ANALYZINGTHEFINANCIALEFFICIENCYANDSTABILITYOF FMCGCOMPANIESININDONESIA:ASTUDYOFINVENTORY TURNOVERANDDEBT-TO-EQUITYRATIOS FINALPROJECT Inpartialfulfillmentoftherequirements forthemaster’sdegree fromInstitutTeknologiBandung By: FEDIOLAHAURANASYWA StudentID:29122129 MasterofBusinessAdministrationProgram INSTITUTTEKNOLOGIBANDUNG 2024 ABSTRACT ANALYZINGTHEFINANCIALEFFICIENCYAND STABILITYOFFMCGCOMPANIESININDONESIA:A STUDYOFINVENTORYTURNOVERAND DEBT-TO-EQUITYRATIOS By FediolaHauraNasywa StudentID:29122129 (MasterofBusinessAdministrationProgram) FastMovingConsumerGoods(FMCG)companiesideallyshouldhaveahigh inventoryturnoverrate(ITR)duetoitsrapidshelfturnover;theyproducefastand aresoldfastsincethedemandishigh.Inventoryturnoversareoneofthemost importantconsiderationsforretailers,asnearlyeveryretailerhasaninventory managementstrategyinplace.Theyhavetobeabletocontroltheirinventoryasit indicateshowquicklythecompanysellsandhowoftenitreplenishestheir inventory.Toomuchinventoryandlessersales,couldresultinspendingalotof capitalonmaintaininginventoryoroverstockingpoorlysellingproducts- understockingcanresultinmissedsalesopportunities.Company’ssolvability dependsonhowliquidisthecompanyandhowwelltheycouldpayoffitsdebt; thisalsorelatestohowtheyfinancetheircompanywhichiswherethecalculation ofdebt-to-equity(D/E)ratioisuseful.Thisdetermineswhetherthecompanyuses equitytofinancetheiroperationsorinsteadrelyondebttofinancetheir operationalexpenses.Astheresearchbeganwithapreliminaryanalysis,after obtainingthelistof87listedFMCGcompaniesfromIndonesianStockExchange andtheircurrentrationumbersfromStockbit,64.37%ofcompanies’ITRin Indonesiaarewaybelowthecurrentaverageratiowhichwas3.31.Thisresearch willbedesignedqualitativelybyusingthequantitativenumbersgivenfrom companiespubliclypostedfinancialstatementsandannualreportswith complementaryknowledgefromsecondarydataderivedfromthecompany's websiteandotherresourcesincludingreputablejournals,massmedia,andonline articles.Lenderswillbemorelikelytolendmoremoneywhenindeedtothe companieswhohavelowerD/Eratiocomparedtoothercompanieswithhigher D/E.AhighITRandlowD/Ecanmakeacompanymoreagile,reducetheburden ofinterestpayments,whicheventuallywillmakeiteasierforthecompanyto investinprofitableopportunities,andleadtohigherROA. Keywords:FMCG,InventoryTurnover,Debt-to-EquityRatio,FinancialStability ABSTRAK ANALYZINGTHEFINANCIALEFFICIENCYAND STABILITYOFFMCGCOMPANIESININDONESIA:A STUDYOFINVENTORYTURNOVERAND DEBT-TO-EQUITYRATIOS By FediolaHauraNasywa StudentID:29122129 (ProgramStudiMagisterAdministrasiBisnis) FastMovingConsumerGoods(FMCG)idealnyamemilikitingkatperputaran persediaanyangtinggikarenaperputaranbarangyangjugacepat;mereka ber-produksidengancepatdandijualdengancepatkarenapermintaanyangtinggi. Perputaranpersediaanpadasuatuperusahaanretailmenjadisalahsatupengukur terpentingataskesuksesanperusahaantersebut.Persediaanyangterlalubanyak danpenjualanyanglebihsedikit,dapatmengakibatkanpengeluaranbanyakmodal