How much short-term cash flow does

a company need to pay its bills?

Current
Current Net Liabilities
Assets Working
Capital Long-Term How can the
Debt firm raise the
money for the
What long-term required
Fixed Assets
investments investments?
1 Tangible should the firm Shareholders’
2 Intangible engage in? Equity
 Survive

Beat the
competition

Maximize Maximize the

sales (fundamental
or economic)
Maximize net value of (stock)
income
shares is the
right goal
Maximize
market share

Minimize
costs

Maximize
price of shares
 ASSET: USD 133 B ASSET: USD 362 B

FB REVENUE: USD 70 B
STOCK PRICE: USD 233 XOM REVENUE: USD 256 B
STOCK PRICE: USD 44
MARKET CAP: USD 665 B MARKET CAP: USD 186 B
Time Value of Money:
A dollar today is worth more than a dollar tomorrow

TIME VALUE

PRESENT
VALUE

DISCOUNTED
CASH FLOW

FUTURE
VALUE
Analysis of
NPV
potential projects

Long-term decisions IRR

Large expenditures

Difficult/
PBP
Impossible to
reverse

Determines firm’s PI
strategic direction

Return
 n CFt
NPV = ∑ (1 + R)t
t=0

The interest rate at

DISCOUNT
which you discount
RATE expected future cash
flows to the present

The Opportunity Cost of Money – Efficient Markets Hypothesis (EMH) in finance

1. INFLATION Also known as the Hurdle Rate The theory states that all stock market prices at any
2. OPPORTUNITY expected rate of return available on given time reflect the accurate present value of
the future cash flows of a business. Assumes
LOSS alternative investment opportunities. market as a whole has rational expectations and
3. INVESTMENT Historically, the stock market has is always right. Uses Capital Assets Pricing
RETURN generated an average annual return of Model (CAPM) to establish the theoretical 'cost'
about 10-15%. of equity
 INTEREST, FREE CASH
COUPON FLOW
PROJECT A

CREDITOR
CAPITAL
DEBT
PROJECT B REVENUE

INVESTOR CAPITAL PRODUCT X

EQUITY
INCOME

PRODUCT Y
DIVIDEND
TAX FUTURE
The cost of capital is the rate of
return that the suppliers of
capital—bondholders and
owners—require as
compensation for their
contributions of capital.

Useful in several settings:

• Used to value the firm.
• Used as a starting point for
determining the discount rate
for investment projects the
firm might undertake.
• is the appropriate rate to use
when evaluating
performance, specifically
whether the firm has created
value for its shareholders.
 Income Statement

Cost of Debt = COD

5.671/54.403 = 10.42%

Cost of Equity = COE

Dividend yield = 4.95%

%Debt = 35.35%
54.403/(54.403+99.796) Balance Sheet

%Equity = 64.65%
99.796/(54.403+99.796)

WACC = COC
= %D x COD x (1 – Tax) +
%E x COE
= 35.35%*10.42%*(1-25%)+
64.65%*4.95%
= 5.96%
Calculate COC using financial report is inaccurate.
Cost of Debt = COD
Cost of Debt 5.671/54.403 = 10.42%
• Interest might be deferred or forwarded
• Interest might not contain fine, administration cost, Cost of Equity = COE
Dividend yield = 4.95%
acquiring cost
• Interest does not represent yield on bond %Debt = 35.35%
• Short term debt does have interest, but sometimes ignored 54.403/(54.403+99.796)
or difficult to separate from non-bearing interest debt
%Equity = 64.65%
99.796/(54.403+99.796)
Cost of Equity
• Dividend might be deferred or forwarded WACC = COC
= %D x COD x (1 – Tax) +
• Dividend might be hold due to reinvestment
%E x COE
• Dividend does not represent all type of equities, including = 35.35%*10.42%*(1-25%)+
treasury stock, preferred stock, and minority interests 64.65%*4.95%
• Dividend might be lower or higher due to stock price = 5.96%
 Costs of
Capital

Cost of Cost of
Cost of Debt Preferred Common
Equity Equity

Yield to Return on Capital Asset

Maturity Preferred Stock Pricing Model

Variations
Dividend
Debt Rating because of
Discount Model
Callability, etc.

