Bankruptcy prediction using altman z-score model and 5w+1h approach to elaborate strategy (case study: spin off company)

Abstract

One way to assess the condition or assess the performance of the company can be done by analyzing the company’s financial statements. The financial statement is a formal record of the financial activities and position of a business, person, or other entity and its objective to provide information about the financial position, performance and changes in financial position of an enterprise. Companies that were examined in this study is a spin off company which is a vendor and a company managed by university. In the financial statements it is known if the company has financial difficulties and at a decline stage. Companies that are at this stage susceptible to bankruptcy. Thus, the purpose of this study is to predict corporate bankruptcy and then proposed alternative strategies that can be used as a solution to the problems of the company. To predict bankruptcy of company, this research used the Altman Z-Score model to calculate financial ratio based on financial statements of company in 2014–2015 and then will be proposed a strategies for the company in accordance with the score. The proposed strategy is defensive strategy which divided into three, namely retrenchment, divestiture and liquidation. Each of the proposed strategies analyzed with 5W+1H (what, where, when, who, why, and how) to provide a clearer picture of the strategy.