FINANCING STRATEGY FOR A CONCRETE BLOCK COMPANY (CASE STUDY: COMPANY V)

• Main Author: A M Napitupulu, Grace
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/57602
• Institution: Institut Teknologi Bandung

The paving block industry is one of the many industries that is the basis of industrial and economic development in Indonesia. Paving blocks, which are one of the building material products made of cement and are used as an alternative cover or hardening of the soil. One of the problems faced by Company V is the capital problem in developing its business. Company V plans to submit business proposals related to capital funding to potential investors, in this case what is meant is angel investors and also an application for bank loan if it is needed. The basis for the business proposal is related to the strategic plan for the utilization of business opportunities, commitments to certain decisions, and financial projection. The financial feasibility study is conducted by measuring Net Present Value (NPV),Internal Rate of Return (IRR), and Payback Period (PP) which are the standard in making decisions. The research presents a capital structure of 60% debt and 40% equity that delivers the best financing alternative to the company. The results of debt financing strategy represent a NPV at 22.955.498.632 rupiah, Payback Period (PP) in 5 years a month, Internal Rate of Return (IRR) at 27,86%, Profitability Index (PI) at 2.92, and Return on Investment about 21.04% in ten years. Furthermore, the US index point shows more than 1 (3.43) which means the company should be financed by debt. As a complement to debt financing alternative, sensitivity analysis is being conducted with assumption the increase and decrease of each independent variables by 20%. The result shown the most significant variable on NPV shifting is price per unit realization and followed by quantity sold realization. This means sales of the product is the key point of the project.