FINANCING STRATEGY TO SUPPORT REQUIRED BUSINESS GROWTH (STUDY CASE: NERTUR)
NerTur targets an annual revenue of IDR 7.5 billion by 2025. To achieve the target, the required growth rate at 70.17% annually is pretty high. However, the actual growth of the company in 2022 at 81.19% outperforms its sustainable growth rate at 29.28% and it seems achieveable but it requires aggre...
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| Format: | Theses |
| Language: | Indonesia |
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| Online Access: | https://digilib.itb.ac.id/gdl/view/71008 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | NerTur targets an annual revenue of IDR 7.5 billion by 2025. To achieve the target, the required growth rate at 70.17% annually is pretty high. However, the actual growth of the company in 2022 at 81.19% outperforms its sustainable growth rate at 29.28% and it seems achieveable but it requires aggressive expansion across operating systems, inventory, and marketing. Business growth cannot exceed the SGR over an extended period as the growth rate will be held back by the lack of capital and requires financing strategy by considering to changing the capital structure.
NerTur with zero debt has positive leverage to decide the financing strategy. The company observes to other comparable companies to decide the metrics and the value to select the financing strategy. In this research, we compare three commonly used financing strategies: equity financing, debt financing, and mixed financing. The metrics and requirements are the debt-to-equity ratio at a maximum of 17%, the current ratio at a minimum of 2.25, and maximal Return on Equity.
The selected option is the mixed financing strategy due to being able to meet all of the requirements even though the option did not have the cheapest option or the highest return on equity. The mixed financing strategy consists of full debt financing in the year 2023 and 2024 with low interest rate, while in the year 2025, the financing strategy is a combination between equity and debt. NerTur shall sell a maximum of 5.72% of its shares that brings capital at least equal to IDR 329 million and the remaining capital of IDR 329 million shall be raised through a bank loan with low-interest rates.
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