OPTIMAL CAPITAL STRUCTURE OF PT WASKITA KARYA (PERSERO) TBK

• Main Author: Hans, Nathanael
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/57758
• Institution: Institut Teknologi Bandung

PT Waskita Karya (PERSERO) Tbk. is one of the biggest construction companies in Indonesia. Currently, PT Waskita Karya (PERSERO) Tbk. only had a total amount of cash for 1,213 trillion IDR. It is not enough to pay the bond obligation due in September 2021 which is amounted to 1.661 trillion IDR. Currently, PT Waskita Karya (PERSERO) Tbk. has a Debt to Equity ratio of 332%, while based on the annual report of PT Waskita Karya, the stock and debt holders of PT Waskita Karya (PERSERO) Tbk. require PT Waskita Karya (PERSERO) Tbk. to have a debt-to-equity ratio below 300%. To solve both problems above, PT Waskita Karya (PERSERO) Tbk. needs to refinance its capital structure to get the lowest cost of capital of funds that will be used to pay the obligation of the bond and fulfill the contract requirements with the debtholders. This research will use the weighted average cost of capital (WACC) method, the cost of debt method that will be used is Damodaran (2020) cost of debt model, and the cost of equity method that will be used is the capital asset pricing model (CAPM). Currently, PT Waskita Karya has a capital structure consist of 33,75% equity, and 66.25% debt, which results in 14.958% in cost of capital, while the optimal capital structure of PT Waskita Karya consists of 69% of equity and 31% of debt, which results in 9.177% cost of capital. PT Waskita Karya needs to decrease its debt and increase its equity, by publishing common stocks or preferred stocks.