Income Statement 2007 2008 2009 2010

(in thousands IDR)

Net Sales 4,284,581,223 6,559,077,280 6,590,857,284 6,022,921,894
Cost of Sales 3,925,624,207 6,113,046,734 5,967,731,531 5,390,011,533
Gross Profit before JO Project 358,957,016 446,030,546 623,125,753 632,910,361
JO Project Profit/Loss 17,349,374 -3,099,025 22,607,657 40,157,871
Gross Profit 376,306,390 442,931,521 645,733,410 673,068,232

Operating Expenses:
Sales Expense 10,948,795 2,589,810 2,421,380 3,527,066
General and Administration Expense 124,745,623 152,411,483 158,361,039 191,929,955
Total Operating Expense 135,694,418 155,001,293 160,782,419 195,457,021
Operating Income 240,611,972 287,930,228 484,950,991 477,611,211

Other Income (expenses):

Interest Income 10,533,319 53,743,541 30,417,205 28,913,365
Gain (Loss) in Foreign Exchange - Net 4,863,378 26,437,634 1,432,768 -4,104,954
Gain on Disposal of Fixed Assets 12,779,358 4,289,126 -2,000 57,351
Interest Expense and Penalty -51,044,430 -44,024,039 -51,764,196 -9,611,427
Allowance for Doubtful Account -23,641,148 -50,177,873 -41,274,146 -34,234,587
Impairment Expense for Aset and
Inventory -45,046,450 -7,401,010
Amortization Expense of Goodwill -2,512,241 -2,512,241
Gain of divestment 0 67,753,928
Tax expenses based on SKP 0 -40,860,172
Others - Net -6,154,769 -21,783,740 -28,092,939 -2,285,430
Total Other Income (Expense) - Net -52,664,292 -31,515,351 -136,841,999 -4,285,177
PROFIT BEFORE INCOME TAX 187,947,680 256,414,877 348,108,992 473,326,034

Income tax (expense):

current tax -40,351,800 -72,726,644
final tax -123,866,051 -132,424,893
non final tax -37,459,198 -38,756,677
deffered tax -3,973,255 -9,034,916 19,740,201 9,096,786
total income (expense) tax -44,325,055 -81,761,560 -141,585,048 -162,084,784

NET INCOME BEFORE MINORITY

INTEREST 143,622,625 174,653,317 206,523,944 311,241,250

MINORITY INTEREST ON GAIN OF ITS

SUBSIDIARIES -14,483,717 -18,618,922 -17,301,869 -26,319,058
NET PROFIT (INCOME) 129,138,908 156,034,395 189,222,075 284,922,192

NET EARNING PER SHARE 45.09 26.75 33.37 50.15

------------------------------------- WIJAYA KARYA INCOME STATEMENT -----------------------------------------------------------------

-------------------------------------WIJAYA KARYA BALANCE SHEET-------------------------------------------------------------------------

BALANCE SHEET
(in thousands IDR) 2007 2008 2009 2010
Asset
Current Asset:
Cash and Cash Equivalent 1,364,820,703 1,051,432,167 1,210,888,160 1,227,704,869
Trade Receivables
Related Parties 104,453,064 205,518,435 222,215,045 273,434,280
Third Parties 494,781,463 833,583,556 649,855,711 626,256,102
Retention Receivables 235,278,298 352,172,831 404,839,180 452,291,797
Due From Customer 572,831,043 706,972,814 643,983,981 934,907,382
Accrued Income 55,248,549 60,224,624 122,631,965 119,481,480
Other Receivables 40,539,682 85,800,618 76,428,845 70,107,915
Inventories 464,468,902 1,350,022,508 1,044,472,772 853,256,824
Advance 166,882,405 234,276,781 181,772,149 148,378,298
Prepaid Tax 106,747,821 203,677,628 226,343,376 181,860,903
Prepaid Expense 80,454,783 146,172,362 177,479,831 178,850,207
Business Guarantee 813,170 75,983 1,619,382 56,142,824
Total Current Assets 3,687,319,883 5,229,930,307 4,962,530,397 5,122,672,881

