INITIAL PUBLIC OFFERING AS A FINANCIAL SOLUTION FOR PT XYZ

• Main Author: Febrizal Imran - Nim: 29115697 , Muhammad
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/29198
• Institution: Institut Teknologi Bandung

<p align="justify">Currently, pre-caster companies are growing especially from SOEs. The existence of pre-caster from SOE does cause the decrease of share in standard product for private company such as PT XYZ. The revenue of PT XYZ Indonesia has decreased since 2014. Moreover, PT XYZ makes profit through high leveraging to keep competitive in the market. This time, most of PT XYZ’s debts come from current liabilities. Consequently, they have a very high short-term debt proportion from its long-term debt with the current ratio of 1.01 and quick ratio of 0.82 and a debt ratio of 80%. Looking at the condition of PT XYZ Indonesia’s short-term debt and debt ratio, there is a huge risk of financial distress when the economic downturn happens or the competition in the market gets heavier which potentially reduces company’s revenue. The issue is how to prevent PT XYZ from the risk of default by managing their liabilities regarding PT XYZ’s optimal capital structure. The author would like to evaluate the financial performance of PT XYZ, specifically, in terms of liabilities and capital structure. <br /> The research is conducted through several stages/steps and tools consisting of business situation analysis consist external and internal environment analysis, ratio analysis, strategies formulation and implementation plan. The PESTEL analysis and porter five forces are conducted to create external analysis. Through external analysis, it will give a picture of the current and future industrial situation. For internal analysis, through ratio analysis, PT XYZ’s operating and financial performance such as its efficiency, liquidity, profitability and solvency will be evaluated. The trend of these ratios over time will be studied to check whether they are improving or deteriorating. Ratios are also compared across different companies in the same sector. This analysis will be then incorporated into the SWOT analysis and it will generate TOWS matrix that will conduct the business model analysis. <br /> The root cause of that issue is there is poor working capital management which makes the cash ratio of PT XYZ is very small compared to the industry average. Furthermore, the high debt ratio which came from the short-term debt, poses a risk of default if PT XYZ doesn’t have sufficient cash on hand. The solution for this issue is by applying the pecking order theory to solve the problem in the working capital management and the capital structure. First, by collecting the account receivables, which makes the biggest proportion in current assets, then using factoring to aid in collecting the receivables and use the cash generated from it to make the payment for the account payable which is the biggest portion in shortterm debt. Second, since it is not sufficient, PT XYZ should skip the option to increase the debt since its debt to equity ratio is already beyond the 4:1 ratio which enacted by the Ministry of Finance in 2016 and jump directly to the option of raising capital by using Initial Public Offering. <br /> The biggest amount comes that PT XYZ should raise based on the scenario conducted is Rp1,276,769,140,561 while the smallest amount is Rp1,227,096,762,876-. <p align="justify">