Financial Health Assessment of Construction Companies Listed on the Indonesia Stock Exchange Using Financial Ratio Analysis

Oct 13, 2025 by windailys.com 105 views

Financial Health Assessment of Construction Companies Listed on the Indonesia Stock Exchange Using Financial Ratio Analysis

Introduction

The construction industry is a vital sector in the Indonesian economy, and the companies listed on the Indonesia Stock Exchange (IDX) play a significant role in shaping the country's economic landscape. However, the financial health of these companies is a crucial factor that determines their ability to sustain growth and remain competitive in the industry. In this study, we conducted a financial health assessment of six active construction companies listed on the IDX using financial ratio analysis. The purpose of this study is to evaluate the financial performance of these companies and identify areas for improvement.

Methodology

The data used in this study were sourced from the financial statements published on the official website of the IDX, www.idx.co.id. We applied purposive sampling, focusing on six construction companies that meet certain criteria. The analysis model used descriptive methods to describe the results found. We examined three main financial ratios: current ratios, asset returns, and debt ratios against equity.

Results

The results of the analysis showed that PT. Adhi Karya (Persero) Tbk experienced a current ratio in the unhealthy category, with a value under 150% during the period 2008 to 2010. The ratio of asset returns in 2008 and 2009 also showed poor results, under 6.5%. However, in 2010, the company succeeded in showing improvements with a ratio of 6.5%. On the other hand, the ratio of debt to equity of PT. Adhi Karya remained in the unhealthy category for three consecutive years with a value of 130%.

PT. Jaya Manggala Pratama Tbk construction had a good current ratio in 2008 and 2009, with a value of 150%, but showed a decline in 2010 with a value below 150%. The return of assets in 2008 and 2010 was in the healthy category with a value of 6.5%, while in 2009 it decreased. Nevertheless, the debt to equity ratio remained in the unhealthy category with a value of 130% over the third year.

Meanwhile, PT. The total building of Persada Tbk showed an unhealthy current ratio in 2008, but improved in 2009 and 2010 with a value of 150%. The ratio of asset returns in 2008 was also in the unhealthy category, but increased in 2009 and 2010. Nevertheless, the ratio of debt to equity remained in the unhealthy category for three years.

PT. Wijaya Karya (Persero) Tbk experienced the same trend, where the smooth ratio remained in the unhealthy category throughout the year under study. However, the ratio of asset returns showed improvement in 2010, to 6.5%. The debt to equity ratio also remained in an unhealthy position.

PT. Duta Graha Indah Tbk had a healthy smooth ratio in 2008 to 2010, with a value that was always at 150%. The ratio of asset returns also showed consistency in the healthy category in 2008 and 2009, but declined in 2010. In the aspect of the debt to equity ratio, the company had a value below 130% over the third year.

Finally, PT. Surya Semesta Internusa Tbk showed an unhealthy current ratio in 2008 and 2009, but improved in 2010 with a value of 6.5%. The ratio of asset returns also showed fluctuations, where in 2008 and 2009 it was in the unhealthy category, but in 2010 there was an improvement.

Discussion

The financial health assessment of the construction companies listed on the IDX during the period studied showed a significant variation. Some companies succeeded in showing improvements, while others experienced a decrease in performance. The results of this study highlight the importance of monitoring and improving financial aspects to ensure sustainability and competitiveness in the increasingly stringent construction industry.

The analysis of financial ratios provides stakeholders with a deeper understanding of the financial performance of these companies. By examining the current ratios, asset returns, and debt ratios against equity, stakeholders can make more informed decisions in company management. The findings of this study can be used as a reference for investors, creditors, and other stakeholders to evaluate the financial health of these companies.

Conclusion

In conclusion, the financial health assessment of construction companies listed on the IDX using financial ratio analysis provides valuable insights into the financial performance of these companies. The results of this study highlight the importance of monitoring and improving financial aspects to ensure sustainability and competitiveness in the construction industry. By examining the financial ratios, stakeholders can make more informed decisions in company management, and the findings of this study can be used as a reference for investors, creditors, and other stakeholders.

Recommendations

Based on the findings of this study, we recommend that construction companies listed on the IDX continue to monitor and improve their financial aspects to ensure sustainability and competitiveness in the industry. The companies should focus on improving their current ratios, asset returns, and debt ratios against equity to ensure a healthy financial position. Additionally, stakeholders should use the financial ratios as a tool to evaluate the financial health of these companies and make more informed decisions in company management.

Limitations

This study has several limitations. Firstly, the data used in this study were sourced from the financial statements published on the official website of the IDX, which may not reflect the actual financial performance of the companies. Secondly, the analysis model used descriptive methods, which may not provide a comprehensive understanding of the financial performance of the companies. Finally, the study only examined six construction companies listed on the IDX, which may not be representative of the entire industry.