Non-Current Asset:
Deferred Tax Assets 6,597,280 0 12,495,893 21,592,680
Investment in Associates 1,708,240 19,708,510 121,508,510 150,108,294
Land for Development 3,441,729 21,589,497 66,123,559 69,622,513
Fixed Assets 245,500,972 335,877,846 332,207,429 405,546,470
Joint Operation Fund Deposits 119,604,768 94,753,932 142,774,616 434,184,903
Goodwill 0 12,561,205 10,048,964 7,536,723
Other Assets 68,890,973 57,002,513 52,924,232 75,040,438
Total Non Current Assets 445,743,962 541,493,503 738,083,203 1,163,632,021

TOTAL ASSETS 4,133,063,845 5,771,423,810 5,700,613,600 6,286,304,902

Liabilities and Equity

Current Liabilities:
Short-term loans 175,994,348 603,838,743 116,734,550 87,272,013
Trade Payables
Third Parties 943,748,570 1,285,670,315 1,143,273,651 1,013,582,454
Related Parties 29,991,077 21,326,789 59,515,116 207,453,500
Other Payables 44,087,972 32,894,938 26,737,623 56,935,127
Due to Customer 4,389,806 386,430 18,144,602 32,563,724
Tax Payables 51,472,128 106,675,119 207,151,667 144,603,233
Advance from Customers 17,162,123 74,868,631 121,441,112 61,759,720
Accrued Expenses 702,758,077 842,852,650 986,086,634 1,345,264,219
Unearned Revenue 262,352,797 652,072,975 756,439,593 692,592,786
Total Current Liabilities 2,231,956,898 3,620,586,590 3,435,524,548 3,642,026,776

Non-Current Liabilities:
Long-term loans 0 3,718,383 0 276,226,938
Employee benefits liabilities 934,489 8,037,914 12,002,917 19,019,154
Advance for long-term projects 544,013,001 665,257,512 617,371,349 432,264,090
Long-term bank loan after
reduced by one-year due part 0 6,426,000 0 0
Total Non-Current Liabilities 544,947,490 683,439,809 629,374,266 727,510,182

MINORITY INTEREST 64,947,389 82,756,205 102,773,556 115,144,163

Equity:
Share Capital 584,615,400 584,615,400 584,636,750 600,154,050
Treasury Stock 0 -12,744,800 -17,668,650 -17,668,650
Additional Paid-in capital 577,339,779 565,877,973 564,159,304 602,311,833
Changes in equity of subsidiary
company 0 0 8,813,220 8,813,220
Foreign exchange of translation of
financial statement 0 0 6,983,190 -439,417
Retained earnings 129,256,889 246,892,633 386,017,420 608,452,745
Total Equity 1,291,212,068 1,384,641,206 1,532,941,234 1,801,623,781

LIABILITY AND EQUITY 4,133,063,845 5,771,423,810 5,700,613,604 6,286,304,902

 ----------------------------------------ADHI KARYA INCOME STATEMENT--------------------------------------------------------------------

Income Statement 2007 2008 2009 2010

Net Sales 4,973,866,812,831 6,639,941,610,900 7,714,613,580,798 5,674,980,407,618

Cost of Sales -4,516,923,770,409 -6,095,668,546,767 -7,059,134,834,802 4,964,348,195,778
Gross Profit before JO Project 456,943,042,422 544,273,064,133 655,478,745,996 710,632,211,840
JO Project Profit/Loss 38,513,100,379 28,247,588,295 96,401,449,417 58,478,145,306
Gross Profit 495,456,142,801 572,520,652,428 751,880,195,413 769,110,357,146

Operating Expenses:
Sales Expense -22,115,787,956 -18,344,183,582 -16,688,716,364 -16,975,162,082
General and Administration
Expense -182,245,941,435 -186,268,714,706 -198,372,128,244 -201,300,768,603
Total Operating Expense -204,361,729,391 -204,612,898,288 -215,060,844,608 -218,275,930,685
Operating Income 291,094,413,410 367,907,754,140 536,819,350,805 550,834,426,461

Other Income (expenses):

