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All Journal Journal of Economic, Bussines and Accounting (COSTING) Jurnal Impresi Indonesia Amkop Management Accounting Review (AMAR) Journal Integration of Social Studies and Business Development
Sumirat, Erman Arif
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Religion Humanities Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Education Law, Crime, Criminology & Criminal Justice Social Sciences

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Journal : Journal Integration of Social Studies and Business Development

 1 
Correlation Between Financial Performance Indicators and Capital Structure of Coal Mining Industry Listed on the Indonesia Stock Exchange Yansil, Eko Thio Ady; Sumirat, Erman Arif; Nainggolan, Yunieta Anny
Journal Integration of Social Studies and Business Development Vol. 1 No. 2 (2023)
Publisher : Integrasi Sains Media

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.58229/jissbd.v1i2.84

Abstract

This research examines the correlation between capital structure (as proxied by Debt-to-Equity Ratio) and several financial performance indicators, including profitability, asset structure, liquidity, and firm size. This research focuses on 18 coal mining companies listed on the Indonesia Stock Exchange (IDX) by at least 2020. The data is derived from the financial reports published on the IDX between 2020 and 2022. Multiple Linear Regression technique is being employed to determine the correlations. Before employing the Multiple Linear Regression technique, several tests were conducted to examine the data's validity and reliability, including normality, multicollinearity, autocorrelation, and heteroscedasticity tests. Multiple Linear Regression is employed after the data passes the tests, consisting of partial regression, ANOVA, and goodness-of-fit tests. This research found that profitability and liquidity negatively correlate with capital structure. At the same time, asset structure and firm size positively correlate with capital structure. Overall, the result of this research supports Pecking Order Theory, in which firms are preferred to use internal financing first. When firms generate higher profits and cash flow, they may consider re-balancing external financing. This research also concludes that profitability, asset structure, liquidity, and firm size represent 47.7% of the variables correlated with capital structure. Future research may be conducted to seek other variables that have not been included in this research yet but are correlated with capital structure.
Stock Valuation of PT Indika Energy Tbk: Impact of Net Zero Emission Transition Mohammad Rusyad Salim; Sumirat, Erman Arif; Sukarno, Subiakto
Journal Integration of Social Studies and Business Development Vol. 1 No. 2 (2023)
Publisher : Integrasi Sains Media

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.58229/jissbd.v1i2.121

Abstract

Climate change drives countries and the private sector to reduce their emission. Investors are becoming aware of sustainability issues and are more likely to prioritize companies demonstrating strong ESG. Adapting to this condition, coal mining companies in Indonesia are improving their ESG performance, one of which is PT Indika Energi Tbk (INDY). As one of the biggest mining companies in Indonesia, INDY has carried out sustainability initiatives and made it one of the companies with the best ESG scores compared to its competitors. However, Indika Energy's good ESG performance was not followed by its good stock performance. This phenomenon initiated the author to analyze how the business transition to low-carbon and Net Zero Emission (NZE) development by INDY will affect the stock valuation. The valuation was based on the Discounted Cash Flow (DCF) method, forecasting ten years of future financial statements considering the company's past performance and strategy. The evaluation was conducted under the Business-As-Usual (BAU) and the NZE Transition Scenario. The author also calculates relative valuations to achieve a more thorough and robust assessment of company value. Based on the DCF method, the intrinsic value of INDY is Rp 2,899 and Rp 2,726 per share for BAU and the NZE Transition Scenario, respectively, while the market price of a share is 1,910 as of the end of Jun-23, which indicated that current share price is undervalued. Therefore, it is recommended that investors buy INDY stock at the current price. The results also showed that the company's diversification strategy did not increase the value of its shares. This outcome might be attributed to the lack of strong incentives from the government or the capital market for supporting sustainable business practices. The company should take the initiative to increase the value, optimize capital structure, and assess assets.
Co-Authors Jota, Astrid Laregan Mohammad Rusyad Salim Pratama, Aditya Firza Satrioutomo, Adrian Subiakto Sukarno Surianto, Andi Muhammad Firzan Sylviana Maya Damayanti Yansil, Eko Thio Ady Yunieta Anny Nainggolan, Yunieta Anny