Indonesian Journal of Digital Business

Journal homepage: https://ejournal.upi.edu/index.php/IJDB/index

Analysis of startup performance in Indonesia before and

after reaching the IPO stage.
Muhammad Zhafran Tsanyi1 , Syti Sarah Maesaroh2 , Asep Nuryadin3

Digital Business Study Program, Tasikmalaya Regional Campus, Universitas Pendidikan Indonesia, Jl. Dadaha
No.18, Kahuripan, Tasikmalaya 46115, West Java, Indonesia
Correspondence: E-mail: zhafrantsanyy@upi.edu

ABSTRACT Article Information

This study aims to analyze changes in financial ratios in startup Article History:
Received
companies in Indonesia after conducting an Initial Public Offering First Revised
(IPO). The background of this research is the large number of Published
companies that can be said to be still early to conduct an IPO. The Available Online
Publication
research method used is descriptive quantitative using the
____________________
Wilcoxon signed rank test to test the hypothesis. The data used in Keywords:
this study is secondary data in the form of financial statements of Startup
startup companies before and after the IPO. The variables IPO
Financial Ratio
studied include the current ratio, debt to equity ratio, total asset
turnover, and return on equity. The analysis was conducted to
identify significant differences in these variables after the
company conducted an IPO. The results showed that there were
significant differences in the current ratio and return on equity
variables after the IPO. The debt-to-equity ratio and total asset
turnover variables did not change significantly after the company
conducted an IPO.

1. INTRODUCTION continuity and expansion plans. As startups

The rapid development of technology in
Indonesia is fueling economic and business
progress. As technology advances in various
fields, its practical and efficient application
in the economy becomes more evident.
Startups in Indonesia are attracting
significant interest, primarily due to their
ability to secure funding for business
compete in the market, many aspire to
register their companies on the stock
exchange, viewing an Initial Public Offering
(IPO) as a crucial milestone and an indicator
of long-term success. Startup companies vie
for stock exchange listings as an IPO marks a
pivotal moment in their journey, signaling
long-term success.
 Based on Salamzadeh's (2015) research,
a startup is defined as a recently established
and emerging company. These startups are
in the early stages of development and often
focus on gaining recognition and
establishing themselves in the market. They
are characterized by their innovative ideas,
which have the potential to drive rapid
growth. The term "startup" originated in the
United States in the 1970s and gained
popularity among business enthusiasts in
the late 1990s, particularly during the
internet and technology boom of the 2000s.
It was introduced by venture capitalists to
differentiate between regular new
businesses and those with high growth
prospects (Reis, 2011).
The financial performance of startups
after going public on the Indonesian stock
exchange has become a topic of interest.
Evaluating their performance before and
after the IPO is crucial to understand their
growth and sustainability. Regular financial
reporting plays a significant role in ensuring
transparency and meeting the disclosure
requirements for public companies.
Financial ratios are widely used as
indicators to assess company performance.
According to Sartono (2001), financial ratio
analysis is an evaluation method that
compares various financial data to
determine the condition and performance
of a company. This approach involves
calculating and interpreting ratios, such as
profitability, solvency, liquidity, and activity
ratios, to gain a comprehensive
understanding of a company's performance.
The use of ratios provides a more insightful
perspective for analysts and experts when
comparing a company's financial
performance before and after the IPO stage,
allowing for a thorough analysis of the
company's financial health.
Financial ratios are crucial indicators
used to evaluate company performance.
Profitability ratios, such as gross profit
margin, profit margin ratio, and return on
assets, assess a company's profit generation
and efficiency in utilizing assets. Solvency
ratios, including the debt-to-equity ratio and
times interest earned ratio, measure
company's effectiveness in managing its
debts and obligations The recording of debts
and receivables is carried out to monitor
accounts payable that must be paid or that
must be received by each business actor
(Maesaroh et al, 2021). Liquidity ratios,
including the current ratio, quick ratio, and
cash ratio, are financial metrics that provide
insights into a company's capacity to fulfill
its immediate financial obligations. These
ratios measure the company's ability to
convert its current assets into cash quickly
and efficiently. The current ratio assesses
the company's ability to pay off its short-
term liabilities using its current assets, while
the quick ratio focuses on the company's
ability to cover its immediate liabilities with
its most liquid assets. Additionally, the cash
ratio compares the company's cash flow
with its current liabilities, providing a
snapshot of its ability to meet short-term
financial obligations using available cash
reserves. These liquidity ratios are crucial
indicators for evaluating a company's short-
term financial health and its ability to
manage day-to-day financial responsibilities.
