MM 5007

FINANCIAL MANAGEMENT

KRAKATAU STEEL CASE

SYNDICATE 3

KRISTIANTO WICAKSANA (29114305)

JONATHAN SOMBA (29114307)

FLORENTINA ANDRE (29114312)

RATNA SARI RADITHA NING TYAS (29114357)

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS AND MANAGEMENT

INSTITUT TEKNOLOGI BANDUNG

2015
 EXECUTIVE SUMMARY

Short brief of project

I. Objective
Bambang Supriyatno wants to invest in Krakatau Steel group. Before he put his money on
Krakatau Steel group, he needs to check the financial ratios and also the BUMN scoring.
These assessments are needed to determine whether PT Krakatau Steel is a good place to
invest.

II. Analysis
Bambang Supriyatno use several ratios to compare Krakatau Steel financial performance to other
similar industry. The indicators that have been use to compare are shown below

After analyzing these indicators, Bambang Supriyatno used the BUMN Scoring. The BUMN Scoring is
described in several figures below
The scoring result of Krakatau Steel is shown below
In Million Krakatau Steel PT Gunawan Dianjaya Steel PT Jaya Pari Steel
2009 2010 2009 2010 2009 2010
Cash 1,759,964 4,193,598 40,234,402 3,720,875 1,429,771 12,552,313
Account Receivables 1,642,212 1,184,338 196,962,760 89,918,674 127,947,069 93,613,470
Net Revenues 16,913,535 14,856,156 1,641,555,178 1,710,131,747 302,868,416 427,792,535
Cost Of Goods Sold 15,728,146 12,621,376 1,829,359 1,413,250 267,459,907 372,059,150
Gross Profit 1,185,389 2,234,780 (187,809,124) 296,880,791 35,408,508 55,733,384
Total Operating Expenses 1,159,449 1,241,851 85,622,086 90,756,876 15,103,228 17,313,898
Income From Operation 25,940 992,929 (273,431,210) 206,123,915 20,305,280 38,419,485
Other Income 442,719 384,219 64,196,140 8,525,507 (17,574,942) 251,316
Net Income 494,672 1,062,683 150,055,121 171,427,614 1,917,377 28,445,580
Earnings Per Share 39 81 (26) 21 2.6 37.93

Current Asset 8,631,162 12,287,724 541,001,941 709,597,600 217,575,710 285,524,089

Net Fixed Asset 3,378,928 4,389,320 255,836,745 246,469,275 19,191,931 17,618,852
Current Liability 6,130,353 6,930,713 488,515,367 419,815,817 75,723,707 103,140,872
Inventory 4,871,981 6,549,776 234,313,675 556,893,664 78,938,647 116,709,942
Total Asset 12,795,803 17,584,059 970,737,084 1,074,569,612 353,951,009 411,281,598
Total Liabilites 6,949,013 8,158,514 496,451,412 428,856,325 82,262,329 111,147,338
Common Stock Equity 2,000,000 7,887,500 820,000,000 820,000,000 75,000,000 75,000,000
Total Equity 12,795,803 9,293,915 645,713,287 474,285,672 271,688,680 300,134,260
REVENUE CAGR CAGR CAGR
Gross Profit margin 7.01% 15.04% 46.50% -11.44% 17.36% #NUM! 11.69% 13.03% 5.56%
Operating Profit Margin 0.15% 6.68% 560.14% -16.66% 12.05% #NUM! 6.70% 8.98% 15.74%
Net Profit Margin 2.92% 7.15% 56.39% 9.14% 10.02% 4.72% 0.63% 6.65% 224.09%
COGS to Revenue 92.99% 84.96% -4.42% 0.11% 0.08% -13.89% 88.31% 86.97% -0.76%
Operating Expenses to Revenue 6.86% 8.36% 10.43% 5.22% 5.31% 0.87% 4.99% 4.05% -9.91%
MARKET
Earnings per share 39 81 (26) 21 2.6 37.93
Book value per share 500 500 100 100 100 100
RETURN
Return on Assets 3.87% 6.04% 25.03% 15.46% 15.95% 1.59% 0.54% 6.92% 257.32%
Return on Equity 24.73% 13.47% -26.19% 18.30% 20.91% 6.88% 2.56% 37.93% 285.17%
Return on Investment 0.28% 7.53% 422.67% -38.25% 24.89% #NUM! 6.07% 9.76% 26.85%
DEBT
Debt to Equity 54.31% 87.78% 27.14% 76.88% 90.42% 8.45% 30.28% 37.03% 10.59%
Debt to Capital 347.45% 103.44% -45.44% 60.54% 52.30% -7.06% 109.68% 148.20% 16.24%
LIQUIDITY
Current Ratio 140.79% 177.29% 12.22% 110.74% 169.03% 23.54% 287.33% 276.83% -1.84%
Quick Ratio 61.32% 82.79% 16.19% 62.78% 36.37% -23.88% 183.08% 163.67% -5.45%
Cash Ratio 28.71% 60.51% 45.18% 8.24% 0.89% -67.20% 1.89% 12.17% 153.88%
Collection Period 35.4 29.1 -9.39% 43.8 19.2 -33.80% 154.2 79.9 -28.03%
Inventory Turnover 105.14 160.92 23.72% 52.10 118.86 51.04% 95.13 99.58 2.31%
Total Asset Turnover 1.32 0.84 -20.05% 1.69 1.59 -2.99% 0.86 1.04 10.25%
Total Equity / Total Asset 1 0.53 -27.30% 0.67 0.44 -18.54% 0.77 0.73 -2.50%
BUMN SCORING PT KRAKATAU STEEL
ROE 20 18 20 20 5.5 20
ROI 2 6 0 15 5 7.5
Cash Ratio 4 5 1 0 0 2
Current Ratio 5 5 4 5 5 5
Collection Period 5 5 5 5 3 4.5
Inventory Turnover 4 3 5 4 4 4
Total Equity / Total Asset 4 4 4 4 4 4
Total Asset Turnover 1.5 1.5 1.5 1.5 1.5 1.5
Total 45.5 47.5 40.5 54.5 28 48.5
SCORING A A BBB A B A
 Krakatau Steel Gross Profit, Operating Profit Margin, and also Net Profit Margin are
increasing. Meanwhile, the Inventory Turnover is much greater than the competitor and also
The Total Asset Turnover is also declining. Based on these conditions, the Krakatau Steel is in
a good shape.

III. Conclusion and Recommendation

3.1 Conclusion
From those Krakatau Steel conditions above, we can see that the Krakatau Steel is a good
place to invest. On paper, The Krakatau Steel’s profitability ratio is quite good but compared
to other steel industry, the Krakatau Steel’s number is much below to its competitors.
Moreover, we can see that The Krakatau Steel BUMN Scoring is at level A which is indicated
as a healthy company.
3.2 Recommendation :
Bambang Supriyatno should invest to Krakatau Steel as their score is better than the other
Industries. As we can see, year 2009 and 2010, Krakatau Steel has grade A.