects
related to income and overall operating costs, debt
structure, assets, and investment returns.
Discussions on financial performance are not limited
to one-period discussions because stakeholders will
also pay attention to any changes (trends) in the
company's financial performance, which include
changes in the statement of financial position, profit
or loss, or cash flow. The company's financial
performance is very dependent on policies,
strategies, and actions implemented by
management to realize organizational goals.
Financial performance can be measured through
financial statement analysis in the form of

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interpretations of financial data summarized in
financial reports as a first step to meet the
information needs of internal and external parties of
the company (Rhamadana & Triyonowati, 2016).
According to Subramanyam (2014), financial
performance is a condition that reflects the financial
condition of a company based on predetermined
goals, standards, and criteria.
Financial Ratio
Harahap (2011) explains that financial ratios are the
values obtained from comparing one item with
another item in the financial statements with a
relevant and significant relationship. Financial ratio
analysis is used to help evaluate a company's
financial performance. The use of ratios is the most
effective way to measure the company's financial
performance (Rhamadana & Triyonowati, 2016).
Foster (1986) states that four things encourage the
use of financial ratio models in financial statement
analysis: 1) being able to control the emergence of
significant differences in numbers between
companies or at the same company in different
periods, 2) making more comfortable to use in
statistical testing, 3) investigating theories related to
financial ratios, and (4) being able to be used as a
measuring tool to test estimates or predictions of
certain variables such as empirical bankruptcy.
Fraser and Ormiston (2016) suggest four categories
of ratios used to analyze a firm's financial
performance. They are liquidity ratio that describes
the company's ability to meet short-term liabilities
(debt), solvency ratio (leverage) that is used to
measure the extent to which the company's assets
are financed with debt, activity ratio that is used to
measure the effectiveness of the company using its
assets, and profitability ratio that is used to assess
the company's ability to generate profits.
Liquidity Ratio
The liquidity ratio measures the company's ability to
pay obligations that are due within one year. One of
the ratios commonly used to measure liquidity is the
current ratio. The current ratio is the ratio used to
compare current assets to current debt. The current
ratio is used to see the current assets' ability to meet
its current liabilities (Sari, 2020). A low current ratio
value illustrates a problem in liquidity. The current
ratio can be said to be normal or on a safe scale if the
value is above100%, which means that current
assets' value must be higher than the value of
current debt. The formula is current ratio = current
assets/current debt (Fraser & Ormiston, 2016).
Managers will see the company's performance based
on the profit from the operational activity carried
out, in which a high current ratio value is better
(Rusdin, 2008). However, if the current ratio value is
too high, it is also not good because it shows the
number of idle funds and reduces its ability to
generate profits (Subramanyam, 2014). The current
ratio can assess the company's liquidity ability to
manage its assets to meet its short-term obligations
and ensure that it can continue its business in the
future (Sajiyah, 2016). This ratio is calculated by
comparing current assets to current liabilities.
An economic crisis can make a company
experience liquidity difficulties. The decline in
economic growth has an impact on decreasing
people's purchasing power. As a result, many
customer receivables are uncollectible, reducing the
company's cash. On the other hand, the economic
crisis also made many supplies pile up. When
liquidity is measured using the current ratio, there
will be an increase in the liquidity ratio. The increase
in the liquidity ratio is not a good condition.
Previous studies show indecisive results regarding
the impact of an economic crisis on the current ratio.
Bintang et al. (2019) show that the changes or
differences in the current ratio's average value were
not significant. However, Istiningrum (2005) found
different results by stating that the 1998 monetary
crisis caused a significant decrease in the current
ratio value.
Leverage Ratio
The leverage ratio measures the company's ability to
pay off all of its obligations. This ratio can be
measured using the debt to equity ratio (DER). This
ratio shows the issuer's capital structure consisting
of debt and equity (Handayani & Zulyanti, 2018).
This ratio is used to assess the extent to which
company assets are financed with debt (Fraser &
Ormiston, 2016; Sajiyah, 2016). It can also represent
the solvency ratio showing the number of funds
needed to cover all or part of the costs required. This
ratio determines the company's ability to pay off not
only short-term debt but also long-term debt. The
use of short-term debt will affect liquidity, and long-
term debt will affect solvency. This ratio will be of
concern to creditors, especially long-term creditors
(Abbas, 2018). The smaller the DER value, the better
the company's condition. Ideally, the company's
amount of capital should be higher than the amount
of debt (Laiman & Hatane, 2017). The formula for
DER is total liabilities divided by total equities.
The economic crisis caused many companies to
reduce their production activities due to the decline
in people's purchasing power. The company's

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230
activities and performance have decreased so that
when companies need loans, fund providers, such as
banks and other financing institutions, are reluctant
to provide loans. Thus, the economic crisis tends to
reduce the company's debt ratio. Previous studies
also reveal different results regarding the impact of
the financial crisis on financial leverage. Proença,
Laureano, and Laureano (2014) prove that financial
crisis cause firms debt ratio to decrease. However,
Rofiqoh (2001) show that there is no significant
difference in DER value.
Profitability Ratio
The profitability ratio measures the company's
ability to generate profits or measure the efficiency
of the company. The most commonly measured
profitability ratio is the return on assets (ROA). It is
a ratio between net income after tax and total assets,
which shows the measure of asset productivity in
generating profit (Handayani & Zulyanti, 2018;
Syafirah, 2019; Subramanyam, 2014). ROA analysis
is often interpreted as economic profitability, which
measures a company's ability to generate profits in
the past (Rhamadana & Triyonowati, 2016). This
ratio is then projected into the future to see the
company's ability to generate profits in the future.
