ANALYSIS OF USING RISK AND CAPITAL BUDGETING FOR INVESTMENT DECISION MAKING IN SINI COMPANY

• Main Author: Millah Syahidah, Tsaniya
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/48883
• Institution: Institut Teknologi Bandung

This research focuses on the SINI Company. SINI Company is a device tracker technology-driven startup company. SINI Device Tracker is proposing to customers that are travelers and entrepreneurs who are often losing their products. SINI's target market covers those who live near Jakarta, Bekasi, Bandung, and Malang. SINI came up with a market solution that is a device tracker linked by application to the smartphone. The device size is as small as a coin, and it can be put in the pocket, purse, and passport case. The application is connecting to the device is now already out for Android users, and SINI is currently developing the application for iOs users. Risk implications may include loss or damage to properties, loss of income, disruption of service levels, overruns of costs, delays in scheduling, poor process performance, sustained losses, cost of repair expenses, accidents, or combinations thereof. (Tummala & Schoenherr, 2011). As a startup that has put a significant amount of investment, SINI does not put a considerable effort into analyzing the risk before. The decision on capital budgeting is one of the big decisions to be made by financial managers, as it impacts the valuation of the company (Ahmed, 2013). The purpose of this research is to describe and explain the risk analysis and capital budgeting for SINI Company. At this stage in the study, the risk analysis and capital budgeting will be generally defined as a guideline for investment decision making in SINI Company. In order to reach the goals, this research will use the theory problem root cause, internal and external business condition, risk analysis, capital budgeting, and decision making. This research uses a problem-solving format. By using the historical data of SINI financial data, they are added with comparation secondary data from the company in a similar specification with SINI, like Tile and Chipolo, market situation secondary data, and data from the previous study. At this stage in the study, the risk analysis and capital budgeting will be defined as a guideline for investment decision making in SINI Company. Given the method of analyzing the risk, the results are that SINI is currently facing six risks. With an organized maintenance protocol and standard and disciplined timeline, the risks can be minimized. By using the analysis of capital budgeting, the result is that the current investment project in SINI can be approved, but with a great effort on managing the increasement of production capacity and exposure marketing strategy to support the level of sales projection to be realized. The guideline for investment decision making in SINI Company will use the consideration parallelly from the analysis of risks and capital budgeting. This research can be a further analysis of SINI’s finance. Also, it can be a benchmark for startups that have uncertainty on their investment using analysis of risk and capital budgeting. A new study needs to analyze the capital structure, solidity of the team, psychologically business owner risk-taking type to determine the investment decision making better.