ANALYSIS FINANCIAL REPORT SEVIE NURROCHMAINY (46110012)

BANGKRUPTCY ANALYSIS

(UNIVARIATE MODEL)

1.      Definition of Financial Statement

Financial statement is the  financial information of a company in an accounting period that can be used to describe the performance of the company to the parties who have a importance to make a decision. The parties like investor, government, and the company it’s self.

2.      Types of financial statement

a.       Balance Sheet

Showing the financial condition of the company, consist of asset, liability, and equity at the end of certain period

b.      Income Statement

Also referred to as a profit and loss statement , provide on a company's income, expenses, and profits/loss over a period of time. A profit and loss statement give information on the operation of the enterprise. include sales and the various expenses incurred during accounting period.

c.       Statement of change financial position

which includes the statement of changes in equity and cash flow statement also in one accounting period.

d.      Notes to financial statement

Generally, give information about the accounting policy and addition information about the account in financial report

3.      Definition Analysis of Financial Statement

Anlysis of financial statement is  process of analyzing financial statement to determine financial position dan performance, and to assess the financial performance of the company in the future.

4.      Scope of Financial Statement Analysis

a.       Liquidity Analysis

b.      Solvency Analysis

c.       Profitability Analysis

d.      Cash Flow Analysis

e.       Bankruptcy Prediction Analysis

f.       Risk Analysis

g.      Investment Analysis

5.      Bangkruptcy Prediction Analysis

Bangkruptcy Prediction Analysis is an analysis that can help companies to anticipate the possibility of the company going bankrupt  or not caused by financial problems.

6.      The Models of Bangkruptcy Prediction Analysis

a.       Univariat Model

b.      Multivariat Model

                                                  i.      Z-Score Model

                                                ii.      Logit Model

7.      Univariate Model

This model was developed by William Beaver who initially examined 29 financial ratios for five years using sample companies go bankrupt and not bankrupt. From these results, Beaver found there are six financial ratios are considered to have the power of discrimination that can distinguish healthy and unhealthy.  And the ratio are:

1.      Net income before depreciation, depletion, & amortization to total liabilities

This ratio showing  the risk of long-term solvency, which is the results of that provide  the total of  cash flows from operating activities are available to cover liabilities of the company. The greater this ratio, the lower the risk for the company. Otherwise, the smaller the ratio, the greater the risk for the company.

2.      Net income to total assets

This ratio provide the profitability of the company, where the measurement results show productivity of assets invested to produce net profit.

For example:

Year	Net Income (In Million)	Total Asset (in million)	Ratio
2004	177	2.415	0,07
2005	107	2.800	0,03

The table shows a decline in profitability in 2005 by 4%. The smaller this ratio, the lower the profitability of the company.

3.      Total debt to total assets

This ratio shows the company's long-term solvency risk, where the measurement results indicate the amount of debt financing used to finance the company assets. The greater the ratio, the greater the risk for the company. Otherwise, the smaller the ratio, the lower the risk for the company. For example:

Year	Total debt	Total Asset	Ratio
2004	906	2.415	0,37
2005	1.213	2.748	0,44

The ratio shows that of all the assets owned by the company financed from debt by 37% in 2004 while in 2005, financed from debt by 44%. This shows an increase in long-term risk in 2005 of  7%.

4.      Net working capital to total assets

This ratio shows the company's short-term liquidity risk, where the measurement results show the structure of the company assets. The greater this ratio, the lower the risk for the company. Oherwise, the smaller the ratio, the greater the risk for the company.

5.      Current assets to current liabilities

This ratio shows the company's short-term liquidity risk, where the measurement results indicate the amount of liquid assets available to meet the current liabilities of the company. The greater this ratio, the lower the risk for the company. Otherwise, the smaller the ratio, the greater the risk for the company

6.      Cash, marketable securities, account receivable to operating expenses excluding depreciation, depletion, & amortization .

This ratio provide the company's short-term liquidity risk, where the measurement results indicate the availability liquidity to cover operating expenses of the company. The greater this ratio, the lower the risk for the company. Otherwise, the smaller the ratio, the greater the risk for the company.