ANALYSIS OF CASH CONVERSION CYCLE TO COMPANY LIQUIDITY & WORKING CAPITAL (CASE STUDY: PT. GISTEX INDONESIA)

• Main Author: RENDISEPTIAN AGFIYATNO, TEODORUS
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/53919
• Institution: Institut Teknologi Bandung

Indonesia textile industry in 2019 is under pressure due to the large number of imports entering the local market, which makes industrial sales depressed because it cannot compete in terms of price. This market pressure caused the performance and growth of the textile industry in Indonesia to decline. PT. Gistex, a company engaged in the textile industry, is also experiencing the same pressure as the industry. The company's poor performance can see the pressure within the company. This poor performance is reflected in the Cash Conversion Cycle Indicator, which is getting higher each period and the value of liquidity is decreasing. This liquidity decreased directly proportionally to the increase in the company's cash conversion cycle because it uses short-term loan alternatives to meet its operational capital needs. Cash Conversion Cycle should be a concern for the company, namely improving company performance and improving shareholder welfare. So it is important to find an improvement in the Cash Conversion Cycle for PT. Gistex so as to improve the welfare of the owner. The analysis is carried out to obtain an indicator of the target improvement for the company, namely by forecasting for 5 years with various different scenarios and adjusting to market conditions. Industry cash conversion cycle benchmarks are also important to look for as a reference for companies. The industry's Cash Conversion Cycle benchmark uses a population of listed companies on the stock exchange. The issuer's data and performance are looking for the Cash Conversion Cycle turnover rate for various aspects such as Receivable Turnover, Inventory Turnover and Payable Turnover. After obtaining the cash conversion reference figure, the forecast will see if the company uses a cash conversion cycle rate above the industry performance. As a reference, the company must improve, namely receivable turnover and inventory turnover. The improvement in terms of receivable and inventory turnover aspects based on industry performance will be used as a reference for companies in determining their business and management strategy. The results obtained after using these references are that the company can improve its performance in obtaining profitability, which is reflected by an increase in the percentage of Gross Profit, Net Income to Sales, Return on Assets and Return on Equity. There has also been an increase in indicators of Current Ratio, Quick Ratio and Debt to Equity Ratio in terms of the level of liquidity. Important for PT. Gistex to increase the cash conversion cycle so as to increase the shareholders welfare, the company must control, manage and monitor the driving factors of the cash conversion cycle.