BANKRUPTCY RISK ANALYSIS OF PROPERTY SECTOR LISTED COMPANIES IN INDONESIA STOCK EXCHANGE USING ALTMAN Z-SCORE
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Date
2010-03-08
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Intellectbase International Consortium
Abstract
Early warning system for financial problem that threatened the operation of industry is needed to anticipates financial difficulty to company. One prediction model commonly used is Altman Z-score which analyze combination of financial ratios on financial statement to see the different between bankrupt and non-bankrupt companies. In this model, there are 5 financial ratios indicators that combined to differentiate between bankrupt and non-bankrupt companies, i.e. Working Capital to Total Assets, Retained Earnings to Total Assets, Earning Before Income Tax to Total Assets, Market Value of Equity to Book Value of Liabilities and Sales to Total Assets. These financial ratios represent liquidity, profitability, solvability and activity aspects of the company. The original work of Altman is applied to publicly held manufactures companies. In this study, we use Altman Z-score to property sector in Indonesia. We analyzed bankruptcy risk of property companies listed at Indonesian Stock Exchange (IDX) on period of 2004-2008 using Altman Z-score prediction model on their audited financial statements. The result of study of 19 listed property companies show that for 5 (five) consecutive years based on Altman Z-score, only 2 (two) companies, LPCK and JRPT are fit into healthy companies category. While only one company, BMSR is fit into bankrupt company category for 5 (five) consecutive years and one company, LPKR is fit into grey area.
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Keywords
Bankrupt Company, Bankruptcy, Financial Ratio, Altman Z-score, Indonesian Stock Exchange, Property Company