Capital Structure Strategy to Enhance Value of PT. Astra International

Abstract

Being the best company in their field is every company’s goal. One of the success measurements of being the best company is how the company enhances its shareholders value through the prosperity increase of the owners or shareholders. Looking at the current performance of PT Astra International Tbk it is unfavourable for current investors and potential investors because of the declining in PT Astra International Tbk’s value which lead to generate less earnings for its shareholders. Consequently the purpose of this research is to propose financial strategy namely capital structure strategy to calculate the appropriate proportion of debt and equity through optimal capital structure calculation that able to enhance the value of PT Astra International Tbk. As for the methodology used in this research, it consists of financial ratio analysis, Discounted Cash Flow (DCF) Valuation and Weighted Average Cost of Capital (WACC) Approach for Optimal Capital Structure calculation. These methodologies will be used in determining the capital structure strategy for PT Astra International Tbk. The financial data in this research are collected from the companies’ annual report from the last 6 years and the data from Indonesian Stock Exchange. According to the analysis in this result, the optimal capital structure for PT Astra International Tbk occurs when the company’s debt proportion at 40% which generates the firm value of Rp295.786.553.748.130.