ASSESSING THE FINANCIAL FEASIBILITY STUDY OF CV. TBSI’S NEW BRANCH

• Main Author: Natanael, Richard
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/73254
• Institution: Institut Teknologi Bandung

The automotive industry in Indonesia grows every year. In 2022, Indonesia has produced more than 5.22 million units of motorcycles. This creates a bright future for Indonesia's motorcycle sector in particular. Established in 2000, CV. TBSI is a business engaged in the motorcycle spare parts industry in Tasikmalaya. After seeing the rapid growth of motorcycle users in Indonesia and the significant increase of their revenue, CV. TBSI wants to expand their business by creating a new branch in order to reach a wider market. This study aims to assess the financial feasibility study of the expansion project by CV. TBSI. Feasibility study is a study that is conducted to assess whether the project is profitable or not. This research begins by conducting projections from financial statements to estimate the CV. TBSI’s financial condition in the future. This research was made using capital budgeting analysis. The capital budgeting analysis method uses indicators such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period. This study also aims to assess risk in capital budgeting by using sensitivity analysis. Risk analysis was carried out to support the feasibility analysis. Expansion project carried out by CV. TBSI’s can be categorized as feasible. The calculation shows that the Net Present Value (NPV) of the project is positive valued. The payback period of CV. TBSI’s expansion project is faster than the maximum return period of 5 years. The Internal Rate of Return (IRR) is smaller than the Weighted Average Cost of Capital (WACC). In addition, the calculation of sensitivity analysis shows that the expansion project of CV. TBSI’s has a low risk and the NPV probability above 0 is 100% if the company can maintain the maximum total sales decrease is 1.9% and the minimum total payment to supplier increase is 2%.