EFFECTS OF WORKING CAPITAL MANAGEMENT, SOLVENCY, AND PROFITABILITY ON BANKRUPTCY RISK (CASE STUDY: PROPERTY SECTOR IN INDONESIA STOCK EXCHANGE)

• Main Author: Azzura Nabila, Meirsya
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/53093
• Institution: Institut Teknologi Bandung

Bankruptcy occurs when the company cannot pay off its debts, so it cannot continue its operations, including property and real estate companies in Indonesia. Based on a Bank Indonesia survey, property sales growth in 2015 experienced a significant decrease quarterly. The downward trend in Indonesia's property market continued into 2017 and remained sluggish in the second quarter of 2020 due to the outbreak of the COVID-19 pandemic. Bankruptcy can be caused by many factors, one of which is through companies such as working capital management. Bankruptcy also caused huge losses for shareholders, investors, creditors, employees, suppliers, and customers. Therefore, the analysis of a company's bankruptcy is an important thing that needs to be done. The purpose of this research was to determine the effects of working capital management, solvency, and profitability on the risk of bankruptcy using three models, namely Altman, Springate, and Zmijewski. This research focused on 50 companies in the property and real estate sector listed on the Indonesia Stock Exchange (IDX) from 2015 to 2019. The research's first phase was to analyze each company's bankruptcy risk for five years based on the Altman, Springate, and Zmijewski models. The second phase is to examine the components of the Cash Conversion Cycle (CCC) as an indicator of working capital management, Debt to Assets Ratio (DAR) as an indicator of solvency, and Return on Equity (ROE) as an indicator of profitability. CCC calculation consists of three components, namely Average Age of Inventory (AAI), Average Collection Period (ACP), and Average Payable Period (APP). This research's last phase was to test the effects of working capital management, solvency, and profitability on the risk of bankruptcy with the Altman, Springate, and Zmijewski models. The analysis using the panel data regression method. This research showed that only DAR has a significant relationship with the Altman model's risk of bankruptcy. In contrast, the Springate and Zmijewski models produce AAI, APP, DAR, and ROE that have a significant relationship to bankruptcy risk.