FINANCIAL FEASIBILITY STUDY OF FISH PROCESSING FACTORY OF PT. XYZ

• Main Author: Alfiyyah Fauzi, Intan
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/64691
• Institution: Institut Teknologi Bandung

PT. XYZ is a processor and exporter of Indonesia seafood products company specialize in fish processing, which includes collection until the whole cleaning process and trading activities. To support Indonesian government goals to enlarge export of Indonesia fisheries product in 2019, PT. XYZ supports all applicable processes and regulation set by the Indonesian government. To obtained one of the requirements, that is Hazard Analysis Critical Control Points (HACCP) certificates, PT. XYZ needs to have its fish processing factory. After a long process, the Board of Directors of PT. XYZ plans to do investment to build a fish processing factory. The investment project cost approximately IDR 5 billion, which the value is not a small amount for PT. XYZ. Based on the interview, the boards want to know the feasibility of this replacement investment project and its risk. However, the company have not done the financial feasibility analysis for this replacement project yet. Therefore, this study aims to determine whether the investment project is financially feasible or not. The research will analyze the financial feasibility using capital budgeting method. The data analysis of this research divided into five stages. It starts with constructing the pro forma financial statement for both conditions, with and without the replacement project, then calculating the incremental free cash flow of the firm (FCFF). After that, analyze financial feasibility by capital budgeting techniques, which are NPV, IRR, PI, payback period, and discounted payback period. Last, the risk analysis performed to strengthen the feasibility analysis. The analysis executed under two scenarios. The first scenario represents the condition of PT. XYZ which only have one product as their revenue, which is frozen fish. The second scenario represents PT. XYZ is generating other revenue streams, that provides whole cleaned fish processing service. Based on the calculation, it can conclude that under scenario B, the replacement investment project of PT. XYZ that build a new fish processing factory has the feasibility to be executed since all the criteria are met while scenario A is not feasible to be executed. It strengthens by the result of Monte Carlo simulation analysis under scenario B, which shows that the project has 100% accumulated probability of NPV higher than 0. This indicates the replacement investment project under scenario B has a very low risk