PREDICTING FINANCIAL DISTRESS USING THE ZMIJEWSKI MODEL IN MANUFACTURING COMPANIES WITH HIGH ESG SCORES

Abstract

This study analyzes the ability of the Zmijewski Model to predict financial distressThis study examined manufacturing companies with high ESG scores on the Indonesia Stock Exchange for the 2021–2023 period. The data used included audited financial reports to calculate ROA, Debt Ratio, and Current Ratio, as well as ESG Risk Ratings Sustainalytics scores. The sample consisted of 14 companies per year with a total of 42 observations. The analysis was conducted through X-Score calculations, healthy or distress classification, and prediction accuracy testing. The results showed that all companies had negative scores (X < 0) and were therefore categorized as healthy. The Zmijewski model achieved 100 percent accuracy without error, proving its effectiveness in identifying non-distress conditions. These findings also confirm that although some companies fall into the Severe Risk ESG category, this does not necessarily imply financial distress, so the Zmijewski model remains relevant for use in the context of manufacturing companies with high ESG scores.