BANKRUPTCY PREDICTION OF LISTED CEMENT COMPANY IN INDONESIAN STOCK EXCHANGES USING ALTMAN Z-SCORE MODEL

Article history : Received : August 2019 Accepted : October 2019 Ratio analysis is one of the most competent tools to predict the bankruptcy of a company. In this paper the bankruptcy prediction of listed cement company in Indonesian Stock Exchanges has been evaluated using Altman Z-score. This study aims to determine the level of the bankruptcy of the listed cement companies in the Indonesian Stock Exchange during 2013 to 2017. There are four listed cement companies, namely PT Semen A, PT Semen B, PT Semen C and PT Semen D. Based on the results of the research, it shows that PT Semen A, PT Semen B and PT Semen C are in the safe zone with the highest Z value which is 15,822 and the lowest Z value which is 3,542. PT Semen D is in the bankrupt zone because it has a Z value below 1.8. For that reason, all companies need to improve the performance immediately to avoid the bankruptcy happening. There are many ways to avoid the bankruptcy such as improving the sales revenue, improving operational cost and waste reduction in operation.


INTRODUCTIONS A. Background Of The Study
Predicting the financial health or corporate bankruptcy can be done by various methods. Ratio analysis is one of the most competent tools to predict the bankruptcy of a company, but the best method in predicting corporate bankruptcy is the Altman Z score method. The study conducted by Altman (2006) used financial ratios predicting corporate health with a 94% accuracy rate for one year before bankruptcy occurs; and 72% two years before the actual incident, while in a series of tests that have been conducted the next Altman was covering three different time periods, until 1999, accuracy in predicting bankruptcy one year ahead, ranging between 80-90% (Altman, 2006). Fataya, Alamsyah & Iwan (2017), find out the financial distress potential of manufacturing companies basic industry and chemicals sector, cement subsector listed on Indonesia Stock Exchange period of 2011-2015 by using Altman Z-Score Modification model. The data used is cement companies listed on Indonesia Stock Exchange period of 2011-2015, that is financial statement of PT. Indocement Tunggal Prakarsa Tbk, PT. Holcim Indonesia Tbk, and PT. Semen Indonesia Tbk. Data analysis technique by using Altman Z-Score Modification analysis in Altman 1995 which use Z = 6,56 X1 + 3,26 X2 + 6,72 X3 + 1,05 X4 that only use X1 (working capital/total asset), X2 (retained earnings/total asset), X3 (earning before interest and taxes/total asset), and X4 (book value of equity/total liabilities). In Altman Z-Score 1995 sales is does not exist. The final results of this research show that cement companies listed on Indonesia Stock Exchange period of 2011-2015 are classified into three categories of companies i.e the companies that fall into the category of distress area, grey area, and non distress area. The analysis results show that PT. Indocement Tunggal Prakarsa Tbk and PT. Semen Indonesia Tbk. are consistently included in non distress area category period of 2011-2015, both of the companies fall into health categories and not potentially to bankruptcy. Other than that there is one company that went financial distress in 2013-2015 and potentially to bankruptcy in the future i.e PT. Holcim Indonesia Tbk. At 2013 PT. Holcim Indonesia Tbk fall into grey area category. PT. Holcim Indonesia Tbk. Fall into distress area in 2014 and 2015.
Therefore, researchers are interested in analyzing the bankruptcy projection of cement companies in Indonesia. For the sake of ease and uniformity of data sources, this research is only limited to companies listed on the Indonesia stock exchange. Until 2018, there were only 4 cement companies listed on the Indonesia Stock Exchange. The four listed cement companies, consisting of two government companies and two private companies. The government companies, namely PT Semen A and PT Semen B. The private companies are PT Semen C and PT Semen D (Indonesia Stock Exchange). For that writer feel the need to research to know the health of a cement company which goes public in Bursa Efek Indonesia to avoid the situation that endangersthe company. By evaluating the health of the company, the manager can take action to avoid corporate bankruptcy. In addition, by knowing the health of the company investors can find out which companies are worth investing in and get investment. A good investment must go through an analysis of the decision to find out whether the business will benefit or not. To avoid losses received by investors, investors must know their investment proposals with long-term risks that will be accepted (Ananda, Risa & Andika, 2018).

