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ANALYSIS OF THE FINANCIAL PERFORMANCE OF
MANUFACTURING COMPANIES BEFORE AND DURING THE
COVID 19 PANDEMIC
Mazliza, Arum Kusumaningdyah Adiati
Universitas Sebelas Maret
Mazlizaza97@gmail.com
ABSTRACT
Corona virus or commonly known as Covid 19 is a virus that can cause disturbances in the respiratory
system to problems in the lungs. The first case of the virus occurred in December 2019 in the Chinese city
of Wuhan. This study aims to determine the financial performance condition of manufacturing companies
listed on the Indonesia Stock Exchange before and during the Covid-19 pandemic. The sample in this study
amounted to 426 observations from 142 manufacturing sector companies listed on the Indonesia Stock
Exchange in 2019 – 2021. The manufacturing company was chosen as the object of research because this
company is engaged in the real sector which has various types of businesses and the number of companies
dominates more than other companies so that it is felt that manufacturing companies can provide a big
picture of the impact of the covid 19 pandemic. The test used in this study used the Wilcoxon ranked signed
rank test method. The results showed that there was a difference between the profitability variable and the
activity variable which was measured using return on assets and total assets turnover before the pandemic
and during the Covid-19 pandemic. Meanwhile, the liquidity and solvency variables measured using the
current ratio and debt to equity ratio have no difference between before the Covid-19 pandemic and during
the Covid-19 pandemic.
Keywords: financial performance, current ratio, return on assets, debt to equity ratio, total assets
turnover
This article is licensed under CC BY-SA 4.0
INTRODUCTION
Coronavirus or commonly known as Covid 19 is a virus that can cause disturbances in the
respiratory system to problems in the lungs (Mohamed & Alawna, 2020). The first case of the
virus occurred in December 2019 in the Chinese city of Wuhan. On March 2, 2020, President
Joko Widodo officially announced the presence of residents who were confirmed positive for
Covid-19 in Indonesia. Until now, the spread of Covid 19 in Indonesia as of August 4, 2022
amounts to 6.22 million confirmed cases and 157 thousand deaths. Various preventive efforts
have been carried out by the government to minimize the rapid spread of the virus, one of
which is the implementation of large-scale social restrictions (PSBB) (Golar et al., 2020). The
existence of PSBB has caused many companies to reduce the number of workers to reduce
operational costs and temporarily suspend their production activities in order to reduce imports
of raw materials.
In 2020, the JCI of the manufacturing sector fell to 45.3 from the previous level of 51.9.
Not only that, the company also laid off some of its employees due to a decrease in consumer
demand during the pandemic. According to the Central Statistics Agency (BPS), during the
Covid-19 pandemic, 32.66% of companies reduced working hours in order to reduce
operational costs amid the decline in revenue due to the pandemic. While 17.06% laid off their
employees without pay, 6.46% of companies laid off employees with partial wage payments,
while laid-off employees with full paid wages were only 3.69%. Not only that there are 12.83%
Analysis of the Financial Performance of Manufacturing Companies Before and During the Covid 19
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902 2, 3., February 2023
of employees who are laid off in a short period of time, (CNN, 2020). So this has resulted in a
decrease in revenue and changes in the company's financial performance statements.
Financial performance is a description of the company's financial health condition that will
reflect its performance within a certain period of time through financial statement analysis tools
(ErnitaSianturi, 2015). Financial performance measurement is used to obtain information
related to funding flow, use of funds, effectiveness, and efficiency and to facilitate godecision-
making (Almajali et al., 2012). In addition, financial performance can be used as a benchmark
to find out whether before and during the Covid-19 pandemic the company had a positive
impact or negatively impacted the company's financial statements.
This study used manufacturing companies that were listed on the IDX in 2019 before the
Covid-19 pandemic and in 2020 – 2021 when the COVID-19 pandemic occurred in Indonesia.
The manufacturing company was chosen as the object of research because this company is
engaged in the real sector which has various types of businesses and the number of companies
dominates more than other companies so it is felt that manufacturing companies can provide a
big picture of the impact of the covid 19 pandemic.
