Financial Risk, Debt, and Efficiency in Indonesia’s Construction Industry: A Comparative Study of SOEs and Private Companies
Abstract
:1. Introduction
2. Literature Review
3. Data Sources and Methods
3.1. Data and Research Variables
3.2. Financial Ratio Analysis
- Liquidity ratio: Measures a company’s ability to meet its short-term obligations. This ratio is essential to assess the health of the company’s liquidity and ensure it has enough current assets to cover its current liabilities. The liquidity ratio proxies in this study are the quick and current ratios;
- Profitability ratios: Assess a company’s ability to generate profits relative to its sales, assets, and equity. This ratio measures operational efficiency and the company’s ability to provide profits to shareholders. The profitability ratio proxies in this study are gross profit margin (GPM), asset turnover (ATPM), return on assets, and return on equity (ROE);
- Debt or leverage ratio: This ratio measures a company’s capital structure, specifically how much it relies on debt to fund its assets. Understanding this ratio is essential to understanding financial risk and the company’s ability to manage its long-term obligations. The debt ratio proxies in this study are current-liabilities-to-net-worth ratio (CLNWR), debt-to-equity ratio (DER), and accounts-payable-to-receivables ratio (APRR).
3.3. Efficiency Analysis
- CCR (Charnes–Cooper–Rhodes) Model: The basic DEA model that assumes Constant Return to Scale (CRS) (Charnes et al. 1978). This model is suitable when the scale of DMU operations does not affect efficiency, i.e., proportional input changes will result in proportional output changes. Assuming CRS, the CCR model calculates overall technical efficiency;
- BCC (Banker–Charnes–Cooper) Model: A model that assumes Variable Return to Scale (VRS) (Banker et al. 1984). This model is used when the scale of DMU operations affects efficiency, i.e., proportional input changes do not necessarily result in proportional output changes. The BCC model makes it possible to measure pure technical efficiency by considering different scales of operation.
- is the efficiency score sought;
- is the sum of the i-th input of DMU j;
- is the sum of the rth output of DMU j;
- and is the sum of the i-th input and r-th output of the evaluated DMU;
- is a decision variable that shows the relative weight of DMU j.
- Hypothesis:
- Null Hypothesis (H0): There is no difference in average efficiency between state-owned and private construction companies;
- Alternative Hypothesis (H1): There is a difference in average efficiency between state-owned and private construction companies;
- The t-test formula:
- is the average difference of the sample pairs;
- is the standard deviation of the difference of the sample pairs;
- n is the number of sample pairs;
- Test Decision:
- If the calculated t value exceeds the critical t value, reject H0;
- If the calculated t value is less than or equal to the critical t value, fail to reject H0.
4. Research Results
4.1. Liquidity Ratio
4.2. Profitability Ratio
4.3. Leverage Ratio
4.4. Efficiency Analysis with DEA
5. Discussion
6. Conclusions
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
Appendix A
No. | Variables |
---|---|
Financial Ratio Variables | |
1. | Quick Ratio (QR) |
2. | Current Ratio (CR) |
3. | Gross Profit Margin (GPM) |
4. | After Tax Profit Margin Ratio (ATPM) |
5. | Return on Asset (ROA) |
6. | Return on Equity (ROE) |
7. | Current-Liabilities-to-Net-Worth Ratio (CLNWR) |
8. | Debt-to-Equity Ratio (DER) |
9. | Accounts-Payable-to-Revenue Ratio (APRR) |
Input-Output Variables | |
1. | Revenue (Output) |
2. | Operating Expenses (Input) |
3. | Cost of Revenue (Input) |
4. | Total Assets (Input) |
Appendix B
Company | Description |
---|---|
ACST | PT Acset Indonusa Tbk |
ADHI(s) | PT Adhi Karya (Persero) Tbk |
BDKR | PT Berdikari Pondasi Perkasa Tbk |
BUKK | PT Bukaka Teknik Utama Tbk |
JKON | PT Jaya Konstruksi Manggala Pratama Tbk |
PTPP(s) | PT Housing Development (Persero) Tbk |
TOTL | PT Total Bangun Persada Tbk |