B. Research Questions and Objective of The Study
Based on previous research, researchers wanted to find out the health analysis of cement companies listed on the Indonesian stock exchange using the latest Altman Z-score model that uses 5 variables, with research question is to understand the level of the bankruptcy of listed cement companies in Indonesian Stock Exchange and the goal to be achieved is to understand the level of the bankruptcy of the listed cement companies in Indonesia Stock Exchange.

RESEARCH METHOD
The sample in this study is the company in the cement sector which listed on the Indonesia Stock Exchange. There are four listed cement companies, from government and private. PT Semen A and PT Semen B are they belong to the government and the private companies are PT Semen C and PT Semen D. This study uses secondary data obtained from Indonesian Capital Market Directory (ICMD) and the annual report of the company (financial statements).
The data had been analyzed through Altman's Z score model, for which a few ratios have been calculated through ratio analysis and collected data is analyzed by using Excel. The ratios are the widely used tool to measure the financial performance of a company. There are four major ratios which define the complete financial position of a company, which is a liquidity ratio, profitability ratio, solvency ratio,and activity ratio. The liquidity ratio helps to measure the company's ability to meet the short-term obligations. The profitability ratio measures the profitbearing capacity of a company. The solvency ratio measures the debt service capacity in the e- ISSN : 2442-2630Vol. 17, No. 2, Oktober 2019p-ISSN : 1963 long run and the activity ratio determines the company's ability to utilize the assets efficiently.
In the above formula, X1 gives the liquidity position to the total capitalization, X2 measures the cumulative profitability overtime and leverages, X3 measures the operating performance and productivity of assets, X4 gives the long-term solvency position and X5 gives the sales generating capacity of the assets. The ratio of net working capital to total assets depicts the liquidity position of the company. The ratio of working capital to the total assets of the firm varies from 0.050 to 0.186 during the study period; there is no upward or downward tendency based on X1 value. It shows that inefficient working capital mobilization seen from fluctuating X1 value. The ratio of retained earnings to total assets is varied from 0,546 to 0,669 during the study period, it indicating that the retained earnings mobilization is low. The ratio of EBIT to total assets is positive and low and varied from 0,056 to 0,225 shows that the earnings of the company are low. The book value of equity to debt is a common indicator of bankruptcy. It is a measure which indicates how much the company's assets can decline in value before the liabilities exceed the assets and the company becomes insolvent. From the analysis, it can be concluded that PT Semen A is relying more on equity rather than debt. The sales to total assets ratio are varied from 0,591 to 0,796 during the study period indicating that the sales of the company are low compared to the total assets invested by the company. Overall, the solvency position of the company is good enough, but the company must be able to make decisions wisely so that the company's financial performance does not continue to decline every year. The ratio of working capital to total company assets varies from 0.090 to 0.736 during the study period. High level of fluctuation indicates that PT Semen B has a good level of investment in current assets. The ratio of retained earnings to total assets is varied from 0.166 to 0.285 during the study period, indicating that the mobilization of retained earnings is good because the trend of retained earnings rises every year. The ratio of EBIT to total assets is positive and low and varied from 0.041 to 0.148 shows that the earnings of the company are low. The ratio of book value of equity and book value of debt ratio ranges from 8,965 to 21,991. From the analysis, it can be concluded that PT Semen B is relying more on equity rather than debt. The sales to total asset ratio is varied from 0.307 to 0.447 during the study period indicating that the sales of the company is low compared to total assets invested by the company. Overall, the solvency position of the company is not poor.  The ratio of working capital to the total assets of the firm varied from 0.326 to 0.530 during the study period. It indicates that PT Semen B has a good level of investment in current assets. The ratio of retained earnings to total assets is varied from 0.693 to 0.726 during the study period, indicating that the mobilization of the retained earnings is good because of the tendency of retained earnings that tend to rise. The ratio of EBIT to total assets is positive and always decreases annually and varied from 0.079 to 0.248 shows that the earnings of the company are low. The ratio of book value of equity and book value of debt ratio ranges from 14,130 to 21,785. From the analysis, it can be concluded that PT Semen C is relying more on equity rather than debt. The sales to total assets ratio are varied from 0,500 to 0.702 indicating that every year the company's sales continue to decline so that the company must make efforts to resell the sales increase. Overall, the solvency position of the company is not poor. The ratio of working capital to total assets has a negative value during the study period. It indicates that PT Semen D has a bad level of investment in current assets. The ratio of retained earnings to total assets is varied from 0.055 to 0.166 during the study period, indicating that the retained earnings are not poor. The ratio of EBIT to total assets is positive and low and varied from 0.009 to 0.090 shows that the earnings of the company are low. The ratio of book value of equity and book value of debt ratio ranges from 0,515 to 2,858. It shows the interest of shareholders is low due to the ill financial health of the company. The sales to total assets ratio are varied from 0.478 to 0.650 during the study period indicating that the sales of the company are low compared to the total assets invested by the company. Overall, the solvency position of the company is not good.  