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FINANCIAL MANAGEMENT II
PT Surya Toto Indonesia Tbk
Foreword
Assalamualaikum wr.wb. Thanksgiving to Allah, so we can complete the
preparation of the module assignment. In the preparation of the module
assignment, we get a lot of guidance and assistance from various parties.
Therefore, on this occasion not to forget that most of our conveying thanks to:
(1) Prof. Dr.Farah Margaretha, PhD, a lecturer of Managerial finance.
(2) Susy Muchtar, SE, MM, a lecturer of Managerial finance.
(3) Friends of excellent class 2013 that many have helped us.
(4) Family that many have helped us.
We hope that God will reward all the virtues of all those who have
helped. Hopefully this module assignment bring benefit for readers .
Writer
Table of Contents
FOREWORD ...................................................................................................... i
CONTENTS ........................................................................................................ ii
CHAPTER I INTRODUCTION
1.1 Company Profile ................................................................................... 1
CHAPTER II THEORIES
2.1 The Cost of Capital ............................................................................... 2
2.2 Choosing the Optimal Capital Structure .............................................. 4
CHAPTER III CALCULATION
3.1 Calculation Cost of Capital in 2009 ...................................................... 5
3.2 Calculation Cost of Capital in 2010 ...................................................... 8
3.3 Calculation Cost of Capital in 2011 ...................................................... 11
3.4 Calculation Cost of Capital in 2012 ...................................................... 14
3.5 Calculation Cost of Capital in 2013 ...................................................... 17
CHAPTER IV CONCLUSION AND SUGGESTION
4.1 Conclusion ............................................................................................ 21
4.2 Suggestion ............................................................................................ 21
LITERATURE ...................................................................................................... 22
APPENDIX ......................................................................................................... 23
ii
Chapter I Introduction
Cost of capital is representing the firms cost of financing and is the minimum
rate of return that a project must earn to increase the value. The cost of capital is
extremely important for financial concept. It acts as a major link between the firms
long term investment decisions and the wealth of the firms owners as determined
by the market value as their shares.
Chapter II Theories
2.1 The Cost of Capital
Cost of capital represents the firms cost of financing an is the minimum
rate of return that a project must earn to increase firm value. Cost of capital is
an extremely important financial concept because it acts as a major link
between the firms long term investment decisions and the wealth of the
firms owners as determined by the market value of their shares. Financial
managers are ethically bound to invest only in projects that they expect to
exceed the cost of capital. To capture all of the relevant financing costs,
assuming some desired mix of financing, we need to loot at the overall cost of
capital rather than just the cost of any single source of financing. There are
four basic sources of long term capital for firms, they are :
+
2
I
= annual interest in dollars
Nd = net proceeds from the sale of debt (bond)
2
The ratio of the preffered stock dividend to the firms net proceeds from
the sale of preffered stock.
1
+
1
+
(1 )
=
EBIT
: Earnings before interest and taxes
WACC : Weighted average cost of capital
NOPAT : Net operating profit after taxes
Estimating Value
The value of the firm associated with alternative capital structures can
be estimated by using one of the standard valuation models.
