| Summary: | It is such a big and risky responsibility for Finance Manager in a company
to set and arrange the composition of capital structure which is usually the
combination of internal funding (capital/equity) and external funding (debt). The
mistake in combining the funding of capital structure can lead to such a fatal
destruction. Thus very important and necessary to periodically evaluate the
financial report of a company, in order to value and analyze whether the financial
ratios still performing good performance or
PT. ABC is a trading company, and since it is established it only used pure
internal funding which is internal capital/equity. As the progress of the company
and in order to gain competitive advantage, at 2009 the management of PT. ABC
has decided to change the composition of the capital structure. They decided to
use debt as added external funding. Since the change of capital structure has been
done, the management of PT. ABC has never evaluated and analyzed its financial
performances. Actually evaluation and analysis toward a company�s financial
performances are very crucial and necessary to be done, because if it is found
indications or symptoms that company�s performance is declining then the
management must find ways to save and increase the performance.
The evaluation on PT. ABC�s financial performance after the change of
the capital structure has been done is using three types of financial ratios, which
are liquidity ratio, profitability ratio, and activity ratio. The next step is comparing
those financial ratios to financial ratios of a company operating in the same
industry with PT. ABC
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