Capital Structure and Working Capital Management Analysis

1. Company Profile

Delta Djakarta Tbk is one of the leading and oldest manufacturer and distributor of some of the best beer brands in the world, such as Anker, Carlsberg, San Miguel, and Kuda Putih trademarks. In Indonesia, Delta Djakarta is also known as a big company, for its brands - Sodaku and Soda Ice become one of Indonesia’s best sellers.

Right now, Delta Djakarta running its business from the headquarters Jl. Inspeksi Tarum Barat-Tambun, Bekasi, West Java – Indonesia. Supported with well management, 479 skilled employees, technological advanced brewery, and full computerized system to consistently produce high quality beer, Delta Djakarta is able to keep a good company's quality and customer commitment and make them ale to compete in various international competitor

2.a. Graphic

2.b. Analysis

At 2004, the closing price is Rp 14,500 and the debt to equity ratio is 0.28 it means that the final price at which a security is traded on a given trading that day is Rp 14,500. This closing price represents the most up-to-date valuation of a security until trading commences again on the next trading day. Closing prices provide a useful marker for investors to assess changes in stock prices over time - the closing price of one day can be compared to the previous closing price in order to measure market sentiment for a given security over a trading day.

The debt to equity ratio is 0.28, it’s indicates the proportion of equity and debt the company is using to finance its assets. At 2005, the closing price is Rp 36,500 and the debt to equity ratio is 0.32. The debt to equity ratio is 32% and it’s higher than 2004, this means that a company has been aggressive in financing its growth with debt. At 2006 the closing price decrease to Rp 22,800 and the debt to equity ratio is 31%. Decrease in debt to equity ratio means that the company. At 2007, the closing price is decrease again to Rp 14,500 and the debt to equity ratio is 29%. At 2008 the closing price is increase to Rp 19,000 and the debt to equity ratio is increase up to 33%. Increase in the debt to equity ratio means that the company could potentially generate more earnings than it would have without this outside financing.

Date	Close	D/E
2004	14,500	0.28
2005	36,500	0.32
2006	22,800	0.31
2007	14,500	0.29
2008	19,000	0.33

Trade off Theory

There are three types of theory of capital structure, Modigliani-Miller, Trade off Theory, and also Pecking Order Theory. Based on the Modigliani-Miller theory, the debt 100% can finance it assets, which is impossible in the reality. Based on Pecking Order Theory, companies prioritize their sources of financing (from internal financing to equity). Internal funds are used first, and when that is depleted, debt is issued, and when it is not sensible to issue any more debt, equity is issued. Based on Trade-Off Theory, a company chooses how much debt and equity are used to finance to generate profit.

From the explanation above, the theory best describe Delta Djakarta condition is Trade-Off theory, because the company chooses how much both debt and equity is used in financing its business. Base on this trade off theory, there are some benefit of company using debt for financing, such as tax benefit of debt which means that from a tax perspective it is cheaper for firms and investors to finance with debt than with equity. In another way, there’s also disadvantage of using debt for financing, such as bankruptcy costs of debt. That’s why the company needs to focus on using debt for financing (doing the trade-off), and be careful the maximum limit of increasing and decreasing the amount of debt for financing, so that company able to optimize its overall value.

From the previous graphic, we can see that on year 2004, Delta Djakarta using 0,28 debt to equity ratio, and the closing price was only Rp. 14.500,-. But on 2005, when Delta Djakarta increasing its debt to financing its business, the company reaches it maximum firm value, which represent by the increase of ending close prices, which value Rp 36.500,-. On year 2006, Delta Djakarta decreased its debt for financing by slightly amount of ratio, but it also gave effect to the firm value (decreasing the closing price into Rp 22.800,-).

On year 2007, Delta Djakarta decreased it again to the ratio of 0.29, but again – it decreased the firm value by decreasing the ending stock prices into Rp 14.500,-. On year 2008, Delta Djakarta increased its used of debt to finance its business upto 0.33 (higher than its used on 2005), but the company value which represent by the stock prices was only increase up to Rp. 19.000,00 (doesn’t exceed the company firm value on year 2005, which was only use 0.32 debt to equity ratio).

