MANAGING WORKING CAPITAL TO IMPROVE FINANCIAL PERFORMANCE (CASE STUDY AT PT PGI)

• Main Author: Syafira, Rakhmaliani
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/63975
• Institution: Institut Teknologi Bandung

PT PGI is one of the companies engaged in the fast-food restaurant industry and one of the pioneer fast food restaurants in Indonesia. Until 2020, the company has four trademarks namely CFC, Caldonat, Sapo Oriental, and Sugakiya. CFC is the company's largest line of business. The company experienced a decline in financial performance from 2018, and this was worsened by the COVID-19 outbreak in 2020. In 2020, the company reported a loss, and financial ratio analysis indicated that the company's performance in managing assets to create revenue had decreased during the previous three years. The increasing value of the company's Cash Conversion Cycle illustrates this. Therefore, the purpose of this study is to analyze the condition of the company, provide recommendations for financial planning to reduce company expenses, and provide recommendations for managing working capital to be more efficient. Several methods were used in each step of the research. The first step is analyzing the condition of the company in the industry using external analysis (PESTEL) and internal analysis (Financial Ratio). The results of the analysis show that PT PGI is still behind its competitors. The next step is to analyze the company's financial condition by analyzing several financial ratios, which are then carried out in three scenarios. The three scenarios are pessimistic, mostlikely, and optimistic scenarios. Financial ratios are then calculated using the results of the three scenarios' projections. The next step is the analysis of working capital management which is divided into three components: inventory, accounts receivable, and accounts payable. PT PGI must minimize the value of the Cash Conversion Cycle by applying inventory management (Economic Order Quantity, Just in time, and First in-First out) in order to achieve efficient working capital. Then, using standard credit selection, manage the turnover of trade receivables so that they are collected faster. Finally, through negotiating with suppliers, the corporation must manage accounts payable so that it may be paid for a longer period of time.