FINANCIAL PERFORMANCE AND WORKING CAPITAL MANAGEMENT ANALYSIS OF PT JAPFA COMFEED INDONESIA TBK FROM 2016-2021
PT Japfa Comfeed Indonesia Tbk (JPFA) is Indonesia's second largest livestock company which was also affected by the COVID-19 pandemic, as evidenced by a decline in profits throughout 2020. In 2016-2021, the company showed a fluctuating net profit, but this was not in line with an increasing tr...
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| Format: | Theses |
| Language: | Indonesia |
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| Online Access: | https://digilib.itb.ac.id/gdl/view/72541 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | PT Japfa Comfeed Indonesia Tbk (JPFA) is Indonesia's second largest livestock company which was also affected by the COVID-19 pandemic, as evidenced by a decline in profits throughout 2020. In 2016-2021, the company showed a fluctuating net profit, but this was not in line with an increasing trend in net sales. In terms of liquidity, the current ratio was also fluctuating. This is consistent with the fluctuations in the company’s Cash Conversion Cycle (CCC) as a component of working capital management. JPFA had a longer CCC in 2016-2018 than the market leader and a shorter one in 2019-2021. CCC is becoming longer each year when compared to the industry average. This demonstrates that the company's ability to convert sales into net profit is still inefficient, so an analysis of the company's financial performance and working capital management is required. This research aimed to provide recommendations on how the company can strengthen their financial performance and manage their working capital more efficiently in order to increase profitability.
This research began with an analysis of external conditions (PESTEL, Porter's Five Forces, Industry Performance Analysis, and Benchmarking) as well as the company's internal conditions. Furthermore, a SWOT analysis was carried out based on information obtained from external and internal analysis. JPFA's financial performance (liquidity, debt, and profitability ratios) continued to lag behind market leaders, and its activity ratio is lower than the industry average. Financial ratio analysis is performed and used to forecast the company's financial performance over the next six years. Furthermore, to increase net sales, the company must conduct below-the-line promotions and optimize its offline and online distribution channels so that the product can be easily reached by the consumers. In order to reduce CCC, an analysis of working capital management, including inventory, account receivables, and account payables, was carried out. Inventory turnover management is carried out by applying the EOQ and FIFO methods and can be optimized using the company's cloud services. Account receivables can be reduced by specifying a credit term that is shorter than the average payment period, providing discounts, applying factoring fees, and establishing a well-defined credit policy. Account payables can be reduced by negotiating with suppliers and farmers to extend the payment period by considering the strong relationship the company has established in the long run.
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