ROA can be broken down into two components:
profit margin and asset turnover. Profit margin is a
measure of a company's efficiency, while asset
turnover reflects its ability to generate sales based on
specific assets (Subramanyam, 2014). The formula of
ROA is the after-tax profit divided by total assets
(Abbas, 2018).
The economic crisis undoubtedly harmed the
company's ability to generate profits. The decline in
people's purchasing power will reduce the
company's demand for products or services. In the
short term, this decline in sales is not accompanied
by a decrease in expenses, so that the impact is to
reduce company profits. The Istiningrum (2005)
result shows that there is a decrease in the return on
assets of service companies during and after the
monetary crisis in 1998. This is in line with Rofiqoh
(2001), stating that there was a decline in public
companies' profitability on the Jakarta Stock
Exchange for all sectors during the crisis.
Activity Ratio
Activity ratio measures the effectiveness of a
company is using its assets to generate sales. This
ratio can be divided into two groups: the ratio of
long-term activities and short-term activities. In the
context of the impact of the economic crisis, the
short-term activity ratio is more relevant. The short-
term activity ratio consists of inventory turnover
and account receivables turnover. This study uses
account receivables to measure activity ratios.
According to Fraser and Ormiston (2016), the
receivable turnover ratio is used to describe working
capital analysis because it can measure how quickly
the company's receivables turn into cash. The
receivable turnover ratio is a ratio to measure the
company's ability to handle credit sales, including
its policies. In its operational activities, the company
carries out cash sales transactions and sales
transactions on credit, resulting in account
receivables. Through credit sales facilities for
customers, it is expected to boost sales growth,
hoping that profits will also increase. The increase in
total credit sales will, of course, also be accompanied
by an increase in risk for the company. Credit risk
due to the emergence of trade receivables will occur
when buyers cannot pay or delay payment (Fridson
& Alvarez, 2011). Fraser and Ormiston (2016) state
that the higher the receivable turnover, the greater
the cash to be received and the greater the
company's profits. On the other hand, the slower the
receivable turnover, the less profitability the
company gets (Notta & Vlachvei, 2014). The faster
the turnover, the fewer funds invested in accounts
receivable. Management can also find out how many
times the funds invested in these receivables revolve
in one period. Thus, through this ratio, it can be seen
whether the company's activities in the collection are
effective. The formula of receivable turnover is sales
divided by the average account receivables (Abbas,
2018)
Economic Crisis
The economic crisis in Indonesia in 1998 caused the
economy to experience a significant downward
contraction of -13.2%. The economic crisis also
caused an increase in unemployment and the
poverty rate and an increase in government debt,
and even Indonesia was almost bankrupt
(Adiningsih et al., 2008). Indonesia experienced
another economic crisis in 2008. Hariyanto (2020)
explained that two main factors caused the global
economic crisis in 2008. First, too loose monetary
policy. Apart from low-interest rates, the increasing
demand for housing loans was also driven by
government policies that encourage
homeownership programs through government
agencies. Second, global imbalances. There was a
global saving glut phenomenon, meaning that many
places carried out too intensive saving activities and
lack of spending activities. There was an asymmetry
in the global financial system where developed

Sunitha Devi, The Impact of COVID-19 Pandemic on the Financial Performance …
231
countries had sophisticated and complex financial
markets different from the countries in the emerging
market.
The current COVID 19 pandemic is also having
a bad impact on the Indonesian economy. The
Organization for Economic Co-operation and
Development (OECD) reports that the COVID-19
pandemic has resulted in the threat of a major
economic crisis marked by the cessation of
production activities in many countries, falling
levels of public consumption, loss of consumer
confidence, and falling stock exchanges that
ultimately lead to uncertainty (OECD, 2020). In the
release of Indonesia's economic growth in the first
quarter of 2020 issued by the Central Statistics
Agency (BPS), it is clear that the Covid-19 Pandemic
has caused damage to the Indonesian economy. The
growth rate for Indonesia's Gross Domestic Product
(GDP) in Q1 2020 was recorded at only 2.97% (year-
on-year). This figure is the lowest growth rate since
2001. The Ministry of Finance and Bank Indonesia
previously had predicted growth in the range of 4%
-5% in Q1 2020. The GDP growth during COVID-19
was much lower than predicted. On the expenditure
side, the biggest contraction in GDP was recorded in
household consumption expenditure, which
worsened by 2.84%, representing the largest
contraction in consumption since 1999. The sharp
decline in consumer household spending can be
attributed to at least two things. First, it is caused by
an increase in the number of unemployed, which
directly impacts decreasing income and household
consumption expenditure. Second, it is caused by an
increase in uncertainty due to the Covid-19
pandemic. This increased uncertainty has led to a
shift in consumption to precautionary savings by
households whose income has not been greatly
affected by this pandemic. However, not all sectors
in the economy have heterogeneous impacts.
According to Modjo (2020), some of the sectors
severely affected were the transportation sector
(1.27% from the previous 7.55%), the construction
sector (-2.41%), and the manufacturing industry (-
1.47%). Various innovations that are more directed
at the defense of people's welfare are needed during
the COVID-19 pandemic because, in the end, the
people's purchasing power is better able to help the
economy move and save business growth, business
profitability, and national economic growth
(Mohammed et al., 2021)
Hypothesis Development
The COVID-19 pandemic has harmed the country's
economy. World Bank Managing Director, Mari
Elka Pangestu, estimated that Indonesia's economic
growth could weaken below 5% in the first quarter
of 2020 (Burhanuddin & Abdi, 2020). The financial
performance of the industrial sector will also
certainly be affected by the economic crisis.
