Z-Score or S-Score Model is Better to Predict Financial Distress?: Test in State-Owned Enterprise Listed in IDX

Abstract

this research investigated four stated-owned entreprise that have negative profit in 2016 and we investigated from 2012 to 2016 using Altman Z-Score and Springate SScore. The probability of bankcruptcy for all company , several step are conducted in this research, the first stage of the calculation of the financial ratios analysis of each company obtained from audit results published by the company from 2012 to 2016. In the second stage of calculation and analysis are included in the formula ZScore and SScore, In the third stage, we provide improvement advice to repair companies located in the gray area and distress category on Z-Score, and companies that fall into the high probability of bankruptcy category, if they have an S-Score below 0.862. Findings from this research show, there are two companies that experienced financial distress they are PT. Garuda Indonesia and PT. Krakatau Steel (<1.81) during 2012 to 2016, while PT. Aneka Tambang and PT. Indofarma must carefully maintain the performance of the company during the period of five years both companies have been included in the category of companies in the area of distress and gray area. Using S-Score, we found, there are three companies during 2012 until 2016, two companies into the high category bankruptcy that is PT. Garuda Indonesia and PT. Krakatau Steel . This indicates that both companies are likely to have substantial bankruptcy because they have an S-Score score below 0.862, for five consecutive years, while PT. Indofarma for four consecutive years from 2013 to 2016 has an S-Score value below 0.862 so it needs a comprehensive preventive measure to prevent the three companies from bankruptcy. The first suggestions is increasing company’s operational efficiency and the second is avoid using debt to financing company. Keywords— Z-Score; S-Score; Financial Distress