PREDICTING THE ISSUANCE OF MODIFIED OPINION ON GOING CONCERN ISSUE BASED ON THE COMPANY FINANCIAL RATIOS DURING THE COVID-19 CRISIS PERIOD
Recognizing the company's business status from the very beginning will allow for actions to prevent things that can lead to financial difficulties. Based on the theory and conservatism paradigm, this research aims to see whether the ratios that accept modified opinions in the finances of companies with uncertainty perform significantly better than companies that do not accept opinions related to the uncertainty of the crisis period of the COVID-19 pandemic. By conducting further analysis of financial ratios, this study aims to formulate a predictive equation model that a modified opinion will be issued, based on the use of financial ratios as proxy variables. The population in this study are all manufacturing companies listed on the Indonesia Stock Exchange for 2018 to 2020 with samples taken from 352 manufacturing companies. Logistic regression analysis was used as a statistical instrument to predict the issuance of modified opinion using SPSS version 25.0. The results showed that three of the nine financial ratio proxy variables tested showed significant differences and were considered to be in a better position. These ratios are the liquidity ratio proxied by the current ratio (CR) with a significance level of 0.017 < 0.05 and the cash ratio with a significance level of 0.032 < 0.05 and the other is the profitability ratio proxied by return on assets (ROA) with significance level 0.037 < 0.05. This study also succeeded in producing a prediction model to issue a modified opinion, namely: Prob = -3.152 + 0.099*Current Ratio – 0.327*Cash Ratio – 0.014*ROA. The internal validation of the research model shows that the prediction model is accurate at 97.7%.
Going concern, Financial Ratio, Modified Opinion, Signalling Theory, and Conservatism.