However, company management still has to strive to
pay attention to stakeholder interests by disclosing
its financial situation. Based on stakeholder theory,
company management must always provide
information related to the company's activities,
including its financial condition, to stakeholders for
the benefit of these stakeholders. Whatever the case,
the company's condition must be disclosed to
stakeholders to maintain company transparency.
Companies must uphold the value of responsibility
and accountability for their stakeholders (Nur &
Priantinah, 2012). This economic crisis will certainly
lead to a decline in industrial sector sales due to
decreased purchasing power (Wijayangka, 2014). If
sales in the industrial sector experienced a decrease
during the economic crisis due to the COVID 19
pandemic, this would certainly affect the company's
financial condition in general, including the value of
the company's current assets. The components of
current assets that are significantly affected by sales
changes are the cash component resulting from cash
sales and the value of trade receivables as a result of
credit sales. When current assets experience
significant changes, this will ultimately affect the
value of the current ratio. Bintang et al. (2019) show
differences in financial performance, including the
current ratio in the period before and after the
monetary crisis. The result of Istiningrum (2005) also
shows that there was a significant decrease in a
firm's liquidity ratios, measured using the current
ratio, during the monetary crisis. Therefore, the first
hypothesis can be formulated as follows:
H1: The COVID-19 pandemic has a negative effect on
the liquidity, measured using the current ratio
A significant decrease in sales will certainly
affect company profits and cash received on cash
sales transactions. This condition will profoundly
impact the company's ability to pay its debts due to
the unavailability of cash to make debt payments.
Besides, the capital value will also decrease due to
losses experienced by the company due to decreased
sales. Minimal income from sales will certainly
reduce the company's ability to cover all operational
costs incurred to suffer losses. Istiningrum (2005)
shows that the global crisis hurts the leverage ratio,
measured using debt to equity ratio (DER). Rofiqoh
(2001) states that an increase in the DER number

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232
indicated the decline in public companies' financial
performance on the Jakarta Stock Exchange during
the crisis compared to before the crisis. This shows
that the long-term risk of public companies on the
Jakarta Stock Exchange increases when the
monetary crisis occurs because there is uncertainty
in long-term performance, especially the many
uncontrollable costs, including interest costs. Hakim
(2012) also found a significant difference in the DER
value between before and after the crisis. Also, the
increase in DER value can be triggered by a decrease
in the capital structure (equity) from the
management or investors due to concerns about the
impact of the crisis on decreasing company earnings,
which are very risky for shareholders. A decrease in
the capital structure (equity) that comes from the
management or investors can impact decreasing
operational effectiveness and efficiency, which in
turn has an impact on the company's overall
performance. The second hypothesis can be
formulated as follows:
H2: The COVID-19 pandemic has a negative effect on
the leverage, measured using debt to equity ratio.
During the monetary crisis, net income
decreased significantly due to weakening people's
purchasing power and increased interest costs, so
that a firm's profitability decreased significantly.
When people's purchasing power decreases, it will
certainly impact the company's total sales. When the
company's sales decline, its profit will also decrease
if the company is unable to minimize operating costs
incurred. The results of Istiningrum (2005) show that
the profitability ratio, measured using returns on
assets (ROA), of service companies before the
monetary crisis and during the monetary crisis differ
significantly, where there is a decrease in the
average ratio. Rofiqoh (2001) also states that there
was a decline in public companies' financial
performance on the Jakarta Stock Exchange for all
sectors during the crisis, especially at the level of
ability to generate profits, as indicated by a
significant decrease in ROA. Besides, Shen et al.
(2020) show that the COVID 19 pandemic has a
significant negative impact on listed Chinese
companies' performance due to a decrease in the
value of total revenue, which affects reducing ROA.
The third hypothesis can be formulated as follows:
H3: The COVID-19 pandemic has a negative effect on
profitability, measured using return on assets.
The current economic crisis during the COVID-
19 will certainly impact decreasing people's income,
especially for people who work in the tourism and
transportation sectors. The decline in community
income will decrease people's purchasing power
because public financial governance will focus on
meeting primary needs. This condition will certainly
have a wider impact on the industrial sector,
particularly a decrease in sales figures, in which
there is no more potential target market. This
condition also causes a higher level of credit risk
faced by the industrial sector because buyers or
service users or customers decline in their ability to
pay debts to companies during the economic crisis
(Fridson & Alvarez, 2011). The decline in sales,
which is not accompanied by a decrease in average
receivables, will certainly impact the decline in
receivable turnover value. The high level of funds
embedded in trade receivables will lead to a slow
turnover of accounts receivable (Notta & Vlachvei,
2014). Therefore, the fourth hypothesis can be
formulated as follows:
H4: The COVID-19 pandemic has a negative effect on
the activity ratio, measured using receivables
turnover.
3. RESEARCH METHOD
The research method used was the quantitative
method. Based on the source, the data used in this
research were secondary data, which were first
processed and collected by other organizations or
parties. This study's secondary data were financial
reports for the second quarter of 2019 and the second
quarter of 2020 of companies listed on the Indonesia
Stock Exchange. The financial reports were obtained
from the official IDX website by accessing the
website https://www.idx.co.id/.
