Financial Ratio Analysis and Altman Z-Score Model of Financial Performance

PT. Pakuwon Jati Tbk in 2015-2019

Adrian Ova Triandi, S.T, Ilona Kirana Saradella, S.Si

Abstract
The property sector plays a very important role in the movement of the
domestic economy. In 2019, 17.61% of the economic contribution came from the
property sector. Large property companies such as PT. Pakuwon Jati Tbk is very
influential in the property sector, they have a lot of assets and experience with a thick
portfolio in a relatively short period of time, founded in 1982 but became a public
company in 1989. So that the study of economic health, especially on PT. Pakuwon
Jati Tbk as the activator in the property sector was carried out to see the trend towards
the development of the property sector in Indonesia. The use of commonly used
financial ratios is also used in this analysis, helping to summarize eight indicators that
assess the financial health of a company. Z-score assessment is also applied to see
trends in the continuity of the related companies so that it can be predicted whether
the company will continue well or vice versa.

Keywords: Property Sector, Financial Ratio, Altmann Z-Score, PT. Pakuwon

Jati Tbk

1. Introduction
The property sector plays a large part in the economic movement in Indonesia.
The construction and real estate industries contributed to the economy of Jakarta by
17.61 percent in 2019. In 2018, the property sector also absorbed 425 thousand
workers in Jakarta. Last year, the construction and real estate industries contributed
23.9 percent to DKI Jakarta Domestic Investment or the equivalent of Rp. 14.8
trillion. The value of foreign investment from the two industries is around 28.3
percent or equivalent to Rp. 17.5 trillion [1]. The economic conditions that
deteriorated in 2020 due to the global pandemic resulted in the property sector
becoming vulnerable. Previously, Bank Indonesia estimated Indonesia's economic
growth at 5-5.5% in 2020. The Indonesian government has also stimulated the
Indonesian economy by funding as much as the US $ 8 billion to maintain economic
growth during the pandemic. Even so, the property development process that is
ongoing is still being carried out. To get more integrated information on a property,
the government plans a second tax amnesty program where the program is considered
successful in 2018 with a total of 965,983 people participating in the program. IDR
4,865.7 trillion (the US $ 300.5 billion) was declared, or the equivalent of 40% of
Indonesia's GDP [2].
Large property companies such as PT. Pakuwon Jati Tbk is very involved in
the development of the property sector in Indonesia. PT. Pakuwon Jati Tbk is a
company engaged in the property sector and has a portfolio as builders of superblock
buildings such as malls, apartments, offices, and hotels focused in Jakarta and
Surabaya which was founded in 1982 and has been in open status since 1989. They
consider that they have customers and permanent tenants, keeping them at the
forefront of their sector [3]. Shareholders that own 5% or more shares of PT.
Pakuwon Jati Tbk, namely: Burgami Investment Limited (20.90%), PT Pakuwon
Arthaniaga (controller) (16.75%), Concord Media Investment Ltd (7.39%), and
Raylight Investment Limited (7.15%). On August 22, 1989, PT. Pakuwon Jati Tbk

