The Zmijewski Model as an Early Indicator of Financial Distress in Retail Companies Listed on the Indonesia Stock Exchange

https://doi.org/10.35912/simo.v6i4.4975
Published: Jan 21, 2026

Abstract:

Purpose: This study aims to evaluate the effectiveness of the Zmijewski Model as an early warning tool for detecting financial distress in retail companies listed on the Indonesia Stock Exchange.

Methodology/approach: The research focuses on 7 companies in the food and staples retailing subsector, using the Zmijewski Model developed in 1984, which includes three financial ratios: current ratio (CR), debt to equity ratio (DER), and return on assets (ROA). The analysis uses annual financial statements, applying a descriptive quantitative approach to calculate and interpret the X-scores.

Results/Findings: The results indicate that the Zmijewski Model accurately predicts financial distress. Companies with positive X-scores are at higher risk of financial problems, while those with positive scores are considered stable.

Conclusions: The Zmijewski Model proves to be an effective tool in identifying early signs of financial distress using basic financial ratios, aiding managers and investors in making better financial decisions.

Limitations: The model does not account for external factors such as market conditions or economic crises, which could impact a company’s financial stability.

Contribution: This study contributes to financial management and accounting by demonstrating how a simple model can be utilized to detect financial distress early, benefiting investors, company managers, auditors, and researchers in the field.

Keywords:
1. Financial Distress
2. Financial Ratios
3. Retail Companies
4. Zmijewski
Authors:
1 . Deni Surya Alam
2 . Ali Mugayat
3 . Mery Sukartini
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How to Cite
Alam, D. S., Mugayat, A., & Sukartini, M. (2026). The Zmijewski Model as an Early Indicator of Financial Distress in Retail Companies Listed on the Indonesia Stock Exchange. Studi Ilmu Manajemen Dan Organisasi, 6(4), 205–220. https://doi.org/10.35912/simo.v6i4.4975
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Issue & Section
Vol. 6 No. 4 (2026): Januari
Articles
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References

    Abrori, S. R., Hendrawaty, E., & Hasnawati, S. (2023). Corporate Governance and Financial Distress: A Comprehensive Analysis of Indonesian Manufacturing Companies. Asian Journal of Economics, Business and Accounting, 23(24), 268–278. https://doi.org/10.9734/ajeba/2023/v23i241203

    Afifah Putri Setiawan, N., & Permata Sari, S. (2025). Metode Zmijewski untuk Memprediksi Financial Distress pada Perusahaan Consumer Non-Cyclicals di Indonesia. 6, 897.

    Andari, N. M. M., & Rahyuda, H. (2021). THE ROLE OF FINANCIAL DISTRESS AS MEDIATOR BETWEEN FINANCIAL PERFORMANCE AND FIRM VALUE. Russian Journal of Agricultural and Socio-Economic Sciences, 119(11), 55–64. https://doi.org/10.18551/rjoas.2021-11.06

    Arisandi, R., Komalasari, A., & Prasetyo, T. J. (2022). Comparison Level of Financial Distress before and During the Covid-19 Pandemic in Indonesia. Asian Journal of Economics, Business and Accounting, 257–262. https://doi.org/10.9734/ajeba/2022/v22i23870

    Bahrum, S., Hariranto, S. S., & Mayangsari, S. (2024). Financial distress BUMN di Indonesia: Studi pada perusahaan go-public tahun 2017-2022. AKURASI: Jurnal Riset Akuntansi Dan Keuangan, 6(1), 15–28. https://doi.org/10.36407/akurasi.v6i1.1149

    Berry, S. (2024). Prediction of retail chain failure: examples of recent U.S. retail failures.