Based on table 6, PT Semen A in 2013-2017 has a financial performance is in a safe area. This can be seen from the value of Z which is above 3 or Z> 3.0. Although the value of Z PT Semen A are in safe areas, but companies must remain cautious because every year the financial performance of the company continues to decline. It can be seen from the value of Z which tends to decrease every year.
PT Semen B in the year 2013-2017 also has financial performance in the safe area. This can be seen from the Z value greater than three. PT Semen B. has a fluctuating financial performance, as seen from the declining Z value in 2015, rising in 2016 and back down in 2017. Therefore, the company must take policy for the company's financial performance does not decrease again in the next year.
PT Semen C in the year 2013-2017 also has financial performance in the safe area. This can be seen from the value of Z which is above three. Until 2015, the financial performance of PT Semen C continues to increase, but in 2016 the value of Z companies decreased until finally rose again in 2017. Therefore the company should strive to improve its performance so that the company Z value does not decrease again in the next year.
PT Semen D in 2014-2017 has a financial performance that is in the area of bankruptcy and located in the gray area only in 2013. Based on the score Z, the performance of PT Semen D continues to decline. It must be addressed by the company so that PT Semen D can improve its performance so the company does not go bankrupt in the next year. Based on Figure 1, PT Semen C is seen as the healthiest company compared to other cement companies listed on the Indonesia Stock Exchange. This can be seen from the graph that PT Semen C has the highest Z score of 15,822. PT Semen C companies are quite stable in dealing with corporate finances that can be seen from the low fluctuations in the company's finances. PT Semen B is a company that is also categorized as healthy because it is in a safe zone or a safe zone. This is because all of the company's Z scores are above 3.0. From the table above it can be estimated that in 2015 there was a decline in the financial condition of the PT Semen B company, but the management of the PT Semen B company acted quickly in the following year. The financial of the PT Semen B company rose significantly again. company finances can continue to increase every year. PT Semen A companies are categorized as healthy because they are in a safe zone or a safe zone. However, the PT Semen A company must continue to improve its strategy because the Z score of the PT Semen A company score continues to improve each year. The company must immediately improve the strategy that has been implemented so that the company will immediately rise and no longer increase its finances in the following years. Based on the table above, it can be seen that PT Semen D is categorized as unhealthy because during the study period the results of the Z score of the PT Semen D company were in the bankrupt or stressed zone, only in 2013 the company was in the gray area. This is because almost all of the company's Z score is below 1.8. If the Z value is less than 1.8, then it is a bankrupt company (depressed zone). Based on the graph above, the PT Semen D company is a company that has the finance that most need greater improvement because all of these company variables are in the insecure category. The company must overhaul its financial strategy so that it is not in the bankrupt zone again the following year and is detrimental to the company.
In general, figure 1 represents the Z score of PT Semen A, PT Semen B, PT Semen C,and PT Semen D (from table 7) is compared to the lowest range (1.8) and the highest range (3) of Altman's Z,score model. It can be seen that PT Semen A, PT Semen B, PT Semen C has a viable financial position, but the management of the company must be careful and remains in a safe zone. Based on figure 1, it can also be seen that PT Semen D is in a bankrupt zone. The company must immediately take quick actions avoiding the and having experienced for the bankruptcy in the future.
There are many ways to avoid a company from bankruptcy, such as: 1. Applying The Quality Function Deployment (QFD) Method to Improve The Company's Competitiveness The QFD method is to increase product reliability, improve product quality, increase customer satisfaction, shorten time to market, reduce design costs, improve communication, increase productivity and increase company profits. Besides that, QFD also aims to develop products that can satisfy consumers by translating consumer desires into technical characteristics that are the target of design and quality control elements for use throughout the production process. The ability to produce products in accordance with the needs and desires of consumers is a key factor that must be owned by the company to be able to produce products that are highly competitive (Trenggonowati, 2017).