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obtained an effective statement from Bapepam-LK to conduct an Initial Public
Offering (IPO) of PT. Pakuwon Jati Tbk to the public as much as 3,000,000 with a
nominal value of IDR 1,000 per share with an offering price of IDR 7,200 per share.
These shares were listed on the Indonesia Stock Exchange (IDX) on October 9, 1989.
Until now, PT. Pakuwon Jati Tbk has 12 subsidiaries as their supporters in driving the
property sector [4].
To predict how financially sound a company is, the Z-score method might be
able to do it. The Z-score method was popular in 2007/08 when the financial crisis
occurred when it was used to predict the likelihood of a bank going bankrupt. The Z-
score can be calculated with market-based risk information. The conciseness of this
method is the main advantage and the reason behind the popularity of the z-score
method. First developed by Professor Edward Altman, a lecturer from New York
University in 1960, the z-score provides an effective financial assessment for credit
risk analysis and lenders. The Z-score can predict debts and risks that may occur and
the feasibility of outsiders. This method is also suitable for public companies such as
PT. Pakuwon Jati Tbk for further analysis [5].
In addition, financial ratios are often used to evaluate a company's finances.
Not infrequently, a company uses this method to see their performance and compare it
with competitors, indirectly giving an idea of where they are in the market they have
[6]. There are nine indicators to measure financial health: Return on Investment
(ROI), Return on Equity (ROE), Cash Ratio, Current Ratio (CR), Quick Ratio (QR),
Collections Period (CP), Inventory Turnover (ITO), Total Asset Turnover, and Total
Equity to the Total Asset (TETA). The level of financial assessment is divided into
very healthy (highest level of financial literacy), healthy (medium level of financial
literacy), and unhealthy (lowest level of financial literacy) [7]. Financial ratios can
also be defined as the selection, evaluation, and interpretation of financial data, with
other important information, to guide investment and financial decision-making
actions. Financial Ratios can also be used internally to evaluate various issues such as
employee performance, the efficiency of operations, credit policy, and can evaluate
externally such as investment potential and creditworthiness, as well as other matters.
Data sources for financial analysis can come from anywhere. However, usually, the
main data comes from the company itself through annual financial reports [8].
Not to forget that the state encourages economic movement, as quoted from
the Decree of the Minister for State-Owned Enterprises Number: KEP-100 / MBU /
2020 concerning the Assessment of the Health Level of State-Owned Enterprises
which considers that the development of the business world in an increasingly open
economic situation needs to be based on work appraisal tools and systems that can
encourage companies to improve efficiency and competitiveness. Although this
ministerial decree only applies to state-owned companies, it is possible that this
ministerial decree can also be a guide for other private/public companies to push
companies towards increased efficiency and competitiveness [9].

2

2. Literature Review
A literature review on the financial ratio method was conducted to determine
the financial health of two cement companies in Indonesia, namely PT. Semen
Baturaja and PT. Semen Indonesia. In the analysis using loose data from 2011 to
2015, it was classified according to the decree of the Ministry of SOEs No. KEP-100 /
MBU / 2002 about financial health assessment of SOE that the value of each indicator
can be determined so that unanimous conclusions can be drawn about the health of
the two companies. The results of this research are very valuable for related
companies [7]. One other study related to financial ratios is a study of the evaluation
of the effects on the financial performance of companies in the trading and service
sector. Data were taken from 10 companies listed in Bursa Malaysia. From the results
of these studies, there are several ways to optimize financial performance for related
companies [6]. It also supports Ministerial Decree No. KEP-100 / MBU / 2002 in
which the decree is expected to support the efficiency and productivity of state-owned
companies which can become a milestone for publich companies such as PT.
Pakuwon Jati Tbk [9].

3. Methodology
In this study, the goal is measuring and analyzing the financial performance on
one of the Public Real Estate Company in Indonesia (PT. Pakuwon Jati Tbk) between
2015 and 2019 using financial ratio analysis and Altman Z-score model. The Z-score
model is used to capture the predictive viability of a company's financial health and
also known as the most famous failure or bankruptcy prediction model. The simplicity
of the model has made it widely use in the manufacturing and non-manufacturing,
service industry, and in the non-listed financial and non-financial institutions [5].
PT. Pakuwon Jati Tbk were selected because it is considered as a representative of
public real estate which has various assets throughout Indonesia [3], [4]. It is not a
state-owned company which finding out the final health assessment can be refers to
the Decree of Ministry of State-Owned Enterprise No. KEP-100 / MBU / 2002.
However, in this study, the authors conducted research on whether the Z score model
can accurately evaluate the financial health and also measuring financial performance
by financial ratio analysis [6]. Not to collect statistics about the company, but to use
those numbers to spot the trends that are affecting the company. Why changes have
occurred, and what should we do in response. Data were collected from annual reports
(audited) which can be accessed through the company’s’ website. There are 5 analysis
which include profitability ratio, activity ratio, liquidity ratio, solvency ratio, and Z
score model [8].