untukmenjagapersediaanatauterlalubanyakmenimbunprodukyang penjualannyaburuk;kekuranganpersediaandapatmengakibatkanhilangnya peluangpenjualan.Solvabilitassuatuperusahaanbergantungpadaseberapalikuid perusahaantersebutdanseberapabaikperusahaantersebutdapatmelunasi utangnya;halinijugaberkaitandengancaramerekamembiayaioperasionalnya sehinggaperhitunganrasiodebt-to-equity(D/E)berguna.Halinimenentukan apakahperusahaanmenggunakanekuitasuntukmembiayaioperasionalnyaatau malahmengandalkanhutanguntukmembiayaibiayaoperasionalnya.Penelitian diawalidengananalisisawal,setelahmemperolehdaftar87perusahaanFMCG yangterdaftardiBursaEfekIndonesiadanangkarasiokeuangandariStockbit, 64,37%rasioperputaranpersediaanperusahaandiIndonesiaberadajauhdibawah rata-ratarasiosaatiniyaitu3,31.Penelitianiniakandirancangsecarakualitatif denganmenggunakanangka-angkakuantitatifyangdiberikandarilaporan keuangandanlaporantahunanperusahaanyangdipublikasikansecarapublik denganpengetahuanpelengkapdaridatasekunderyangdiperolehdariwebsite perusahaandansumberlaintermasukjurnalbereputasi,mediamassa,danartikel online.Akanlebihbesarkemungkinannyauntukpemberipinjamanuntuk memberikanpinjamankepadaperusahaanyangmempunyairasioD/Elebih rendahdibandingkandenganperusahaanlainyangmemilikiD/Elebihtinggi. RasiopersediaanperusahaanyangtinggidanrasioD/Eyangrendahdapat membuatperusahaanmemilikilebihbanyakfleksibilitas,mengurangibeban pembayaranbunga,yangpadaakhirnyaakanmemudahkanperusahaandalam berinvestasi,danberujungpadanilaiROAyanglebihtinggi. Keywords:FMCG,InventoryTurnover,Debt-to-EquityRatio,FinancialStability VALIDATIONPAGE ANALYZINGTHEFINANCIALEFFICIENCYAND STABILITYOFFMCGCOMPANIESININDONESIA:A STUDYOFINVENTORYTURNOVERAND DEBT-TO-EQUITYRATIOS By FediolaHauraNasywa StudentID:29122129 MasterofBusinessAdministrationProgram InstitutTeknologiBandung, Approved Date22December2023 DECLARATIONOFNON-PLAGIARISM Plagiarismis: Taking,using,andsubmittingaworkofanotherincludinganidea,writing,or invention,asifitwasherorhisown. Plagiarismincludes(butnotlimitedto): 1.Quotingverbatimtheworkofanotherwithoutacknowledgment ofthesource; 2.Paraphrasingtheworkofanotherwithoutacknowledgmentof thesource; 3.Usingtheideaofanotherwithoutacknowledgmentofthesource; 4.Submittingtheworkofanotherwithoutidentifyingclearlywho didthework; 5.Colludingbysubmittingtheworkofanotherasherorhisown withconsentfromtheother. IunderstandthatPlagiarismiswrong,abreachofacademicintegrity,andagainst Program,School,andUniversity’sPolicyandRegulation. IdeclarethatallmaterialinthisFinalProjectisoriginal,myownwork,anddoes notinvolveplagiarism. Ihavenotallowed,andwillnotallow,anothercocopymyworkwiththe intentionofsubmittingitasherorhisownwork. Name:FediolaHauraNasywa StudentID:29122129 Signed: Date:18December2023 ACKNOWLEDGEMENT TheauthorexpressesgratitudetoAllahSWTforHisblessingsandwisdomby enablingthesuccessfulcompletionofthefinalprojecttitled“ANALYZING THEFINANCIAL EFFICIENCY ANDSTABILITYOFFMCG COMPANIESININDONESIA:ASTUDYOFINVENTORYTURNOVER ANDDEBT-TO-EQUITYRATIOS.”Deepestgratitudefortheincredible supportandencouragementfortheauthor’sMBAstudiesatSBMITB;hence. Theauthorwouldliketoextendthesegratefulthankstothefollowingpeople: 1.Theauthor’sbelovedandlovingparentsandsister;Eet,Dodi,andPutrifor theirendlessprayersandmoralsupportaswellasmaterialassistance throughthestudy. 