Altman Z-Score Method Application to Predict Financial Distress on Property and Real Estate Sector Listed in Indonesia Stock Exchange

Abstract

Financial distress is a bankruptcy prediction model that is useful as an early warning system to anticipate information on the worst possibilities that will occur in the future. This study aims to determine the effect of liquidity, leverage and operating cash flow on financial distress with firm size as a moderating variable. In predicting financial distress, it is proxied by the Altman Z-Score model. The sample determination method using a purposive sampling method and obtain 17 samples of property and real estate companies listed on the Indonesia Stock Exchange in 2016-2020. According to the research, liquidity positively affects financial distress; leverage negatively affects financial distress; operating cash flow does not affect financial distress. The effect of liquidity on financial distress can not moderated by firm size; nevertheless, firm size can moderate the effect of leverage on financial distress.