22 November 2009

Capital Structure and Working Capital Management

0 comments Posted by Monopoly at 11/22/2009 04:03:00 PM




Closing Price of Company Stock from 2004-2008
30-12-2004 = 1050
29-12-2005 = 1200
28-12-2006 =1820
28-12-2007 = 2450
30-12-2008 = 3100





As we can see from the figure and the calculation above, the amount of stocks were increasing significantly. The amounts of stocks that trade on December 2004 are 1,050 lots and on December 2008 the amount of stocks those trades are 3,100 lots. These show that the amounts of stocks represent the company financing progress, PT. Fast Food Indonesia grown better each year. 


Debt to Equity Ratio (DER)

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of equity and debt used to finance a company's assets. This ratio is also known as Risk, Gearing or Leverage. It is equal to total debt divided by shareholder's equity. The two components are often taken from the firm's balance sheet or statement of financial position (so-called book value), but the ratio may also be calculated using market values for both, if the company's debt and equity are publicly trade, or using a combination of book value for debt and market value for equity.

Debt to Equity Ratio (DER) =  Total Debt / Total Equity
DER 2004 = 0.65
DER 2005 = 0.66
DER 2006 = 0.68
DER 2007 = 0.65
DER 2008 = 0.63
 













From the figure above, we can see the graph almost have no changing. Its flattened, the changing on the amount slightly too small; the figure above compared debt and capital equity. 



WORKING CAPITAL 






Current Assets -  Current Liabilities = Working Capital

One of the main advantages of looking at the working capital position is being able to foresee any financial difficulties that may arise. Even a business that has billions of dollars in fixed assets will quickly find itself in bankruptcy court if it can't pay its monthly bills. Under the best circumstances, poor working capital leads to financial pressure on a company, increased borrowing, and late payments to creditor - all of which result in a lower credit rating. A lower credit rating means banks charge a higher interest rate, which can cost a corporation a lot of money over time.
Working Capital 2004 = 121,330,143 – 94,829,303 = 26,500,840
Working Capital 2005 = 125,832,989 – 110,742,451 = 15,090,538
Working Capital 2006 = 158,551,835 – 148,044,538 = 10,507,297
Working Capital 2007 = 240,957,065 – 188,227,594 = 52,729,471
Working Capital 2008 = 314,519,923 – 228,082,526 = 86,437,397
 

















 

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