3.1 Profitability Ratio

The most common measure for company’s financial performance is evaluate the
profitability. It is an ability of a company to use its resources to generate revenues in
excess of its expenses and also consist of several ratio. However, in this study we only
calculate the Return on Equity (ROE) and Return on Investment (ROI). ROE
measures the efficiency of capital or financial management, it measures how
efficiently a company can use the money from shareholders to generate profits and
grow the company. The equation for ROE measurement can be expressed as :

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝑅𝑂𝐸 = 𝑥 100%
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟 4 𝑠 𝐸𝑞𝑢𝑖𝑡𝑦

3

 Return on investment (ROI) is a profitability ratio that calculates the profits of an
investment as a percentage of the original cost. It shows the ability of the company to
measure the income generated on investment relative to the amount of money
invested [10]. The equation of ROI can be expressed as:

>?@ ABCDE?FAB@?G?H@ (JKLMN?H)

𝑅𝑂𝐼 = 𝑥 100% ,
PMQR@MS TEQSDU?V

𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑 = 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 − 𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡

3.2 Liquidity Ratio

Liquidity ratio can be used to measure the company’s ability to pay their short-
term liabilities. Liquidity itself consist of Cash, Current, and Acid-test (Quick) Ratio
that may have different character to define wether the company is liquid or illiquid
[11].

3.3. Cash Ratio

Cash ratio is a measurement of a company's liquidity, specifically the ratio of a
company's total cash and cash equivalents to its current liabilities. If the company has
cash ratio equal to one, it indicates that company has the same amount of cash and its
debt. If the value of cash ratio is more than one, it indicates that company has more
cash to pay its debt. However, if the value is less than one, it indicates that company
has less cash to pay its debt [12].The metric calculates a company's ability to repay its
short-term debt with cash or near-cash resources [13]. The equation of Cash Ratio can
be expressed as:
𝐶𝑎𝑠ℎ + 𝐶𝑎𝑠ℎ 𝐸𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡
𝐶𝑎𝑠ℎ 𝑅𝑎𝑡𝑖𝑜 = 𝑥 100%
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

3.3 Current ratio

Current ratio is away to evaluate how the company uses its cash. It measures the
company ability to repay its current liability or short-term obligations with current
asset. If the company has a current ratio below 1, it indicates that company has a
problem with its short-term debt. If the company has a too high current ratio, it
indicates that company has a problem in managing their current asset. The current
ratio is an important measure of liquidity because short-term liabilities are due within
the next year [13].So, we can conclude that the higher curent ratio the more liquid the
company. The equation of Current Ratio can be expressed as:

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝑥 100%
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

A ratio that focuses on the relationship of monetary current assets to current

liabilities is called the acid-test ratio, or quick ratio. Acid- test (Quick) Ratio shows
the company's ability to pay its current liabilities when they come due with only quick
assets. The equation of Acid- test (Quick) Ratio can be expressed as:

𝑀𝑜𝑛𝑒𝑡𝑎𝑟𝑦 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠

𝐴𝑐𝑖𝑑 − 𝑡𝑒𝑠𝑡 (𝑞𝑢𝑖𝑐𝑘) 𝑅𝑎𝑡𝑖𝑜 = 𝑥 100%
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

4

 𝑀𝑜𝑛𝑒𝑡𝑎𝑟𝑦 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

3.4 Activity Ratio

This ratio measures how many times the inventory is being sold of a certain
period of time. Inventory Turnover could shows how effectively inventory is
managed by comparing cost of goods sold with average inventory for a period. In
other words, it measures how many times a company sold its total average inventory
dollar amount during the year [13]. It also indicates the velocity with which
merchandise moves through a business. If the ratio is low, it indicates that the
company is overstocking and deficiencies in the marketing effort. The equation of
Inventory Turnover can be expressed as:

𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑 𝑆𝑜𝑙𝑑

𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = 𝑥 365 𝑑𝑎𝑦𝑠
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

Total Asset Turnover measures the value and the effectiveness of a company's
sales or revenues relative to its total assets. TATO ratio indicates the company ability
to generate revenue from utilizing its asset. A higher ratio indicates that company
using its assets more efficiently and lower ratio indicates that company is using its
asset deficiently. The equation of Total Asset Turnover can be expressed as:

𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = 𝑥 100%
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑

The Collection Period is an important indicator for the company to monitor their
cash flow and measure the company ability to pay its debt in due date. It is the
amount of time it takes for a business to receive payments owed by its clients in term
of Accounts Receivables (AR). If the collection period is increasing dramatically
over several periods, and it is not a planned increase,this might mean stepping up your
collection practices, or putting tighter limits on the credit you extend to your
customers. The equation of Collection Period can be expressed as:

𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
𝐶𝑜𝑙𝑙𝑒𝑐𝑡𝑖𝑜𝑛 𝑃𝑒𝑟𝑖𝑜𝑑 = 365 𝑑𝑎𝑦𝑠
𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒

3.5 Solvency Ratio

Total Equity to Total Asset Ratio, or sometimes called “Shareholder Equity
Ratio”, indicates how much of a company's assets have been generated by issuing
equity shares rather than by taking on debt. If the company has less value, then the
company funding its asset inefficiently. In the other words, company has very low
net value for investor. The closer a firm's ratio result is to 100%, the more assets it
has financed with stock rather than debt then it may be consider as iliquid company
which sign as the red code for them [14]. This ratio can be expressed in an equation
as:
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 𝑡𝑜 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 = 𝑥 100%
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡

5

3.6 Z-Score Model
The Z-Score was first developed by New York University Professor Edward
Altman in 1960. A multiple discriminant analysis (MDA) was chosen as the applied
appropriate statistical technique. It is used primarily to classify and/or make
predictions in problems where the dependent variable appears in qualitative form. In
this study model of Z-Score, the MDA determines a set of discriminant coefficients.
Its technique was selected as most appropriate for the bankruptcy study. More
recently this method had been successfully to financial problems such as consumer
credit evaluation and investment classification.
The variables for Z-score model are classified into five standard ratio categories,
including liquidity, profitability, leverage, solvency, and activity ratios. The ratios are
chosen on the basis of their 1) popularity in the literature, 2) potential relevancy to the
study, and a few "new" ratios which was initiated by Altman itself. From the original
list of variables, five variables are selected as doing the best overall job together in the
prediction of corporate bankruptcy. In reference to Chotalia, 2014 research, The final
discriminant function Z-score value for Public Companies or Manufacturing
Industries is calculated as follows:

Z Score = 1.2*X1 + 1.4*X2 + 3.3*X3 + 0.6*X4 + 1.0*X5

Table 1 Z-Score Ratio

Ratio Formula
Working capital
X1 Working capital = Current asset - current liabilities
Total Assets
Retained earnings
X2 Retained Earnings = Total Equity - Capital stock
Total Assets
Earnings Before Interest and Taxes
X3 EBIT = Net Income + Interest Expenses + Taxes
Total Assets
Market value of equity
X4 MVE = Closing Stock Price x Σ Outstanding Stock
Total liabilities
Net Sales
X5
Total Assets

The result of Altman Z-score Model for public and manufacturing companies
is interpreted as follows:
Table 2 Z-Score Interpretation

Z Score Interpretation
The company is considered Safe‘ based on the financial figures
Above 3.0
only

Between On Alert‘. This zone is an area where one should exercise

2.70 -2.99 Caution‘

Between Good chance of the company going bankrupt within 2 years of

1.8 -2.7 operations from the date of financial figures given.

Under 1.8 Probability of Financial Catastrophe is Very High.

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4. Result and Discussion
4.1 Financial Ratio Analysis
4.1.1 Profitability Ratio
PT. Pakuwon Jati Tbk Provitability
(ROE vs. ROI)
30.00

25.00

20.00
Percent (%)

15.00
ROI
10.00 ROE
5.00

0.00
2015 2016 2017 2018 2019
Year

Figure 1 PT. Pakuwon Jati Provitability (ROE vs ROI)