0 =
Chapter IIICalculation
THE CALCULATION OF COST OF CAPITAL FROM 2009 TO 2013
PT Surya Toto Indonesia Tbk
Cost Of Capital
a. Cost of Long Term Debt
Before tax cost of debt
=
The before tax cost of debt for PT Surya Toto Indonesia Tbk in 2009 is
9.317.307.417
= 0,0501 = 5,01%
185.830.860.884
1
+
The cost of common stock equity for PT Surya Toto Indonesia Tbk in 2009 is
708,19
+ 0.1869 = 0,2702 = 27,02%
8.500
= 2009 (1 + )
2009
2009
= 708,19
2010 = 1
. 840,55
. 193.797.649.353
= 0,2411
. 3.912
. 630.982.040.872
2011 = 1
. 900
. 218.724.016.284
= 0,3001
. 440
. 760.541.257.156
2012 = 1
. 550
. 236.695.643.357
= 0,0401
. 476
. 898.164.900.513
2013 = 1
. 100
. 236.557.513.162
= 0,1328
. 239
. 1.035.650.413.675
So, the growth rate for PT. Surya Toto Indonesia Tbk Is
0,2411 + 0,1328
= 0,1869 = 18,69%
2
The proportion of long-term debt for PT Surya Toto Indonesia Tbk in 2009 is
185.830.860.884
= 0,2601
185.830.860.884 + 528.673.291.519
=
The proportion of common stock equity for PT Surya Toto Indonesia Tbk in 2009
is
528.673.291.519
= 0,7399
185.830.860.884 + 528.673.291.519
= +
The weighted average cost of capital for PT Surya Toto Indonesia Tbk in 2009 is
0,2601 0,0326 + 0,7399 0,2702 = 0,2084 = 20,84%
(1 )
=
The value of the firm for PT Surya Toto Indonesia Tbk in 2009 is
202.927.209.827 (1 0,35)
= 632.930.356.900
0,2084
Estimating Value
0 =
The value of the firm for PT Surya Toto Indonesia Tbk in 2009 is
3.691
= 17.711,13
0,2084
Debt Ratio
=
Cost Of Capital
a. Cost of Long - Term Debt
Before tax cost of debt
=
The before tax cost of debt for PT Surya Toto Indonesia Tbk in 2010 is
8.109.640.548
= 0,0682 = 6,82%
118.993.117.324
1
+
The cost of common stock equity for PT Surya Toto Indonesia Tbk in 2010 is
840.55
+ 0,1869 = 0,2085 = 20,85%
39.000
The proportion of long-term debt for PT Surya Toto Indonesia Tbk in 2010 is
118.993.117.324
= 0,1587
118.993.117.324 + 630.982.040.872
=
The proportion of common stock equity for PT Surya Toto Indonesia Tbk in 2010
is
630.982.040.872
= 0,8413
118.993.117.324 + 630.982.040.872
= +
The weighted average cost of capital for PT Surya Toto Indonesia Tbk in 2010 is
0,1587 0,0443 + 0,8413 0,2085 = 0,1824 = 18,24%
(1 )
=
The value of the firm for PT Surya Toto Indonesia Tbk in 2010 is
258.884.895.383 (1 0,35)
= 922.561.304.800
0,1824
Estimating Value
0 =
The value of the firm for PT Surya Toto Indonesia Tbk in 2010 is
3.912
= 21.447.37
0,1824
Debt Ratio
=
10
Cost Of Capital
a. Cost of Long Term Debt
Before tax cost of debt
=
The before tax cost of debt for PT Surya Toto Indonesia Tbk in 2011 is
12.925.825.299
= 0,0962 = 9,62%
134.391.701.934
1
+
The cost of common stock equity for PT Surya Toto Indonesia Tbk in 2011 is
900
+ 0,1869 = 0,2049 = 20,49%
50.000
11
The proportion of long-term debt for PT Surya Toto Indonesia Tbk in 2011 is
134.391.701.934
= 0,1502
134.391.701.934 + 760.541.257.156
=
The proportion of common stock equity for PT Surya Toto Indonesia Tbk in 2011
is
760.541.257.156
= 0,8498
134.391.701.934 + 760.541.257.156
= +
The weighted average cost of capital for PT Surya Toto Indonesia Tbk in 2011 is
0,1502 0,0625 + 0,8498 0,2049 = 0,1835 = 18,35%
(1 )
=
The value of the firm for PT Surya Toto Indonesia Tbk in 2011 is
299.796.707.565 (1 0,35)
= 1.061.950.190.000
0,1835
12
Estimating Value
0 =
The value of the firm for PT Surya Toto Indonesia Tbk in 2011 is