Bond Yield plus

Risk Premium
semester

C = 1.200 per semester

F = 20.000
P = 21.544
n = 10 (2x per tahun dalam 5 tahun)

Approximation YTM
= (1.200 – (1.544/10))/ (41.544/10)
= 1.046/4154 = 25%

COD – before tax = 25%

COD – after tax = 18.75%
 ▪ There is a riskless or risk-free asset, where
individual seeks certainty or guarantee.
▪ Individual willing to take more risk in the
risky assets, if there is exist a proportional
benefit or return.
The world of assets ▪ In the risky world, there is exist 2 type of
Risky assets risks. Systemic risk that affect all assets &
undiversifiable. Unsystematic risk /
Risk-free
idiosyncratic risk that associated to specific
assets asset & diversifiable.
▪ Market risk represents systemic risk on a
market, beta represents an index (of specific
asset) related to systematic risk.
Rf → Obligasi Pemerintah denominasi
local 10 tahun ke atas
Rm → Risiko pasar
Beta → Volatilitas aset terhadap pasar

Contoh: TLKM.JK (semua dalam persentase)

Beta = 0.14
Rf = 7.68
Rm = 11.19
COE = 7.68 + 0.14 x (11.19-7.68) = 8.17%
Cost of Debt = COD
Peringkat Bond 10 tahun AAA,
Spread 1.24%.
Yield ORI 10 tahun = 7.03%
COD = 1.24%+7.03% = 8.27%

Cost of Equity = COE

Rf + B (Rm – Rf) = 7.03% +
0.14 * (11.19% - 7.03%) = 7.61%

%Debt = 35.35%
%Equity = 64.65%

WACC = COC
= %D x COD x (1 – Tax) +
%E x COE
= 35.35%*8.27%*(1-25%)+
64.65%*7.61%
= 7.11%
 Marginal cost of capital
Investment opportunity schedule
Cost
or
Return

Optimal
Capital
Budget

Amount of New Capital

fokus
 Analisis Analisis Analisis Arus
Aktivitas LIkuiditas Kas

Analisis Analisis
Profitabilitas Solvabilitas

Analisis
Imbal Hasil

Analisis Analisis
Pasar Ekuitas
X
Y

Laba/Rugi Neraca

Pendapatan → Aset →
Kinerja Kekayaan

Biaya → Utang/Ekuitas
Maka Pengelolaan → Sumber
makna dana dana
rasio:
Menunjukkan seberapa besar efektivitas
Pendapatan penggunaan/konversi kekayaan untuk
menghasilkan pendapatan
Aset
Menunjukkan seberapa besar laba bersih
Laba bersih sebagai sisa pendapatan dikurangi seluruh
biaya, dapat dihasilkan dari sumber dana
Ekuitas ekuitas yang digunakan
 Liquidity Ratio Makna
Menggambarkan besaran jumlah aset lancar perusahaan dalam melunasi
Current Ratio
kewajiban jangka pendek

Menggambarkan bagian aset lancar yang lebih mudah terkonversi menjadi

Quick Ratio
uang tunai untuk menutup seluruh utang jangka pendek

Menggambarkan kemampuan kas perusahaan untuk menutup seluruh

Cash Ratio
utang jangka pendek

Profitability Ratio Makna

Menggambarkan komposisi bagian dari penjualan yang terkonversi

Gross Margin
menjadi laba kotor

Menggambarkan komposisi bagian dari penjualan yang terkonversi

Operating Margin
menjadi laba operasi/laba usaha

Menggambarkan komposisi bagian dari penjualan yang terkonversi

Pretax Margin
menjadi laba sebelum pajak

Menggambarkan komposisi bagian dari penjualan yang terkonversi

Net (Profit) Margin
menjadi laba bersih

Return on Assets Menggambarkan kemampuan atau utilisasi aset untuk menghasilkan laba

Menggambarkan kemampuan atau utilisasi ekuitas untuk menghasilkan

Return on Equity
laba
 Solvency Ratio Makna

Menggambarkan komposisi nilai utang terhadap jumlah modal secara

Debt to Total Capital Ratio
keseluruhan

Menggambarkan komposisi nilai utang terhadap ekuitas secara

Debt to Equity Ratio
keseluruhan, atau nilai utang disbanding modal sendiri

Menggambarkan kemampuan perusahaan dalam menutupi beban bunga

Time Interest Earned Ratio
yang muncul atas pendanaan melalui utang

UKURAN KETERANGAN MAKNA

Price per share Closing stock price Harga per lembar saham

(Net income – Preferred (Laba bersih – Dividen

Earning per share (EPS) Dividend)/Weighted average number of preferen)/(Rata-rata tertimbang
shares saham beredar

Price per share/ Harga per lembar saham/Laba per

Price earning ratio (PER)
Earning per share lembar saham

Price per share/Book value of equity per Harga per lembar saham/Nilai buku
Price to book ratio (PBV) share saham

Dividend of common shareholders/(Net Dividen untuk saham biasa/(Laba

Dividend payout ratio
income – Preferred Dividend) bersih- Dividen preferen)