CREDIT RATING DOWNGRADED AND OPTIMAL CAPITAL STRUCTURE ANALYSIS: CASE OF PT. SRI REJEKI ISMAN
The COVID-19 pandemic has increased credit risk of many companies. The number of companies facing potential credit rating downgrades has reached all time high as rating drift plummeted to minus 22% in 2020. PT. Sri Rejeki Isman or Sritex is one of Indonesian textile and garment manufacturers that...
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| Format: | Theses |
| Language: | Indonesia |
| Subjects: | |
| Online Access: | https://digilib.itb.ac.id/gdl/view/56827 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | The COVID-19 pandemic has increased credit risk of many companies. The number
of companies facing potential credit rating downgrades has reached all time high
as rating drift plummeted to minus 22% in 2020. PT. Sri Rejeki Isman or Sritex is
one of Indonesian textile and garment manufacturers that also faces credit rating
downgrade. Moody’s credit rating agency downgraded Sritex’s from Ba3 to B1 per
December 2020. This credit rating downgrade may have negative impacts to the
firm performance due to the higher cost of financing. This research analyzes the
root cause of this credit rating downgrade and provide alternative solutions for
Sritex to upgrade its credit rating using financial performance and optimal capital
structure analysis. The findings show that the root causes are liquidity, profitability,
and efficiency, and financial leverage problems. This research suggests several
financial strategies that could be applied by Sritex improve its credit rating. The
research will provide implications to Sritex on managing through difficult
economic condition and debtholders on evaluating the financial condition of Sritex. |
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