2. Analysis Working Capital Management of the Company

a) Company Working Capital from 2004 - 2008

Working capital is a common measure of a company’s liquidity, efficiency, and overall health. Because it includes cash, inventory, account receivable, accounts payable, the portion of debt due within one year, and other short-term accounts, a company’s working capital reflects the results of a host of company activities, including inventory management, debt management, revenue collection, and payments to suppliers.

Positive working capital generally indicates that a company is able to pay off its short-term liabilities almost immediately. Negative working capital generally indicates is unable to do so. One of the most significant uses of working capital is inventory.

In 2004, that is a positive working capital. The current asset is Rp299.334.225,- exceed the current liabilities is Rp72.388.645,-. So, in 2004 Delta Djakarta has 226,945,580 to paying back creditors in short-time.

In 2005, Delta Djakarta has a positive capital working like 2004, the value is Rp279.182.635,-. The value from Rp299.334.255,- (current asset) minus Rp103.622.706,- (current liabilities). The value is more than in year 2004 because the current asset in year 2005 is bigger than in year 2004. That is mean; Delta Djakarta has more possibility to paying back to creditors.

In 2006, we can see the working capital growing up from year 2005. Rp306.019.627,-. The value from Rp419.203.738,- (current asset) minus Rp110.184.111,- (current liabilities).

In 2007, Delta Djakarta show the working capital still increase from last year, the value is Rp328.882.363,-. The value from Rp432.546.745,- (current asset) minus Rp103.664.382,- (current liabilities).

In year 2008, the value is Rp347.408.764,-. The value from Rp474.010.532,- (current asset) minus Rp126.601.768,- (current liabilities). Year 2008, the working capital still show the increasing of working capital.

Working capital for Delta Djakarta Tbk. show the value is increase every year, the current asset is increase every year too. When the current asset is increase, while the current liability stays the same, the working capital tends will increase as well. In year 2006 show the current liabilities is bigger than in year 2007 but, both of them still lower than current asset of each year. So, the working capital still has positive working capital.

Analysts commonly point out that the level and timing of a company’s cash flows are what really determine whether a company is able to pay its liabilities when due. The working capital formula assumes that Delta Djakarta Tbk. really would liquidate its current assets to pay current liabilities, which is not always realistic considering some cash is always needed to meet payroll obligations and maintain operations. Further, the working capital formula assumes that accounts receivable are readily available for collection, which may not be the case for Delta Djakarta Tbk.

b) Cash Conversion Cycle from 2004 - 2008

Cash Conversion is a metric that expresses the length of time, in days, that takes for a company to convert resource inputs into cash flows. The cash conversion cycle attempts to measure the amount of time each net input dollar is tied up in the production and sales process before it is converted into cash through sales to customers. This metric looks at the amount of time needed to sell inventory, the amount of time needed to collect receivables and the length of time the company is afforded to pay its bills without incurring penalties.

Cash Conversion Analysis is very important because it represents the number of days a firm's cash remains tied up within the operations of the business. It is also a powerful tool for assessing how well a company is managing its working capital. The lower the cash conversion cycle, the more healthy a company generally is. If you compare the results of the cycle over time and see a rising trend it is often a warning sign that the business may be facing a cash flow crunch.

We can calculate the cash conversion by using the formula bellow:

CCC = avg. inventory + avg. acc receivable – avg. acc payable

COGS / 365 Revenue / 365 COGS / 365

Based on Delta Djakarta Tbk. financial data at December 31 2004 until 31 December 2008 we can determine that:

1. Base on our calculation, for 2004 the inventory conversion period shows the number of 78.29 it means that the company takes an average of 78 days to convert materials into finished goods and then sell it to the customers. And then, the receivables conversion period shows the number of 133.89 which means that the company have an average of 133 or 134 days after a sale to convert their receivables into cash. Then, for payables conversion period from the calculation we get the number of 23.35 it means that the company have the ability to pay their bills about 23 days. After that, we calculate it by using the formula above we get the number of cash conversion cycle is 188.83 or 188 – 189 days.