Company Financial Performance
Financial performance is one of the indicators of the company's achievement in a period
in terms of financial aspects related to income, operating costs, debt, assets and company
investment results. Financial performance is used by the company to assess the prospects,
growth, and potential development that has been achieved by the company. This is reinforced
by Putri & Dharma (2016) who explained that financial performance is a picture of the
achievements achieved by a company or bank in a period through company operations in order
to generate profits efficiently and effectively and can be measured its development using data
analysis on financial statements.
Financial performance largely depends on the policies, strategies, and actions used by
management to achieve an organizational goal. Measuring financial performance is important
to do in order to assess whether the company's goals have been achieved so that the interests
of stakeholders can be met. This is reinforced by the statement of Rhamadana &
Triyonowati,(2016), stated that the assessment of financial performance is one of the ways
that management does to fulfill its obligations to funders and is used to achieve the company's
goals and the company's potential in carrying out its business as indicated in the financial
statements.
Financial Ratios
The financial ratio is a figure obtained from the results of a comparison between one
financial statement post and another financial statement post that has a relevant and significant
relationship (Hery, 2018). According to Putri & Dharma (2016), financial ratios can be used
as a benchmark in estimating the origin of funds that can be obtained and estimating the
reaction of investors and creditors to determine the funds to be determined. In addition,
financial ratio analysis can help companies in evaluating financial performance and is carried
out periodically according to company policy. Munawir (2004) suggests four categories of
ratios used to analyze financial performance, namely liquidity ratio, profitability ratio,
solvency ratio, and activity ratio.
Analysis of the Financial Performance of Manufacturing Companies Before and During the Covid
19 Pandemic
903 2, 3., February 2023
Liquidity Ratio
The liquidity ratio is a ratio that describes the company's ability to finance operations and
meet financial obligations due in one year. One of the ratios that is often used to measure
liquidity is the current ratio. The current ratio is a common measure used for short-term
solvency and is used to measure a company's ability to pay short-term obligations or debt as
a whole that is about to mature (Fahmi, 2017). The current ratio is used to describe the
comparison between current assets and current debt. This ratio is one of the indicators that
analysts or economists often use to conduct balance sheet analysis.
H1: There is a difference in liquidity ratios before and during the Covid-19 pandemic
which is measured using the current ratio (CR).
Profitability Ratio
The profitability ratio is a ratio that describes the company's ability to profit from policies
and decisions that have been taken by the company. A common and frequently used
profitability ratio is the return on assets (ROA). Return on assets is also often called return on
investment because ROA is used by companies to see the extent to which investments that
have been invested in a company are able to provide a return on profits as expected (Fahmi,
2017). If ROA has a high value, the company's financial performance in making profits can
be said to be good.
H2: There is a difference in profitability ratio before and during the Covid-19 pandemic
which is measured using return on assets (ROA).
Solvency Ratio
The solvency ratio measures the extent to which a company's assets are financed by debt.
The solvency ratio used in this study is the debt-to-equity ratio (DER). Debt to equity ratio
(DER) is a comparison between liabilities and equity and is used to see the ability of capital
owned by the company to meet all obligations (Endri et al., 2020). The higher the value of the
company's DER, the higher the risk borne by the company in paying its debts.
H3: There is a difference in solvency ratio before and during the Covid-19 pandemic
which is measured using the debt to equity ratio (DER).
Activity Ratio
The activity ratio is used to measure the company's ability to carry out daily activities and
the effectiveness of the company in utilizing its assets. The activity ratio that can be used is
the turnover of total assets or total assets turnover (TATO). The turnover ratio is used to
measure how effectively and efficiently a company is in utilizing its assets to make a profit
(Endri et al., 2020). Companies with a high TATO value indicate that the company has good
performance because the company is able to utilize and process the total assets owned
optimally in obtaining income (Atmaja & Davianti, 2022).
H4: There is a difference in the ratio of activities before and during the Covid-19
pandemic which is measured using total assets turnover (TATO).
Analysis of the Financial Performance of Manufacturing Companies Before and During the Covid 19
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904 2, 3., February 2023
METHOD
The approach and type of research used in this study is quantitative descriptive research.
The data used in this study is data sourced from secondary data that has been processed and
collected by other organizations or parties. The secondary data in this study uses financial
report data for the 2019-2021 period from manufacturing companies listed on the Indonesia
Stock Exchange (IDX). The financial statement data is obtained through the official IDX
website which can be accessed on.
