WSEAS Transactions on Business and Economics

Print ISSN: 1109-9526
E-ISSN: 2224-2899

Volume 16, 2019

Notice: As of 2014 and for the forthcoming years, the publication frequency/periodicity of WSEAS Journals is adapted to the 'continuously updated' model. What this means is that instead of being separated into issues, new papers will be added on a continuous basis, allowing a more regular flow and shorter publication times. The papers will appear in reverse order, therefore the most recent one will be on top.

Volume 16, 2019

Financial Distress Prediction in Indonesia

AUTHORS: Mochammad Chabachib, Renny Hapsari Kusmaningrum, H. Hersugondo, Imang Dapit Pamungkas

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ABSTRACT: Altman in 1968 specified that there were five ratios of company difficulties, namely Working Capital to Total Assets (WCTA), Retained Earning to Total Assets (RETA), Earning Before Interest and Tax to Total Assets (EBITTA), Market Value of Total Liabilities (MVETL), Sales to Total Assets (STA). The purpose of this study was to analyze the effect of WCTA, RETA, EBITTA, MVETL, and STA on predictions of the occurrence of Financial Distress conditions. The population of this study is the annual report of Manufacturing companies listed on the Indonesia Stock Exchange during 2012-2016 with a purposive sampling method resulting in 40 total samples. Using Logistic regression analysis with SPSS 21.0 proves that Market Value of Equity to Total Liabilities (MVETL) and Sales to Total Assets (STA) have a significant negative effect on prediction of Financial Distress. Working Capital to Total Assets (WCTA), Retained Earning to Total Assets (RETA) and Earning Before Interest and Tax to Total Assets (EBITTA) have no effect on financial distress predictions.

KEYWORDS: Altman Z-Score, Bankruptcy, Financial Distress


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WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 16, 2019, Art. #28, pp. 251-260

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