Performance, Planning and Forecasting - Group 2

Dewi Kusumawati Endang Supriyatna Finno Hadiwardoyo

Gustiaulia Nabila Herindra Airlangga Isti Paramesti

ACCOUNTING & FINANCE

 TOPIC

Performances & FS Analysis 01

Financial Planning 02
Financial Forecasting 03
 Performance
Chapter 01
& FS Analysis
Why do we evaluate a company’s performance?
How do we measure performance?
What are some tools/ratios to measure performance?
Chapter 01 Performance & FS Analysis

01 Performance Overview

02 Measuring Performance

03 Case Study
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Gustiaulia Nabila Retmono

Performance Overview: What is It?

• Objective of corporate finance: Maximize the current

value of shareholders’ investment in the firm
• Shareholder value depends on:
– Good investment decisions
– Good financing decisions
• To gauge a company’s financial performance, we can
derive ratios from quantitative data in financial
statement.
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Gustiaulia Nabila Retmono

Main Stakeholders Impacted

Internal
• Managers
• Employees

• Shareholders
External • Financial Institutions
• Stock market
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Gustiaulia Nabila Retmono

Measuring Performance At A Glance

Source: Fundamentals of Corporate Finance, 11th Edition

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Gustiaulia Nabila Retmono

Ratio Analysis

• Various ratios to examine different aspect of company’s

operations
• Divided into 5 categories, namely:
– Market value ratios;
– Profitability ratios; PR
– Liquidity ratios; LR
– Asset management ratios; AMR
– Debt management ratios; DMR
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Gustiaulia Nabila Retmono

Market Value Ratios

• Market value  Present value of the cash flow the firm is

expected to add in the future
• Tools and ratios as measure to:
– Evaluate the economic status of publicly traded companies and
– Identify stocks that may be over/under-valued, or priced fairly
• Drawbacks related to fluctuation and macro POV of company
performance
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Isti Pramesti

Market Value Ratio

• Market value added = Market Capitalisation – Book value of equity
• Market-to-Book Value Ratio is the ratio of stock’s market price to its book value 
How much value added for each dollar invested by shareholders
𝑀𝐴𝑅𝐾𝐸𝑇 𝑃𝑅𝐼𝐶𝐸 𝑃𝐸𝑅 𝑆𝐻𝐴𝑅𝐸
𝑀𝐴𝑅𝐾𝐸𝑇 𝑂𝑅 𝐵𝑂𝑂𝐾 𝑅𝐴𝑇𝐼𝑂=
𝑆𝐻𝐴𝑅𝐸 𝑂𝑈𝑇𝑆𝑇𝐴𝑁𝐷𝐼𝑁𝐺

• Price-to-Earning Ratio  Amount investors will pay for Rp 1 of current earnings

𝑃𝑅𝐼𝐶𝐸 𝑃𝐸𝑅 𝑆𝐻𝐴𝑅𝐸
𝑃𝑅𝐼𝐶𝐸 𝐸𝐴𝑅𝑁𝐼𝑁𝐺 𝑅𝐴𝑇𝐼𝑂=
𝐸𝐴𝑅𝑁𝐼𝑁𝐺 𝑃𝐸𝑅 𝑆𝐻𝐴𝑅𝐸
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Isti Pramesti

Profitability Ratio
• A group of ratio that show the combined effect of liquidity, asset management and
debt on operating result
• EVA/Residual income  Profit after deduction of all costs, including cost of capital

• Operating Margin  Measures operating income or EBIT, per Rp of sales

𝐸𝐵𝐼𝑇
𝑂𝑃𝐸𝑅𝐴𝑇𝐼𝑁𝐺 𝑀𝐴𝑅𝐺𝐼𝑁 =
𝑆𝐴𝐿𝐸𝑆
• Profit Margin: Measures net income per Rp of sales
𝑁𝐸𝑇 𝐼𝑁𝐶𝑂𝑀𝐸
𝑃𝑅𝑂𝐹𝐼𝑇 𝑀𝐴𝑅𝐺𝐼𝑁=
𝑆𝐴𝐿𝐸𝑆
• Basic Earning Power (BEP) Ratio: indicates the ability of the firm’s assets to generate income
𝐸𝐵𝐼𝑇
𝐵𝐴𝑆𝐼𝐶 𝐸𝐴𝑅𝑁𝐼𝑁𝐺 𝑃𝑂𝑊𝐸𝑅( 𝐵𝐸𝑃 )=
𝑇𝑂𝑇𝐴𝐿 𝐴𝑆𝑆𝐸𝑇
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Isti Pramesti