The test used in this study was the Wilcoxon signed test. Wilcoxon signed test is a test
conducted to test the significance of the comparison of two samples that are interconnected but
not normally distributed (Sugiyono, 2013). The Wilcoxon signed test used in this study aims
to measure how much difference in the financial performance of manufacturing companies
before and during the announcement of the COVID-19 pandemic case in Indonesia. Using the
purposive sampling method, there were 142 manufacturing companies during the 2019-2021
period that met the criteria to be used as samples in this study.
Table 1
Research Sample Selection Criteria
No
Criterion
Year 2019-
2021
1
Manufacturing companies listed on the Indonesia Stock
Exchange (IDX) during the period 2019-2021
193
2
The Company does not present financial statements using
Rupiah currency and does not have complete data or
information
(32)
3
Companies that are delisted and suspended from the IDX
during the period 2019-2021
(12)
4
Companies that did not release audited financial statements
during the period 2019-2021
(7)
Number of companies that have sample criteria
142
Number of financial statement data to be observed (142 x 3
years)
426
Operational Definition
The variables in this study are financial performance consisting of liquidity, profitability,
solvency and activity. The measurement of the variables to be used is described in the following
explanation.
Analysis of the Financial Performance of Manufacturing Companies Before and During the Covid
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905 2, 3., February 2023
Table 2
Variable Measurement
No
Variable
Measurement
1
Liability
2
Profitability
3
Solvency
4
Activity
RESULTS AND DISCUSSION
Manufacturing companies listed on the Indonesia Stock Exchange became the population
in this study with a total of 193 companies listed during the 2019-2021 period. Based on the
predetermined sample criteria, there are 124 companies that will be used in the study.
Descriptive Statistical Test Results
The following are the results of a descriptive statistical test of the research variables:
Table 3
Descriptive Statistical Test
Descriptive Statistics
N
Minimum
Maximum
Mean
Std. Deviation
CR Before
142
.00
21.70
2.5766
2.77777
CR During
142
.07
308.03
5.3470
27.16938
ROA Before
142
-.40
.61
.0466
.09773
ROA During
142
-.75
1.41
.0384
.17320
DER Before
142
-4.24
103.29
1.9819
8.94728
DER During
142
-7.56
14.46
1.0668
1.94488
TATTOOS Before
142
.00
3.67
.9608
.51968
TATTOOS During
142
.00
5.92
.9447
.79539
Valid N (listwise)
142
Table 3 shows the descriptive statistical results of the research variables. Based on the table,
current ratio, return on assets, debt to equity before the pandemic and during the Covid-19
pandemic have a standard deviation value above the average, which means that the distribution
Analysis of the Financial Performance of Manufacturing Companies Before and During the Covid 19
Pandemic
906 2, 3., February 2023
of data in the study varies. While the variable total assets turnover both before the pandemic
and during the covid 19 pandemic had a smaller standard deviation than the average, this shows
less varied data.
Normality Test Results
Normality tests are used to see whether or not the research data is normally distributed. A
data can be said to be normal if the probability value of the test result is more than 0.05, if the
probability value is less than 0.05 then the data is not normally distributed.
Table 4
Normality Test
Tests of Normality
Kolmogorov-Smirnov
a
Shapiro-Wilk
Statistics
Df
Sig.
Statistics
Df
Sig.
CR Before
.223
142
.000
.639
142
.000
CR During
.423
142
.000
.126
142
.000
ROA Before
.163
142
.000
.806
142
.000
ROA During
.208
142
.000
.614
142
.000
DER Before
.402
142
.000
.161
142
.000
DER During
.262
142
.000
.629
142
.000
TATTOOS
Before
.084
142
.016
.931
142
.000
TATTOOS
During
.191
142
.000
.701
142
.000
Data source processed author 2022
Based on table 4 above, a significance value of less than 0.05 is obtained, which means that
the data is not normally distributed. When the data is not normally distributed, hypothesis
testing can be done using the Wilcoxon Signed Rank Test. While the data is normally
distributed, hypothesis testing can be done using paired sample t-test. Therefore, this study
used the Wilcoxon signed rank test in hypothesis testing.