    Edith Ebele Agu, Courage Idemudia, & Shadrack Obeng. (2024). The revolutionary role of digital transformation in financing Small and Medium Enterprises (SMEs). International Journal of Management & Entrepreneurship Research, 6(8), 2476–2487. https://doi.org/10.51594/ijmer.v6i8.1366

    Girardone, C., Nieri, L., Piserà, S., & Santulli, R. (2024). Does FinTech credit affect firms’ cost of capital and capital structure? European Journal of Finance. https://doi.org/10.1080/1351847X.2024.2383643

    Gupta, V. (2024). Evaluating the Impact of Geopolitical Risk on the Financial Distress of Indian Hospitality Firms. Journal of Risk and Financial Management, 17(12). https://doi.org/10.3390/jrfm17120535

    Haris, A., Ghozali, I., & Najmudin, N. (2022). Indicators of financial distress condition in Indonesian banking industry. Accounting, 8(1), 27–36. https://doi.org/10.5267/j.ac.2021.6.009

    Hossan, D., Dato’ Mansor, Z., & Jaharuddin, N. S. (2023). Research Population and Sampling in Quantitative Study. In International Journal of Business and Technopreneurship (Vol. 13, Issue 3). https://orcid.org/0000-0002-2772-0556

    Kanapickien?, R., Kanapickas, T., & Ne?i?nas, A. (2023). Bankruptcy Prediction for Micro and Small Enterprises Using Financial, Non-Financial, Business Sector and Macroeconomic Variables: The Case of the Lithuanian Construction Sector. Risks, 11(5). https://doi.org/10.3390/risks11050097

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    Li, Y., & Gao, F. (2024). The impact of digital transformation on corporate financing constraints?: Based on the analysis of internal and external dual paths. 6, 163–174. https://doi.org/10.23977/acccm.2024.060523

    Liu, B., Ju, T., Bai, M., & Yu, C. F. (Jeffrey). (2021). Imitative innovation and financial distress risk: The moderating role of executive foreign experience. International Review of Economics and Finance, 71, 526–548. https://doi.org/10.1016/j.iref.2020.09.021

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    Muzanni, M., & Yuliana, I. (2021). TIJAB (The International Journal of Applied Business) Comparative Analysis of Altman, Springate, and Zmijewski Models in Predicting the Bankruptcy of Retail Companies in Indonesia and Singapore. The International Journal of Applied Business), 5(1), 81–93.

    Raharjo, Y., & Fitriani, N. (2024). The Role of Firm Attributes in Financial Distress Risk. Journal of Economics, Business, and Government Challenges, 7, 141–152. https://doi.org/10.33005/ebgc.v7i02.1538

    Rizai, S., Ratnawati, T., & Pristiana, U. (2023). INTERNATIONAL JOURNAL OF SOCIAL SCIENCE HUMANITY & MANAGEMENT RESEARCH The Effect of Macroeconomics, Firm Size, Assets Growth, and Liquidity on Financial Distress and Hedging with Good Corporate Governance as a Moderation Variable in Manufacturing Companies Listed on the Indonesia Stock Exchange. https://doi.org/10.58806/ijsshmr.2023.v2i12n11

    Rosihana, A. D., Ridwan, A., Saputra, W., Madewi, A., & Rosihana, A. D. (2025). Bankruptcy Prediction Analysis Based on the Altman Z-Score, Springate, and Zmijewski Methods (Case Study on PT. Net Visi Media Tbk). Journal of Economics and Social Sciences (JESS), 4, 61–66. https://doi.org/10.59525/jess.v4i1.654

    Saha, P. (2024). Comprehensive Analysis of Altman’s Z Score, Zmijewski X Score, Springate S-Score and Grover G-Score Model for Predicting Financial Health of Listed Non-Bank Financial Institutions (NBFIs) of Bangladesh. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4957004

    Santosa, P. W., Aprilia, O., & Tambunan, M. E. (2020). The intervening effect of the dividend policy on financial performance and firm value in large indonesian firms. International Journal of Financial Research, 11(4), 408–420. https://doi.org/10.5430/ijfr.v11n4p408

    Siti Dini, S. V. O. C. N. B. S. (2021). Struktur Modal, Profitabilitas, Likuiditas, Leverage dan Financial Distress. E-Jurnal Akuntansi, 2761–2773.