Return on Investment (ROI) is the ratio between Net Income (plus interest and
taxes) and the cost of investment. This ratio describes the good or bad form of
investment invested in a business in a period, to answer a fundamental question; 'Is
the form of investment being carried out appropriately?'. In fact, the higher the ROI
value, the investment returns that turn into profits will be very large, making the
company get a large return on every form of investment. In other words, the
investment direction is clear and there is a target market. Conversely, if the ROI value
is lower, the form of investment made is wrong, the investment does not turn into a
profit as it should, evaluation needs to be done [15].
Return on Equity (ROE) is the ratio between net income and interest and the
average shareholder equity. ROE value will be considered good if it exceeds the
average shareholder's equity, below is a loss. A value above 14% is considered good,
but any value if it is below 10% is considered terrible [16].
The ROI figure looks good and has increased throughout 2015/16, growing
rapidly from 23.47% to 27.22%. However, there was a reversed trend in 2017 where
the ROI rate fell to 21.98% before finally returning to the original trend of 27.08% in
2018 and increasing again to 28.13% in 2019. Based on ROI figures, PT. Pakuwon
Jati Tbk has well-divided profits, even though it experienced a sizable decline in 2017
but they can return to their original trend, even slightly more than before.
ROE figures throughout 2015-19 are actually quite good, although quite
fluctuating but offset by a positive trend. 2015 saw the lowest ROE rate in the period,
which was 14.9%. Quite a lot of developments occurred towards 2016 where the ROE
figure reached 16.12% before plunging (along with the ROI value) in 2017 to
15.65%. Amazingly, PT. Pakuwon Jati Tbk actually found a very significant increase
in ROE in 2018 to 18.62% after falling, before dropping slightly to 17.86% in 2019.

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4.1.2 Activity Ratio

PT. Pakuwon Jati Tbk Activity

(IT vs. CP vs. TATO)

200
180
160
Inventory
140
Turnover (Days)
120
100 Collection Period
(Days)
80
60 TATO (Percent)
40
20
0
2015 2016 2017 2018 2019
Year

Figure 2 PT. Pakuwon Jati Tbk Activity (IT vs CP vs TATO)

Inventory turnover graph at PT. Pakuwon Jati Tbk has a periodic negative trend in
the first 3 years, shrinking from 186 days in 2015 to 151 days in 2017 which was the
lowest point before then increased significantly in 2018 by 190 days followed by a
slight change of 185 days in 2019.
Collection period which is the ratio of accounts receivable to sales revenue in the
2015-19 period at PT. Pakuwon Jati Tbk has a positive trend line. The lowest point
occurred in 2016 with 18 days, down from 24 days in the previous year, before rising
slowly to reach its highest point of 47 days in 2019. This means that the accounts
receivable collection process will be bad if it takes too long.
Total Assets Turn Over (TETA) is a ratio that shows the extent to which a
company can generate profits from its assets [8]. The bigger the number, the better the
use of assets to convert into profit. PT. Pakuwon Jati Tbk experienced a negative
trend on the TETA line, reaching a high of 85.51% in 2015 before dropping regularly
to 67.84% in 2017, then increasing to 74.75% in 2018 and experiencing a slight
change of 74, 69% in 2019.

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 4.1.3 Liquidity Ratio
PT. Pakuwon Jati Tbk Liquidity
(CR vs. CrR vs. QR)
350.00

300.00

250.00
Percent (%)
200.00
Cash Ratio
150.00
Current Ratio
100.00 Quick Ratio
50.00

0.00
2015 2016 2017 2018 2019
Year

Figure 3 PT. Pakuwon Jati TBK Liquidity (CR vs CrR vs QR)

From the figure above can be seen that the liquidity of PT. Pakuwon Jati Tbk is
represented by cash ratio, current ratio, and quick ratio in percentage value. At a
glance look, the ratios are all generated an increasing trend from 2015 and reaching its
peak in 2019. The current ratio has the most dramatic rise starting in 2017 with more
than 60% uphill from its previous year and was continuously increase until 2019. It
can be concluded that the current asset ratio is still above 1 in ratio value or above
100%, therefore this company considered as a liquid company and have a good at
manage to repay its current liability or short-term obligations with the current asset. It
shows that the company’s financial health was good in the short term.
Different from the current ratio, for the cash ratio it was started at not so good
condition with the ratio in 2016 is 47.11% which was below 1 in ratio value or 100%.
It indicates that the company has less cash to pay its debt. But over time it has
recovered and reaches 128% in 2019. This means that from 2018, PT. Pakuwon has
already able to pay its debt with cash. Same as the cash ratio, the Acid-test (quick)
ratio did not start at a good spot which starts at 35.32% in 2015 and hit the overall
lowest ratio in 2016 with 27.78 %. Nevertheless, PT. Pakuwon Jati Tbk has developed
very well during this 5 years period. It shows that they have moving forward into
financial health year by year, and within 2019 all ratio already rises above 100%.

