ABSTRACT
This study aims to empirically examine and analyze the effect of earnings and cash flows to
predict financial distress of the manufacturing companies in the textile and garment sector
using financial and non-financial variables. This study used secondary data obtained from
the company's financial statements in the period 2009 to 2012 that are listed in the Indonesia
Stock Exchange. The results of this study showed that the profit model is strong enough to use
as a model for the prediction of financial distress of a company, while the cash flow model
can not be used as a predictive model of financial distress of a company because it is
statistically insignificant.
