Analysing the Potential of Bankruptcy using Altman Z-Score: A Case Study of PT. Garuda Indonesia

Darwin Lie; Yerisma Welly; Ady Inrawan; Lenny Dermawan Sembiring; Debi Eka Putri

doi:10.56225/finbe.v1i1.80

Authors

Darwin Lie Sekolah Tinggi Ilmu Ekonomi Sultan Agung, Indonesia
Yerisma Welly Sekolah Tinggi Ilmu Ekonomi Sultan Agung, Indonesia
Ady Inrawan Sekolah Tinggi Ilmu Ekonomi Sultan Agung, Indonesia
Lenny Dermawan Sembiring Sekolah Tinggi Ilmu Ekonomi Sultan Agung, Indonesia
Debi Eka Putri Sekolah Tinggi Ilmu Ekonomi Sultan Agung, Indonesia

DOI:

https://doi.org/10.56225/finbe.v1i1.80

Keywords:

financial distress, bankruptcy, Altman Z-Score, Indonesia stock exchange

Abstract

The improper company’s financial condition can affect the company’s performance to stay on track in the airline’s competition. The company should be gaining extra efforts, especially the management system, to achieve the company goal of obtaining the maximum profit. This study aimed to analyse the financial distress of Indonesian airline companies. This study was designed using a quantitative approach through secondary data collected from the financial report of the Indonesia Stock Exchange (IDX) from 2016 to 2020. The data were analysed using the Altman Z-Score. The variable of this study includes working capital to total assets, retained earnings to total assets, earnings before interest and taxes to total assets, market value of equity to book value of total liabilities and sales to total assets. The results of the study revealed that PT. Garuda Indonesia faced the financial difficulty that potentially led to bankruptcy risk. Evidence on the basis of Altman Z-Score value of PT. Garuda Indonesia in 2016-2020 is less than 1.81. In 2020, PT. Garuda Indonesia suffered high losses due to the impact of the COVID-19 pandemic.

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