2. For 2005 from the data we can calculate that the inventory conversion shows the number of 70.26 which means that the company have an average of 70 days to convert their raw materials into finished goods and then sell it into the market. The receivables conversion period show the number of 122.13 it means that it takes 122 days to convert the receivables into cash. For the payables conversion period shows the number of 28.78 that means the company afforded to pay the bills within 28 – 29 days without any penalties. Then, we calculate all of this variable we get the number of 163.61 that shows the cash conversion cycle of the company in 2005 would be 163 – 164 days.

3. In the year of 2006 the inventory conversion period of Delta Djakarta Tbk. shows the number of 81.42 means that the company takes an average of 81 days to convert their material into finished goods and then sell it. The Receivables conversion period shows the number of 171 that means the company have an average of 171 days to collect their receivables into cash. The payables conversion period shows the number of 29.18 which means that the company have an ability to pay their bills about 29 days. And then, the calculation of cash conversion cycle is about 223.24 or 223 days.

4. At 2007, The inventory conversion period is 51.73 meaning that the company takes an average of 51 until 52 days to produce their goods and then sell it into the market. The receivables conversion period is 155.80 that means the company takes an average of 155 – 156 days to collect their receivables into cash. The payables conversion period is 27.03 which means that the company afforded to pay their bills within 27 days. Then, the cash conversion cycle would be 180.5 or 180 days.

5. For 2008, inventory conversion period is 220.61 that means the company have an average of 220 – 221 days to convert their raw materials into finished goods and then sell it. The receivables conversion period is 375.56 meaning that the company takes an average of 375 – 376 days to collect their receivables and the payables conversion period is 64.72 means that the company ability to pay their bills within 64 until 65 days. From these variables we can find the cash conversion cycle is about 531.45 or it would be 531 days.

From all of the calculation of cash conversion cycle within 2004 until 2008 we can determine that Delta Djakarta Tbk. have to shortening their cash conversion cycle by doing:

· Reducing the inventory conversion period by processing and selling goods more quickly.

· Reducing the receivables conversion period by speeding up collections

· Lengthening the payables conversion period by slowing down the company’s own payments.

But based on Delta Djakarta Tbk. case we determine that the company have to reducing the receivables conversion period by speeding up collections because from the calculation of the data we get the great number of receivables conversion period especially at 2008 the receivables conversion period reach the number of 375.56 which means that the company takes the average of 375 until 376 days to collect all of their receivables. The large number of receivables conversion period make the cash conversion cycle great too. It’s risky for the company because rising trend it is often a warning sign that the business may be facing a cash flow crunch.

4. Conclusion

Trade off Theory

Thetheory best describe Delta Djakarta condition is Trade-Off theory, because the company chooses how much both debt and equity is used in financing its business. Base on this trade off theory, there are some benefit of company using debt for financing, such as tax benefit of debt which means that from a tax perspective it is cheaper for firms and investors to finance with debt than with equity. In another way, there’s also disadvantage of using debt for financing, such as bankruptcy costs of debt. That’s why the company needs to focus on using debt for financing (doing the trade-off), and be careful the maximum limit of increasing and decreasing the amount of debt for financing, so that company able to optimize its overall value.

From the previous graphic, we can see that on year 2004, Delta Djakarta using 0,28 debt to equity ratio, and the closing price was only Rp. 14.500,-. But on 2005, when Delta Djakarta increasing its debt to financing its business (0.32), the company reaches it maximum firm value, which represent by the increase of ending close prices, which value Rp 36.500,-. On year 2008, Delta Djakarta increased its used of debt to finance its business upto 0.33 (higher than its used on 2005), but the company value which represent by the stock prices was only increase up to Rp. 19.000,00 (doesn’t exceed the company firm value on year 2005, which was only use 0.32 debt to equity ratio). Now we can conclude that the decision of Delta Djakarta Tbk. made on 2005 to use 0.32 debt to equity ratio was the best because it made the company to reach maximum firm value.