Population and Sample
The population of this study was companies listed
on the IDX in 2019 and remained registered until the
second quarter of 2020, when secondary data was
collected. The population also included companies
with financial report data for the second quarter of
2019 until the second quarter of 2020. Based on this
provision, the total population was 463 public
companies, which were divided proportionally into
nine sectors or 49 sub-sectors. The nine sectors
included: 1) agriculture, 2) mining, 3) basic industry
and chemicals, 4) miscellaneous industry, 5)
consumer goods industry, 6) property, real estate,
and building construction, infrastructure, 7) utilities
and transportation, 8) finance, and 9) trade, service,

Sunitha Devi, The Impact of COVID-19 Pandemic on the Financial Performance …
233
and investment.
The number of samples was determined using a
statistical approach, that is, by using the Slovin
formula to avoid subjectivity in determining the
number of samples. The error rate used was 5%,
with a confidence level of the sample to the
population of 95%.
=
1+2
Note:
n: number of samples
N: total population
e: error tolerance
The number of samples used in this study,
based on calculations using the Slovin formula, was
214 companies, proportionally divided into nine
sectors or 49 sub-sectors.
Research Variables
The liquidity ratio is measured using the current
ratio. It is the ratio to compare current assets to
current debt. The current ratio is used to see the
current assets' ability to meet its current liabilities
(Sari, 2020). The current ratio formula is current
assets/current liabilities (Fraser & Ormiston, 2016).
The leverage ratio is measured using the debt to
equity ratio (DER). It is a ratio that shows how the
company can fulfill all of its obligations with its
capital. DER is used to see the company's ability to
pay off debt, short-term debt, and long-term debt.
The formula of DER is total debt/total equity (Fraser
& Ormiston, 2016).
Profitability is measured using the return on
assets (ROA). It is used to measure the company's
effectiveness to generate profits by taking advantage
of the company's effectiveness (Syafirah, 2019). ROA
can reflect the level of company performance. The
formula of ROA is after-tax profit total assets
(Abbas, 2018).
Receivable Turnover is used to measure the
activity ratio. It is a ratio to measure a company's
ability to handle credit sales and its policies. The
formula of receivable turnover is sales/average
receivables (Abbas, 2018).
4. DATA ANALYSIS AND DISCUSSION
Descriptive Analysis
This research data analysis included descriptive
statistics and analysis of different tests on public
companies' performance in Indonesia between
before and during the economic crisis due to the
COVID-19 pandemic. First, a data normality test
was conducted to determine which statistical tests
would be used in the difference test. The data
normality test is an absolute requirement in the
parametric statistical test. If the data is not normally
distributed, another test can be done to use non-
parametric statistics, such as the Wilcoxon signed-
rank test. The data were analyzed using SPSS
version 25.
The results of the descriptive analysis in Table 3
show that there was a decrease in the average
current ratio in Indonesian companies during the
COVID-19 pandemic compared to before the
COVID-19 pandemic. The average value of the
current ratio before the COVID 19 pandemic was
8.069, while the average value of the current ratio
during the COVID-19 pandemic was 5.201. The
decline in the current ratio from the COVID 19
pandemic to during the COVID-19 pandemic was
2.868. This decrease in average indicates that the
COVID-19 pandemic has harmed its financial
performance when viewed from changes in the
value of the current ratio. The average value of DER
increased during the COVID-19 pandemic
compared to before the COVID-19 pandemic. The
average value of DER before the COVID-19
pandemic was 1.408, while the average value of DER
during the COVID-19 pandemic was 1.482. This
increase in average indicates that the COVID-19
pandemic has had a negative impact on the
company's financial performance when viewed
from changes in the DER value.
When viewed from other performance aspects,
such as changes in ROA value, it was found that
there was a decrease in the average ROA value,
which means that the COVID-19 pandemic situation
has harmed the company's financial performance
when viewed from changes in the ROA value. The
average value of ROA before the COVID-19
pandemic was 0.011, while the average ROA value
during the COVID-19 pandemic was 0.004. The
decline in the average value of ROA from before to
during the COVID-19 pandemic was 0.007.
Performance appraisal will be different when
viewed from changes in the value of receivable
turnover. The increase in the average value of
receivable turnover shows that the COVID-19
pandemic situation has positively impacted the
company's financial performance when viewed
from changes in the value of receivable turnover.
The average value of receivable turnover before the
COVID 19 pandemic was 3.826, while the average
value of receivable turnover during the COVID 19
pandemic was 5.870. The increase in the average
value of receivable turnover before the COVID 19
pandemic was 2.044.

Journal of Economics, Business, and Accountancy Ventura Vol. 23, No. 2, August – November 2020, pages 226 – 242
234
Table 3. Descriptive analysis results
N
Min
Max
Mean
Std. Deviation
CR_before COVID-19
214
0.193
257.740
8.069
29.263
CR_during COVID-19
214
0.113
120.045
5.201
16.188
DER_before COVID-19
214
0.010
10.535
1.408
1.665
DER_during COVID-19
214
0.005
16.395
1.482
2.169
ROA_before COVID-19
214
-0.037
0.097
0.011
0.021
ROA_during COVID-19
214
-0.534
2.269
0.004
0.347
RTO_before COVID-19
214
0.001
44.292
3.826
7.215
RTO_during COVID-19
214
0.001
42.822
5.870
8.219
Note: CR is current ratio, DER is debt to equity ratio, ROA is return on assets, andRTO is receivable turnover
Data Normality Test
The results of the Shapiro-Wilk normality test,
presented in Table 4, show that the research data were
not normally distributed with the significance value
of <0.05 or 0.00 on each observation, as shown in
Table 4. The normality test results show that the
research data were not normally distributed, so the
data could not be tested using a parametric statistical
test. Therefore, a non-parametric statistical test was
done using the Wilcoxon signed-rank.
