Proceeding Book of The 4th ICMEM 2019 and The 11th IICIES 2019, 7-9 August 2019, Bali, Indonesia ISBN: 978-623-92201-0-5 Published by Unit Research and Knowledge, SBM ITB 234 | Page IMPROVING FINANCIAL HEALTH (CASE OF MAIN BRANCH PT. G) Siti Nur’aini Nabila * and Asep Darmansyah School of Business and Management, Institut Teknologi Bandung, Indonesia * Email: siti.nuraini@sbm.itb.ac.id Abstract. PT G is a private family company that operates in the seafood industry. The company started with processing and exporting frozen shrimps, specializing in vannamei shrimp. PT G main branch only have general suspicion about that the financial health is doing bad, the need to be a confirmation of the general financial health, not only the profitability level. The financial health analysis was done by using financial ratios. The first indicator that the finance of the company isn’t healthy was the continuous loss that they experience and the retained loss that was carried through until 2018 with the value of minus 12 billion rupiah. As bad as the profitability level, the other financial ratios that indicate problem is the solvency ratios. Improving the financial health means turn the company retained loss must be turned into retained earnings which can be done by forecasting with financial target. There are two types of forecasting the internal and external. The end result is that the external target forecasting yields a more plausible solution to improve their financial situation that is to aim increase the sales by 5% each year, keeping the COGS by 87% and supporting it by switching capital structure by taking in long term debt. Keywords: Financial Health, Financial Ratios, Forecast, Net Profit Margin, Retained Earning Since 1987, Indonesia has become one of the most important suppliers of shrimp in the world as stated in Directorate of Agricultural and Forestry Product Export 2012 Indonesia Agriculture for the world. Supplying at least 145,077.9 metric tons or equal to 1,311,010.9 thousand USD of shrimps in 2015 to the whole world. This striving industry is competing with, not only domestic companies but with global competitors such as company from India, Thailand, Vietnam, and others. A competitive business ecosystem compels companies to create strategies that can sustain them, especially if a few years the company financial health suffers. Mr. E (alias), the financial supervisors or ‘controller’, as he would like to call it, of PT G. is tasked with improving the financial condition (2018) of the main branch of PT G for the next five years (2019-2023). PT G is a private family company that operates in the seafood industry. The company started with processing and exporting frozen shrimps, specializing in vannamei shrimp. They marketed the products to USA, Europe, Middle East, Africa and Asia. The company is a part of the a larger group called ISG that is owned by Mr.S (alias) as the majority shareholder. PT G first facility was built at the end of 2008 in Sidoarjo, East Java, Indonesia. The founder created the company because he saw an opportunity to operate in East Java as he previously experienced success from his shrimp processing company in Lampung and was looking to expand the business under a new name. PT G owns a processing facility which processes the raw material from outsourced farmers and other supplying companies in Sidoarjo. PT G strategy is about providing specialized frozen shrimp products, catering to the needs of the customers. In 2011, PT G expanded the business in marine product processing by adding a new line of product, pasteurized crabmeat, and building another facility in Gresik. In the same year, the company expanded again to Kendari, Southeast Sulawesi with the same line of product, shrimp, and adding other products such as octopus and fish. PT G continues to expand the business by providing new lines of products at the end of 2014. They started to produce and export canned sardines, mackerel, tuna, shrimp and crabmeat with location at Muncar, all located in Indonesia. All these new ventures are built as the subsidiaries of the main PT. G branch. THE PROBLEM The business went well, the sales kept on coming and operation kept on producing. In 2015 something unexpected happen. The parent company, PT G, suffers losses in the form of negative net income and deficit retained earnings. At first, the company suspected the reason of this happen due to the devaluation of USD, the main payment currency, but this loss kept on continuing into 2017. In 2018, they finally got a positive income but still have a large amount retained loss, around 12 billion rupiah. The finance division in the main branch had trouble figuring things out because of the lack of personnel to tackle this problem. PT G main branch finance team consist of 5 people who all handled different things: one person for bank transaction, one for sales transactions, one person for operational transactions and one for the accounting problem. As such, Mr E, who is the controller of finances for all PT G was called to solve the problem. Previously, he was station at the other branches such as Kendari and Gresik branches to help solve the problems there. He managed to solve the problem in the subsidiaries, now it is time to solve PT G main branch problem. As PT G main branch only have general suspicion about that the financial health is doing bad, the need to be a confirmation of the general financial health, not only the profitability level. They had never done a financial analysis to examine the company (Nugraha, 2019). Financial analysis should be done because it can evaluate the company performance, compare firm different brought to you by CORE View metadata, citation and similar papers at core.ac.uk provided by SBM ITB Journal System