BANKRUPTCY PREDICTION USING ZAVGREN MODEL (A Study on Automotive and Spare Part Companies Listed in the Indonesia Stock Exchange in the Period of 2012-2016)

Abstract

This  study  aims  to  predict  and  determine  bankruptcy  of  automotive  and  spare  part companies  listed  in  the  Indonesia  Stock  Exchange  (IDX)  in  the  period  of  2012-2016  using Zavgren model. The financial ratios in this study, i.e. the independent variables, are inventory, receivable,  cash,  quick,  return  on  investment,  debt,  and  turn.  This  quantitative  descriptive research provides an objective description about a situation using statistical procedures or other ways of quantification.

This  study  uses  a  sample  of  45  respondents  selected  through  saturated  sampling technique from the population of automotive and spare part companies. Logistic regression was used to analyze the data, and cut-off was used to distinguish between healthy, vulnerable, and bankrupt condition to help determine the financial level of the companies,.

The  results  of  this  study  indicate  that  the  independent  variables  in  Zavgren  model consisting of inventory, receivable, cash, quick, return on investment, debt, and turn are able to explain the dependent variable and have a simultaneous effect on bankruptcy. In addition, inventory is partially the most significant variable for bankruptcy. Furthermore, 2 companies are  categorized  as  healthy,  5  companies  are  categorized  as  vulnerable,  and  2  companies  are declared bankrupt.