FINANCIAL FEASIBILITY STUDY OF PRINTING PLANT PROJECT (CASE STUDY OF RA PLANNER BOOK STORE)

• Main Author: Rumbianingrum, Wahyu
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/50348
• Institution: Institut Teknologi Bandung

RA Planner is a publisher company that create and publish printing product, their main product is yearly planner/journal and a baby journal. In 2018 with high demand RA Planner successfully printed planner book as much as 23,000 planner books and sold out With the analysis of the printing industry that is still experiencing growth and sales growth which is increasing every year, owner RA Planner is interested to do a plan to make a printing plant independently.The objective of this study is to analyze total investment needed, profitability, and risks of the project to create suggestion for investment decision. This study will use Discounted Cash Flow (DCF) model and its parameters for analyzing project’s profitability, Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PP), and Profitability Index (PI). In order to develop DFC model, author made free cash flow projections using FCFF approach. The financial model was based on many assumptions which are obtained from several perspectives and approaches. Risk analysis conducted using sensitivity analysis, scenario analysis, and Monte Carlo analysis. According to the financial feasibility analysis, the Net Present Value obtained from the calculation is 23,120,867,265 which is higher than IDR 0; the Internal Rate of Return is 18.55% which is higher than its Cost of Equity 15.88%; the Payback Period is 6 Profitability Index from this project is 1.97 which is more than the criteria must greater than 1. From these four parameters, it can be concluded that this projects is financially feasible. Financing required in this project is IDR23,948,192,488 which will be used debt financing 60%. Based on sensitivity analysis, variable that has the highest sensitivity is quantity sold realization and price per unit for product A (main product of RA Planner). In scenario analysis for risk assessment author used changes 40% on variables from sensitivity analysis to determine the NPV for best and worst scenario. The best scenario of this business can generate NPV of IDR36,404,815,900 and the worst-case scenario will result in NPV is IDR9,836,918,631. Monte Carlo Analysis using excel the average NPV generated is IDR 23,119,245,247. Because of RA Planner does not have a complete financial statement, the authors recommend to management RA Planner should begin to make financial reports in accordance with the financial standards to facilitate the analysis and evaluation of the company. RA Planner can also benchmark financial reports with similar companies to make good and correct financial reports. It will also be very helpful for RA Planner to monitor and manage the company's financial situation at any time. According to risk analysis, the most sensitive variables are products as the main source of revenue streams from RA Planner in which the planner book (Product A) and school textbook (Product B). The price and quantity of product A or B is very influential on the NPV results of this project. Therefore, author’s recommendation company should focus on the price and quantity of the product sold. At this time RA Planner on the type of book planner products only have 3 types of products namely annual book planner, financial planner, and my baby journal. Suggestion from the author is to add more product output from RA Planner by launching new products such as diet planner, wedding planner, etc. According to RA Planner's analysis also has many agents and resellers, so the authors suggest inviting any agent or reseller who has the idea to make new types of products in the form of books or planners can print their books in RA Planner and add value that will be assisted in terms of marketing and book sales