REINSTALL FINANCIAL PERFORMANCE OF PT BARA
In 2022, the government of Indonesia release new regulations regarding the increment of royalty tariff which is double from the previous year. In addition, global politic condition made the oil price jumped significantly. Those situations force the company to evaluate the business condition and econ...
Saved in:
| Main Author: | |
|---|---|
| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/77177 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | In 2022, the government of Indonesia release new regulations regarding the increment of royalty tariff which is double from the previous year. In addition, global politic condition made the oil price jumped significantly. Those situations force the company to evaluate the business condition and economic value over the life of the contract. To evaluate the business condition, PESTEL Porter’s Five Forces, SWOT, and VRIO framework are used to assess the internal and external influencing factors. To evaluate the economic condition, the firm value using discounted cash flow is applied. The free cash flow approach using discounted method with weighted average cost of capital (WACC). The terminal value is not applicable as the company operation will cease in line with the termination date of the license, the asset will be returned to the government.
The result of the calculation is the present value of the firm plummet from the USD 43,7 million to USD 27,3 million. If royalty tariff remained 3%, the firm value increase to USD 39,4 million. The value incline because the company does not need to decrease the stripping ration then the coal sales keep going as planned. For the sensitivity analysis, the factors that considered are selling price, WACC, production cost and S&GA expense. the swing parameter is increase and decrease 5% and 20% from the current assumptions. The result of the calculation shown the production cost is prominent cost and decreasing of WACC will increase firm value.
|
|---|