Activity ratios, encompassing indicators like
total asset turnover, inventory turnover, and
accounts receivable ratio, measure resource
utilization efficiency within a company.
These ratios provide valuable insights into
different aspects of a company's financial
performance and aid in evaluating its overall
financial health. Thus, the proposed
hypothesis is:
(H1). T There is a noticeable disparity
can be observed in the company's current
ratio (CR) before and after the initial public
offering (IPO).
Companies that demonstrate the
capability to fulfil their liquidity
requirements will enhance the confidence of
external parties or investors in the seamless
operation of the company's business
activities. (Silano, 2021). Therefore, the
company embarked on an initial public
offering (IPO) endeavour aimed at
significantly increasing the company's
liquidity through the acquisition of
additional capital.
(H2) There is a noticeable disparity can
be observed in the company's debt-to-
equity ratio (DER) before and after the initial
public offering (IPO).
Assuming a company has higher
solvency indicates a greater risk to its
liquidity and can negatively impact its
performance. This is because higher levels of
debt imply higher interest expenses,
resulting in reduced profits. As a result,
investors typically prefer companies with
lower solvency. To address this, conducting
an initial public offering (IPO) on the stock
exchange is expected to lead to a decrease
in solvency levels, enabling the company to
meet its obligations more effectively (Juliana
& Sumani, 2019).
(H3). There is a noticeable disparity can
be observed in the company's TATO
activities before and after the IPO
A higher activity ratio signifies a more
efficient utilization of all assets, leading to
increased sales and profits for shareholders
(Hartono & Djawoto, 2018). As the company
undergoes the process of going public, it is
expected that there will be a substantial
improvement in the company's capacity to
effectively leverage its assets in order to
generate higher levels of profitability and
financial success.
(H4). There is a noticeable disparity can
be observed in the company's ROE before 6
and after the IPO
In a general sense, it can be posited that
a higher numerical value on the profitability official approval from the Capital Market
ratio corresponds to a greater level of Supervisory Agency (BAPEPAM) regarding
profitability for the company, as indicated
by previous research (Juliana & Sumani,
2019). Therefore, the company's decision to
undertake an initial public offering (IPO) is
expected to result in an increase in its
profitability. This phenomenon can be
interpreted as a manifestation of the
company's enhanced ability, post-IPO, to
generate net profit by effectively leveraging
its capital resources.
2. METHODOLOGY
The method used in this research is
descriptive quantitative method.
Quantitative methods are research methods
based on concrete data and presented in
the form of numbers measured using
statistics as a test tool for data calculation
(Sugiyono, 2018). Data will be calculated
and described descriptively about how the
state of startup financial performance in
Indonesia before and after reaching the IPO
stage which is seen based on the company's
financial statements.
The population used in this study is
startup companies that have gone through
the IPO stage for three years to compare
their performance before and after the IPO
through annual reports and IPO
prospectuses. Therefore, the sampling
technique used in this research is purposive
sampling. Purposive sampling is a sampling
technique that sets the entire population
into a sample to be studied (Sugiono, 2017).
Table 1. Research Subject
No Company Name
1 Kioson
2 Mcash
3 NFC Indonesia
4 Passpod
5 DIVA
HDI
7 Telefast
8 Digital Mediatama Maxima
These companies have received an
their legal status in preparation for 3. RESULT AND DISCUSSION
conducting an initial public offering (IPO)
Table 2. Research Subject
and obtaining permission to sell their
No Company Name
shares to the public
1 Kioson
This study analyses the financial 2 Mcash
performance of startups using four key 3 NFC Indonesia
ratios: current ratio, debt to equity ratio, 4 Passpod
total asset turnover, and return on equity. 5 DIVA
The current ratio is used to measure 6 HDI
liquidity and the ability of startups to meet 7 Telefast
short-term obligations. The debt-to-equity 8 Digital Mediatama Maxima
ratio indicates the company's solvency and These companies have received an
its ability to obtain new loans and utilize official approval from the Capital Market
assets as collateral. Total asset turnover Supervisory Agency (BAPEPAM) regarding
measures the efficiency of asset utilization in their legal status in preparation for
generating sales. Finally, return on equity conducting an initial public offering (IPO)
evaluates the profitability of startups by and obtaining permission to sell their shares
assessing the ability of equity to generate to the public
net income. These ratios have been proven
effective in previous studies and provide 3.1 Descriptive Analysis
valuable insights into the financial The analysis of the current ratio reveals
performance of startups. notable disparities between the periods
In summary, this study employs four before and after the IPO. The current ratio
essential ratios to analyze the financial exhibited a decline from the pre-IPO period,
performance of startups: current ratio for indicating a stronger liquidity position in the
liquidity, debt to equity ratio for solvency, earlier period. Moreover, the post-IPO
total asset turnover for activity, and return average current ratio showed an increase,
on equity for profitability. By examining accompanied by a decrease in variability,
these ratios, researchers gain a suggesting enhanced financial stability and
comprehensive understanding of startups' improved liquidity management following
ability to meet short-term obligations, the IPO.
