Individual Assignment Business Strategy and Enterprise Modelling

Rizqi Ghani Faturrahman

29120382
YP64-B
Task Calculating EVA
Company: PT Garuda Indonesia 2020
1. Calculating NOPAT
 Tax = Tax Expense/Net profit before tax * 10%
= (115,950,186 / 2,592,583,535) * 10%
= 4,5%
 Tax = 1,045
 NOPAT= (EBIT (1 – Tax)
= 2,203,059,625*1,045
= 2,302,197,308
2. Calculating Invested Capital
 Invested Capital = Total debt and Equity – Short Term Debt

= 10,789,980,407 – 4,294,797,755

= 6,495,182,652

3. Calculating WACC

WACC = (D x Rd) (1-Pajak) + (E x Re)

 D = Total Debt / Total Debt & Equity * 100%

= (12,733,004,654/10,789,980,407) *100%
= 118%
 Rd = Interest Expense/Total Debt * 100%
= 553,669,995/12,733,004,654 * 100%
= 4,4%
 E = Total Equity/Total Debt and Equity *100%
= (1,943,024,247)/10,789,980,407 * 100%
= (18%)
 Re = Net profit after tax/Total Equity *100%
= (2,443,042,762)/(1,943,024,247) * 100%
 = 125%
 Tax = Tax Expense/ Net profit before tax *100%
= 115,950,186/ (2.592.583.535) *100%
= (4,5%)
 1-Tax = 1- (4,5%)
= 1,045

WACC = (118% x 4,4%) (1,045) + ((18%) x 125%)

= (0,2%)

4. Calculating Capital Charges

 Capital Charges = WACC x Invested Capital
= 0,002% x 6,495,182,652
= 12,990,365
5. Calculating Economic Value Added (EVA)
 EVA = NOPAT – Capital Charges
= (2,302,197,308) – 12,990,365
= (2,315,187,673)

Analysis: Based on the above calculation results, PT Garuda Indonesia's EVA is (2,315,187,673) and it
can be concluded that Garuda's EVA value < 0 means that Garuda Indonesia has not been able to create
added value for the company. Garuda Indonesia did not experience added value because the available
profit did not meet the expectations of the shareholders and the shareholders did not get a return
commensurate with the investment invested. There is no economic added value, and it can be interpreted
that the company's financial performance is in a bad condition.

Solution for PT Garuda Indonesia: management of Garuda Indonesia should manage company assets
well, increase sales and can reduce costs that are deemed unnecessary so that companies can increase
profit (profit) without increasing capital. Company can also reduce the use of debt in managing the
business, by paying more attention to the company's leverage and can increase the value of the current
ratio because with the value of the current ratio which increases it can be interpreted that the company can
reduce uncertainty for investors, but this indicates that the existence of idle cash, thereby reducing the
level of profitability of the company, which will result in the value of ROE the smaller.