Financial performance is a description of the company's financial condition for a certain period, whether it is related to fund raising aspect and fund distribution, which is usually measured by capital adequacy, liquidity and profitability indicators (Jumingan, 2006: 239).
Company's financial performance is an achievement achieved by the company in a certain period that reflects the level of health of the company (Sutrisno, 2009: 53).
Financial performance is an analysis conducted to see how far a company has implemented by using the rules of financial implementation properly and correctly. Company performance is a description of the financial condition of a company that is analyzed by means of financial analysis, so it can be known about both the bad financial condition of a company that reflects the performance of work in a certain period. It is very important that resources are used optimally in the face of environmental change (Fahmi, 2011: 2).
Financial Performance Measurement
The company's financial performance is closely related to the measurement and performance appraisal. Performance measurement (performance measurement) is the qualification and efficiency and effectiveness of the company in business operations during the accounting period. The performance assessment according to Srimindarti (2006: 34) is the determination of operational effectiveness, organization, and employees based on the targets, standards and criteria previously set periodically.
Performance measurement is used by the company to make improvements over its operational activities in order to compete with other companies. Financial performance analysis is a critical review process to review data, calculate, measure, interpret, and provide solutions to the company's finances in a certain period.
According Munawir (2012: 31) states that the purpose of measuring the company's financial performance is:
Know the level of liquidity. Liquidity indicates a company's ability to meet its financial obligations that must be resolved immediately upon billing.
Know the level of solvency. Solvency shows the company's ability to meet its financial obligations if the company is liquidated, both short-term and long-term financial.
Know the level of profitability. Profitability or profitability often indicates a company's ability to generate profits over a period of time.
Know the level of stability. Stability indicates a company's ability to conduct its business on a stable basis, measured by taking into account the company's ability to pay its debts and paying interest expenses on its debts on time.