2.Dr.ErmanSumirat,M.Bus.,CSA.,CRP.,CIB.,Ak.andDzikri FirmansyahHakam,S.T.,Pg.Dip.,M.Sc.,Ph.Dasthesupervisinglecturers whohavegiventheirvaluabletimeandknowledgeforthisthesistobe insightfulandknowledgeable. 3.ClassmatesofBLEMBA67WeekdaysandSyndicate6colleagueswho haveworkedtogetherthroughouteveryassignmentandclassestogether; whosepresencehavemadethislearningexperienceexciting. 4.Gibran,belovedclosestfriendsandcolleagueswhohaveprovided consistentsupport,comfort,andcompanionshipthroughoutthecompletion ofthisthesis. Hopefullythisresearchwillbeusefulforallthereaders. Bandung,18December2023 FediolaHauraNasywa TABLEOFCONTENT ABSTRACT ii ABSTRAK iii VALIDATIONPAGE iv DECLARATIONOFNON-PLAGIARISM v ACKNOWLEDGEMENT vi TABLEOFCONTENT vii LISTOFFIGURES ix LISTOFGRAPHANDTABLES xi LISTOFAPPENDICES xii CHAPTER1INTRODUCTION 1 1.1Background 1 1.2FMCGIndustry 4 1.3BusinessIssue 4 1.4ResearchQuestions&Objectives 6 1.4.1ResearchQuestions 6 1.4.2ResearchObjectives 7 1.5ResearchScopeandLimitations&BriefWritingStructure 7 CHAPTER2LITERATUREREVIEW 11 2.1TheoreticalFoundation 11 2.1.1InventoryTurnoverRatio 11 2.1.2Debt-to-EquityRatio 11 2.1.3ReturnonAssets 12 2.1.4ReturnonEquity 12 2.1.5CurrentRatio 13 2.1.6GrossProfitMargin 13 2.1.7InterrelationshipBetweentheFinancialRatios 14 2.2ConceptualFramework 15 CHAPTER3RESEARCHMETHODOLOGY 17 3.1ResearchDesign 17 3.2PreliminaryResearchFindings 18 3.2.1CompanieswithHighInventoryTurnoverandLowerD/ERatio19 3.2.2CompanieswithAverageInventoryTurnoverandLowerD/ERatio 20 3.2.3BottomTierCompany 20 3.2.4BiggestFMCGCompaniesinIndonesia 21 3.3DataCollectionMethod(s) 21 3.4DataAnalysisMethod 22 CHAPTER4RESULTSANDDISCUSSION 23 4.1AnalysisofFMCGCompanieswithPositiveNetIncome 23 4.1.1DebtAnalysisofFMCGCompanyFromTopTierLists 26 4.1.2DebtAnalysisofFMCGCompanyFromMiddleTierLists 32 4.1.3DebtAnalysisofBiggestFMCGCompaniesinIndonesia 37 4.2AnalysisofFMCGCompanieswithNegativeNetIncome 40 4.2.1DebtAnalysisofFMCGCompanyFromTopTierLists(Negative NetIncome) 42 4.2.2DebtAnalysisofFMCGCompanyFromMiddleTierLists 45 4.2.3DebtAnalysisofFMCGCompanyFromBottomTierLists 52 4.3BusinessSolutions 57 4.4ImplementationPlanandJustification 61 CHAPTER5CONCLUSION ANDRECOMMENDA TION 65 5.1Conclusion 65 5.2Recommendation 66 BIBLIOGRAPHY 68 APPENDIX 73 LISTOFFIGURES Figure1.1SummaryofCalculatedNationwideAverageRatioValueand PercentageofCompaniesinIndonesiaThatAreBelowtheRatio. 