440
= 2397,82
0,1835
Debt Ratio
=
13
Cost Of Capital
a. Cost of Long Term Debt
Before tax cost of debt
=
The before tax cost of debt for PT Surya Toto Indonesia Tbk in 2012 is
11.650.595.380
= 0,0663 = 6,63%
175.731.390.933
1
+
The cost of common stock equity for PT Surya Toto Indonesia Tbk in 2012 is
550
+ 0,1869 = 0,2696 = 26,96%
6.650
14
The proportion of long-term debt for PT Surya Toto Indonesia Tbk in 2012 is
175.731.390.933
= 0,1636
175.731.390.933 + 898.164.900.513
=
The proportion of common stock equity for PT Surya Toto Indonesia Tbk in 2012
is
898.164.900.513
= 0,8364
175.731.390.933 + 898.164.900.513
= +
The weighted average cost of capital for PT Surya Toto Indonesia Tbk in 2012 is
0,1636 0,0431 + 0,8364 0,2696 = 0,2325 = 23,25%
(1 )
=
The value of the firm for PT Surya Toto Indonesia Tbk in 2012 is
342.972.150.032 (1 0,35)
= 958.846.871.100
0,2325
15
Estimating Value
0 =
The value of the firm for PT Surya Toto Indonesia Tbk in 2012 is
476
= 2047,31
0,2325
Debt Ratio
=
16
Cost Of Capital
a. Cost of Long Term Debt
Before tax cost of debt
=
The before tax cost of debt for PT Surya Toto Indonesia Tbk in 2013 is
15.002.417.990
= 0,0701 = 7,01%
214.032.439.472
1
+
The cost of common stock equity for PT Surya Toto Indonesia Tbk in 2013 is
100
+ 0,1869 = 0,1999 = 19,99%
7.700
17
100 + 100
= . 100
2
The proportion of long-term debt for PT Surya Toto Indonesia Tbk in 2013 is
214.032.439.472
= 0,1713
214.032.439.472 + 1.035.650.413.675
=
The proportion of common stock equity for PT Surya Toto Indonesia Tbk in 2013
is
1.035.650.413.675
= 0,8287
214.032.439.472 + 1.035.650.413.675
= +
The weighted average cost of capital for PT Surya Toto Indonesia Tbk in 2013 is
0,1713 0,0456 + 0,8287 0,1999 = 0,1735 = 17,35%
(1 )
=
The value of the firm for PT Surya Toto Indonesia Tbk in 2013 is
332.815.933.721 (1 0,35)
= 1.246.860.847.000
0,1735
Estimating Value
0 =
18
The value of the firm for PT Surya Toto Indonesia Tbk in 2013 is
239
= 1377,52
0,1735
Debt Ratio
=
19
ri
Growth
rs
wi
ws
WACC
2009
2010
2011
2012
Debt
Ratio
47,70%
42,19%
43,22%
41,01%
3,26%
4,43%
6,25%
4,31%
18,69%
18,69%
18,69%
18,69%
27,02%
20,85%
20,49%
26,96%
0,2601
0,1587
0,1502
0,1636
0,7399
0,8413
0,8498
0,8364
2013
40,69%
4,56%
18,69%
19,99% 0,1713
0,8287
Year
Value
20,84%
18,24%
18,35%
23,25%
V
Rp632.930.356.900
Rp922.561.304.800
Rp 1.061.950.190.000
Rp958.846.871.100
P0
Rp17.711,13
Rp 21.447,37
Rp2397,82
Rp2047,31
17,35%
Rp 1.246.860.847.000
Rp1377,52
Description
*Optimal Capital
Structure
The optimal capital structure for PT. Surya Toto Indonesia Tbk is in 2013 because it had lowest debt ratio (40,69%),
lowest Weighted Average Cost of Capital (17,35%), and highest Value of The Firm (Rp1.246.860.847.000).
20
4.2 Suggestion
The Optimal Capital Structure is at 40,69% Debt Ratio in 2013.
2014 =
796.096.371.054
=
= 39,27%
2.027.288.693.678
Because the debt ratio in 2014 is lower than 2013, we suggest that
they should increase their debtby doing debt/equity swap and/or borrow
money & buy shares, so they will reach the optimal capital structure.
21
Literature
Gitman, Lawrence J and Chad J. Zutter. 2013. Principles of Managerial Finance,
Thirteenth Edition. Pearson Education
http://finance.yahoo.com/q/hp?s=TOTO.JK+Historical+Prices
http://www.idx.co.id/idid/beranda/perusahaantercatat/laporankeuangandantah
unan.aspx
22