PREDICTING CORPORATE BANKRUPTCY: BASED ON MDA TEXTILE AND GARMENT ON INDONESIA STOCK EXCHANGE

Kurnia Fajar Afgani; Agil Krisna Rivanda; Radia Purbayati

doi:10.31955/mea.v5i2.1392

Kurnia Fajar Afgani Bandung Institute of Technology
Agil Krisna Rivanda Bandung State of Polytechnic
Radia Purbayati Bandung State of Polytechnic

DOI: https://doi.org/10.31955/mea.v5i2.1392

Keywords: Bankruptcy; Financial Ratio; Multiple Discriminant Analysis

Abstract

During the Covid-19 Pandemic, Indonesian companies, especially the various industrial sectors, were affected in various ways. This may have an impact especially in the textile and garment sub-sector, while one of the strategic sectors that continue to make a significant contribution to the national economy, such as exports of non-oil foreign exchange earner, employment, and domestic needs. It is therefore important to know the company's bankruptcy to do with predicting bankruptcy. This study uses a statistical model of multiple discriminant analysis (MDA). This is a model developed by Altman in a study to predict the failure of a company.The statistical method used is discriminant analysis using five Altman variables, namely working capital/total assets, retained earnings/total assets, earnings before interest/total assets, and taxes, market value equity to book value of total debt and sales to total assets. There are 17 textile and garment companies available on the Indonesia Stock Exchange for the period 2015 to 2020. The results also show that the five independent variables used are significant in distinguishing between the bankruptcy prediction group and the non-bankruptcy prediction group through the F test and the Wilks Lambda test. At < 0.05, the ratio of WC/TA and EBIT/TA is the most dominant independent variable in distinguishing between groups that are predicted to be bankrupt and not bankrupt

Author Biography

Kurnia Fajar Afgani, Bandung Institute of Technology

Kurnia Fajar Afgani is the full -time lecturer in Business Risk and Finance group. His research interests are Islamic Finance and Business Economics. His teaching interest includes Business Economics, and Islamic Finance. He graduated with Master of Business Administration from the School of Business and Management (SBM) ITB, and has also obtained a Bachelor of Business Administration from Parahyangan Catholic University (Unpar). He worked for the Bank bjb Syariah Company for around 10 years Prior to taking this position as a faculty member of the SBM ITB until present.

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