DETERMINING THE OPTIMAL CASH CONVERSION CYCLE (CASE STUDY: PT SRIWAHANA ADITYAKARTA TBK)

• Main Author: Oktavia Utami, Ezza
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/74778
• Institution: Institut Teknologi Bandung

PT. Sriwahana Adityakarta Tbk (SWAT) is a paper and pulp company that manufactures corrugated cartons, paper cones, and paper tubes. SWAT has evolved from a simple manufacturer of corrugated boxes to a provider of corrugated packaging solutions that protecting a company's valuable goods, whether they are contained in lightweight containers or heavy-duty cartons. However, PT Sriwahana Adityapura Tbk's (SWAT) management of working capital is not yet optimal; this is the primary focus of this study. The cash conversion cycle (CCC) is one indicator that can be used to evaluate the effectiveness of a company's working capital management. In the past six years, SWAT's CCC has significantly outpaced the industry average and fluctuated unpredictably. To cope with these conditions, businesses must optimize their cash conversion cycle. The objective of this study is to help PT. Sriwahana Adityakarta Tbk (SWAT) get the most out of its CCC. The initial stage is to identify the business problem and explore it through a review of related news and journals. Secondary data from the financial statements of SWAT and the same sector companies was collected from 2017 to 2022. The analysis begins by identifying SWAT external conditions through PEST and Porter's Five Forces analysis, as well as internal analysis using the SWOT method and evaluation of financial ratios. The root cause of the problem is revealed through the Five Whys method, followed by proposed solutions using sensitivity and scenario analysis. This study concludes with conclusions and recommendations. Inventory is the most sensitive variable compared to receivables and payables, as determined by the sensitivity analysis. For optimal CCC, businesses must effectively manage inventory. The recommended business solution to reduce AAI and CCC is to optimize inventory by establishing minimal inventory turnover requirements. CCC will decline as AAI declines. Therefore, it is recommended that SWAT modify its inventory management to optimize its cash conversion cycle. This solution can generate a CCC of 215 days, which is better than before, and has the potential to increase the profitability of the business.