BANKRUPTCY RISK ANALYSIS USING THE MODIFIED ALTMAN Z-SCORE MODEL IN RURAL BANKS (BPR) AND ISLAMIC RURAL BANKS (BPRS) IN WEST SUMATRA

Abstract

The aim of this research is to analyze the bankruptcy level of Bank Perkreditan Rakyat (BPR) dan Bank Pembiayaan Rakyat Syariah (BPRS) which are measured based on the financial ratios Working Capital to Total Assets, Retained Earnings to Total Assets, Earning Before Interest and Taxes to Total Assets, Book Value of Equity to Total Liabilities using modified Altman Z-Score. In this research, the bankruptcy level of BPR and BPRS will be calculated. This research was conducted on BPR and BPRS in West Sumatra which are registered with Bank Indonesia and the Financial Services Authority as well as the websites of each banking company for the period 2021 – 2023. The results of this research are that in the group classified as “Bankrupt” in 2021 there are 11 BPR, in 2022 there are 9 BPR and in 2023 there are 10 BPR and 1 BPRS. In the group classified as “Grey Area” in 2021 there are 16 BPR and 2 BPRS, in 2022 there are 16 BPR and 3 BPRS and in 2023 there are 13 BPR and 2 BPRS. The group classified as “HEALTHY” 2021 includes 4 BPR and 1 BPRS, In 2022 there will be 6 BPR and in 2023 there will be 8 BPR. For folk credit banks and Islamic community financing banks from bankruptcy, it is expected to improve and financial performance. Breaking up sufficient capital will help maintain the stability of financial performance by doing the current assets and maintaining the composition of the current debt.