Financial Expenses -144,310,612,188 -23,663,379,442 -25,444,788,651 -25,429,113,414
Interest Income 4,819,128,258 4,565,040,329 2,400,749,640 13,327,019,038
Gain (Loss) in Foreign Exchange
9,794,627,605
- Net 3,822,287,723 -12,779,730,761 -2,091,079,379
Gain on Disposal of Fixed Assets 5,122,049,839 374,199,877 44,398,449,174 0
Bad Debt Expenses -22,312,823,050 -146,955,698,236 -51,432,153,677
Interest Expense and Penalty -106,289,369,109 -107,845,979,596 -107,312,461,479
Allowance for Doubtful Account 0 -96,151,180,468
Impairment Expense for Asset
and Inventory 0 0
Amortization Expense of
Goodwill 0 0
Gain of divestment 0 0
Tax expenses based on SKP 0 0
Others - Net 15,603,370,391 39,380,321,466 -76,916,906,491 -12,357,260,021
Total Other Income (Expense) -
Net -137,256,599,027 -245,368,615,876 -205,046,001,996 -230,014,075,723
PROFIT BEFORE INCOME TAX 153,837,814,383 122,539,138,264 331,773,348,809 320,820,350,738

Income tax (expense):

current tax -47,066,917,510 -69,464,993,715 -156,787,818,519 -128,427,480,739
final tax
non final tax
deffered tax 6,140,121,416 29,920,215,829 -12,061,771,384 -2,199,307,656
total income (expense) tax -40,926,796,094 -39,544,777,886 -168,849,589,903 -130,626,788,395

NET INCOME BEFORE

MINORITY INTEREST 112,911,018,289 82,994,360,378 162,923,758,906 190,193,562,343

MINORITY INTEREST ON GAIN -1,309,614,777 -1,511,865,370 2,605,974,346 -709,923,732

OF ITS SUBSIDIARIES

NET PROFIT (INCOME) 111,601,403,512 81,482,495,008 165,529,733,252 189,483,638,611

Basic Earning Per Share

Operating Income 161.6 207.88 305.49
Net Income (Loss) 61.96 46.04 94.2

-----------------------------------------ADHI KARYA BALANCE SHEET--------------------------------------------------------------------------

BALANCE SHEET
2007 2008 2009 2010
Asset
Current Asset:
Cash and Cash Equivalent 784,297,751,668 364,904,002,740 306,902,360,957 242,117,620,949
Temporary investment 2,290,171,047 858,577,487 280,551,677 2,006,411,315
Trade / Account Receivables
Related Parties 184,867,176,500 374,740,551,501 352,427,308,521 632,875,562,112
Third Parties 592,040,995,052 741,518,078,060 980,653,403,067 459,855,763,471
Retention Receivables 269,848,702,532 306,740,218,158 373,942,452,505 455,586,809,149
Progress Billing 1,418,000,696,160 1,596,243,555,074 1,906,832,729,061 1,502,004,187,452
Other Receivables 44,290,263,509 53,695,604,276 82,255,357,000 109,068,930,959
Inventories 264,230,912,130 580,233,658,847 510,173,578,566 61,766,216,479
Advance Payment 155,514,016,810 315,173,029,215 262,274,229,893 117,155,249,952
Prepaid Tax 168,917,930,125 197,925,564,929 344,309,437,173 124,974,546,640
Prepaid Expenses 68,358,310,391 120,943,570,991 84,314,953,183 236,421,213,184
Total Current Assets 3,952,656,925,924 4,652,976,411,278 5,204,366,361,603 3,943,832,511,662