Company Working Capital

Working capital is a common measure of a company’s liquidity, efficiency, and overall health. There are two types of company working capital, positive and negative. Negative working capital generally indicates that company is unable to pay off its short term liabilities. While positive working capital indicates that company is able to do so.

Delta Djakarta, during the period of 2004 – 2008, always has bigger amount of assets rather than its liabilities. This condition leads Delta Djakarta to have a positive working capital, which is good, because it indicates that company is able to pay off its short term liabilities.

The working capital of Delta Djakarta had been increasing during that period as well. This fact shows that company has a good performance and better progress from year to year. This increases shows that company abilities to pay off its debt are increase, means that company is not a risky company.

Cash Conversion Cycle

Cash Conversion is a metric that expresses the length of time, in days, that takes for a company to convert resource inputs into cash flows. The cash conversion cycle attempts to measure the amount of time each net input dollar is tied up in the production and sales process before it is converted into cash through sales to customers.

During period of 2004 – 2008, Delta Djakarta Tbk. reach it best condition of cash conversion cycle on year 2005. Because in this year, Delta Djakarta got the smaller amount of CCC, which value is 163.61.

From the data we can calculate that the inventory conversion shows the number of 70.26 which means that the company have an average of 70 days to convert their raw materials into finished goods and then sell it into the market. The receivables conversion period show the number of 122.13 it means that it takes 122 days to convert the receivables into cash. For the payables conversion period shows the number of 28.78 that means the company afforded to pay the bills within 28 – 29 days without any penalties.

Assignment 2 # Stock Analysis of Delta Djakarta Tbk. ( Jan 2, 2008 - Sep 30, 2009)

1. Company Profile

Delta Djakarta Tbk is one of the leading and oldest manufacturer and distributor of some of the best beer brands in the world, such as Anker, Carlsberg, San Miguel, and Kuda Putih trademarks. In Indonesia, Delta Djakarta is also known as a big company, for its brands - Sodaku and Soda Ice become one of Indonesia’s best sellers.

Right now, Delta Djakarta running its business from the headquarters Jl. Inspeksi Tarum Barat-Tambun, Bekasi, West Java – Indonesia. Supported with well management, 479 skilled employees, technological advanced brewery, and full computerized system to consistently produce high quality beer, Delta Djakarta is able to keep a good company's quality and customer commitment and make them ale to compete in various international competitor

2. Analysis of Company Stock

2. a. Stock Chart

2. b. Analysis of the Stock Chart

The graphic above shows the movement of stock prices of Delta Djakarta Tbk during January 2, 2008 until September 30, 2009 which analyze daily. The stock prices can be an indicator of market trend. It means that the movement above describes market condition at one moment, whether it is active or dull. There are two components of the graphic that will be discussed: Volume and High Low Close Prices.

From January 2, 2008 until April 29, 2008 the price is Rp 16.000,- / share, and is remain unchanged. There is only several transaction occurred during that period. Delta Djakarta had not much transaction during that period, because the company is may be not interesting enough to people to buy it stocks.

The first transaction on 2008 was made on February 20, which consist of 6 lot (1 lot = 500 shares), followed by second transaction which was made on April 16, which consist of 3 lot.

In the end of April 2008, Delta Djakarta Tbk announced the growth of net income for 2008 9.44% into 51.8 billions from the year 2007 with the amount of 47.33 billions. While the volume of minimum selling is increasing 7% from last year. Management of Delta Djakarta Tbk also optimist announced to public that the target will be reached, because in the first three months the selling is reaching Rp 221 billions. That number is increase up to 50.35% from the same period in last year (Rp 147 billions). The optimism also supported by the fact that the exchange of rupiah currency to other currencies is decreasing, so that the export selling is increasing.