Table 4. Normality test results
Kolmogorov-Smirnov
a
Shapiro-Wilk
Statistic
Df
Sig.
Statistic
Df
Sig.
CR_before COVID-19
0.406
214
0.000
0.346
214
0.000
CR_during COVID-19
0.378
214
0.000
0.248
214
0.000
DER_before COVID-19
0.205
214
0.000
0.682
214
0.000
DER_during COVID-19
0.248
214
0.000
0.569
214
0.000
ROA_before COVID-19
0.390
214
0.000
0.716
214
0.000
ROA_during COVID-19 0.121
214
0.001 0.794
214
0.000
RTO_before COVID-19
0.325
214
0.000
0.502
214
0.000
RTO_during COVID-19
0.411
214
0.000
0.553
214
0.000
Wilcoxon Signed-Rank Test
Table 4 shows that the values of the ties for the current
ratio, DER, and ROA were 0, meaning that there were
no same values for the current ratio, DER, and ROA
between before and during the COVID-19 pandemic.
At the same time, the receivable turnover has a ties
value of 2, meaning that two companies had the same
receivable turnover value between before and during
the COVID-19 pandemic.
There are 113 companies that experienced a
decrease in the current ratio and 101 companies that
experienced an increase in their current ratio during
the COVID-19 pandemic, as shown by the negative
ranks at the N value of 113 and the positive ranks at
the N value of 101. Table 5 also shows that 108
companies experienced a decrease in DER value and
106 companies experienced an increase in DER value
during the COVID-19 pandemic as indicated by the
negative ranks at the N value of 108 and positive
ranks of 106. Based on ROA value, 114 companies
experienced a decrease in ROA value and 100
companies experienced an increase in ROA value
during the COVID-19 pandemic as indicated by the
negative ranks value at the N value of 114 and
positive ranks at the N value of 100. Based on the
receivable turnover value, 72 companies experienced
a decrease in the receivable turnover value and 140
companies experienced an increase in the receivable
turnover value during the COVID-19 pandemic as
indicated by the negative ranks at the N value of 72,
and positive ranks at the N value of 140. The ties
values of the current ratio, DER, and ROA are 0,
which means that there are no the same values for the
current ratio, DER, and ROA between before and
during the COVID-19 pandemic, while the value of
the ties of receivable turnover is 2, which means that
there are two companies that have the same
receivable turnover values before and during the
COVID-19 pandemic.

Sunitha Devi, The Impact of COVID-19 Pandemic on the Financial Performance …
235
Table 5. Wilcoxon Signed-Rank test results
N
Mean Rank
Sum of Ranks
CR_during COVID-19 -
CR_before COVID-19
Negative Ranks
113
a
60.29
6812.77
Positive Ranks
101
b
56.11
5667.11
Ties
0
c
Total
214
DER_during COVID-19 -
DER_before COVID-19
Negative Ranks 108d 57.18 6175.44
Positive Ranks
106
e
60.98
6463.88
Ties
0
f
Total
214
ROA_during COVID-19 -
ROA_before COVID-19
Negative Ranks
114
g
64.82
7389.48
Positive Ranks
100
h
42.69
4269.00
Ties
0
i
Total
214
RTO_during COVID-19 -
RTO_before COVID-19
Negative Ranks
72
j
49.92
3594.24
Positive Ranks
140
k
58.02
8112.80
Ties
2
l
Total
214
The results of the Wilcoxon signed-rank test in
Table 6 show that there is a significant difference in
the values of ROA and receivable turnover between
before and during the COVID 19 pandemic, which
can be seen from the Asymp. Sig. (2-tailed) values of
0.03 and 0.00 <0.05. For the current ratio and DER,
there is no significant difference between before and
during the COVID 19 pandemic, which can be seen
from the Asymp. Sig. (2-tailed) values of 0.19 and 0.72
> 0.05. It can be concluded that H1 and H2 are
rejected, while H3 and H4 are accepted.
Table 6. Wilcoxon Signed-Rank test results
CR_during
COVID 19 -
CR_before
COVID 19
DER_during
COVID 19 -
DER_before
COVID 19
ROA_during
COVID 19 -
ROA_before
COVID 19
RTO_during
COVID 19 -
RTO_before
COVID 19
Z
-1.29b
-0.35c
-1.69b
-5.81c
Asymp. Sig. (2-tailed)
0.19
0.72
0.03
0.00
The Impact of COVID-19 Pandemic on the Financial
Performance of Industrial Sector
Based on the test results, changes in the average value
of the current ratio, DER, ROA, and receivable
turnover between before and during the COVID 19
pandemic in each industrial sector can be seen in
Tables 7, 8, 9, 10, 11, 12, 13, 14 and 15.
Table 7. Changes in Average Value of Current Ratio, DER, ROA, and
Receivable Turnover in the Agricultural Sector
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
CR_before COVID 19
7
0.642
2.704
1.440
1.107
CR_during COVID 19
7
0.490
2.286
1.212
0.948
DER_before COVID 19
7
1.077
2.083
1.695
0.541
DER_during COVID 19
7
0.855
2.733
1.887
0.953
ROA_before COVID 19
7
-0.016
0.020
0.003
0.018

Journal of Economics, Business, and Accountancy Ventura Vol. 23, No. 2, August – November 2020, pages 226 – 242
236
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
ROA_during COVID 19
7
-0.028
0.031
0.006
0.030
RTO_before COVID 19
7
3.373
12.400
6.562
5.063
RTO_during COVID 19
7
2.016
20.326
11.156
9.155
Table 7 shows that the seven agricultural sector
companies experienced a decrease in the average
value of the current ratio, from 1.440 to 1.212, while
the average DER value increased from 1.695 to 1.887.