    Taufik, M., & Sugianto, C. V. (2021). TIJAB (The International Journal of Applied Business) Do Accounting, Market, and Macroeconomic Factors Affect Financial Distress? Evidence in Indonesia. The International Journal of Applied Business), 5(2), 166–182.

    Winarto, J., Susan, M., & Hartawati, H. (2024). JPPI (Jurnal Penelitian Pendidikan Indonesia) The impact of macroeconomic factors and internal company variables on the profit of textile and garment sector companies listed on the indonesian stock exchange-NC-SA license (https://creativecommons.org/licenses/by-nc-sa/4.0. 10(4), 994–1001. https://doi.org/10.29210/020244876

  1. Abrori, S. R., Hendrawaty, E., & Hasnawati, S. (2023). Corporate Governance and Financial Distress: A Comprehensive Analysis of Indonesian Manufacturing Companies. Asian Journal of Economics, Business and Accounting, 23(24), 268–278. https://doi.org/10.9734/ajeba/2023/v23i241203
  2. Afifah Putri Setiawan, N., & Permata Sari, S. (2025). Metode Zmijewski untuk Memprediksi Financial Distress pada Perusahaan Consumer Non-Cyclicals di Indonesia. 6, 897.
  3. Andari, N. M. M., & Rahyuda, H. (2021). THE ROLE OF FINANCIAL DISTRESS AS MEDIATOR BETWEEN FINANCIAL PERFORMANCE AND FIRM VALUE. Russian Journal of Agricultural and Socio-Economic Sciences, 119(11), 55–64. https://doi.org/10.18551/rjoas.2021-11.06
  4. Arisandi, R., Komalasari, A., & Prasetyo, T. J. (2022). Comparison Level of Financial Distress before and During the Covid-19 Pandemic in Indonesia. Asian Journal of Economics, Business and Accounting, 257–262. https://doi.org/10.9734/ajeba/2022/v22i23870
  5. Bahrum, S., Hariranto, S. S., & Mayangsari, S. (2024). Financial distress BUMN di Indonesia: Studi pada perusahaan go-public tahun 2017-2022. AKURASI: Jurnal Riset Akuntansi Dan Keuangan, 6(1), 15–28. https://doi.org/10.36407/akurasi.v6i1.1149
  6. Berry, S. (2024). Prediction of retail chain failure: examples of recent U.S. retail failures.
  7. Edith Ebele Agu, Courage Idemudia, & Shadrack Obeng. (2024). The revolutionary role of digital transformation in financing Small and Medium Enterprises (SMEs). International Journal of Management & Entrepreneurship Research, 6(8), 2476–2487. https://doi.org/10.51594/ijmer.v6i8.1366
  8. Girardone, C., Nieri, L., Piserà, S., & Santulli, R. (2024). Does FinTech credit affect firms’ cost of capital and capital structure? European Journal of Finance. https://doi.org/10.1080/1351847X.2024.2383643
  9. Gupta, V. (2024). Evaluating the Impact of Geopolitical Risk on the Financial Distress of Indian Hospitality Firms. Journal of Risk and Financial Management, 17(12). https://doi.org/10.3390/jrfm17120535
  10. Haris, A., Ghozali, I., & Najmudin, N. (2022). Indicators of financial distress condition in Indonesian banking industry. Accounting, 8(1), 27–36. https://doi.org/10.5267/j.ac.2021.6.009
  11. Hossan, D., Dato’ Mansor, Z., & Jaharuddin, N. S. (2023). Research Population and Sampling in Quantitative Study. In International Journal of Business and Technopreneurship (Vol. 13, Issue 3). https://orcid.org/0000-0002-2772-0556
  12. Kanapickien?, R., Kanapickas, T., & Ne?i?nas, A. (2023). Bankruptcy Prediction for Micro and Small Enterprises Using Financial, Non-Financial, Business Sector and Macroeconomic Variables: The Case of the Lithuanian Construction Sector. Risks, 11(5). https://doi.org/10.3390/risks11050097
  13. Kurniawan Sofyan, A. (2024). Pengaruh Likuiditas, Leverage, Profitabilitas Terhadap Financial Distress. 5, 5530.