From the data above, Delta stock prices increase Rp 2.000,- become Rp 18.000,- / share. This increasing caused the transaction, included in 3 lots. The stockholders tend to sell their stocks when the price goes up. While people that haven’t own the stock tends to buy the stock with the hope that the stock prices will increase continually. That’s why in the beginning of May, the volume of the transaction started to increase (21 lots were transacted). On May 2, the low price were Rp. 16.000,- while the high price reach Rp 18.000,-. With these increasing price, people do the transaction (buy and sell) with the hope to gain profit. People analyze every piece of data on a company and say how much a 'fair price' is for it. If it’s trading above this price and people own stock then sell, if it’s trading below this price then buy. That's it in very simple on gaining profit terms.

The issue of this price of the company capturing a lot of attention of the investor and finally resulted on the number of lots being transacted increase constantly on May 5 (150 lots). But on the May 6, the high prices decrease to Rp. 17.000,- while the low prices increase to Rp. 16.600,-, these condition resulted on volume stock being transacted decrease constantly.

During May 2008, the stock price level of Delta Djakarta was going up. It probably happens because of the issue that Delta Djakarta will distribute the dividend on June 16, 2008 toward its stockholders which listed on the stockholders list on June 2. Delta Djakarta approved to pay the dividend year book 2007 by Rp 1.400,-/shares or Rp 22.418 billions. From that total amount, about Rp 12.170 billions will be paid cash as dividend (from common stock) Rp 760 per shares and Rp 10.248 billions as an additional cash dividend (for preferred stock) Rp 640 per shares.

In the middle of June 08 until the end of July 08, there were no significant changes both in volumes and prices. It probably happen because the stock prices increase to Rp 22.000,-/shares, and has no difference in high low close price. This condition is not interesting enough for the investor to invest their money to the Delta Djakarta Stock.

The net profit of Delta Djakarta Tbk during the first six months of 2008 is Rp 34,36 billions. This number increase until 79.8% compare to from the same period year 2007 (Rp 19,11 billions). This significant growth also supported by the increase of net sales about 46.3% into Rp 532,55 billions from Rp 363,92 billions. The progress of Delta Djakarta result on the increase of earning per share from Rp 1.194,- to Rp 2.146,-. This increasing resulting a lot of demand from public, and because a lot demand of the stocks, the price is going up during August 2008.

From middle of November 2008 until middle of March 2009, the stock price level of Delta Djakarta was remaining the same, stable, and unchanged. This is prove that the Company doesn’t affected by the global crisis which was started on middle 2007 and was finally felt by Indonesia in the middle of 2008 till 2009.

On April 2009, Delta Djakarta announced the growth of net income is 5% compare to 2008. While the net sales is being targeted to reach Rp 1,3 trillion till the end of the year 2009 with the profit Rp 104 billions. Marketing Manager DLTA Ronny Titiheruw said that the beer industry last year (2008) increasing by 20% from the year before (2007). That’s why in 2009, Delta Djakarta set the target to growth minimum 5%. On the other hand, DLTA will distributed the dividend for year 2008 with the amount of Rp 3.500,- / share. Starting from this period, the stock price of Delta Djakarta keep increasing from the amount of Rp 25.000,- until Rp 45.000,- (On May 27, 2008). The transactions in between those periods were really varied, and we can see that from the graphic. Compare to the period before, the transaction between April 2009 till May 27, 2009 were pretty much alive, and investor are interested to the DLTA stock, even though is not much, because of the high price per share is relatively expensive compare to the other company that may only cost Rp 1.000,- or Rp 5.000,- per shares..

On August 17, 2009, Delta Djakarta has a significant increasing volume of transaction (110 lots). It probably happened because of increase in the high price were Rp. 52.000,- while the low price reach Rp 49.000,-. With these increasing price, people do the transaction (buy and sell) with the hope to gain profit. People analyze every piece of data on a company and say how much a 'fair price' is for it. If it’s trading above this price and people own stock then sell, if it’s trading below this price then buy.