Non-Current Asset:
Deferred Tax Assets 18,775,827,497 50,047,081,779 2,745,561,549 0
Deferred Charge 2,318,279,987 3,306,440,418 17,796,498,764 15,447,866,585
Investment in Associates 73,460,010,001 61,947,516,238 61,545,255,165 0
Long-term investment /
0
Property Investment 0 0 44,227,628,066
Due from Employee 2,119,042,504 0 0 0
Related Parties Receivables
Real Estate Assets
Fixed Assets
Joint Operation Fund
Deposits
Investment in Progress
Land non developed
Warranties
Other Assets
Total Non Current Assets
Total Assets before
discontinued operation
Discontinued operation
Assets
TOTAL ASSETS
Liabilities and Equity
Current Liabilities:
Short-term (bank) loans
Trade / Account Payables
Third Parties
Related Parties
Other Payable
Related Parties
Third Parties
Tax Payables
Contracts Advances
Advance from Customers
Accrued Expenses
Retention Payables
Current Maturities of Long-
term Payables
obligation loans
Retention Loans
Leasing
Unearned Revenue
Ongoing Expenses
Total Current Liabilities
Non-Current Liabilities:
16,320,737,207 9,811,941,013 253,438,896,863
0 0 0 294,653,470,110
147,232,941,546 166,809,583,460 128,128,294,785 186,401,376,095
50,120,498,347 87,129,744,489 80,870,374,694 169,621,913,092
73,835,237,021 80,901,895,289 118,306,055,671 0
0 0 0 11,685,761,634
6,181,057,476 3,941,680,072 3,933,327,527 0
6,467,528,975 1,987,451,290 1,950,664,622 8,386,778,168
380,510,423,354 472,392,130,242 425,087,973,790 983,863,690,613
4,333,167,349,278 5,125,368,541,520 5,629,454,335,393 4,927,696,202,275
0 0 0 0
4,333,167,349,278 5,125,368,541,520 5,629,454,335,393 4,927,696,202,275
311,147,285,951 217,249,868,999 353,740,840,321 304,032,612,796
1,550,587,426,451 2,297,521,458,628 2,721,533,277,856 2,130,987,236,953
77,177,114,217 58,083,385,179 128,185,237,843 83,246,706,913
29,159,804,001 9,065,341,480
69,518,995,269 6,949,442,440
10,845,173,200 73,281,244,068
30,037,350,788 42,143,681,688 48,079,807,415 74,492,267,233
781,990,686,954 926,155,865,245 548,588,874,220 525,472,069,150
17,474,200,768
166,579,850,225 179,709,287,486 249,232,795,285 0
111,706,093,835
199,537,434,338 0 0 0
73,622,132,081 97,957,864,643 139,789,555,629 0
7,105,252,671 0 0
37,859,615,548 54,777,646,775 93,599,048,553 0
0 0 0 196,342,541,974
3,268,543,873,754 3,963,050,896,862 4,352,268,432,391 3,450,703,172,062
Related Parties Payables 0 0 0 31,223,577,383
Bank Loans 0 0 0 40,000,000,000
Retention Payables 10,398,139,263
Long-term contract advances 8,902,895,376 47,275,103,058 0 2,519,480,567
other long-term payables
(net of current maturities) 0 0 14,742,419,075 0
Bonds Payable 497,831,438,029 498,313,340,689 498,795,243,349 499,298,167,869
Post Employment Benefit
Liabilities 12,533,612,469 16,829,644,728 22,775,230,327 25,798,691,637
Total Non-Current Liabilities 519,267,945,874 562,418,088,475 536,312,892,751 609,238,056,719
TOTAL LIABILITIES (before
discontinued operation) 3,787,811,819,628 4,525,468,985,337 4,888,581,325,142 4,059,941,228,781
Discontinued operation
liabilities 0 0 0 0
Minority Interest in
subsidiaries 14,120,869,248 15,620,366,544 9,673,350,312 6,641,489,449

Shareholders Equity
Equity 180,132,000,000 180,132,000,000 180,132,000,000 180,132,000,000
Additional Paid-in capital 19,143,631,284 19,143,631,284 19,143,631,284 19,143,631,284
Revaluation increment in
fixed assets 904,419,699 904,419,699 904,419,699 0
Difference Restructuring of
Entities Under Common
Control 3,232,427,011 3,232,427,011
Difference in Foreign
Currency Transalation 0 5,922,563,820 8,668,848,822 -65,683
Retained earnings 331,054,609,419 384,320,075,836 528,868,066,623 0
Treasury Stock 0 -6,143,501,000 -9,749,733,500 -9,749,733,500
Profit Balance
Defined Utilization 0 0 0 481,318,807,376
Not Defined Utilization 0 0 0 187,036,417,557
Total Equity 531,234,660,402 584,279,189,639 731,199,659,939 861,113,484,045

