OVERCOME THE COMPANY’S CASH SHORTAGE THROUGH THE CASH CONVERSION CYCLE IMPROVEMENT APPROACH AND A SPECIAL FUNDING STRATEGY

• Main Author: Harun A R, Mochamad
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/35296
• Institution: Institut Teknologi Bandung

The goal of each company is to keep the business running smoothly, even grow and develop in accordance with the expectations of all share holders and company stakeholders. These hopes must be fought through various efforts and methods such as by maintaining the liquidity of the company's finances so that it can continue to finance the company's operations, finance working capital expenditures even for investment spending for the company's growth and development. PT. Dirgantara Indonesia (persero) / PTDI as a strategic state-owned enterprise (BUMN), like most business entities must be able to run the company to fulfill and be feasible on a business basis and carry out a special task as a strategic industry that is meeting the needs of the country's main defense systems (alusista) , developing aircraft products as well as supporting tools and systems for special mission purposes and also having the obligation to encourage domestic supporting businesses to progress and develop. But on the other hand the condition of the company is trying to survive by making improvements through a restructuring and revitalization program. The purpose of this final project is to find root cause and provide recommendations regarding the financial condition of companies that experienced cash shortages in certain months throughout 2018 experienced by PTDI and found crucial factors as the cause of the cash shortage, using the 5 why's method to find root cause of problems and financial planning to see business prospects and budget plans to determine funding that is appropriate to the business nature of PTDI to support the promising business prospects. Using the analysis of working capital management through the cash conversion cycle measured the length of time it takes PTDI to generate cash from working capital invested and sharpen the root cause of the cause of the problem where the Average Age of Inventory shows low performance, as a result of long lead time production process. Business solutions for business issues in the final project are identified The crucial factor that causes cash shortages in certain months is the long lead time of the effective contracts, the long lead time of the production process, and the pattern of payments that accumulate at the end of the contract period. The root of the problem is supported by the suggested initiative to improve Cash Conversion Cycle Performance by accelerating the production process lead time through 22 initiatives including improvement of the procurement process through procurement initiatives through Global Purchase Agreement (GPA) and Vendor Managed Inventory (VMI) and recommendations for effective funding sources to finance the company's operational activities by proposing the project funding strategy uses bank and non-bank facilities using the underlying project.