Applying Lean Manufacturing Approaches in Reducing Waste
According to Gaspersz (2007) lean manufacturing is a production system that uses very little energy and waste to fulfill what consumers want precisely. The purpose of lean manufacturing is to eliminate waste (non value adding activity) from a process so that activities along the value stream are able to produce value adding. There are seven waste in the production process, namely overproduction, waiting, transportation, processing, inventory, motion and defects. By implementing a lean manufacturing approach, it is hoped that companies will be able to eliminate waste and increase profits, so that the company will avoid bankruptcy (Akhmad, Wahyu & Ilyas, 2015.) 3. Implement a Quality Management Model in Improving Product Competitiveness In order for a cement company to be able to compete in the cement industry and avoid bankruptcy, the company must have very high quality that makes the company able to meet customer satisfaction, make products sold out, be able to compete with competitors, and increase market share. Some things that affect product competitiveness are leadership, strategic planning, measurement analysis and knowledge management, human resource focus, and process management (Billy & Wiwik, 2018).

Improve The Company's Supply Chain Management
There are many things companies must do to avoid bankruptcy, one of which is to improve the supply chain system. Supply Chain Risk Management is a risk that occurs in the flow of products, information, raw materials to the delivery of the final product that threatens the entire supply chain from the initial supplier to the consumer. Whereas supply chain disruptions are unplanned events that occur in the supply chain that can affect the flow of materials and components. Some of the risks that often occur are demand risk, delays in raw materials, natural disasters (discruption), while other risks are, supplier quality, product quality, information systems, prices, supply, warehouse damaged products, financial, supplier dependency, delays, production capacity , inventories, shortages of raw materials, stock differences and politics. There are 9 strategies to mitigate supply chain disruptions, namely: postponement, stock strategy, flexible supply base. make and buy, economic supply incentives, flexible transportation. revenue management via dynamic pricing and promotion, planning planning. silent product rollover (Handayani, 2016).

Implement a Six-Sigma Approach in Improving Product Quality
The profits obtained by the company, is a combination of all aspects that exist in the company. Six Sigma is a method used to make efforts to repair and improve processes that are continuous or continuous (Tannady, 2015). To achieve quality products, companies must always control and improve the quality of their products, so that perfect results will be obtained (Kartini, 2019). The Six Sigma approach with the Define, Measure, Analyze, Improve, and Control (DMAIC) methods can help identify problems that occur in the company, measure process performance and product performance, then analyze these problem factors in order to provide solutions and proposals for improvements to company performance so that the company can avoid bankruptcy projections going forward. (Hartono et al. 2010).

CONCLUSION
The bankruptcy level of the listed cement company in Indonesian stock exchange show that PT Semen A financial performance level is in the safe zone with Z value more than 3, 3.542 to 8.807. PT Semen B financial performance level is the safe zone with Z value in between 7.233 to 14.321, PT Semen C. This cement company is also having the financial performance in the safe zone, with Z value 10.905 to 15.882. Compared to other cement companies, Indocementhas the highest Z value. It means this company is the best among the others. PT Semen D. It is showing that during the 2014 -2017, the financial performance in the area of bankruptcy, and on the verge of bankruptcy in 2013. Z value is in between 0.818 -2,792 which is very low compared to others. This company needs to improve the performance immediately to avoid the bankruptcy happening.
There are many ways to avoid bankruptcy such as improving the sales revenue with the stronger sales team, improving operational cost by improving productivity and waste reduction in operation. Lastly, the most important thing is the leadership team have to come out with clear objectives and strategic action of how to get out from the bankruptcy zone.
All the companies need the elemental improvement on company performance and financial management. It will help company fitness level in stock exchange to avoid the indication of bankruptcy which will impact and share the value in the stock list of Indonesian exchange.