acquire new loans, utilize assets efficiently, The examination of the debt-to-equity
and generate net income. The Wilcoxon ratio demonstrates a reduction in debt
signed rank test is being employed in this relative to equity after the IPO. The average
research because the data collected from debt-to-equity ratio decreased post-IPO,
before and after the IPO does not exhibit a indicating a tendency to lower the level of
normal distribution, as indicated by the debt in the company's capital structure.
results of the normality test. The purpose of Additionally, the post-IPO period exhibited
this hypothesis test is to determine whether reduced variability, indicating potential
there is a statistically significant difference improvements in financial stability, primarily
between the two sets of data, namely the driven by a decrease in the reliance on debt
financial performance before and after the financing.
IPO. By applying the Wilcoxon signed rank
test, the researcher aims to assess if there is The analysis of the total assets turnover
a meaningful and noteworthy disparity reveals a higher turnover rate in generating
between these two time periods in terms of sales during the pre-IPO period compared to
their financial performance. the post-IPO period. The average total
assets turnover was higher before the IPO, Kolmogorov- Shapiro-
indicating a more efficient utilization of Smirnova Wilk
assets to generate sales. Additionally, the Stati Sig. Statisti Sig.
post-IPO period displayed lower variability, stic c
signifying enhanced stability and efficiency DER_ .41 .000000 .526 .0000
in asset utilization after the IPO. pre 1 000011 0010
DER_ .25 .000448 .801 .0003
The examination of the return on equity post 0 34 08714
(ROE) indicates a higher average ROE before The company's debt to equity ratio 3
the IPO compared to the post-IPO period. years before and 3 years after the IPO did
This suggests that the company had not follow a normal distribution, as
relatively poorer financial performance in indicated by the significance values of
generating profits relative to shareholders' 0.00001 and 0.00044, respectively. Due to
equity before going public. However, it is the non-normal distribution, the Wilcoxon
important to consider that the average ROE signed rank test was used instead of the
in the post-IPO period tends to be lower, paired sample t-test.
potentially influenced by factors such as
slower company growth or changes in 3.2.3. Total Asset Turnover
capital structure. Furthermore, the post-IPO Table 4. Total Asset Turnover Normality Test
period exhibited reduced variability, Tests of Normality
indicating a higher level of stability in ROE
performance after the IPO. Kolmogorov- Shapiro-Wilk
Smirnova
3.2 Normality Test Statistic Sig. Statistic Sig.
3.2.1. Current Ratio TATO .282 .00 .707 .000013
Table 2. Current Ratio Normality Test _pre 003
Tests of Normality TATO_ .205 .01 .711 .000014
post 053
Kolmogorov-Smirnova Shapiro- The company's total asset turnover 3
Wilk years before and 3 years after the IPO did
Stati Sig. Statis Sig. not follow a normal distribution, as
stic tic indicated by the significance values of
cr .415 .00000000 .407 .00000 0.000013 and 0.000014, respectively.
pre 00065 0008
Consequently, the Wilcoxon signed rank test
cr post.260 .00019 .771 .00010
was conducted instead of the paired sample
3176
t-test due to the non-normal distribution of
The company's current ratio 3 years
the data.
before and 3 years after the IPO did not
follow a normal distribution, as indicated by 3.2.4 Return on Equity
the significance values of 0.0001 and 0.0019,
respectively. Due to the non-normal Table 3. Return on Equity Normality Test
distribution, the Wilcoxon signed rank test Tests of Normality
was used instead of the paired sample t- Kolmogorov-Smirnova Shapiro-
test.
Wilk
3.2.2. Debt to Equity Ratio
Sta Sig. Statis Sig.
Table 3. Debt to Equity Normality Test tic
tisti
Tests of Normality
 c current ratio in assessing a company's
Roe .433 .00000000 .295
pre 000051
Roe .327 .00000036 .696
post
The company's return on equity 3 years
before and 3 years after the IPO did not
follow a normal distribution, as evidenced
by the significance values of 0.0000000958
and 0.00000088, respectively. Consequently,
the Wilcoxon signed rank test was employed
instead of the paired sample t-test due to
the non-normal distribution of the data.