  14. Kushermanto, A., Rahayu, T., Kurnianingsih, H., Ulum, A. S., Fachrur, M. M., & Alisa, I. R. (2024). Determinant of Financial Distress in Conventional Rural Banks in Central Java: Before and during Covid-19 Period. KnE Social Sciences. https://doi.org/10.18502/kss.v9i24.16867
  15. Li, Y., & Gao, F. (2024). The impact of digital transformation on corporate financing constraints?: Based on the analysis of internal and external dual paths. 6, 163–174. https://doi.org/10.23977/acccm.2024.060523
  16. Liu, B., Ju, T., Bai, M., & Yu, C. F. (Jeffrey). (2021). Imitative innovation and financial distress risk: The moderating role of executive foreign experience. International Review of Economics and Finance, 71, 526–548. https://doi.org/10.1016/j.iref.2020.09.021
  17. Mark E. Zmijewski. (1984). Methodological Issues Related to the Estimation of Financial Distress Prediction Models. Journal of Accounting Research, Vol. 22, Studies on Current Econometric Issues in Accounting Research, 22, 59–82.
  18. Muzanni, M., & Yuliana, I. (2021). TIJAB (The International Journal of Applied Business) Comparative Analysis of Altman, Springate, and Zmijewski Models in Predicting the Bankruptcy of Retail Companies in Indonesia and Singapore. The International Journal of Applied Business), 5(1), 81–93.
  19. Raharjo, Y., & Fitriani, N. (2024). The Role of Firm Attributes in Financial Distress Risk. Journal of Economics, Business, and Government Challenges, 7, 141–152. https://doi.org/10.33005/ebgc.v7i02.1538
  20. Rizai, S., Ratnawati, T., & Pristiana, U. (2023). INTERNATIONAL JOURNAL OF SOCIAL SCIENCE HUMANITY & MANAGEMENT RESEARCH The Effect of Macroeconomics, Firm Size, Assets Growth, and Liquidity on Financial Distress and Hedging with Good Corporate Governance as a Moderation Variable in Manufacturing Companies Listed on the Indonesia Stock Exchange. https://doi.org/10.58806/ijsshmr.2023.v2i12n11
  21. Rosihana, A. D., Ridwan, A., Saputra, W., Madewi, A., & Rosihana, A. D. (2025). Bankruptcy Prediction Analysis Based on the Altman Z-Score, Springate, and Zmijewski Methods (Case Study on PT. Net Visi Media Tbk). Journal of Economics and Social Sciences (JESS), 4, 61–66. https://doi.org/10.59525/jess.v4i1.654
  22. Saha, P. (2024). Comprehensive Analysis of Altman’s Z Score, Zmijewski X Score, Springate S-Score and Grover G-Score Model for Predicting Financial Health of Listed Non-Bank Financial Institutions (NBFIs) of Bangladesh. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4957004
  23. Santosa, P. W., Aprilia, O., & Tambunan, M. E. (2020). The intervening effect of the dividend policy on financial performance and firm value in large indonesian firms. International Journal of Financial Research, 11(4), 408–420. https://doi.org/10.5430/ijfr.v11n4p408
  24. Siti Dini, S. V. O. C. N. B. S. (2021). Struktur Modal, Profitabilitas, Likuiditas, Leverage dan Financial Distress. E-Jurnal Akuntansi, 2761–2773.
  25. Taufik, M., & Sugianto, C. V. (2021). TIJAB (The International Journal of Applied Business) Do Accounting, Market, and Macroeconomic Factors Affect Financial Distress? Evidence in Indonesia. The International Journal of Applied Business), 5(2), 166–182.
  26. Winarto, J., Susan, M., & Hartawati, H. (2024). JPPI (Jurnal Penelitian Pendidikan Indonesia) The impact of macroeconomic factors and internal company variables on the profit of textile and garment sector companies listed on the indonesian stock exchange-NC-SA license (https://creativecommons.org/licenses/by-nc-sa/4.0. 10(4), 994–1001. https://doi.org/10.29210/020244876