LIABILITY AND EQUITY 4,333,167,349,278 5,125,368,541,520 5,629,454,335,393 4,927,696,202,275

FINANCIAL RATIO CALCULATION:

1. Liquidity Ratios
2007
Current Ratio = Current Assets / Current Liabilities
= 3,687,319,883 / 2,231,956,898
= 1.652

Quick Ratio = (Current Assets – Inventory) / Current Liabilities

= (3,687,319,883 - 464,468,902) / 2,231,956,898
= 3,222,850,981 / 2,231,956,898
= 1.444
Current Ratio:

To assessing the company’s ability to pay its bills is by comparing the size of its current assets to
the size of its current liabilities.

Obviously, the higher the current ratio leads to the higher the likelihood that a firm will be able
to pay its bills. From creditor’s point of view, higher is better.

From the shareholders’ point of view, it is not always showing as a better result. Because
current assets usually have a lower expected return than do fixed assets, therefore the
shareholders prefer to see just the minimum amount of the company’s capital is invested in
current assets.

But, too little investment in current assets could be disastrous for creditors and owners of the
firm because there will be the difficulties to pay the bills and the company will not have
sufficient source of cash funds to run its daily business.

Quick Ratio:

2. Debt Management Ratios ( or Leverage / Gearing Ratios )

Note:
* : Operating Income or EBIT

2007
Debt ratio = Debt (Total Liabilities) / Total Assets
= 2,776,904,388 / 4,133,063,845
= 0.672
 Times Interest Earned (Interest
Operating Income*/Interest
Coverage Ratio) =
= 240,611,972 / -40,511,111
= -5.939

3. Asset Management Ratios

Notes:
DSO = Days Sales Outstanding
AR = Account Receivables
* : some analysts use ‘Cost of Goods Sold’

2007
Account Receivables Days = DSO = AR / (Sales/365)
= 875,052,507 / 11,738,578.69
= 74.545

Inventory Turnover = Sales* / Inventory

= 3,925,624,207 / 464,468,902
= 8.452

Total Asset Turnover = Sales / Total Assets

= 4,284,581,223 / 4,133,063,845
= 1.037

4. Profitability Ratios
2007
Gross Margin = Gross Profit / Sales
= 376,306,390 / 4,284,581,223
= 0.088

Operating Margin = EBIT / Sales

= 228,458,791 / 4,284,581,223
= 0.053

Net Profit Margin = Net Income / Sales

= 129,138,908 / 4,284,581,223
= 0.030

ROA = Net Income / Total Assets

= 129,138,908 / 4,133,063,845
= 0.031
 ROE = Net Income / Total Equity
= 129,138,908 / 1,291,212,068
= 0.100

5. Market Value Ratios (or Market Multiple Ratios)

Completed Ratio Worksheet for Wijaya Karya

WIJAYA KARYA

Completed Ratio Worksheet for Wijaya Karya

Ratio 2010 2009 2008 2007

Liquidity
Current Ratio 1.407x 1.444x 1.444x 1.652x
Quick Ratio 1.172x 1.140x 1.072x 1.444x
Debt Management Ratio
Debt Ratio 69.51% 71.31% 74.57% 67.19%
Times Interest Earned
24.744x -22.718x 29.624x -5.939x
(Interest Coverage Ratio)
Assets Management Ratio
Account Receivables Days
(DSO) 86.18 days 74.95 days 82.20 days 74.55 days
Inventory Turnover 6.317x 5.714x 4.528x 8.452x
Total Asset Turnover 0.958x 1.156x 1.136x 1.037x
Profitability Ratio
Gross Margin 11.18% 9.80% 6.75% 8.78%
Operating Margin 7.54% 5.61% 3.76% 5.33%
Net Profit Margin 4.73% 2.87% 2.38% 3.01%
ROA 4.53% 3.32% 2.70% 3.12%
ROE 15.81% 12.34% 11.27% 10.00%
Market Value Ratio
2.099x 1.449x 2.449x 3.079x
Price to Book Value
12.562x 11.387x 21.682x 15.081x
PER
 Current Ratio
1.700x
1.650x
1.600x
1.550x
1.500x
1.450x Current Ratio
1.400x
1.350x
1.300x
1.250x
2007 2008 2009 2010

