Measuring and Comparing the Financial Performance of Construction Industry: An Indonesia Experience

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Afriza, Eka Sri Dana and Daryanto, Wiwiek Mardawiyah (2019) Measuring and Comparing the Financial Performance of Construction Industry: An Indonesia Experience. International Journal of Business, Economics and Law, 19 (1). pp. 59-73. ISSN 2289-1552

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Abstract

Infrastructure development is currently one of the main concerns of the Indonesian government. Indonesia’s government planned to spend US $450 billion of infrastructure between 2016 and 2020, with over US$22 billion of confirmed spending for 2016. State Owned Enterprise (SOE) has been competing with the private sector to catch the projects from the government. This study aims to analyze and compare the financial health conditions of two SOEs construction industries for periods of 2011 – 2015. The data were collected from their publicly audited financial reports. The Decree No.KEP-100/MBU/2002 issued by Indonesia Ministry of State-Owned Enterprises (SOEs) in June 2002 provides the mandatory of measuring and rating of the SOEs financial health condition. The results of eight financial ratios investigating; 1) return on equity, 2) return on investment, 3) cash ratio, 4) current ratio, 5) collection period, 6) inventory turnover, 7) total asset turnover, 8) total equity to total asset, then be validated by the said Ministry of SOEs Decree to conclude the yearly financial health conditions of each SOEs. The result shows that from 2011 - 2015, the both SOEs has achieved financial healthy condition levels and rating as follows; PT. Adhi Karya (AA, A, AA, A, A); and PT. Wijaya Karya (AA, AA, AA, AA, A). This study has added the knowledge in the financial literature. It also gives a strong insight for managers in construction industry about the financial performance. Therefore, the managers could make decisions to increase the market share and the profitability. Keywords: Financial Health, Decree of Ministry of State Owned Company, Financial Performance, SOEs, Inventory Management

Item Type:	Article
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance
Divisions:	Research And Community Empowerment > Journals
Depositing User:	Rizky Amalia
Date Deposited:	27 Jan 2020 07:52
Last Modified:	19 Feb 2021 04:51
URI:	http://repository.ipmi.ac.id/id/eprint/645

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