OPTIMAL CAPITAL STRUCTURE ANALYSIS OF PT TRIPUTR AGRO PERSADA TBK

• Main Author: Samuel Aquila, Michael
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/77397
• Institution: Institut Teknologi Bandung

PT Triputra Agro Persada Tbk is a Crude Palm Oil (CPO) company that has operated in Indonesia since 2005. This company operates in Jambi, Central Kalimantan, and East Kalimantan. Since its inception, PT Triputra Agro Persada Tbk has continued to support CPO production in Indonesia. The company believes that the CPO industry in Indonesia has enormous potential in the future. The company can take advantage of this potential to make profits through CPO production. Therefore, the company continues to evaluate its production capacity. In 2023, PT Triputra Agro Persada Tbk will increase production capacity with an expansion plan that will cost IDR 900 billion. Currently, PT Triputra Agro Persada Tbk has a different capital structure from other competitors in the Indonesian CPO industry. This indicates that the company might not yet have an optimal capital structure. By having an optimal capital structure, the company is expected to be able to minimize the cost of capital and maximize the value of the company. The expansion plan with a cost of IDR 900 billion is expected to be a momentum for PT Triputra Agro Persada Tbk to carry out capital restructuring. This study applies M&M Theory Proposition II to find the optimal capital structure of PT Triputra Agro Persada Tbk. This study succeeded in finding that the company has an optimal capital structure with the lowest weighted-average cost of capital (WACC). Currently, the company has a proportion of 15% debt and 85% equity to total capital. Based on the results of this study, the optimal capital structure of the company is with a proportion of 89% debt and 11% equity to total capital. Previously, the company had a WACC of 13.71%. With an optimal capital structure, the company can have a WACC of 12.45%. In conclusion, this study shows that PT Triputra Agro Persada Tbk should have adjustments to the capital structure to get a proportion of 15% debt and 85% equity to total capital. This should be done so that the company can minimize the cost of capital and maximize the value of the company. The company should raise a budget of IDR 900 billion for an expansion plan in the form of debt because the company needs to increase the proportion of debt to total capital.