OPTIMAL CAPITAL STRUCTURE ANALYSIS TO IMPROVE CREDIT RATING (CASE STUDY: PT AGUNG PODOMORO LAND TBK).

• Main Author: Grenadi Priatna, Wildan
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/69682
• Institution: Institut Teknologi Bandung

The global economic crisis has substantially reduced corporate earnings in many sectors. It has triggered a credit rating downgrade in response to the harmful effects of business disruptions and economic slowdown in many sectors and regions, one of which is the property sector. Agung Podomoro Land, Tbk or APLN is one of the Indonesian real estate companies facing a credit rating downgrade. In 2021 Moody's Investors Service downgraded the APLN family of companies to Caa1 from B3. The credit rating downgrade reflects its reliance on asset sales & external funding to meet its cash needs. It also shows that its high leverage indicates that APLN's capital structure is not sustainable. This study provides alternative solutions for APLN to improve its credit rating and estimate the company's optimal capital structure. The optimal capital structure is the best mix of equity & debt financing that maximizes the firm's market value while minimizing its cost of capital. In the long term, using this method will increase the value of the company & provide benefits for shareholders. This study will also provide the financial strategy the company should apply to reach optimal capital structure in current conditions.