3.3 Hypothesis Test
3.3.1. Current ratio
Table 4. Current Ratio Wilcoxon Test
Test Statisticsa
crpost - crpre
Z -2.657b
Asymp. Sig. (2-tailed) .008
The significance value of 0.008,
indicating a statistically significant
difference, suggests that the current ratio
undergoes changes between the period of 3
years before the IPO and 3 years after the
IPO. This signifies that startup companies
experience shifts in their liquidity levels
following the IPO. A decrease in the current
ratio post-IPO suggests a more conservative
approach or allocation of current assets
towards long-term business growth. This
reflects a potential change in the company's
financial strategy, focusing on capital
utilization for product development or
market expansion, impacting their liquidity
level. Conversely, an increase in the current
ratio may indicate that companies have
successfully enhanced their financial
liquidity after becoming publicly traded.
These findings align with previous
research conducted by Silanno et al. (2021),
demonstrating the importance of the
.000000
financial health and stability. Notable
disparities in the current ratio before and
000958 after the IPO indicate shifts in liquidity and
.000008 financial stability. This emphasizes the
significance of effective financial
8160
management and adaptive strategies
following the IPO for long-term growth and
success. However, despite going public, the
company's aspirations of increasing liquidity
were not realized according to the study's
results.
3.3.2 Debt to Equity
Table 5. Debt to Equity Ratio Wilcoxon Test
Test Statisticsa
DER_post DER_pre
Z -1.814b
Asymp. Sig. (2-tailed) .070
The significance value of 0.70 (>0.05)
indicates no difference in the debt-to-equity
ratio between 3 years before and 3 years
after the IPO. The Wilcoxon signed rank test
results support this finding. Since the
significance value (0.70) is higher than the
commonly used threshold (0.05), there is
insufficient statistical evidence to conclude a
significant difference between the two
periods. This suggests that the company's
debt to equity ratio remained relatively
stable, reflecting a balanced mix of internal
(equity) and external (debt) funding sources.
Such stability indicates the company's
financial strength and effective management
of financial risks.
These findings align with prior research
by Arfandi & Taqwa (2018), which also
found no difference in solvency ratios post-
IPO due to suboptimal utilization of
additional paid-up capital and ineffective
deployment of IPO-derived funds. Despite
allocating funds, companies were unable to
improve the comparison between long-term
debt and equity value. These results instill
confidence in investors and the capital
market, showcasing the company's robust
financial foundation and potential for
sustainable growth.
3.3.3 Total Asset Turnover
Table 6. Total Asset Turnover Wilcoxon Test
Test Statisticsa
TATO_post - TATO_pre
Z -1.457b
Asymp. Sig. (2-tailed) .145
The significance value of 0.145 (>0.05)
suggests no significant difference in total
asset turnover between 3 years before and
3 years after the IPO. The results of the
Wilcoxon signed rank test support this
finding, indicating that the company's ability
to generate income from its assets has not
changed significantly after going public.
Total asset turnover is a measure of
efficiency in utilizing assets to generate
income. A higher turnover indicates better
utilization of assets, while a lower turnover
may signify inefficiency.
These results indicate that changes in
ownership structure through the IPO do not
significantly impact the efficiency of asset
utilization in generating income. Despite
accessing larger capital sources after the
IPO, there is no significant improvement or
decline in total asset turnover. These
findings align with previous research by Sen
& Syafitri (2014), which showed that post-
IPO, companies' financial performance did
not improve due to inadequate asset
rotation and failure to increase sales.
3.3.4 Return on Equity
Table 7. Return on Equity
Test Statisticsa
ROE_post - ROE_pre
Z -2.601b
Asymp. Sig. (2- .009
tailed)
The significance value of 0.009 (<0.05)
indicates a difference in return on equity
between 3 years before and 3 years after
the IPO. The Wilcoxon signed rank test also
confirms this difference with a significance
value of 0.009. Profit variations suggest
changes in capital utilization and company
efficiency after the IPO. Successful post-IPO
companies implement effective financial
strategies, increase profitability, and
manage risks. However, the current findings
show a significant decrease in the ROE ratio.
This could be due to inefficient use of IPO
capital or lack of significant profit
generation. IPO-related costs, such as fees
and commissions, can impact net income
and therefore ROE. These results align with
previous research by Juliana & Sumani
(2019), demonstrating significant differences
after the IPO, indicating a decline in
profitability relative to own capital. Thus,
the company's aim to increase profitability
was not achieved post-IPO.
4. CONCLUSION & RECOMMENDATIONS
1.1 Conclusion
Based on the research that has been
done, the following conclusions can be
drawn:
1. The financial performance of startup
companies in Indonesia has changed
before and after reaching the IPO stage.
