Analysis of Financial Distress Levels With The Methods of Altman Z-Score, Grover, Springate and Zmijewski
DOI:
https://doi.org/10.54099/aijb.v4i2.1417Keywords:
Selected:Financial distress, Altman Z-Score, Grover, Springate, ZmijewskiAbstract
Purpose – This study is to determine the level of accuracy of the Altman Z-Score, Grover, Springate and Zmijewski methods are able to predict bankruptcy in Consumer Goods Companies.
Methodology/approach – The research method used Altman Z Score, Grover, Springate and Zmijewski. The sample used in this study is 70 consumer goods companies listed on the Indonesia Stock Exchange (IDX). The method used in this study is a quantitative approach by utilizing secondary data sourced from the company's financial statements.
Findings – It was found that the Altman Z-Score model predicted 16 companies (22.85%) to go bankrupt. Although it is quite accurate with a correct classification rate of 77.15%, this model has a tendency to over-predict healthy companies. Grover's model shows similar results to Altman's, predicting 15 companies (21.5%) as bankrupt and an accuracy rate of 78.5%. This model is slightly more selective than the Altman Z-Score model. The Springate model has the highest bankruptcy prediction rate, which is 26 companies (37.15%), with the lowest accuracy of 62.85%. The model is the most aggressive and has the lowest level of accuracy compared to the other three models. Zmijewski's model predicts only 8 companies (11.5%) as bankrupt, and results in the highest accuracy of 88.5%. Thus, this model is the most accurate and selective in identifying bankruptcy. Overall, all four models can be used to predict bankruptcy, but with different degrees of accuracy and precision. The Zmijewski model proved to be most appropriate in the context of a still running and healthy company.
Novelty/value – Zmijewski's model predicts 8 companies that are bankrupt and 62 companies that are predicted not to go bankrupt, which is the highest prediction rate for companies that are not bankrupt because the company is still running until the time this study was conducted. The Zmijewski model shows a high accuracy level of 88.5%, followed by the grover model of 78.5%, the Altman Z-Score model of 77.15% and finally the Springate model of 62.85. The prediction of the predicted company will not go bankrupt because there is no company in the sample that will go bankrupt.
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