Debt Restructuring Forecast of PT. X During Covid-19 Pandemic Using Monte Carlo Simulation
Abstract
The Covid-19 pandemic has led to the worst economic crisis in Indonesian history. The economic crisis has negatively influenced the financial condition of the majority of the companies operating in Indonesia. PT. X as an Indonesian mining contractor is currently facing financial distress due to its incapability to sustain its healthy cash flow. Debt restructuring is one method for PT. X to escape and restore its financial position during the pandemic. This paper offers managerial recommendations for debt restructuring alternatives by forecasting the Net Present Values using Monte Carlo Simulation with cash flow volatility as the basis of analysis. Three alternatives, such as debt to equity swap, asset liquidation, and debt rescheduling, are considered as the most viable options for PT. X. The results of the simulation showed that Debt to Equity Swap generates the highest Net Present Value of Rp 23 billion, whereas rescheduling and asset liquidation only yields Rp 22 billion and Rp 21 billion respectively. Furthermore, to look for the best outcome in the future, other restructuring methods should be taken into consideration according to the capabilities of the company.
References
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Leary, M. T., & Roberts, M. R. (2005). Do firms rebalance their capital structures? Journal of Finance, 45.
Lee, D. K., In, J., & Lee, S. (2015). Standard Deviation and standard error of the mean. Korean Journal of Anesthesiology.
Luwiyanto. (2016). Analisis rasio keuangan perusahaan tambang batubara yang terdaftar di bursa efek indonesia. e-Jurnal Katalogis, 4(10), 93-108.
Manaligod, M. G. (2008). Debt Restructuring: alternatives and implications. Notes on business education, 8(1). Retrieved from http://xsite.dlsu.edu.ph/research/centers/cberd/pdf/business/vol8/Vol8no1.pdf
Metropolis, N. (1987). The Beginning of the Monte Carlo Method. Los Alamos Science Special, 125 - 130. Retrieved from https://permalink.lanl.gov/object/tr?what=info:lanl-repo/lareport/LA-UR-88-9067
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Mitra, S. K. (2011). Revisiting WACC. Global Journal of Management and Business Research, 11(11), 89 - 95.
Nurmasari, I. (2020, May 3). Dampak Covid-19 terhadap perubahan harga saham dan volume transaksi. Jurnal Sekuritas, 3(3), 230 - 236.
Palisade. (2018). Monte Carlo Simulation. Retrieved Agustus 13, 2020, from Palisade: https://www.palisade.com/risk/monte_carlo_simulation.asp
Pamplona, E. d., Brandao, M. C., Montevechi, J. A., Pinho, A. F., Alburquerque, V. O., & Junior, a. P. (2013, October 14). Evaluating Energy Sectors Investments: Calculating Volatility. (C.-Y. Lu, Ed.) Mathematical Problems in Engineering, 2013. doi:http://dx.doi.org/10.1155/2013/128309
Patunrui, K. I., & Yati, S. (2017, July). Analisis Penilaian Financial Distress Menggunakan Model Altman (ZScore) Pada Perusahaan Farmasi Yang Terdaftar di Bursa Efek Indonesia. Jurnal Akuntansi, Ekonomi, dan Manajemen Bisnis, 5(1), 55-71.
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Yamali, F. R., & Putri, R. N. (2020, September). Dampak Covid-19 Terhadap Ekonomi Indonesia. Journal of Economics and Business, 4(2), 384 - 388. doi:10.33087/ekonomis.v4i2.179
Altman, E. I. (1968). Financial Ratios, Discriminant Analysis and the Prediction of Corporate. Journal of Finance.
Ardiprawiro. (2016). Bentuk Restrukturisasi Perusahaan. In Manajemen Keuangan (pp. 110 - 120).
Back, W. E., Boles, W. W., & Fry, G. T. (2000). Defining Triangular Probability Distributions from Historical Cost Data. Journal of Construction Engineering and Management.