The average value of ROA increased from 0.003 to
0.006, and the average value of receivable turnover
also increased, from 6.562 to 11.156.
Table 8. Changes in Average Value of Current Ratio, DER, ROA, and
Receivable Turnover in the Mining Sector
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
CR_before COVID 19
11
0.202
9.535
1.972
2.973
CR_during COVID 19
11
0.248
9.028
2.268
2.647
DER_before COVID 19
11
0.070
6.094
1.020
2.841
DER_during COVID 19
11
0.130
9.679
2.805
4.243
ROA_before COVID 19
11
-0.018
0.097
0.029
0.040
ROA_during COVID 19
11
-0.220
0.112
-0.008
0.090
RTO_before COVID 19
11
0.001
23.637
4.462
7.395
RTO_during COVID 19
11
0.001
38.954
7.097
12.243
Table 8 shows that the eleven mining sector
companies experienced an increase in the current
ratio's average value, from 1.972 to 2.268. The average
value of DER also increased from 1.020 to 2.805. The
average value of ROA decreased from 0.029 to -0.008,
while the average value of receivable turnover
increased from 4.462 to 7.097.
Table 9. Changes in Average Value of Current Ratio, DER, ROA, and
Receivable Turnover in the Basic Industri & Chemicals Sector
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
CR_before COVID 19
24
0.858
4.329
1.798
1.082
CR_during COVID 19
24
0.415
15.365
2.404
3.171
DER_before COVID 19
24
0.166
10.535
2.163
3.100
DER_during COVID 19
24
0.005
10.059
0.511
4.006
ROA_before COVID 19
24
-0.019
0.059
0.007
0.018
ROA_during COVID 19
24
-0.534
0.070
-0.029
0.148
RTO_before COVID 19
24
1.044
44.292
5.395
9.538
RTO_during COVID 19
24
1.767
27.409
6.678
6.253
Table 9 shows that the twenty-four Basic
Industry and Chemicals sector companies
experienced an increase in the current ratio's average
value from 1.798 to 2.404. In contrast, the average
value of DER decreased from 2.163 to 0.511. The
average value of ROA also decreased from 0.007 to -
0.029, while the average value of receivable turnover
increased from 5.395 to 6.678.

Sunitha Devi, The Impact of COVID-19 Pandemic on the Financial Performance …
237
Table 10. Changes in Average Value of Current Ratio, DER, ROA, and
Receivable Turnover in the Miscellaneous Sector
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
CR_before COVID 19
14
0.193
9.682
2.531
2.531
CR_during COVID 19
14
0.121
13.402
3.218
3.516
DER_before COVID 19
14
0.120
2.732
0.564
1.585
DER_during COVID 19
14
0.782
4.829
1.205
1.924
ROA_before COVID 19
14
-0.034
0.036
0.011
0.017
ROA_during COVID 19
14
-0.158
0.035
-0.019
0.052
RTO_before COVID 19
14
0.365
9.132
2.314
2.321
RTO_during COVID 19
14
0.001
6.902
3.331
2.2811
Table 10 shows that fourteen companies in the
Miscellaneous Industry used as samples experienced
an increase in the current ratio's average value from
2.531 to 3.218. The average value of DER also
increased from 0.564 to 1.205. The average value of
ROA decreased from 0.011 to -0.019, while the
average value of receivable turnover increased from
2.314 to 3.331.
Table 11. Changes in Average Value of Current Ratio, DER, ROA, and
Receivable Turnover in the Sector of Consumer Goods
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
CR_before COVID 19
20
0.767
6.765
3.154
1.912
CR_during COVID 19
20
0.799
14.135
4.504
4.152
DER_before COVID 19
20
0.121
3.299
0.826
0.933
DER_during COVID 19
20
0.119
1.959
0.622
0.568
ROA_before COVID 19 20 -0.013 0.060 0.018 0.024
ROA_during COVID 19
20
-0.025
2.269
0.211
0.624
RTO_before COVID 19
20
0.334
10.667
2.882
3.569
RTO_during COVID 19
20
0.698
42.822
8.309
12.100
Table 11 shows that twenty companies in the
Consumer Goods Industry experienced an increase in
the current ratio's average value from 3.154 to 4.504.
In contrast, the average value of DER decreased from
0.826 to 0.622. The average value of ROA increased
from 0.018 to 0.211, and the average value of
receivable turnover also increased from 2.882 to 8.309.
Table 12. Changes in Average Value of Current Ratio, DER, ROA, and
Receivable Turnover in the Sectors of Property, Real Estate, and Building Construction
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
CR_before COVID 19
24
1.147
10.196
3.717
3.441
CR_during COVID 19
24
1.135
3.809
2.612
1.157
DER_before COVID 19
24
0.084
3.689
1.352
1.315
DER_during COVID 19
24
0.079
5.700
1.614
2.101
ROA_before COVID 19
24
-0.015
0.043
0.005
0.019
ROA_during COVID 19
24
-0.015
0.014
-0.004
0.012
RTO_before COVID 19
24
0.688
23.789
6.093
8.803
RTO_during COVID 19
24
0.421
36.691
9.278
13.890

Journal of Economics, Business, and Accountancy Ventura Vol. 23, No. 2, August – November 2020, pages 226 – 242
238
Table 12 shows that the twenty-four companies
in the Property, Real Estate, and Building
Construction sector used as the samples experienced
a decrease in the average value of the current ratio
from 3.717 to 2.612. The average value of DER
increased from 1.352 to 1.614. The average value of
ROA decreased from 0.005 to -0.004, while the
average value of receivable turnover increased from
6.093 to 9.278.
