EVALUATION OF USE OF FINANCIAL RATIOS IN PREDICTING PROFIT CHANGES ON CREDIT UNIONS IN DENPASAR CITY

Large companies, generally have different financial ratio components with small companies, if the ratio will be used to predict future earnings changes. Credit Union (C.U) as one of the small-scale business entities, also require financial ratio analysis to assess their business position and conditions. The study tested the use of 49 financial ratios from a sample of 105 C.U units in Denpasar City. Data were analyzed by descriptive method and multiple regression stepwise regression models. The purpose of this study is to explain the financial ratios that can be used as predictors of earnings change in C.U in Denpasar City for the next one year, two years and three years. Descriptive analysis shows that the best non-financial performance is the C.U in South Denpasar, while the best financial performance is the C.U in East Denpasar. The results found that; partially and simultaneously, significant and positive ratios used to predict changes in earnings for the next year are the Operating Profit to Profit Before Taxes (OPPBT) ratio and the Current Assets to Net Sales  (CANS) ratio. Partially and simultaneously, significant and negative ratios are used to predict earnings changes in the next two years is the Working Capital To Fixed Asset (WCFA) ratio. Partially and simultaneously, significant and positive ratios used to predict earnings changes for the next three years are the Total Liabilities To Current Assets (TLCA) ratio and the Current Assets To Total Liabilities (CATL) ratio. The results of the study can be said to be consistent with previous findings, although individually they still appear to be inconsistent with these findings. The differentiator that can be found in this study, is that financial ratios are also significant to predict changes in earnings C.U for one year, two years and three years to come.

Keywords - Credit Union, changes in profits, financial ratios.