Analysis of Bankruptcy Prediction of Regional Development Banks (BPD) using the Altman Z-Score Method

Rahayu, Muhammad Ridwan

2019

Abstract

The purpose of this study is to predict the level of bankruptcy of BPD using the Altman Z score method. The data used is the BPD Audited Financial Statements in Sumatera region since 2014-2018. The sample of this research is BPD Aceh, North Sumatra, South Sumatra Babel, Bengkulu, West Sumatra, Lampung, Jambi, Kepulauan Riau. The analysis techniques in this research is the Altman Z-score modification method using 4 ratio, that working capital to total assets ratio (X1), retained earnings to total assets ratio (X2), earnings before interest and taxes to total assets ratio (X3), book value of equity to total debt ratio (X4). The formula of Altman Z-score method to calculate the level of health for the company, that Z-score = 6.56 X1 + 3.26 X2 + 6.72 X3 + 1.05 X4. Z-Score indicator to determine the bankruptcy of companies grouped into the healthy category (Z-score> 2.60), gray area (Z-scores between 1.1 and 2.60) and bankrupt (Z-score <1.1). The calculation results show that there are no BPDs in the healthy category, all of them are in the bankrupt and gray area categories.

Paper Citation

in Harvard Style

Rahayu. and Ridwan M. (2019). Analysis of Bankruptcy Prediction of Regional Development Banks (BPD) using the Altman Z-Score Method. In Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting - Volume 1: MIICEMA, ISBN 978-989-758-582-1, pages 289-300. DOI: 10.5220/0009855100002900

in Bibtex Style

@conference{miicema19,
author={Rahayu and Muhammad Ridwan},
title={Analysis of Bankruptcy Prediction of Regional Development Banks (BPD) using the Altman Z-Score Method},
booktitle={Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting - Volume 1: MIICEMA,},
year={2019},
pages={289-300},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0009855100002900},
isbn={978-989-758-582-1},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting - Volume 1: MIICEMA,
TI - Analysis of Bankruptcy Prediction of Regional Development Banks (BPD) using the Altman Z-Score Method
SN - 978-989-758-582-1
AU - Rahayu.
AU - Ridwan M.
PY - 2019
SP - 289
EP - 300
DO - 10.5220/0009855100002900