6 Figure1.2IllustrationofConnectionsBetweentheFinancialRatios(Author, 2023) 9 Figure2.1FormulaofInventoryTurnoverRatio 11 Figure2.2FormulaofDebt-to-EquityRatio 12 Figure2.3FormulaofReturnonAssets 12 Figure2.4FormulaofReturnonEquity 13 Figure2.5FormulaofCurrentRatio 13 Figure2.6FormulaofGrossProfitMargin 14 Figure2.7ConceptualFramework 16 Figure3.1FlowchartMethodologyandResearchDesign 17 Figure3.2InventoryTurnoverRateMatrix 18 Figure3.3TopTierCompaniesBasedonInventoryTurnoverandDebttoEquity Ratio(Stockbit,2023) 20 Figure3.4MiddleTierCompaniesBasedonInventoryTurnoverandDebtto EquityRatio(Stockbit,2023) 20 Figure3.5BottomTierCompaniesBasedonInventoryTurnoverandDebtto EquityRatio(Stockbit,2023) 21 Figure3.6BiggestandBestPerformanceFMCGCompaniesinIndonesiaBased onInventoryTurnoverandDebttoEquityRatio(Stockbit,2023) 21 Figure4.1CalculationofInventoryTurnoverRatio 23 Figure4.2CalculationofD/ERatio 23 Figure4.3CalculationofROA 24 Figure4.4ComparisonofInventoryTurnoverRatio,DER,ROA 24 Figure4.5CalculationofROE 25 Figure4.6CalculationofCurrentRatio 25 Figure4.7CalculationofGrossProfitMargin 25 Figure4.8PTBuyungPoetraSembadaFinancialHighlights(AnnualReport HOKI,2022). 27 Figure4.9PTBuyungPoetraSembadaAssets(AnnualReportHOKI,2022).28 Figure4.10PTBuyungPoetraSembadaCashFlows(Author,2023) 29 Figure4.11PTBuyungPoetraSembadaFinancialHighlights(AnnualReport HOKI,2022). 31 Figure4.12PTTigaraksaSatriaTbkFinancialHighlights(TGKAAnnual Reports,2022) 33 Figure4.13PTTigaraksaSatriaTbkFinancialStatementsNotes15(TGKA FinancialStatements,2022) 35 Figure4.14IllustrationofPTTigaraksaSatriaTbkCashFlows 36 (Author,2023) 36 Figure4.15PTAkashaWiraInternationalTbkFinancialHighlights (AnnualReportADES,2022) 37 Figure4.16IllustrationofPTAkashaWiraInternationalTbkCashFlows (Author,2023) 39 Figure4.17CalculationofInventoryTurnoverRatioforCompanieswithNegative NetIncome 40 Figure4.18CalculationofD/ERatioforCompanieswithNegativeNetIncome40 Figure4.19CalculationofROAforCompanieswithNegativeNetIncome 40 Figure4.20ComparisonofInventoryTurnoverRatio,DER,ROAforCompanies withNegativeNetIncome 41 Figure4.21CalculationofROEforCompanieswithNegativeNetIncome 41 Figure4.22CalculationofCurrentRatioforCompanieswithNegativeNet Income 41 Figure4.23CalculationofGPMforCompanieswithNegativeNetIncome 41 Figure4.24PTAndiraAgroTbkFinancialHighlights(ANDIAnnualReports, 2022). 43 Figure4.25IllustrationofPTAndiraAgroTbkCashFlows(Author,2023).44 Figure4.26PTFKSFoodSejahteraTbkFinancialHighlights(AISAAnnual Report,2022) 46 Figure4.27PTFKSFoodSejahteraTbkConsolidatedStatementsofFinancial Position(AISAAnnualReport,2022) 47 Figure4.28PTFKSFoodSejahteraTbkFinancialStatementsNotes7(AISA FinancialStatements,2022) 48 Figure4.29PTFKSFoodSejahteraTbkFinancialStatementsNotes11(AISA FinancialStatements,2022) 49 Figure4.29PTFKSFoodSejahteraTbkFinancialStatementsNotes11 Continued(AISAFinancialStatements,2022) 50 Figure4.30IllustrationofPTFKSFoodSejahteraTbkCashFlows(Author, 2023) 51 Figure4.31PTMatahariPutraPrimaTbkFinancialHighlights(MPPAAnnual Report,2022).