Future Research Directions

Future research directions include examining the financial health of construction companies listed on the IDX using other financial ratio analysis models, such as the DuPont analysis or the Altman Z-score model. Additionally, researchers can investigate the impact of macroeconomic factors, such as inflation and interest rates, on the financial health of construction companies listed on the IDX. Furthermore, researchers can examine the relationship between financial health and other factors, such as corporate governance and risk management practices.

References

[1] Indonesia Stock Exchange. (2020). Financial Statements.
[2] Adhi Karya (Persero) Tbk. (2020). Annual Report.
[3] Jaya Manggala Pratama Tbk. (2020). Annual Report.
[4] The total building of Persada Tbk. (2020). Annual Report.
[5] Wijaya Karya (Persero) Tbk. (2020). Annual Report.
[6] Duta Graha Indah Tbk. (2020). Annual Report.
[7] Surya Semesta Internusa Tbk. (2020). Annual Report.

Note: The references provided are fictional and for demonstration purposes only.
Financial Health Assessment of Construction Companies Listed on the Indonesia Stock Exchange Using Financial Ratio Analysis: Q&A

Introduction

In our previous article, we conducted a financial health assessment of six active construction companies listed on the Indonesia Stock Exchange (IDX) using financial ratio analysis. The purpose of this study was to evaluate the financial performance of these companies and identify areas for improvement. In this Q&A article, we will answer some of the most frequently asked questions related to the study.

Q: What are the main financial ratios used in this study?

A: The three main financial ratios used in this study are:

Current Ratio: This ratio measures a company's ability to pay its short-term debts. It is calculated by dividing the company's current assets by its current liabilities.
Asset Return Ratio: This ratio measures a company's ability to generate profits from its assets. It is calculated by dividing the company's net income by its total assets.
Debt to Equity Ratio: This ratio measures a company's level of indebtedness. It is calculated by dividing the company's total debt by its total equity.

Q: What are the results of the financial health assessment?

A: The results of the financial health assessment showed that PT. Adhi Karya (Persero) Tbk experienced a current ratio in the unhealthy category, with a value under 150% during the period 2008 to 2010. The ratio of asset returns in 2008 and 2009 also showed poor results, under 6.5%. However, in 2010, the company succeeded in showing improvements with a ratio of 6.5%. On the other hand, the ratio of debt to equity of PT. Adhi Karya remained in the unhealthy category for three consecutive years with a value of 130%.

Q: What are the implications of the financial health assessment?

A: The financial health assessment has several implications for the construction companies listed on the IDX. Firstly, it highlights the importance of monitoring and improving financial aspects to ensure sustainability and competitiveness in the industry. Secondly, it provides stakeholders with a deeper understanding of the financial performance of these companies. By examining the financial ratios, stakeholders can make more informed decisions in company management.

Q: What are the limitations of the study?

A: The study has several limitations. Firstly, the data used in this study were sourced from the financial statements published on the official website of the IDX, which may not reflect the actual financial performance of the companies. Secondly, the analysis model used descriptive methods, which may not provide a comprehensive understanding of the financial performance of the companies. Finally, the study only examined six construction companies listed on the IDX, which may not be representative of the entire industry.

Q: What are the future research directions?

A: Future research directions include examining the financial health of construction companies listed on the IDX using other financial ratio analysis models, such as the DuPont analysis or the Altman Z-score model. Additionally, researchers can investigate the impact of macroeconomic factors, such as inflation and interest rates, on the financial health of construction companies listed on the IDX. Furthermore, researchers can examine the relationship between financial health and other factors, such as corporate governance and risk management practices.

Q: What are the recommendations for the construction companies listed on the IDX?

A: Based on the findings of this study, we recommend that construction companies listed on the IDX continue to monitor and improve their financial aspects to ensure sustainability and competitiveness in the industry. The companies should focus on improving their current ratios, asset returns, and debt ratios against equity to ensure a healthy financial position.

Q: What are the implications for stakeholders?

A: The financial health assessment has several implications for stakeholders. Firstly, it provides stakeholders with a deeper understanding of the financial performance of the companies. Secondly, it enables stakeholders to make more informed decisions in company management. Finally, it highlights the importance of monitoring and improving financial aspects to ensure sustainability and competitiveness in the industry.

Conclusion

In conclusion, the financial health assessment of construction companies listed on the IDX using financial ratio analysis provides valuable insights into the financial performance of these companies. The results of this study highlight the importance of monitoring and improving financial aspects to ensure sustainability and competitiveness in the industry. By examining the financial ratios, stakeholders can make more informed decisions in company management.