Wilcoxon Signed Rank Test
The hypothesis test in this study uses the Wilcoxon signed rank test which has decision-
making criteria when the value of Asymp.Sig is less than 0.05 (<0.05) then the hypothesis or
Ha is accepted. Conversely when Asymp.Sig is more than 0.05 (>0.05) then the hypothesis or
Ha ditolak.
Table 5
Wilcoxon Signed Rank Test Statistics
Test Statistics
CR During – CR
Before
ROA During –
ROA Before
DER During –
DER Before
TATTOO
DURING –
TATTOO Before
Z
-.846
b
-2,455
c
-.262
c
-4,298
c
Analysis of the Financial Performance of Manufacturing Companies Before and During the Covid
19 Pandemic
907 2, 3., February 2023
Asymp. Sig. (2-
tailed)
.397
.014
.794
.000
Table 6
Ranks Wilcoxon Signed Rank Test
Ranks
N
Mean
Rank
Sum of Ranks
CR During - CR Before
Negative Ranks
65
a
71.71
4661.00
Positive Ranks
77
b
71.32
5492.00
Ties
0
c
Total
142
ROA Over – ROA Before
Negative Ranks
80
s
78.53
6282.00
Positive Ranks
62
e
62.44
3871.00
Ties
0
f
Total
142
DER During - DER
Before
Negative Ranks
75
g
69.40
5205.00
Positive Ranks
67
h
73.85
4948.00
Ties
0
i
Total
142
TATTOO DURING –
TATTOO BEFORE
Negative Ranks
92
h
78.12
7187.00
Positive Ranks
50
K
59.32
2966.00
Ties
0
l
Total
142
Based on the results of the Wilcoxon signed rank test on research variables before and during
the COVID-19 pandemic in tables 5 and 6 as follows:
1. Differences in the current ratio (CR) before the pandemic and during the COVID-19
pandemic in manufacturing companies listed on the IDX
Liquidity variables measured using the current ratio (CR) before and during the covid 19
pandemic have a significance value of 0.397. The value of the sig. 0.397 > 0.05 was rejected,
meaning that there was no difference between the
current ratio (CR) before and during
the COVID-19 pandemic in manufacturing companies listed on the IDX. The results of this
study are in line with research conducted by Esomar & Christianty (2021), showing the
same result that there is no significant difference between the current ratio (CR) before and
during the Covid-19 pandemic.
Table 6 shows 65 manufacturing companies that have less good CR during the covid 19
pandemic than before covid 19, this is because the company has not been able to maximize
existing lancer assets so the lancer assets are less optimal in guaranteeing their current debt.
And as many as 77 companies have better CR during the covid 19 pandemic than before the
covid 19 pandemic, which means that the company maximizes the management of its assets
so that it can guarantee its smooth debt. The results of the Wilcoxon signed rank test explain
that manufacturing companies in Indonesia during the Covid-19 pandemic have current
Analysis of the Financial Performance of Manufacturing Companies Before and During the Covid 19
Pandemic
908 2, 3., February 2023
assets that are stable enough to be able to pay off the short-term debt that matures. This
research is in line with research conducted by Violandani (2021) which explains that during
the Covid-19 pandemic, the assets owned by the company are still able to cover and pay off
their short-term challenges.
2. Differences in return on assets (ROA) before the pandemic and during the Covid-19
pandemic in manufacturing companies listed on the IDX
The profitability variable measured using return on assets (ROA) before and during the
covid 19 pandemic has a significance value of 0.014. The value of Sig. 0.014 < 0.05 is
accepted, meaning that there is a difference between the
return on assets (ROA) before
and during the Covid-19 pandemic in manufacturing companies listed on the IDX. The
difference in ROA that occurs is due to the profit or profit obtained by the company during
the Covid-19 pandemic, the majority of which decreased. This research is supported by
research from Rahmani (2020) which shows that during the Covid-19 pandemic, ROA has
decreased very drastically.