There was a decrease in the current ratio
after the IPO, indicating a decrease in
the company's liquidity. However, a
decrease in the debt to equity ratio
signifies a reduction in debt levels
relative to equity. total assets turnover
also decreased after the IPO, indicating
increased efficiency in asset use. In
addition, the current ratio and return on
equity experienced a significant decline
after the IPO which can be caused by
several factors, that are an increase in
the number of assets, changes in capital
structure, or the company's financial
performance.
2. The utilization of statistical analysis
techniques, specifically the Wilcoxon
signed rank test, provides compelling
evidence of a statistically significant
distinction between the current ratio
and return on equity before and after
the IPO over a span of 3 years. This
finding underscores the presence of a
noteworthy shift in the company's
liquidity, as indicated by the current
ratio, and its profitability, as represented
by return on equity, following the
attainment of the IPO milestone. These
notable changes could potentially be
attributed to a range of factors, such as
alterations in the company's capital
structure, heightened operational
efficiency, enhanced risk management
practices, or strategic shifts in financial
approaches implemented subsequent to
the company's transition into a publicly
traded entity.
3. There is a significant difference between
the current ratio and return on equity 3
years before and 3 years after the IPO.
This difference indicates a change in the
company's financial structure and
performance after the IPO. A decrease in
the current ratio after the IPO indicates
an increase in the company's liquidity
risk, due to lower current assets
compared to short-term liabilities.
Meanwhile, a decrease in return on
equity after an IPO can be caused by
changes in the company's capital
structure and the influence of other
factors such as slower growth or
increased financial costs.
1.2 Recommendations
Based on the research conclusions that
have been previously described, researchers
can provide research recommendations and
suggestions as follows:
1. Further research is recommended to
involve other financial ratio variables in
this study so that the results of research
on this topic become more
comprehensive.
2. Future research is expected to involve
other broader variables such as profit
margin, cash flow, or earnings per share,
as well as involve more subjects of
startup companies that have conducted
IPOs, so as to provide a more
representative picture of changes in
post-IPO financial ratios.
3. Future research is expected to use more
complex statistical methods and tests
such as multiple linear regression or
factor analysis to identify factors that
contribute to changes in post-IPO
financial ratios.
4. Future research may consider external
factors that may influence changes in
post-IPO financial ratios. For example,
factors such as market conditions,
industry regulation, or changing
consumer trends can be important
considerations in analyzing the impact of
an IPO on a startup company's financial
ratios.
5. REFERENCE
Anshari, S. (2013). The Affect OF Sales
Promotion On Consumer Interest To
Purchase In Ikco Automotive
Company.
Salamzadeh, A., & Kawamorita Kesim, H.
(2015). Startup companies: Life cycle
and challenges. In 4th International
conference on employment, education
and entrepreneurship (EEE), Belgrade,
Serbia.
Reis, E. (2011). The Lean Startup. New York:
Crown Business, 27.
Sartono, Agus, 2001. Manajemen Keuangan
Edisi 3, Dosen Fakultas Ekonomi
 Universitas Gajah Mada, BPFE,
Yogyakarta.
Sugiyono, S. (2017). Metode Penelitian
Kuantitatif, Kualitatif, dan R&D.
Bandung: Alfabeta, CV.
Silanno, G. L., & Loupatty, L. G. (2021).
Pengaruh current ratio, debt to equity
ratio dan return on asset terhadap
financial distress pada perusahaan-
perusahaan di sektor industri barang
konsumsi. Jurnal Ekonomi, Sosial &
Humaniora, 2(07), 85-109.
Juliana, S. R., & Sumani, S. (2019). Analisis
kinerja keuangan perusahaan sebelum
dan sesudah melakukan initial public
offering (IPO). Jurnal Akuntansi, 13(2),
105-122.
Hartono, P. N., & Djawoto, D. (2018).
Analisis Kinerja Keuangan Perusahaan
Sebelum Dan Sesudah Go Public Pada
Perusahaan Manufaktur. Jurnal Ilmu
dan Riset Manajemen (JIRM), 7(3).
Arfandi, A., & Taqwa, S. (2018). Analisis
Kinerja Keuangan Sebelum dan
Sesudah Initial Public Offering (IPO)
Pada Perusahaan Non Keuangan di
Bursa Efek Indonesia. Wahana Riset
Akuntansi, 6(2), 1347-1364.
Sen., & Syafitri, L. (2014). Analisis perbedaan
kinerja keuangan sebelum dan
sesudah initial public offering pada
perusahaan go public di Bursa Efek
Indonesia.