WIKA(s) | PT Wijaya Karya (Persero) Tbk |
WSKT (s) | PT Waskita Karya (Persero) Tbk |
Appendix C
No. | Ratio | Industry Average | Range |
---|---|---|---|
1 | Quick Ratio (QR) | 120% | 60%–190% |
2 | Current Ratio (CR) | 150% | 120%–280% |
3 | Gross Profit Margin (GPM) | 16% | |
4 | After Tax Profit Margin Ratio (ATPM) | 1.9% | 0.5%–8.1% |
5 | Return on Asset (ROA) | 5.6% | 1.5%–21% |
6 | Return on Equity (ROE) | 15.1% | 4.2%–53% |
7 | Current-Liabilities-to-Net-Worth Ratio (CLNWR) | 123% | 38%–259% |
8 | Debt-to-Equity Ratio (DER) | 140% | 50%–280% |
9 | Accounts-Payable-to-Revenue Ratio (APRR) | 8.2% | 3.1%–13.3% |
Appendix D
Liquidity Ratio | ||||
---|---|---|---|---|
Company | Quick Ratio | Benchmark | Current Ratio | Benchmark |
ACST | 26% | Average: 120% Range: 60%–190% | 123% | Average: 150% Range: 120%–280% |
ADHI(s) | 36% | 127% | ||
BDKR | 98% | 124% | ||
BUKK | 50% | 122% | ||
JKON | 90% | 168% | ||
PTPP(s) | 56% | 132% | ||
TOTL | 82% | 139% | ||
WIKA | 51% | 129% | ||
WSKT | 33% | 116% |
Appendix E
Profitability Ratio | ||||||||
---|---|---|---|---|---|---|---|---|
Company | GPM | Benhcmark | ATPM | Benhcmark | ROA | Benchmark | ROE | Benchmark |
ACST | −0.1% | Average: 16% | −27% | Average: 1.9% Range: 1.5%–8.1% | −8.28% | Average: 5.6% Range: 1.5%–21% | −99.44% | Average: 15.1% Range: 4.2%–53% |
ADHI(s) | 13.73% | 2.62% | 1.48% | 6.5% | ||||
BDKR | 46.18% | 14.05% | 5.62% | 10.61% | ||||
BUKK | 16.95% | 8.79% | 8.59% | 16.74% | ||||
JKON | 15.96% | 4.1% | 4.61% | 8.66% | ||||
PTPP(s) | 14.16% | 3.96% | 2.31% | 9.63% | ||||
TOTL | 14.3% | 6.92% | 5.68% | 17.08% | ||||
WIKA(s) | 11.31% | 3.92% | 2.28% | 8.42% | ||||
WSKT(s) | 14.84% | −4.07% | 1.02% | −3.64% |
Appendix F
Leverage Ratio | ||||||
---|---|---|---|---|---|---|
Company | CLNWR | Benchmark | DER | Benchmark | APRR | Benchmark |
ACST | 709% | Average: 123% Range: 38%–259% | 265.98% | Average: 140% Range: 5%–280% | 53% | Average: 8.2% Range: 3.1%–13.3% |
ADHI(s) | 337% | 130.2% | 73% | |||
BDKR | 59% | 50.62% | 5% | |||
BUKK | 76% | 34.83% | 10% | |||
JKON | 63% | 23.13% | 7% | |||
PTPP(s) | 184% | 97.7% | 75% | |||
TOTL | 161% | 1.15% | 7% | |||
WIKA(s) | 187% | 106.04% | 50% | |||
WSKT(s) | 212% | 283.22% | 45% |
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Input | Output | |||||||
---|---|---|---|---|---|---|---|---|
Cost of Revenue (Billion IDR) | Operating Expenses (Billion IDR) | Total Assets (Billion IDR) | Revenue (Billion IDR) | |||||
SOE | Private | SOE | Private | SOE | Private | SOE | Private | |
Mean | 16,946 | 2423 | 1638 | 265 | 55,624 | 3681 | 19,737 | 2833 |
Median | 14,295 | 2227 | 1125 | 193 | 51,805 | 3236 | 16,325 | 2629 |
Stand dev | 7367 | 1318 | 1332 | 169 | 29,781 | 2006 | 9160 | 1555 |
Minimum | 8415 | 226 | 395 | 93 | 16,761 | 819 | 9390 | 413 |
Maximum | 39,926 | 5231 | 5433 | 786 | 124,392 | 10,447 | 48,789 | 6040 |
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Wibowo, F.A.; Satria, A.; Gaol, S.L.; Indrawan, D. Financial Risk, Debt, and Efficiency in Indonesia’s Construction Industry: A Comparative Study of SOEs and Private Companies. J. Risk Financial Manag. 2024, 17, 303. https://doi.org/10.3390/jrfm17070303
Wibowo FA, Satria A, Gaol SL, Indrawan D. Financial Risk, Debt, and Efficiency in Indonesia’s Construction Industry: A Comparative Study of SOEs and Private Companies. Journal of Risk and Financial Management. 2024; 17(7):303. https://doi.org/10.3390/jrfm17070303
Chicago/Turabian StyleWibowo, Febrianto Arif, Arif Satria, Sahala Lumban Gaol, and Dikky Indrawan. 2024. "Financial Risk, Debt, and Efficiency in Indonesia’s Construction Industry: A Comparative Study of SOEs and Private Companies" Journal of Risk and Financial Management 17, no. 7: 303. https://doi.org/10.3390/jrfm17070303
APA StyleWibowo, F. A., Satria, A., Gaol, S. L., & Indrawan, D. (2024). Financial Risk, Debt, and Efficiency in Indonesia’s Construction Industry: A Comparative Study of SOEs and Private Companies. Journal of Risk and Financial Management, 17(7), 303. https://doi.org/10.3390/jrfm17070303