Tabel 13. Changes in Average Value of Current Ratio, DER, ROA, and
Receivable Turnover in the Sectors of Infrastructure, Utilities, and Transportation
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
CR_before COVID 19
24
0.205
2.855
0.874
0.762
CR_during COVID 19
24
0.113
3.456
0.942
0.941
DER_before COVID 19
24
0.010
3.744
0.003
53.658
DER_during COVID 19
24
0.006
3.563
1.152
1.995
ROA_before COVID 19
24
-0.032
0.042
0.010
0.045
ROA_during COVID 19
24
-0.189
0.019
-0.027
0.056
RTO_before COVID 19
24
0.409
38.168
7.235
11.163
RTO_during COVID 19
24
1.117
23.009
6.188
6.001
Table 13 shows that 24 companies in the
Infrastructure, Utilities, and Transportation sectors
experienced an increase in the current ratio's average
value from 0.874 to 0.942. The average value of DER
increased from 0.003 to 1.152. The average value of
ROA decreased from 0.010 to -0.027, and the average
value of receivable turnover decreased from 7.235 to
6.188.
Table 14. Changes in Average Value of Current Ratio, DER, ROA, and
Receivable Turnover in the Sector of Finance
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
CR_before COVID 19
33
1.077
257.740
36.582
71.507
CR_during COVID 19
33
1.015
120.045
20.080
41.842
DER_before COVID 19
33
0.010
10.535
2.609
2.791
DER_during COVID 19
33
0.005
16.395
3.131
4.131
ROA_before COVID 19
33
-0.022
0.047
0.006
0.015
ROA_during COVID 19
33
-0.270
0.021
-0.017
0.076
RTO_before COVID 19
33
0.002
2.618
0.514
0.752
RTO_during COVID 19
33
0.001
14.303
1.793
3.778
Table 14 shows that thirty-three companies in the
finance sector experienced a decrease in the current
ratio's average value from 36.582 to 20.080. The
average value of DER increased from 2.609 to 3.131.
The average value of ROA decreased from 0.006 to -
0.017. The average value of the receivable turnover
increased from 0.514 to 1.793.
Table 15. Changes in the Average Value of Current Ratio, DER, ROA, and
Receivable Turnover in the Sectors of Trade, Services, and Investment
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
CR_before COVID 19
57
0.209
100.943
7.863
20.307
CR_during COVID 19
57
0.192
21.903
3.508
4.715
DER_before COVID 19
57
0.013
2.718
0.854
0.997

Sunitha Devi, The Impact of COVID-19 Pandemic on the Financial Performance …
239
Descriptive Statistics
N
Min
Max
Mean
Std. Deviation
DER_during COVID 19
57
0.020
3.020
0.914
0.972
ROA_before COVID 19
57
-0.037
0.037
0.004
0.016
ROA_during COVID 19
57
-0.169
0.054
-0.014
0.056
RTO_before COVID 19
57
0.001
33.217
3.214
6.592
RTO_during COVID 19
57
0.543
42.128
5.744
9.570
Table 15 shows that 57 companies in the Trade,
Service, and Investment sector experienced a
decrease in the average value of the current ratio from
7.863 to 3.508. The average value of DER increased
from 0.854 to 0.914. The average value of ROA
decreased from 0.004 to -0.014, and the average value
of receivable turnover increased from 3.214 to 5.744.
Analysis and Discussion
Based on the statistical analysis results, H1 and H2 are
rejected, which means that there is no significant
difference in the liquidity ratio (current ratio) and
leverage ratio (DER) between before and during the
COVID-19 pandemic. The descriptive analysis results
show a decrease in the average value of the current
ratio and an increase in the average DER value.
However, these changes are not significant, according
to the results of the Wilcoxon signed-rank test.
Indonesia began to face the COVID-19 pandemic
situation in mid-March 2020. Since March 16, 2020,
the work from home (WFH) policy has begun to be
applied. The first quarter of 2020 was the initial stage
of economic upheaval. In the second quarter, which
was until the end of June 2020, Indonesia could still
use funding sourced from the state treasury that had
been previously collected through the largest tax
revenue. However, if the COVID-19 pandemic cannot
be resolved immediately, the Indonesian economy
will gradually weaken due to decreased income
obtained through tax revenue from the real sectors
affected.
When the real sectors that absorb the most labor
are no longer able to operate, the impact will decrease
people's income. The decline in people's income due
to the economic crisis during the COVID-19
pandemic will certainly impact the decrease in
people's purchasing power so that sales activity in the
industrial sector will also decrease. The decline in
sales value in the industrial sector will certainly
impact lowering profits and a decrease in cash
inflows, which can help increase current assets.
Several components of current assets affected by sales
activities are the cash component resulting from cash
sales and the value of trade receivables as a result of
credit sales. When current assets experience
significant changes, this will ultimately affect the
value of the current ratio.
