Springate Analysis in Measuring Financial Distress on Company Performance in The Property and Real Estate Sector Listed on The Indonesia Stock Exchange Period 2018 - 2022

: This research aims to determine the effect of financial distress on company performance in the property and real estate sector listed on the Indonesia Stock Exchange for the 2018-2022 period, which is measured using the Springate analysis method. The performance of the property sector has been greatly impacted by the Covid-19 pandemic. Along with paralyzed economic activity, especially in 2020, the performance of the property sector was also paralyzed. Financial distress is a situation where a company experiences financial difficulties. Financial difficulties if they continue can result in the company going bankrupt. Financial distress can be considered an early warning of the company's poor condition so that the company can prepare itself to face this and improve its financial condition and improve company performance. Measurement of the financial distress variable uses the Springate Method.


Introduction
A company is an organization formed by individuals or groups engaged in the production of goods or services continuously with the primary aim of making a profit, and its continuous objective is to enhance the company's value.Financial reports are used as a form of accountability to the public to monitor performance and evaluate management, provide a basis for observing trends over time periods, achieving established goals, and comparing them with similar organizations' performances, if any.It also allows external parties to obtain cost information for goods and services received and to assess the efficiency and effectiveness of organizational resource utilization.Financial reports also serve to assist companies in providing a basis for planning policies and activities in the future, especially supporting information for fund usage and organizational viability.Every company is established with the hope of generating a profit so that it can sustain and grow in the long term.It is assumed that the company will continue to exist and is not expected to undergo liquidation.In practice, such assumptions are not always realized.Often, companies that have been operating for a certain period are forced to dissolve due to financial distress, leading to bankruptcy.
The value of a company is one of the factors that provide an insight into a company's performance.Good company performance reflects stability and a positive image for the company, so investors looking to invest their capital are expected to gain trust and be attracted to the company.Company performance is directly related to the company's goal of increasing profits in the future as a measure of company performance and aims to influence investors in the company.The property sector's performance has been heavily impacted by the Covid-19 pandemic.Along with the paralyzed economic activities, especially in 2020, the property sector's performance was also affected.
According to signaling theory, investors react to new signals provided by companies to the market, which typically come in the form of corporate earnings announcements (José García et al., 2014).If the signal given by the company is negative, it will cause an increase in stock price volatility compared to positive or neutral signals (tending to be the same, neither significantly good nor bad), which decrease stock price volatility, as people tend to focus more on losses than gains (Yasar et al., 2020).Thus, if there is a business failure or financial difficulty evident from the financial statements, it will affect the stock price in the future.However, company management often withholds such negative information simultaneously to prevent the company's stock price from falling (Andreou et al., 2021).This management action can be detrimental to shareholders (investors).However, it is known that this event aligns with agency theory (Donaldson & Davis, 1991), which states the divergence of interests between company management (agents) and shareholders (investors).
One of the factors influencing company performance is financial distress.The emergence of financial distress results from the company's inability to meet obligations, especially short-term obligations.Financial statements are a source of all information regarding a company's financial position, performance, and changes in financial position issued to support decision-making.This research was conducted on property and real estate https://equatorscience.com/index.php/jabtersector companies listed on the Indonesia Stock Exchange for the period 2018-2022, where economic conditions weakened due to the Covid-19 pandemic affecting the financial performance of companies and potentially causing financial distress, resulting in companies facing operational difficulties.
Financial statements reflecting good performance serve as signals or indicators that the company has been operating effectively.A positive signal will be well-received by external parties because market response heavily depends on the fundamental signals issued by the company.Investors will only invest their capital if they perceive the capable of providing greater value for the invested capital compared to other investment options.Therefore, investor attention is directed towards the profitability of the company, which is reflected in the financial statements published by the company.
Financial distress is defined as a stage of deteriorating financial condition that occurs before bankruptcy or liquidation.Financial distress is manifested by the company's inability or lack of funds to meet its obligations that have fallen due.Common signs of financial distress involve difficulties in paying debts, depreciation of assets, difficulty in obtaining additional funding, or even the threat of liquidation or bankruptcy.In a business context, financial distress can affect day-to-day operations, limit the ability to invest or grow, and harm relationships with creditors and shareholders.
It is important to manage finances wisely and detail good financial planning to prevent financial distress.For companies, effective risk management and financial planning can help identify potential financial problems and take necessary actions before reaching a crisis level.For individuals, having a solid financial plan, managing debts wisely, and having an emergency fund can help reduce the risk of personal financial distress.
The development of a Financial Distress model is crucial as it is expected to take actions to anticipate conditions leading to bankruptcy, such as converting assets into cash to meet short-term financial obligations, calculating the company's investment in working assets to generate revenue, issuing shares to raise capital, and borrowing capital from creditors.This helps companies avoid the worst-case scenario of bankruptcy.Bankruptcy prediction methods are models used to assess when a company will go bankrupt by combining a set of financial ratios that provide an overview of the company's financial condition or performance.One of the factors supporting a company to continue operating is financial factors or the company's financial condition, prompting many researchers to develop bankruptcy prediction models.
Analysis of the Springate Prediction Model by Rudianto (2013:262) explains that Springate is an analysis style for predicting industry profitability by combining several common financial indicators with different weights.Springate is a method developed in 1978 by Gordon L.V. Springate.Called the Springate S-Score, it defines a threshold (by default) in the form of different balances in each section to predict the company's condition, whether it may survive or not (prudently stated).Springate explains that the cutoff value applied in the formula above is 0.862, divided into two categories where if the S-value is greater than 0.862, then the company is considered to be in good condition and not potentially facing bankruptcy.
Based on the statistical data analysis using the Springate analysis method, it is indicated that there are 3 companies at risk of bankruptcy, namely ASRI, BKSL, and DILD, because they have an S value < 0.862.These companies are predicted to potentially experience financial difficulties due to the impact of the Covid-19 pandemic, leading to global economic uncertainty and income decline, causing investors to be reluctant to invest and companies unable to expand their businesses and experiencing revenue decline.However, on average, the property and real estate sector over the past 5 years shows a healthy Springate analysis figure of 1.641, where the S value > 0.862, indicating that the financial condition of the companies is healthy and not potentially experiencing financial difficulties or bankruptcy.

Conclusion
The results of the data analysis conducted indicate that the Springate analysis method can predict bankruptcy and financial difficulties of a company.This method is based on financial ratio analysis, which identifies early signs of a company's inability to meet its financial obligations.The Springate analysis combines these ratios using statistical methods to provide scores or predictions about the risk of corporate bankruptcy.