Muhammad Ivannanda Falahandhika - 2502478111

FINANCIAL STATEMENT CHOOSEN: PT UNITED TRACTORS TBK FISCAL

YEAR 2023 – 2022

Link: https://www.unitedtractors.com/wp-content/uploads/2023/04/FS-UNTR-1223.pdf

1. Calculate the firm's working capital requirements for fiscal year 202x and 202x-1.
Interpret your findings.

Working Capital = Current Asset – Current Liabilities

Working Capital 2023

Working Capital = Current Asset – Current Liabilities
Working Capital = 62,667,105 – 48,038,229
Working Capital = 14,628,876

Working Capital 2022

Working Capital = Current Asset – Current Liabilities
Working Capital =78,930,048– 42,037,402
Working Capital = 36,892,646

So the finding was the working capital in 2023 is 14,628,876 and working capital in
2022 is 36,892,646, it can conclude that the working capital is decrease

2. Calculate the ratio of working capital requirement to sales. What is the effect of faster
growth on the company's liquidity position?

NWC to Sales = Net Working Capital

Sales
2023
NWC to Sales = Net Working Capital
Sales

NWC to Sales = 14,628,876

128,583,264
NWC to Sales = 0,113

2022
NWC to Sales = Net Working Capital
Sales

NWC to Sales = 36,892,646

123,607,460
NWC to Sales = 0,298

Faster growth can have both positive and negative effects on a company's liquidity
position. On the positive side, faster growth can lead to increased cash inflows, which
can improve a company's liquidity position. This is because the company is generating
more cash from its operations, which can be used to pay off debts and meet other short-
term obligations. Additionally, faster growth may lead to increased investment
opportunities, which can further improve the company's liquidity position.

On the negative side, faster growth can also lead to increased cash outflows, which can
negatively impact a company's liquidity position. This is because the company may
need to invest in new projects, hire additional employees, or purchase new equipment
to support its growth, which can put pressure on the company's cash reserves.
Additionally, faster growth may lead to increased working capital requirements, which
can also strain a company's liquidity position.

In summary, while faster growth can lead to increased cash inflows and investment
opportunities, it can also lead to increased cash outflows and working capital
 requirements, which can negatively impact a company's liquidity position. Therefore,
it is important for companies to carefully manage their liquidity position as they pursue
growth opportunities.

3. Calculate the company's average collection periods, inventory turnover, and average
payment periods (based on cost of sales) for the company in 2023 and 2022-

Account Recievable Turnover per 2023 (2022 as prior year)

Account Recievable Turnover = Cost of Good Sold

Average Account Recievable

Account Recievable Turnover = 92,797,027

(19,429,613 + 17,033,575) /2
Account Recievable Turnover = 5,08

Average Collection Period = 365 days

Account Recievable Turnover

Average Collection Period = 365 days

5,08
Average Collection Period = 73 Days

4. What can you conclude about the impact of these parameters on the magnitude of the
company's working capital requirements?

The impact of the average collection period on the magnitude of a company's working
capital requirements can be significant. A longer average collection period indicates
that a company is taking longer to collect cash from its customers, which means that
the company's working capital requirements will be higher. This is because the
 company will need to hold more cash or other liquid assets to cover its short-term
obligations until it receives payment from its customers.

On the other hand, a shorter average collection period indicates that a company is
collecting cash from its customers more quickly, which means that the company's
working capital requirements will be lower. This is because the company will not need
to hold as much cash or other liquid assets to cover its short-term obligations until it
receives payment from its customers.

Therefore, a company with a longer average collection period will generally have
higher working capital requirements than a company with a shorter average collection
period. This is because the longer collection period means that the company will need
to hold more cash or other liquid assets to cover its short-term obligations until it
receives payment from its customers. Conversely, a company with a shorter average
collection period will generally have lower working capital requirements because it will
not need to hold as much cash or other liquid assets to cover its short-term obligations
until it receives payment from its customers.

5. Calculate the company's current ratio and quick ratios. What can you conclude about
the reliability of these liquidity ratios for the company?

Current Ratio
Current Ratio = Current Aset
Current Liabilities

2023
Current Ratio = Current Aset
Current Liabilities
Current Ratio = 62,667,105
48,038,229
Current Rasio = 1,29x
2022
Current Ratio = Current Aset
Current Liabilities
Current Ratio = 78,930,048
42,037,402
Current Ratio = 1,85x

2023

Quick Ratio = Current Aset - Inventory

Current Liabilities

Current Ratio = 62,667,105 - 19,429,613

48,038,229
Current Ratio = 0,89x

2022

Quick Ratio = Current Aset - Inventory

Current Liabilities

Current Ratio = 78,930,048- 17,033,575

42,037,402
Current Ratio = 1,45x

Based on the provided data, the company's liquidity position has improved in 2023
compared to 2022. The current ratio has decreased from 1.85x in 2022 to 1.29x in 2023,
indicating that the company's current assets are now able to cover a smaller portion of
its current liabilities. However, the quick ratio has also decreased from 1.45x in 2022
to 0.89x in 2023, indicating that the company's most liquid assets are now able to cover
a smaller portion of its current liabilities.
6. What can you conclude about the company's financing strategies? Is it a conservative
or aggressive strategy?

Overall, the company's financing strategies appear to be more conservative in

2023 compared to 2022. The decrease in the current and quick ratios indicates that the
company is holding fewer liquid assets to cover its short-term obligations, which may
be a sign of a more conservative approach to liquidity management. However, the
decrease in the average collection period may also indicate that the company is
collecting cash more quickly, which can improve its liquidity position.

7. What is your recommendation?

In terms of recommendations, it may be helpful for the company to consider

implementing strategies to improve its liquidity position, such as reducing its inventory
levels or increasing its accounts receivable turnover. Additionally, the company may
want to consider implementing strategies to improve its cash flow, such as reducing its
operating expenses or increasing its sales volume. By taking these steps, the company
may be able to improve its liquidity position and better position itself for future growth
opportunities.