Debt Ratio
76.00%
74.00%
72.00%
70.00%
68.00% Debt Ratio
66.00%
64.00%
62.00%
2007 2008 2009 2010
 Account Receivables Days (DSO)
88.00 days
86.00 days
84.00 days
82.00 days
80.00 days
78.00 days Account Receivables
76.00 days Days (DSO)
74.00 days
72.00 days
70.00 days
68.00 days
2007 2008 2009 2010

Inventory Turnover
9.000x
8.000x
7.000x
6.000x
5.000x
4.000x Inventory Turnover
3.000x
2.000x
1.000x
0.000x
2007 2008 2009 2010
 Total Asset Turnover
1.400x

1.200x

1.000x

0.800x

0.600x Total Asset Turnover

0.400x

0.200x

0.000x
2007 2008 2009 2010

ROA
5.00%
4.50%
4.00%
3.50%
3.00%
2.50%
ROA
2.00%
1.50%
1.00%
0.50%
0.00%
2007 2008 2009 2010
 ROE
18.00%
16.00%
14.00%
12.00%
10.00%
8.00% ROE
6.00%
4.00%
2.00%
0.00%
2007 2008 2009 2010

Price to Book Value

3.500x

3.000x

2.500x

2.000x

1.500x Price to Book Value

1.000x

0.500x

0.000x
2007 2008 2009 2010
 PER
25.000x

20.000x

15.000x

PER
10.000x

5.000x

0.000x
2007 2008 2009 2010

Completed Ratio Worksheet for Adhi Karya

ADHI KARYA

Completed Ratio Worksheet for Adhi Karya

Ratio 2010 2009 2008 2007

Liquidity
Current Ratio 1.143x 1.196x 1.174x 1.209x
Quick Ratio 1.125x 1.079x 1.028x 1.128x
Debt Management Ratio
Debt Ratio 82.39% 86.84% 88.30% 87.41%
Times Interest Earned
-5.861x -5.091x -3.617x 60.404x
(Interest Coverage Ratio)
Assets Management Ratio
Account Receivables Days
(DSO) 106.60 days 84.66 days 81.17 days 80.06 days
Inventory Turnover 80.373x -13.837x -10.506x -17.095x
Total Asset Turnover 1.152x 1.370x 1.296x 1.148x
Profitability Ratio
Gross Margin 13.55% 9.75% 8.62% 9.96%
Operating Margin 7.31% 5.67% 3.38% 3.00%
Net Profit Margin 3.34% 2.15% 1.23% 2.24%
ROA 3.85% 2.94% 1.59% 2.58%
ROE 22.00% 22.64% 13.95% 21.01%
Market Value Ratio
 1.443x 1.256x 4.316x 5.764x
Price to Book Value
6.399x 5.414x 30.408x 27.437x
PER

Du Pont Analysis
ROE is important to managers and investors. It is important what managers can do to improve
ROE of the firm and have knowledge what factors cause changes in ROE over time. According
to Wijaya Karya's ROE that we get from the above ratios, we can see that its ROE has smoothly
increased from 2007 through 2010.

Based on the Du Pont Analysis, ROA can be improved by increasing profitability through
expense reductions or by using assets more efficiently.

ROA = Net Income / Total Assets

= (Net Income / Sales ) * (Sales / Total Assets)

it is measured by Net Profit Margin (Profitability) and Total Assets Turnover (the efficiency of
asset usage). The amount of leverage that a firm uses is the link between ROA and ROE.

ROE = Net Income / Equity

= (Net Income / Total Assets) / (1-(total debt/total assets))

= ROA / (1-(total debt/total assets))

This formula is showing that ROE is a function of the firm's ROA and the Total Debt Ratio.

