ANALYSIS OF FINANCIAL DISTRESS IN MANUFACTURING COMPANIES LISTED IN INDONESIA STOCK EXCHANGE (IDX) IN THE PERIOD OF 2013-2014 USING DISCRIMINANT ANALYSIS

Abstract

This study tries to determine the indication of financial distress using the
Altman Z-score analysis manufacturing companies are listed on Indonesian Stock
Exchange during 2013-2014. Analysis Altman Z-Score uses five financial ratios.
Which are Working Capital To Total Assets , Ratio of Retained Earnings Against
Total Assets / Retained Earnings to Total Assets , Ratio of EBIT Against Total
Assets / Earnings before Interest and Taxes to Total Assets, Equity Capital ratios
Market Value Book Value Against Debt / Market Value of Equity to Book Value
of Total Debts, and Sales ratio to Total Assets / Sales to Total Assets.
This quantitative descriptive research examine the financial statements of
companies manufacturing and conducts critical studies using discriminant analysis
of Altman Z-Score, which a new function discriminant. The nature of the research
is a replication of previous studies. This study uses a sample of 65 manufacturing
companies through purposive sampling technique.
The results of the Altman Z-Score analysis have shown of the five variables.
Being used variable Capital Ratio Working Against Total Assets, ratio of
Retained Earnings to Total Assets, ratio of EBIT Against Total Assets / Earnings
before Interest and Taxes to Total Assets, variable ratio of Market Value Share
Capital to Book Value Debt / Market Value of Equity to Book Value of Total
Debts, and variable Sales ratio to Total Assets / Sales to Total Assets, only
variable turnover ratio Total Assets / Sales to Total Assets is the most influential
variable significant to find indications of group of companies experiencing
financial distress.

Keywords: financial distress, discriminant analysis, Altman Z-Score method, manufacturing companies