THE ANALYSIS OF POSSIBLE BANKRUPTCY USING ALTMAN Z-SCORE MODEL OF FINANCIAL REPORT ANALYSIS IN LISTED TELECOMMUNICATION COMPANY AT BEI
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Date
2010-08-05
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Faculty of Business Management Universiti Teknologi MARA (UiTM) Terengganu Malaysia
Abstract
The research investigated the use of financial report analysis to predict the bankrupcty in telecommunication company using Altman Z-Score model. Altman Z-Score has five financial ratio indicators that can be combined to differentiate between bankrupt and not bankrupt company. The five indicators are Working Capital to Total Assets, Retained Earnings to Total Assets, EBIT to Total Assets, Market Value of Equity to Book Value of Liabilities and Sales to Total Assets. The five financial ratio indicators represent the aspect of Liquidity, Profitability, Solvability and Activity. The purpose of the research is to identified and analyse Altman Z-Score model of financial ratios in a tellecommunication company listed in Indonesia Stock Market. The sample of the research were choosed by the purposive sampling method and identified two companies meet the criteria which are PT Telkom, Tbk and PT Indosat, Tbk. The investigation showed that on the period of analysis between 2003-2007 PT Telkom, Tbk is chategorized as healthy company with Altman Z-Score > 2,99 meanwhile PT. Indosat, Tbk has Altman Z-Score between 1,8 – 2,99 chategorized in the grey area condition.
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Keywords
finacial report analysis, finacial ratio, altman z-score, tellecommunication company