Profitability Ratio
• Return on Asset (ROA): Measure Rate of return on the firm’s Assets
𝑁𝐸𝑇 𝐼𝑁𝐶𝑂𝑀𝐸
𝑅𝐸𝑇𝑈𝑅𝑁 𝑂𝑁 𝐴𝑆𝑆𝐸𝑇 =
𝑇𝑂𝑇𝐴𝐿 𝐴𝑆𝑆𝐸𝑇
• Return on Equity (ROE): Measures the rate of returns of common stockholders investment
𝑁𝐸𝑇 𝐼𝑁𝐶𝑂𝑀𝐸
𝑅𝐸𝑇𝑈𝑅𝑁 𝑂𝑁 𝐸𝑄𝑈𝐼𝑇𝑌 =
𝐶𝑂𝑀𝑀𝑂𝑁 𝐸𝑄𝑈𝐼𝑇𝑌

• Return on Invested Capital (ROIC): Measures the total return that company has provided for its investors
𝐸𝐵𝐼𝑇 (1− 𝑇 )
𝑅𝐸𝑇𝑈𝑅𝑁 𝑂𝑁 𝐼𝑁𝑉𝐸𝑆𝑇𝐸𝐷 𝐶𝐴𝑃𝐼𝑇𝐴𝐿=
𝑇𝑂𝑇𝐴𝐿 𝐼𝑁𝑉𝐸𝑆𝑇𝐸𝐷 𝐶𝐴𝑃𝐼𝑇𝐴𝐿
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Herindra Cahya Airlangga

Liquidity Ratio
• Liquidity ratios show the relationship of firm’s cash and other current
(short-term) assets to its current liabilities.
• Liquid asset are those that can be converted to cash quickly without having
to drastically reduce the asset’s price.
• Primary ratio for liquidity:

• Quick ratio  Measures the firm’s ability to pay off short-term obligation
without relying on the sale of inventories
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Herindra Cahya Airlangga

Asset Management Ratios (AMR)

• Measures how effectively the firm is managing its assets  Does the amount
of each type of asset seem reasonable, too high, or too low in view of current
and project sales?
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Herindra Cahya Airlangga

Debt Management Ratios (DMR)

• Measure how effectively a firm manages its debt.
• The use of debt will increase, or leverage up, a firm’s ROE if the firm earns
more on its assets than the interest rate it pays on debt.
• Debt exposes the firm to more risk than if it financed only with equity.
02
Isti Pramesti

DuPont Equity
• DuPont Equity  To evaluate the component parts of a
company’s ROE
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Finno Ariandiyudha Hadiwardoyo

Case Study: Pupuk Kaltim Indonesia

• PT Pupuk Kalimantan Timur (PKT)
adalah salah satu produsen pupuk
urea dan NPK terbesar di Asia
• Hingga saat ini Pupuk Kaltim
memiliki 13 Pabrik diantaranya 5
pabrik Amoniak berkapasitas 2,74
juta ton/tahun, 5 pabrik Urea
berkapasitas 3,43 juta ton/tahun
dan 3 pabrik NPK berkapasitas 300
ribu ton/tahun.
03
Finno Ariandiyudha Hadiwardoyo

Analysis & Benchmark Against Industry

PKT SAM
Performance Measures
Book Value per Share common equity / share outstanding 1,95 248,79
Market-To-Book Ratio market price per share / book value per share 255,97 3,28
Profitability Measures
Return On Assets (ROA) net income / total assets 35,25% 14,88%
Return On Invested Capital (ROIC) EBIT (1-Tax) / total invested capital 33,60% 17,59%
Return On Equity (ROE) net income / equity 44,54% 40,33%
EVA after-tax operating income - cost of capital x capital
Effi ciency Measures
Asset Turnover sales / total assets at start of year 0,85 1,63
Receivables Turnover sales / receivables at start of year 21,04
Average Collection Period receivables at start of year / daily sales 17,35
Inventory Turnover cost of goods sold / inventory at start of year 7,97 3,16
Days in Inventory inventories at start of year / daily cost of goods sold 45,78068 115,6893
Profit Margin net income/ sales 41,45% 9,04%
Operating Profit Margin after-tax operating income / sales 51,10% 9,35%
Leverage Measures
Long-Term Debt Ratio long-term debt / (long-term debt + equity) 1,29% 2,86%
Long-Term Debt-Equity Ratio long-term debt / equity 1,31% 2,94%
Total Debt Ratio total liabilities / total assets 20,86% 63,83%
Times Interest Earned EBIT / interest payments 7,99
Cash Coverage Ratio (EBIT + depreciation) / interest payments 9,68
Liquidity Measures
Net Working Capital to Assets net working capital / total assets -14,97% 24,16%
Current Ratio current assets / current liabilities 24,47% 138,77%
Quick Ratio (cash + marketable securities + receivables) / current liabilities 1,83
Cash Ratio (cash + marketable securities) / current liabilities 1,63 0,16
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Finno Ariandiyudha Hadiwardoyo