2. c. The Average, Standard Deviation, Highest and Lowest

2. d. Analysis of the Average, Standard deviation, Highest and Lowest result

1.Average

In general terms the idea is that both a stock's high and low prices are temporary and that a stock's price will tend to have an average price over time. When the current market price is less than the average price, the stock is considered attractive for purchase, with the expectation that the price will rise. When the current market price is above the average price, the market price is expected to fall. In other words, deviations from the average price are expected to revert to the average.

From the data shows that the average price of stock of Delta Djakarta Tbk n the almost 2 years between January 1 2008 until September 30 2008 for the high price of stock is Rp. 25,219.81777. From The data between January 2 2008 until April 2 2009 shows that the price of stock is less than average price, it mean that the stocks are considered for purchase. But in the April 3 2009 until September 30 2009 the price of stock is above the average price, that’s mean the market price is expected to fall down.

For the low price of stock, the average price is Rp. 25,174.71526. At 2 January 2008 until 2 April 2009 Delta Djakarta has a good performance in selling their stock because in that moments the price of stock is less than average price, but at April 3 2009 until September 30 2009 Delta Djakarta got their bad performance because in this period the price of stock is above the average price is means that the market stock price of Delta Djakarta is falling down in this period.

The average price of close price Delta Djakarta stock is Rp. 25,196.12756. At January 2 2008 until April 2 2009 Delta Djakarta got their best performance on selling stock because the price of the stock in this period is upper the average price. But unfortunately, at April 3 2009 until September 30 2009 Delta Djakarta face the problem that the price of stock is above the average price which means that the stock will difficult to selling and got fall down in market price.

The last is average volume of Delta Djakarta stock; from the data we calculate that the average volume is 1.496583144. It means that on average in one day Delta Djakarta have 1 or 2 volume in selling stock. At May 5 2008, Delta Djakarta have a good performance in selling stock because in this date was 150 transactions happens.

2. Standard Deviation

In finance, standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility. Standard Deviation is a statistical measurement that sheds light on historical volatility.

The standard deviation is often used by investors to measure the risk of a stock or a stock portfolio. The basic idea is that the standard deviation is a measure of volatility: the more a stock's returns vary from the stock's average return, the more volatile the stock.

The larger the difference between the closing prices and the average price, the higher the standard deviation will be and the higher the volatility. The closer the closing prices are to the average price, the lower the standard deviation and the lower the volatility. From all the data, the high level price (10490.66748) is the highest one. From the volume level, we can see the standard deviation have high volatility 9.273833281 than average 1.496583144. Because of the standard deviation is very high, there is the great dispersion in volume or we can say volume has high volatility.

Delta Djakarta has a risky condition to having stock because the data is highly dispersed. Because of the standard deviation is high so, this company’s stock exchange price has high possibility to change, which mean that the price is not stable.

3. Highest and Lowest Analysis

Volume

On May 5, 2008 the price in low and close is Rp16.000,- and it’s become the lowest price. But, the issue of this price of the company capturing a lot of attention of the investor and finally resulted on the number of lots being transacted increase constantly (150 lots) and it makes on May 5, 2008 reach the highest in volume.

The lowest volume is 0. Delta Djakarta stock often get this number (0) which means that DLTA had not much transaction during the period, because the company stock prices is flat, there were no difference of price during that period, that’s why investor tends not to be interesting to invest their money to Delta Djakarta stocks, because there are no progress. This were happen on January 2, 2008 -April 29, 2008, June 4, 2008 -July 20, 2008, and November 11, 2008- March 17,2009

.

High and Low Stock Prices

The highest of stock price is Rp. 52.000,- per shares during September 27, 2009 until September 30, 2009 . It probably because Delta Djakarta has proved the growth of net income is 5% compare to 2008. While the net sales is being targeted to reach Rp 1,3 trillion till the end of the year 2009 with the profit Rp 104 billions. This highest price also supported by the extreme lot being transacted on September 16, 2009. The price of company could be increase because a lot of demands were occurred.