Barker, J. (2020, April 24). Debt Restructuring – what options are there? Retrieved from fsp-law: https://www.fsp-law.com/debt-restructuring-what-options-are-there/
Beisbart, C., & Norton, J. D. (2012, June 11). Why Monte Carlo Simulations are Inferences and not Experiments. Retrieved from https://core.ac.uk/download/pdf/11923305.pdf
Bloomberg. (2020, Maret 17). Mahathir: Krisis pandemi corona lebih buruk dari krisis keuangan 1997. (B. T. Rafie, Editor) Retrieved July 2, 2020, from Internasional kontan: https://internasional.kontan.co.id/news/mahathir-krisis-pandemi-corona-lebih-buruk-dari-krisis-keuangan-1997
Brunner, A., & Krahnen, J. P. (2001). Corporate debt restructuring: Evidence on lender. CFS Working Paper, No. 2001/04. Retrieved from http://nbn-resolving.de/urn:nbn:de:hebis:30-9811
CFI. (2020). What is a Debt/Equity Swap? Retrieved from Corporate Finance Institute: https://corporatefinanceinstitute.com/resources/knowledge/finance/debt-equity-swap/
CNN Indonesia. (2021, January 31). Pengamat: Pemulihan Ekonomi RI Lebih Lama dari Krisis 1998. Retrieved from CNN Indonesia: https://www.cnnindonesia.com/ekonomi/20210131103354-532-600486/pengamat-pemulihan-ekonomi-ri-lebih-lama-dari-krisis-1998
Corporate Finance Institute. (2020). WACC. Retrieved from Corporate Finance Institute: https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-wacc-formula/
Dudley, E., & James, C. M. (2015, July 28). Cash Flow Volatility and Capital Structure Choice. SSRN Electronic Journal. doi:10.2139/ssrn.2492152
Ernawati. (2007). Analisis Du Pont dan Z-Score Altman Sebagai Alat Evaluasi Keuangan PT. Mutu Gading Tekstil Di Karanganyar. Thesis, Universitas Muhammadiyah, Surakarta. Retrieved from http://v2.eprints.ums.ac.id/archive/etd/11168/1/
Fadrul, & Ridawati. (2020). Analysis of Method Used to Predict Financial Distress. International Journal of Economics Development Research, 57-69.
Fairchild, K. W., Misra, L., & Shi, Y. (2016). Using Triangular Distribution for Business and Finance Simulations in Excel. Journal of Financial Education, 313-336.
Faulkender, M., & Petersen, M. (2006). Does the source of capital aaffect capital structure? The Review of Financia Studies, 45 - 79.
Frank, M. Z., & Goyal, V. (2009). Capital Structure Decisions: Which factors are reliably important? . Financial Management Spring, 1-37.
Hargrave, M. (2021, March 9). Weighted Average Cost of Capital (WACC). (D. Kindness, Editor) Retrieved from Investopedia: https://www.investopedia.com/terms/w/wacc.asp
Harper, S. R. (2017). Cash Flow Volatility and Investor Sentiment. Managerial Finance, 43.
Heine, M. L. (2000). PREDICTING FINANCIAL DISTRESS OF COMPANIES:. New York University, New York. Retrieved from http://pages.stern.nyu.edu/~ealtman/Zscores.pdf
Hudiyono, R. F., & Husodo, Z. A. (2013). Realized Volatility and Liquidity in The Indonesia Stock Exchange. University of Indonesia, Faculty of Economics and Business. Jakarta: SSRN. doi:https://dx.doi.org/10.2139/ssrn.2221715
Ichwan, C. M. (2003). Proses Restrukturisasi Hutang: Suatu Tinjauan Kasus Pada PT.X. University of Indonesia, Faculty of Economics. Jakarta: University of Indonesia.
Indraini, A. (2020, April 19). Duh! Nyaris 2 Juta Pekerja Dirumahkan dan Kena PHK Gegara Corona. Retrieved March 16, 2021, from detikfinance: https://finance.detik.com/berita-ekonomi-bisnis/d-4982393/duh-nyaris-2-juta-pekerja-dirumahkan-dan-kena-phk-gegara-corona
Johanputro, B. (2004). Restrukturisasi Perusahaan Berbasis Nilai. Jakarta: Lembaga Pendidikan dan Pembinaan Manajemen.
KEMENKES. (2021, February 1). 5M dimasa Pandemi Covid 19 Di Indonesia. Retrieved March 16, 2021, from Kementerian Kesehatan Republik Indonesia: http://www.padk.kemkes.go.id/article/read/2021/02/01/46/5-m-dimasa-pandemi-covid-19-di-indonesia.html
Kuepper, J. (2020, March 13). Volatility Definition. (P. Westfall, Editor) Retrieved from Investopedia: https://www.investopedia.com/terms/v/volatility.asp#:~:text=Volatility%20is%20a%20statistical%20measure,same%20security%20or%20market%20index.
Leary, M. T., & Roberts, M. R. (2005). Do firms rebalance their capital structures? Journal of Finance, 45.
Lee, D. K., In, J., & Lee, S. (2015). Standard Deviation and standard error of the mean. Korean Journal of Anesthesiology.
Luwiyanto. (2016). Analisis rasio keuangan perusahaan tambang batubara yang terdaftar di bursa efek indonesia. e-Jurnal Katalogis, 4(10), 93-108.
Manaligod, M. G. (2008). Debt Restructuring: alternatives and implications. Notes on business education, 8(1). Retrieved from http://xsite.dlsu.edu.ph/research/centers/cberd/pdf/business/vol8/Vol8no1.pdf
Metropolis, N. (1987). The Beginning of the Monte Carlo Method. Los Alamos Science Special, 125 - 130. Retrieved from https://permalink.lanl.gov/object/tr?what=info:lanl-repo/lareport/LA-UR-88-9067
Mitchell, C. (2020, July 14). Haircut Definition and Example. Retrieved from Investopedia: https://www.investopedia.com/terms/h/haircut.asp
Mitra, S. K. (2011). Revisiting WACC. Global Journal of Management and Business Research, 11(11), 89 - 95.