Limitations of Financial Analysis

1. Accounting entries tend to be historical and relies on company’s
discretion
– Not reflective of current market values
– Transparency becomes questionable
2. In many cases, the ratios are not definitive and standalone
– Different industries have different risks which affects aggregate
values
– Requires benchmarking against historical data and other firms in
same industry to be meaningful
3. Quantitative data does not take into account force majeure and other
potential disruptions
 Financial
Chapter 02
Planning
How do we plan based on financial analysis?
What is strategic planning?
 Dewi Kusumawati

Chapter 02 Financial Planning

Strategic Planning
The Key Elements :

e.Operating Plan
a.Mission Statement
Memberikan manajemen panduan implementasi
Menetapkan Visi & Misi Perusahaan
terperinci terkait operasional berdasarkan strategi
b.Corporate Scope
perusahaan untuk membantu memenuhi tujuan/
Menetapkan Ruang Lingkup Bisnis Perusahaan
kebutuhan perusahaan.
c. Statement of Corporate Objectives
f. Financial Plan
Menetapkan Tujuan Perusahaan
Perencanaan keuangan untuk mencapai tujuan bisnis
d.Corporate Strategic
dan keuangan perusahaan.
Menetapkan strategi tingkat korporat (tingkat tertinggi
perusahaan) dengan pendekatan yang luas untuk
mencapai tujuan dan sasaran perusahaan.
 Financial
Chapter 03
Forecasting
What are some forecasting methods?
Is forecasting reliable?
Chapter 03 Financial Forecasting

01 Sales Forecast

02 AFN Equation

03 Forecast Financial Statement

04 Study Case
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Dewi Kusumawati

Sales Forecast
• Perencanaan keuangan diawali dengan perkiraan penjualan (sales forecast) yang ingin
dicapai yaitu dengan melakukan peninjauan penjualan selama 5 tahun terakhir terlebih
dahulu.
• Perkiraan penjualan merupakan masukan terpenting dalam perkiraan laporan keuangan
perusahaan.
• Pertumbuhan penjualan harus seimbang dengan biaya untuk mencapai pertumbuhan.

02 The AFN Equation

Rumus yang digunakan untuk menghitung kebutuhan dana tambahan yang dibutuhkan
oleh perusahaan untuk mendukung pertumbuhan penjualan atau ekspansi bisnis.

Persamaan AFN menunjukkan hubungan dana

eksternal yang dibutuhkan perusahaan terhadap
proyeksi peningkatan aset, peningkatan spontan
kewajiban, dan peningkatan laba ditahan.

When the AFN is zero, sustainable growth rate show the maximum achievable growth rate without the firm having to
raise external funds
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Dewi Kusumawati

Forecast Financial Statement

Explain how spreadsheets are used in the forecasting process, starting with historical statements,
ending with projected statements, and including a set of financial ratios based on those projected
statements.
• Forecast The Growth Rate
• Forecasted Income Statement
• Forecasted Balance Sheet
• Forecasted Ratios and EPS

Using Regression to Improve Forecasts

Regression Analysis a statistical technique that fits a line to observed data points so that the result in
equation can be used to forecast other data points.
Ilustrasi analisis regresi
Misalnya, berikut perkiraan hubungan antara persediaan
dan penjualan (dalam jutaan dolar):

Kita dapat menggunakan persamaan regresi untuk memperkirakan

tingkat persediaan tahun 2009.Sejak 2009 penjualan diproyeksikan
sebesar $3,300 juta, menurut regresi, persediaan tahun 2009
seharusnya berjumlah $578 juta

Angka ini lebih rendah $49 juta dari perkiraan $627 juta yang digunakan dalam proyeksi laporan keuangan.
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Endang Supriyatna
Kinerja Keuangan
Pengembangan Study Case: Forecast of Pupuk Kaltim
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Endang Supriyatna

Benchmarking : Profil PT SAMF

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Endang Supriyatna

Study Case: Forecast of Pupuk Kaltim

1. Growth Rate

CAGR (Compound Annual Growth Rate) = 14,3 % -> 15%

2. Sales Increase
Increase in Sales = 0,15(36,9T)= 5,53 T

3. Req’d Increase in Asset

2022 Asset = 21.068.580 – 2022 Sales = 36.940.770
Increase in Asset = 0,5703 x 5,53 T = 3,15 T
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Endang Supriyatna

Study Case: Forecast of Pupuk Kaltim

Forecasting Result by Financial
Modelling in Excel
 Sources:

Brigham, Houston, J.F et all. 2003. Essentials of

Financial Management, 4th Edition. Cengage
Learning

Brealey, Myers & Marcus. 2020. Fundamentals of

Corporate Finance, 11th Edition. McGraw-Hill
Education.

Thank You!