Altman’s Z”-Scores for financial distress predictions among food and beverages industry in Indonesia
DOI:
10.33395/owner.v6i1.696Keywords:
Altman’s Z-Score, Financial Distress, Bankruptcy, F&b industryAbstract
The food and beverage industry is an accelerated sector in Indonesia. They are predicted to be one of the pivotal sectors supporting manufacturing and economic growth. This study aims to predict financial distress on food and beverage industries in Indonesia using Altman's Z”-Score modification model. The samples of this study are 48 firm-year observations in the period of 2018 and 2019. The results show there are 2.1 percent of firms experienced financial distress (Z < 1.10), 2.1 percent of firms was in grey area, i.e., prone to financial distress (Z < 1.10 < 2.60), and 95.8 percent of firms did not experience financial distress. It implies that food and beverage industries in Indonesia is relatively safe if there is no economic shock. Furthermore, the prediction is able to be considered either for stakeholders or shareholders in decision making and financial policies, respectively. Nevertheless, the signal is given for firms that are included in financial distress and grey area.
Downloads
Plum-X Analityc
References
Agarwal, V. and R. Taffler. (2008). Comparing the Performance of Market-Based and Accounting-Based Bankruptcy Prediction Models. Journal of Banking and Finance 32, 1541–1551.
Altman, E.I. (1968). Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy. Journal of Finance 23, 589–609.
Altman, E.I. (1983). Corporate Financial Distress: A Complete Guide to Predicting, Avoiding, and Dealing with Bankruptcy. Hoboken: Wiley Interscience, John Wiley and Sons.
Altman, E. I., Iwanicz-Drozdowska, M., Laitinen, E. K., & Suvas, A. (2016). Financial Distress Prediction in an International Context: A Review and Empirical Analysis of Altman’s Z- Score Model. Journal of International Financial Management & Accounting, 28(2), 131–171. doi:10.1111/jifm.12053.
Bauer, J. & V. Agarwal, V. (2014). Are Hazard Models Superior to Traditional Bankruptcy Prediction Approaches? A Comprehensive Test. Journal of Banking and Finance 40, 432–442.
Das, S.R., Hanouna, P., & Sarin, A. (2009). Accounting-Based Versus Market-Based Cross- Sectional Models of CDS Spreads. Journal of Banking and Finance 33, 719–730.
Hamid, T., Akter, F., & Rab, N. B. (2016). Prediction of Financial Distress of Non-Bank Financial Institutions of Bangladesh using Altman’s Z Score Model. International Journal of Business and Management 11(12), doi: http://dx.doi.org/10.5539/ijbm.v11n12p261.
Intan, K., Patunrui, A., & Yati, S. (2017). Analisis Penilaian Financial Distress Menggunakan Model Altman (Z-Score) Pada Perusahaan Farmasi Yang Terdaftar di Bursa Efek Indonesia Periode 2013-2015. Jurnal Akuntansi, Ekonomi dan Manajemen Bisnis Vol. 5(1), 55-71.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.Journal of Financial Economics 3: 305-360.
Kementrian Perindustrian. (2017). Retrieved from https://kemenperin.go.id/artikel/18465/Industri-Makanan-dan-Minuman-Masih-Jadi-Andalan
Kementrian Perindustrian. (2021). Retrieved from https://kemenperin.go.id/artikel/22485/Industri-Makanan-dan-Minuman-Diakselerasi-Menuju-Transformasi-Digital
Morris, R. D. (1987). Signalling, Agency Theory and Accounting Policy Choice. Accounting and Business Research, 18:69, 47-56, DOI: 10.1080/00014788.1987.9729347
Nurhayati, D., Dewi, R. R., & Fajri, R. N. (2021). Pengaruh Rasio Keuangan Terhadap Financial Distress pada Industri Food And Beverage di Bursa Efek Indonesia Periode 2017-2019. Ekonomis: Journal of Economics and Business 5(1), 59-64.
Opler, T. C., & Titman, S. (1994). Financial Distress and Corporate Performance. The Journal of Finance, 49(3), 1015–1040.doi:10.1111/j.1540-6261.1994.tb00086.x
Panigrahi, A. (2019). Validity of Altman's “Z” Score Model in Predicting Financial Distress of Pharmaceutical Companies. NMIMS JOURNAL OF ECONOMICS AND PUBLIC POLICY 4(1).
Whitaker, R.B. (1999). The early stages of financial distress. J Econ Finan 23, 123–132. https://doi.org/10.1007/BF02745946.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Ruth Samantha Hamzah, Mutiara Lusiana Annisa
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.