From January 2, 2008 until April 29, 2008 become the lowest price in high price that is Rp16.000,-/share, and is remain unchanged. Delta Djakarta had not much transaction during that period; means the company is may be not interesting enough to people to buy it stocks. The low price in the beginning of January till April 2008 may also be supported because during that time, Delta Djakarta Tbk was not performance compare to the recent months in 2009.

Closing Price

The different between the highest price and the lowest price is relatively high, it can be seen by observe the highest closing price per shares is Rp 52.000,- reached on September 24, 2009 until September 30, 2009. While the lowest closing price is Rp 16.000,- reached on January 2, 2008 until April 29, 2008. The different shows that the company has high risk, because of its unpredictable and wide changes.

4. Conclusion

Based on the information of its stock during January 2, 2009 – September 20, 2009, Delta Djakarta Tbk. has a good progress. It stocks prices is increasing as well as the volume of transaction in the recent period, compared from the historical past. During January 2008 – April 2008, the stock prices were unchanged (Rp 16.000,-/shares), neither nor the volume (zero volume). This means that Delta Djakarta was not interesting enough to be invested.

At the beginning of May 2008, Delta Djakarta has a significant progress. Its volume increase up to 150 lots, and its price increase up to Rp 17.200,-/ shares. The increase both in volume and prices means that Delta Djakarta has a good performance in the stock market. This increase also might be supported by the statement that Delta Djakarta was going to distribute the dividend toward its stockholders on June 2008.

The stock prices were increase and decrease not significantly depending on the stock market progress and price list during May 2008 till beginning of November 2008, before actually reach the constant on price Rp 20.000,-/shares during end of November 2008 – beginning March 2009. The volume during this period was zero; means that company had no transaction. This might be cause by the increase of prices that being too expensive and might be the effect of global crisis that felt in Indonesia.

There was a good progress because of the prices that keep increasing during end of March 2009- until June 2009. This increasing of price is followed by the increasing of volume being transaction as well. On this point, Delta Djakarta is able to performance well, that’s why although its stock prices keep increasing, the demand for this stock also increasing.

The prices were going down a little bit during June 14- June 24, 2009, but then it keep increasing again from the end of June 2009 till the September 2009. It follows by significant volume (110 lots) in middle of September. From the fact above, we can say that the company has a good progress seeing from the graphical and its historical data.

Seeing from the standard deviation analysis, the data are also dispersed, which means have high volatilities. High volatilities describes that the stock prices have high possibilities to change, this changing prices seeing a risky condition for the stockholder, because of the very vary prices (unstable) – it could be really high, or really down. But on the other hand, this changing price also could be an opportunity for the stockholders to gain profit, by use the difference or change of those prices.

Financial Analysis Periode 2004-2008 of Delta Djakarta Tbk.

COMPANY PROFILE

Delta Djakarta Tbk is one of the leading and oldest manufacturers of distributor of some of the best beer brand in the world, such as Anker, Carlsberg, San Miguel, and Kuda Putih trademarks. From 1932, the management has changes many times and in 1984 is the first time for Delta Djakarta Tbk go public started to sell it shares in Indonesia at Jakarta and Surabaya Stock Exchange and the headquarters at Jl. Inspeksi Tarum Barat-Tambun, Bekasi, West Java-Indonesia.

Delta Djakarta Tbk also produce non alcoholic drinks, there are Sodaku and Soda Ice which are the lead brand of Delta Djakarta for carbonated soft drink brand and carbonated water in Indonesia. Delta Djakarta Tbk is able to keep a good company’s quality and customer commitment and make them able to compete in various international competitor.

FINANCIAL ANALYSIS

Liquidity Analysis

Liquidity analysis requires the use of cash budgets and ratio analysis provides a quick, easy-to-use measure of liquidity.

1. Current Ratio

Current Ratio indicates the extent to which current liabilities are covered by assets expected to be converted to cash in the near future. From the data, we can know that: If the current ratio is bigger than 1.00, generally the company is on a good position and is able to meet its short term debt obligation.