A significant decrease in company profits and
cash flows received from cash sales transactions
greatly impacts the company's ability to pay its debts
due to cash unavailability in the form of cash to make
debt payments. Besides, the value of capital will
decrease due to losses experienced by the company
due to decreased sales. Minimal income from sales
will certainly reduce the company's ability to cover all
operational costs incurred to suffer losses. The result
is in line with Bintang et al. (2019), showing that there
were differences in financial performance, including
the current ratio before and after the monetary crisis.
However, this study shows that changes or
differences in the average value of the current ratio
are not significant. Regarding the DER value, Rofiqoh
(2001) states that an increase in the DER value
indicated the decline in public companies' financial
performance listed on the Jakarta Stock Exchange
during the crisis compared to before the crisis.
However, the results of this study show that there is
no significant difference in DER value. The difference
between the results of this research and those
conducted by Bintang et al. (2019) and Rofiqoh (2001)
can be caused by the influence of samples from all
industrial sectors used in this study, while the
research conducted by Bintang et al. (2019) was
limited to the use of manufacturing sector as the
sample and the research conducted by Rofiqoh (2001)
is limited to the use of 4 types of industries only, such
as food and beverage, automotive, property and real
estate, textile. The use of all industrial sectors in this
study can lead to a decrease in the level of significance
of differences due to the presence of sectors that
experience a decrease, which is offset by the presence
of sectors that experience an increase in the current
ratio or DER with varying degrees of change. This
research was also carried out until the second quarter
of 2020 financial reporting so that it has not been very
long since experiencing a crisis due to the COVID-19
pandemic.
The economic crisis due to the COVID-19
pandemic has a significant impact on firms’
profitability (ROA) and activity ratio (receivable

Journal of Economics, Business, and Accountancy Ventura Vol. 23, No. 2, August – November 2020, pages 226 – 242
240
turnover). When the company's profit decreases as a
result of decreased sales, it will certainly have an
impact on the profitability. The decline in sales will
have an impact on the decline in profits if the
company is still unable to reduce the company's
operating costs or other costs outside the operational
costs which are also taken into account in the
company's profit value. The results of this research
are supported by Istiningrum (2005) stating that the
returns on assets (ROA) of service companies before
the monetary crisis and during the monetary crisis
decreased significantly. Rofiqoh (2001) also states that
there was a decline in the financial performance of
public companies on the Jakarta Stock Exchange for
all sectors during the crisis, especially at the level of
ability to generate profits as indicated by a significant
decrease in ROA. Regarding the firms’ activity ratio,
as measured using receivable turnover, the results of
this research show an increase in the average value of
receivable turnover, which means that a significant
decrease in average receivables accompanies a
decrease in sales. A significant decrease in average
receivables can be caused by intensive collection from
companies for outstanding receivables as a form of
early anticipation of an economic situation such as
during the COVID-19 pandemic.
Based on the descriptive analysis results, it is
found that there are various changes in the value of
the liquidity, leverage, profitability, and activity
ratios for each sector of the industry. The sector that
experiences an increase in liquidity, profitability, and
activity, as well as decreased leverage, is the
consumer goods sector. The consumer goods sector
includes food and beverage, tobacco manufacture,
pharmaceuticals, cosmetics, and houseware. The
COVID-19 crisis will not reduce people's need for
food, household needs, and health needs. This
subsector will continue to survive and even
experience a surge in financial performance amidst
the economic crisis caused by the current COVID-19
pandemic. Meanwhile, sectors that experience a
decline in liquidity and profitability include property,
real estate and building construction, finance, trade,
services, and investment. The results of this study
support Hadiwardoyo (2020) stating that the business
sectors that are greatly affected by the current
COVID-19 pandemic are those that rely on crowds,
such as tourism and tourism supporting businesses
including mass transportation, hotels, tertiary
product businesses whose sales are depending on
public savings funds, property, and credit
institutions. The energy sector is also under great
pressure due to drastically shrinking business
activities, except for PLN. Meanwhile, the health
sector business can generate profits for certain
products such as masks, hand sanitizers,
disinfectants, soaps, and other similar products.
5. CONCLUSION, IMPLICATION,
SUGGESTION, AND LIMITATIONS
The conclusion that can be drawn from this research
is that a) there was an increase in leverage ratio and
activity ratio, but a decrease in liquidity ratio and
profitability ratio in the public companies during the
COVID-19 pandemic; b) there was no significant
difference in the liquidity ratio and leverage ratio,
but there was a significant difference in the
profitability ratio and activity ratio in the public
companies between before and during the COVID-
19 pandemic; and c) the sector that experienced an
increase in liquidity ratio, profitability ratio, and
activity ratios is consumer goods sector, while the
sectors that experienced a decrease in the liquidity
ratio and profitability ratio are property, real estate
and building construction, finance, trade, services,
and investment sector.
This study's results can be used as a source of
relevant information for investors or potential
investors in making investment decisions during a
crisis due to the current COVID-19 pandemic. This
study's results can also be used as information for
the government regarding the relevance of
providing the right tax incentives for the affected
sectors so that tax incentives can be given to the right
sectors.
This research's limitation is that the research has not
examined changes in each subsector's financial
performance so that the research results are still
general for each industrial sector. Besides, testing
could only be carried out until the second quarter of
2020, when the COVID-19 pandemic began to enter
Indonesia because the public companies' financial
reports were only until the second quarter of 2020.
Further research is expected to carry out more in-
depth research related to the sub-sector with the
highest potential for increased financial
performance so that investor attention can be more
specific. Further research is also expected to add an
analysis period after the companies publish their
third-quarter 2020 financial reports to test the
consistency of this study's results.
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