Here is another form of ROE:

ROE = (Net Profit Margin x Total Asset Turnover) / (1-Total Debt Ratio)

Wijaya Karya vs Adhi Karya

ROA --> From 2007 up to 2010, ROA of Wijaya Karya always be higher than ROA of Adhi
Karya. It indicates that Wijaya Karya has proved to use its assets more effieciently to generate
profitability from its sales or more able to reducing its expenses than Adhi Karya has been doing
during that period of time.

ROE --> From 2007 up to 2010, ROE of Wijaya Karya always be lower than ROE of Adhi
Karya. It indicates that compared to its peer, to run the business Wijaya Karya is less in using
debt in its capital than what Adhi Karya did (Adhi Karya is using more debt).
Financial Distress Prediction

By using original Z-score model, we will place the company into one of two or more groups
depending on the score, such as: group 1 is predicted to be bankrupt soon, group 2 is predicted to
be in the secured zone and stably, for some reason there is another one which is group 3 that fell
into a gray-zone. This model is known was created by Professor Edward Altman in 1968.

The level of credit risk amongst those groups is:

- Group 1: greatest credit risk

- Group 2: less credit risk than group 1, yet still higher credit risk than the group 3
- Group 3: the least one, means the most secure and safe one

Generally, the lower the Z-score, the higher the risk of financial distress (bankruptcy).

The original Z-score model for public companies:

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

X1 = Net Working Capital / Total Assets

X2 = Retained Earnings / Total Assets

X3 = EBIT / Total Assets

X4 = Market Value of all equity / book value of total liabilities

X5 = sales / total assets

This model is claimed to be accurate in using the cutoff point of 2.675:

The company with Z-score below 2.675 can reasonably be expected to experience
financial distress and possibly bankruptcy within the next year. The next even better predictive
ability is using cutoff point of 1.81. there are three ranges of Z-scores, each one for each group:

Group 1  Z < 1.81 : Bankruptcy predicted within one year

Group 2  1.81 < Z < 2.675 : Financial distress, possibly bankruptcy

Group 3  Z > 2.675 : No financial distress predicted

Finding the Wijaya Karya’s financial distress prediction

Net Working Capital (including cash)* = (Long-term debt + equity)-fixed assets

Market Value of all equity = Price per share * Number of shares outstanding

Book Value of total Liabilities = Current Liabilities + Non-Current Liabilities

 2010 2009 2008 2007
Net Working Capital* = Net Working Capital* = Net Working Capital* = Net Working Capital* =
1,672,304,249 1,200,733,805 1,058,907,743 1,045,711,096
X1 = X1 = X1 = X1 =
0.266023407 0.210632379 0.183474265 0.253011116

X2 = X2 = X2 = X2 =
0.096790206 0.067715065 0.042778462 0.031273867

X3 = X3 = X3 = X3 =
0.07222432 0.064809862 0.042744283 0.055275892

Market Value of all Market Value of all Market Value of all equity Market Value of all
equity = equity = = equity =
3,780,970,515,000 2,221,619,650,000 3,390,769,320,000 3,975,384,720,000
Book Value of total Book Value of total Book Value of total Book Value of total
Liabilities = Liabilities = Liabilities = Liabilities =
4,369,536,958,000 4,064,898,814,000 4,304,026,399,000 2,776,904,388,000

X4 = X4 = X4 = X4 =
0.865302331 0.546537504 0.787813318 1.43158862

X5 = X5 = X5 = X5 =
0.958102095 1.156166291 1.136474724 1.03665982
Z= Z= Z= Z=
2.170358126 2.045521285 2.030277815 2.425420189

2007Z = 2.170  1.81 < Z < 2.675

2008  Z = 2.046  1.81 < Z < 2.675

2009  Z = 2.030  1.81 < Z < 2.675

2010  Z = 2.425  1.81 < Z < 2.675

According to above consideration, from 2007 through 2010, Wijaya Karya is the
company that fit into group 2 (1.81 < Z < 2.675). It has some or bit of Financial distress, and
possibly could be bankruptcy if lack of balancing financial management. In short, so far the
company is assumed to be relatively stable.