Nurmasari, I. (2020, May 3). Dampak Covid-19 terhadap perubahan harga saham dan volume transaksi. Jurnal Sekuritas, 3(3), 230 - 236.
Palisade. (2018). Monte Carlo Simulation. Retrieved Agustus 13, 2020, from Palisade: https://www.palisade.com/risk/monte_carlo_simulation.asp
Pamplona, E. d., Brandao, M. C., Montevechi, J. A., Pinho, A. F., Alburquerque, V. O., & Junior, a. P. (2013, October 14). Evaluating Energy Sectors Investments: Calculating Volatility. (C.-Y. Lu, Ed.) Mathematical Problems in Engineering, 2013. doi:http://dx.doi.org/10.1155/2013/128309
Patunrui, K. I., & Yati, S. (2017, July). Analisis Penilaian Financial Distress Menggunakan Model Altman (ZScore) Pada Perusahaan Farmasi Yang Terdaftar di Bursa Efek Indonesia. Jurnal Akuntansi, Ekonomi, dan Manajemen Bisnis, 5(1), 55-71.
Pesiwarissa, D. A. (2006). Pengukuran Risiko Operasional Dengan Monte Carlo Simulation (Studi Kasus Pada PT Bank "X"). Master Thesis, University of Indonesia, Faculty of Economics and Business, Jakarta.
Putri, C. A. (2021, January 30). Bank Dunia Ramal Ekonomi RI Baru Pulih & Normal 5 Tahun Lagi. Retrieved from CNBC Indonesia: https://www.cnbcindonesia.com/news/20210130162502-4-219878/bank-dunia-ramal-ekonomi-ri-baru-pulih-normal-5-tahun-lagi
Raychaudhuri, S. (2008). Introduction to Monte Carlo Simulation. Proceedeings of the 2008 Winter Simulation Conference, (pp. 91 - 100). Broomfield. Retrieved from https://www.informs-sim.org/wsc08papers/012.pdf
Ross, S. A., Westerfield, R. W., Jaffe, J., & Jordan, B. D. (2016). Corporate Finance (11th ed.). New York: McGraw-Hill Education.
Salling, K. B. (2007). Risk Analysis and Monte Carlo Simulation within Transport Appraisal.
Setiadi, A. (2011). Analisis Financial Distress Terhadap Prediksi Kebangkrutan Dengan Menggunakan Altman’s Z-Score Studi Kasus pada PT. Bakrie & Brothers Tbk. Universitas Komputer Indonesi, Fakultas Ekonomi.
Soemarso, S. (1998, September 30). Strategi Nasional Dengan Kreditur Asing Dalam Upaya Penyelesaian Hutan Luar Negeri. Prakarsa Jakarta Conference, 2.
Taleb, N. N. (2007). The Black Swan: The Impact of the Highly Improbable. Random House.
Turner, A., & Benjamin, I. (2020, May 18). Funding alternatives in difficult times – converting debt to equity. Retrieved from Farrer&Co: https://www.farrer.co.uk/news-and-insights/funding-alternatives-in-difficult-times--converting-debt-to-equity/
UNICEF. (2020). Frequently Asked Questions about coronavirus disease (COVID-19). Retrieved July 2, 2020, from UNICEF: https://www.unicef.org/indonesia/coronavirus/FAQ#whatiscoronavirus
Victoria, A. O. (2020, April 7). Sri Mulyani Sebut Covid-19 Lebih Kompleks dari Krisis 1998 dan 2008. (H. Fajrian, Editor) Retrieved July 2, 2020, from Katadata: https://katadata.co.id/berita/2020/04/07/sri-mulyani-sebut-covid-19-lebih-kompleks-dari-krisis-1998-dan-2008
WHO. (2020, October 12). Coronavirus Disease (Covid-19). Retrieved from World Health Organization: https://www.who.int/emergencies/diseases/novel-coronavirus-2019/question-and-answers-hub/q-a-detail/coronavirus-disease-covid-19#:~:text=symptoms
WHO. (2020, July 31). Rolling updates on coronavirus disease (Covid-19). Retrieved from World Health Organization: https://www.who.int/emergencies/diseases/novel-coronavirus-2019/events-as-they-happen
Yamali, F. R., & Putri, R. N. (2020, September). Dampak Covid-19 Terhadap Ekonomi Indonesia. Journal of Economics and Business, 4(2), 384 - 388. doi:10.33087/ekonomis.v4i2.179
Published
2021-09-01
How to Cite
LEE, Jeremy; PRIJADI, Ruslan.
Debt Restructuring Forecast of PT. X During Covid-19 Pandemic Using Monte Carlo Simulation.
International Journal of Advanced Research in Economics and Finance, [S.l.], v. 3, n. 3, p. 50-62, sep. 2021.
ISSN 2682-812X.
Available at: <https://myjms.mohe.gov.my/index.php/ijaref/article/view/15085>. Date accessed: 15 sep. 2024.
Section
English Section
