The Role of Adaptation Strategies in Improving Financial Health

Oct 13, 2025 by talynt.org 48 views

Risk Analysis of Bankruptcy with the Altman Z-Score Method at PT. Matahari Department Store Tbk for the period 2017-2019

The retail sector in Indonesia plays a vital role in the economy, with business activities focused on the sale of goods and services to consumers. Retail functions as the last chain in distribution, where the product can be accessed directly by the buyer. However, despite having promising potential, the retail sector, especially the Department Store, is facing serious challenges. Many department stores that close their outlets, which are likely to be triggered by increased competition, emergence of e-commerce platforms, and changes in consumers who prefer shopping online.

The Importance of Bankruptcy Risk Analysis in the Retail Sector

In this context, PT. Matahari Department Store Tbk, one of the main players in the Indonesian retail sector, needs to conduct an analysis to evaluate its financial health. One method that can be used for bankruptcy risk analysis is Altman Z-Score, which is a mathematical formula designed to predict the possibility of bankruptcy of a company. This method combines five different financial ratios to produce one score. The score is then used to determine the liquidity, profitability, and financial strength of the company.

Understanding the Altman Z-Score Method

Altman Z-Score is calculated using the formula:

\ [Z = 1.2 \ TIMES X_1 + 1.4 \ TIMES X_2 + 3.3 \ TIMES X_3 + 0.6 \ TIMES X_4 + 1.0 \ TIMES X_5 ]

Where:

\ (x_1 ) = working capital / total assets
\ (x_2 ) = retained earnings / total assets
\ (x_3 ) = profit before interest and tax (EBIT) / total assets
\ (x_4 \) = market value of equity / total liability
\ (x_5 ) = sales / total assets

The results of this calculation will provide a score that can be grouped into the category:

** Under 1.8 **: at high risk for bankruptcy
** 1.8 - 2.99 **: gray zone, need more attention
** above 3 **: good financial condition and low risk for bankruptcy

PT. Matahari Department Store Tbk: Analysis of the 2017-2019 Period

In the period 2017 to 2019, PT. Matahari Department Store Tbk faces several challenges that can affect its Z-Score score. With the rise of competition from e-commerce and changes in consumer behavior, this company needs to consistently monitor its financial ratios. For example, a decline in retained earnings or profit margin can indicate a fundamental problem that requires immediate attention.

Z-Score analysis results from PT. The sun every year will help in identifying trends: whether the company is getting closer to the bankruptcy zone or vice versa, shows improvement. If the Z-Score score decreases, this can indicate the inability to adapt to changing market conditions. For example, if the sales ratio to total assets shows a decline, this indicates that the company may not be effective in generating income from its assets.

The Role of Adaptation Strategies in Improving Financial Health

Analysis of bankruptcy risk using the Altman Z-Score method provides a clear view of the financial health of PT. Matahari Department Store Tbk. During the 2017-2019 period, it is essential for companies to develop effective adaptation strategies to increase competitiveness in increasingly competitive retail markets. By understanding and analyzing the Z-Score results, management can take mitigative steps to improve financial conditions and improve business sustainability in the midst of existing challenges.

Conclusion and Recommendations

Through an in-depth analysis of internal and external factors that affect the company, it is expected that PT. Matahari Department Store Tbk can continue to innovate and achieve maximum potential in the Indonesian retail sector. The company should focus on developing effective adaptation strategies to improve its financial health and competitiveness in the market. This can be achieved by:

Monitoring financial ratios: Regularly monitoring financial ratios such as working capital, retained earnings, and profit margin to identify potential problems.
Improving liquidity: Maintaining a healthy liquidity position by managing cash flow and reducing debt.
Enhancing profitability: Focusing on improving profitability by increasing sales and reducing costs.
Developing e-commerce capabilities: Investing in e-commerce capabilities to stay competitive in the market.

By implementing these strategies, PT. Matahari Department Store Tbk can improve its financial health and achieve maximum potential in the Indonesian retail sector.
Frequently Asked Questions (FAQs) about Risk Analysis of Bankruptcy with the Altman Z-Score Method at PT. Matahari Department Store Tbk for the period 2017-2019

Q: What is the Altman Z-Score method and how does it work?

A: The Altman Z-Score method is a mathematical formula designed to predict the possibility of bankruptcy of a company. It combines five different financial ratios to produce one score, which can be used to determine the liquidity, profitability, and financial strength of the company.

Q: What are the five financial ratios used in the Altman Z-Score method?

A: The five financial ratios used in the Altman Z-Score method are:

Working capital / total assets
Retained earnings / total assets
Profit before interest and tax (EBIT) / total assets
Market value of equity / total liability
Sales / total assets

Q: How is the Altman Z-Score calculated?

A: The Altman Z-Score is calculated using the formula:

\ [Z = 1.2 \ TIMES X_1 + 1.4 \ TIMES X_2 + 3.3 \ TIMES X_3 + 0.6 \ TIMES X_4 + 1.0 \ TIMES X_5 ]

Q: What do the results of the Altman Z-Score indicate?

A: The results of the Altman Z-Score can be grouped into three categories:

Under 1.8: at high risk for bankruptcy
1.8 - 2.99: gray zone, need more attention
Above 3: good financial condition and low risk for bankruptcy

Q: What are the challenges faced by PT. Matahari Department Store Tbk in the period 2017-2019?

A: PT. Matahari Department Store Tbk faces several challenges in the period 2017-2019, including:

Increased competition from e-commerce platforms
Changes in consumer behavior
Decline in retained earnings and profit margin

Q: How can PT. Matahari Department Store Tbk improve its financial health and competitiveness in the market?

A: PT. Matahari Department Store Tbk can improve its financial health and competitiveness in the market by:

Monitoring financial ratios
Improving liquidity
Enhancing profitability
Developing e-commerce capabilities

Q: What is the role of adaptation strategies in improving financial health?

A: Adaptation strategies play a crucial role in improving financial health by enabling companies to respond to changing market conditions and stay competitive. By understanding and analyzing the Z-Score results, management can take mitigative steps to improve financial conditions and improve business sustainability.

Q: What are the benefits of using the Altman Z-Score method?

A: The benefits of using the Altman Z-Score method include:

Provides a clear view of the financial health of a company
Enables companies to identify potential problems and take mitigative steps
Helps companies to develop effective adaptation strategies to improve financial health and competitiveness in the market.