2. Quick or Acid-test Ratio

Some assets are closer to cash than others. If trouble comes, inventory may not sell at anything above fire-sale prices. From the data, we can know that: The bigger ratio the better, because company would not have to sell inventory to pay its obligations.

3. Cash Ratio

A company’s most liquid assets are its holdings of cash and marketable securities. It may not be a big deal, if company has low cash ratio, because the company can borrow on short notice, but still the company needs to know their most liquid assets regarding pay its current obligations.

Efficiency Analysis

Efficiency Analysis is another important thing to evaluate financial statement, because it measures the efficiency of a company on turning their inventory, assets, and accounts receivables.

Average Collection Period

Average Collection period is average number of days that a company needs to collect or receive money in cash from its account receivable.

1. Account Receivables Turnover

Account Receivable Turnover measures the speed they received cash from account receivable. The higher the ratio, the better the company performs, because a high turnover ratio is generally a good thing since it means that customers are paying their bills on time.

2. Total Assets Turnover

The total asset turnover ratio measures the ability of a company to use its assets to generate sales. The higher the total asset turnover ratio as compared from historical data for the company, the more intense the firm’s sales, which is related with one or more of the asset composing total assets.

3. Inventory Turnover

Inventory Turnover measures the efficiency of the business in managing and selling its inventory. This ratio gauges the liquidity of the firm's inventory. From the data, we can know that the higher inventory turnover ratio means the better, because a high inventory ratio shows that company is efficiently managing and selling its inventory.

Fixed Assets Turnover

Fixed Assets turnover measures the company ability and its effectiveness to generate sales based on the use of their investments in plant, property, and equipment.

Leverage Analysis

Leverage ratios show the degree to which the business is leveraging itself through its use of borrowed money. Financial leverage ratios measure the extent to which the firm is using long term debt.

1. Debt Ratio

Debt ratio measures the leverage of the company along with the potential risks the company faces in terms of its debt-load. A debt ratio of greater than 1 indicates that a company has more debt than assets; meanwhile, a debt ratio of less than 1 indicates that a company has more assets than debt.

2. Equity Ratio

Equity ratio indicates the relative proportion of equity to all used to finance a company's assets. A low equity ratio will produce good results for stockholders as long as the company earns a rate of return on assets that is greater than the interest rate paid to creditors.

3. Debt to Equity Ratio

Debt to Equity Ratio measures how much money a company should safely be able to borrow over long periods of time. The smaller, the better, because it less risky for the company.

Profitability Analysis

Profitability ratios show a company’s overall efficiency and performance as well as represent the firm’s ability to measure the overall efficiency of the firm in generating returns for its shareholders.

1. Operating Profit margin

Operating profit margin measures a company’s operating efficiency and pricing efficiency with its successful cost controlling. The higher means the better overall operating efficiency, incorporating all of the expenses of ordinary, daily business activity.

2 Net Profit Margin:

Net profit margin represents the firm’s ability to measure the overall efficiency of the firm in generating returns for its shareholders. The higher means the better show of how much each sales dollar shows up as net income after all expenses are paid.

3. Operating Income Return on Investment:

Operating Income Return on Investment measured that the firm’s ability to meet its annual interest payment.

4. Return on Assets

It measures the efficiency with which the company is managing its investment in assets and using them to generate profit. The higher the percentage, the better, because it shows that the company is doing a good job on using its assets to generate sales.

5. Return on Equity

The Return on Equity ratio is perhaps the most important of all the financial ratios to investors in the company. It measures the return on the money the investors have put into the company. The higher the percentage, the better, because it shows that the company is doing a good job on managing shareholders’ money.

6. Times Interest Earnings

Times Interest Earning indicates how many times a company can cover its interest charges on a pretax basis. Failing to meet these into obligation could force a company into bankruptcy.

7. Earnings per Shares

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability. The higher is number is the better because company gain the more profit on each share they sell.

DuPont Analysis

DuPont analysis tells us that ROE is affected by three things: Operating efficiency, which is measured by profit margin; Asset use efficiency, which is measured by total asset turnover; Financial leverage, which is measured by the equity multiplier.