ROA is used to measure the effectiveness of companies in managing existing assets to
generate profits. The covid 19 pandemic has had a bad impact on the company's financial
performance, we can see in table 6, there are 80 manufacturing companies that have a less
good ROA during the covid 19 pandemic than before covid 19. Almost all the companies
sampled in this study suffered losses when the Covid-19 pandemic entered Indonesia. This
loss occurred because, during the Covid-19 pandemic, many companies had to make
adjustments to several government policies in minimizing the transmission of the COVID-
19 virus, requiring companies to stop their operations and even temporarily close their
businesses.
3. The difference in debt to equity ratio (DER) before the pandemic and during the Covid-19
pandemic in manufacturing companies listed on the IDX
The solvency variable measured using the debt-to-equity ratio (DER) before and during the
covid 19 pandemic had a significance value of 0.794. The value of Sig. 0.794 > 0.05 was
rejected, meaning that there was no difference between the
debt to equity ratio (DER)
before and during the Covid-19 pandemic in manufacturing companies listed on the IDX.
A company that has a low DER indicates that the company has fewer liabilities than the
overall equity held, so when the company is in a bad state (bankrupt), the company can still
pay off all obligations that must be paid. Conversely, a high DER indicates the amount of
liabilities is greater than the total equity held.
Based on table 6, there are 75 companies that have a less good DER during the covid 19
pandemic than the DER before the covid 19 pandemic where the company experienced an
average DER decrease of 69.40. Meanwhile, 67 companies have better DER during the
covid 19 pandemic than DER before the covid 19 pandemic with an average increase in
DER of 73.85. The results of this study are supported by research conducted by Ibrahim et
al (2021), Violandani (2021) and Fachira (2022) which show that there is no significant
difference between DER before and during the COVID-19 pandemic. For a company, the
use of large debts is quite dangerous because the company will have difficulty in
maintaining the stability of its cash flow so and it can reduce the company's performance
(Ambarwati et al., 2021). The results of the Wilcoxon signed rank test explain that during
the COVID-19 pandemic, there were several companies that chose to increase debt as an
Analysis of the Financial Performance of Manufacturing Companies Before and During the Covid
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909 2, 3., February 2023
alternative to funding. Although the use of large debts can harm the company, these
companies are confident in the prospects of their companies in the future.
4. Differences in total assets turnover (TATO) before the pandemic and during the Covid-19
pandemic in manufacturing companies listed on the IDX
Activity variables measured using total asset turnover (TATO) before and during the Covid-
19 pandemic have a significance value of 0.00. The value of Sig. 0.00 < 0.05 is accepted,
meaning that there is a difference between TATO before and during the covid 19 pandemic
in manufacturing companies listed on the IDX. This difference occurs because during the
COVID-19 pandemic, TATO has decreased very drastically. We can see this in table 6,
based on the results of the
Wilcoxon signed rank test, there are 92 companies that have
less good TATO during the covid 19 pandemic than before the covid 19 pandemic, where
92 of these companies experienced a decrease in the average value of TATO by 78.12.
Meanwhile, 50 companies have better tattoos during the covid 19 pandemic than before the
covid 19 pandemic with an increase in the average value of 59.32.
This research was strengthened by research from Aqila & Suji (2022), Violandani (2021),
and Tirmoriani, Marjam & Indrie (2022) which stated that there were significant differences
between TATO before and during the COVID-19 pandemic. The decline in the value of
TATO is caused by many factors, one of which is high production but demand from
consumers decreases so that the company cannot meet its sales target.
CONCLUSION
This research was conducted to determine the condition of the financial performance of
manufacturing companies before and during the Covid-19 pandemic. The hypothesis in this
study was carried out using the Wilcoxon Signed Rank Test. Based on the test results from
Wilcoxon signed rank test, shows that there are significant differences in profitability and
activity variables measured using return on assets (ROA) and total assets turnover (TATO).
The Wilcoxon signed rank test on liquidity variables measured using the current ratio (CR)
showed no difference between before and during the covid 19 pandemic. This is because,
during the Covid-19 pandemic, manufacturing companies in Indonesia have current assets that
are stable enough to be able to pay off their short-term debt. Meanwhile, the results of the study
on solvency variables measured using the debt-to-equity ratio (DER) showed that there was no
difference between before and during the Covid-19 pandemic. This is because during the
Covid-19 pandemic, there were several companies that chose to increase their debt even though
this could endanger the company but they were confident in the prospects of their company in
the future.
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