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 4.1.4 Solvency Ratio
PT. Pakuwon Jati Tbk Solvency
75

70

65
Percent (%)

60

55 TETA

50

45

40
2015 2016 2017 2018 2019
Year

Figure 4 PT. Pakuwon Jadi Tbk Solvency

The figure above is Total Equity-to-Asset Ratio (TETA) in percentage value, this
graph reflects how much a company's assets have been generated by issuing equity
shares rather than by taking on debt. Beter solvency ratio is less than a hundred
percent. The closer a firm's ratio result is to 100%, the more assets it has financed
with stock rather than debt. Called insolvent, this may lead them to face high-risk
investing activity in financing activity. But based on the graph above, the solvency
ratio of PT. Pakuwon Jati is still under 100%. But they need to be careful and
consider better steps because the ratio is getting higher steadily from 50.35% in 2015
until it reaches the highest point in 2019 at 69.34%. As mentioned before, if PT
Pakuwon Jati Tbk still has this kind of path until a couple of years later they are might
have financial problems in long term.

4.2 Z-Score Model

PT. Pakuwon Jati Tbk Z-Score Model
5
4.5
4
Percent (%)

3.5
3
2.5 Z-Score

2
1.5
1
2015 2016 2017 2018 2019
Year

Figure 5 PT. Pakuwon Jati Tbk Z-Score Model

10

 In line with the liquidity and solvency ratios, the Z-score model graph above
shows a significant increase in value. In 2015 the company scored 2.491 below 2.77,
which indicates the possibility that the company will go bankrupt within 2 years.
However, it gradually increased so that in 2016 they achieved higher points but still
this position is categorized as “on standby” and the company may still need to take
major action. Towards 2017, PT. Pakuwon Jati Tbk has exceeded the safe zone of 3.0
points. Gradually the company continues to increase its points to reach 3,686 in 2019.
Therefore, now PT. Pakuwon Jati Tbk can be said to be a healthy company.

5. Conclusion
With the goal to measure and analyse the financial performance of Pakuwon Jati
by using Financial ratio analysis and Altman Z-Score, this study has succeeded prove
that both methods can be applied to conclude a company's financial health condition.
Within both methods, corresponding results can be achieved. As what happened in
2017, that the government predicts there will be a revival of the national property
sector. This event did affect PT. Pakuwon Jati Tbk's performance during 2017 up
until 2019.
From the liquidity ratio, it starts reaching the safe zone which may refer to the
health performance of the company in 2017. It also intertwined with the result of the
Z-score model which gave a clue that in 2017, Pakuwon Jati achieved a Z-score above
3.0. In addition, Pakuwon Jati had unstable performance in 2015-2016 and within a
year there is a lot of financial transformation turning in to better way.
However, there are things to remember that the value of Pakuwon Jati's solvency
ratio in the 2015-2019 period has rosed rapidly, where this needs to be addressed
immediately. If the solvency ratio value reaches 100%, it is possible that Pakuwon
Jati might have financial problems in a long term.
In conclusion, the Z score model can accurately evaluate the financial health and
financial ratio analysis can also reflect and measuring the financial performance of a
company really well. A spot of the trends is visible which affecting the company and
lead to a better suggestion to its performance for the better financial of PT. Pakuwon
Jati Tbk.

6. References

[1] Media Relation SBM ITB, “Sektor Properti Berperan Signifikan Bangkitkan
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[4] Britama, “Sejarah dan Profil Singkat PT. Pakuwon Jati Tbk,” Britama, 2012.
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Available: https://www.investopedia.com/terms/r/returnoninvestment.asp.
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