WORKING CAPITAL MANAGEMENT OF PT KRAKATAU STEEL

• Main Author: Wira Buwana, Andhika
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/49792
• Institution: Institut Teknologi Bandung

PT Krakatau Steel is the largest steel producer in Indonesia, which is one of the strategic industries in Indonesia. As one of Indonesia's state-owned enterprises, the company contributes to the development of the nation through the supply of steel to support infrastructure development and manufacture industry. The problem is PT. KS has a current ratio always below 1 with a downward trend which indicates that the company has a greater risk related with the payment of its short term obligations and not optimal in managing its working capital. The first step that should be done, PT. Krakatau Steel must implement financial planning as a function to control, monitor and evaluate the company's financial performance. Financial planning is expected to be able to control the company's financial performance so that the company has the ability to pay its debts that are past due and have sufficient working capit al for the company's operations. Company also requires scenario analysis to anticipate the company’s financial condition in different situations and able to develop the best scenario to save the company’s finances. To implement working capital management properly, PT Krakatau steel must reduce the value of the cash conversion cycle (CCC). the way is to implement inventory management and account receivable management correctly. For managing inventory, the target is to reduce inventory days by implementing the just in time principle and applying EOQ (Economic Order Quantity). For managing accounts receivable the target is to reduce the collection period by tightening credit standards and giving cash discounts. The results of the study show that reducing inventory days and collection periods has a major impact on increasing cash flow from operating activities because the cash conversion cycle has also decreased. Based on the calculation results for the financing strategy, companies are advised to use an aggressive strategy because the cost is cheaper than a conservative strategy. even with a big risk but the company's opportunity to increase profits is better.