FINANCIAL DISTRESS PREDICTION USING ALTMAN MODEL (CASE STUDY: PT. X)

• Main Author: Mulyana Muslihat, Rahmat
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/42930
• Institution: Institut Teknologi Bandung

Now Indonesia is experiencing rapid industrial development, one of them is industry 4.0. Industry 4.0 will bring to changes and innovations in the business sector to become more efficient and effective, to support the development of industry 4.0 investment is needed one of them in the telecommunications infrastructure sector because of that the company which will become a research topic is one of the telecommunications infrastructure companies in Indonesia. To prepare for the development of industry 4.0 the company must be able to survive in the changes in the industry. Therefore, one of the supporting factors so that the company can survive is to have a healthy financial condition. After seeing the annual reports, it can be seen that within five years it turns out that the net profit earned by PT. X has increased and decreased and also the growth of current assets and short-term debt is not comparable, this can be used as an indication of financial problems that occur in the company. To analyze further, the authors use the Altman z-score as a tool in analyzing the company's financial condition. Altman uses five variables in his analysis, namely (X1) Networking capital / total assets, (X2) Retained earnings / total assets, (X3) EBIT / total assets, (X4) Book value of equity/book value of liabilities, and last is ( X5) Revenue / total assets. After doing calculations and analysis for five years from 2014 to 2018 the company produced the z-score referred to in the distress zone group where the resulting score was below 1.81. For further analysis, the authors analyze these factors one by one so that it can be seen in which sectors or variables the company should pay attention. Based on the study that has been done it turns out that what needs to be considered is in the variables X3 and X5 wherein X3 the decline and increase in net profit are caused by an imbalance between the net profit that can be earned and expenses incurred by the company. Therefore, the net profit earned by the company is far from optimal. This is also influenced by other variables, namely X5 which is directly proportional to the variable X3 where the higher revenue that earns by the company, the more net profit obtained by the company. To overcome these problems, the authors provide proposals to companies to reduce costs to be more productive and take strategic steps to increase their sales. It is expected that after making these two steps, companies can raise their z-scores, avoid the possibility of bankruptcy and can compete in facing industry change 4.0.