Du Pont System Analysis To Measure Financial Performance

Financial statements play a major role in a company which is used as decision making material and performance benchmarking. A successful company should have a good financial performance. The other way around, a company which does not have a good financial performance would impact on the company success. The study employs a ratio analysis called Du Pont System Analysis in which the analysis often applied to measure financial performance on company. Du Pont System Analysis is a combination of financial ratios from ratio activities and profitability in which the result shows interaction from assets profitability of the company. Object of the study is PT. Indosat Tbk in 2016 – 2018 as a Telecommunication company. There are 3 similiar companies used as a comparison to indicate PT Indosat Tbk position which are PT Telekomunikasi Indonesia Tbk, PT XL Axiata Tbk, and Smartfren Telecommunication Tbk. The study draws a conclusion that financial performance of PT Indosat Tbk is good compared to the other similiar companies but PT Telekomunikasi Indonesia has the best performance than the other.

The world is in a globalization era nowadays, as well as the modern economy development. Financial statements play a major role in a company which is used as decision making material and performance benchmarking. The financial statements are basically arranged and published yearly, once in six months, monthly, or in a daily. According to Wikipedia (2018), "The factors that directly connected to financial position are assets, liabilities, and equity. The factors that connected to income statements measurement are income and expenses." It indicates that financial statements is an important data and it is even more important to have data comparison from both periods or more included with further analysis. The result would valuable for the company in condition establishing and decision making.
Every company has the same goal to make profit. A successful company should have a good financial performance. The other way around, a company which does not have a good financial P-ISSN : 2655-3651  E-ISSN : 2656-0435 38 performance would impact on the company success. The study employs a ratio analysis called Du Pont System Analysis in which the analysis often applied to measure financial performance on company. Du Pont System Analysis is a combination of financial ratios from ratio activities and profitability in which the result shows interaction from assets profitability of the company. PT Indosat Tbk commonly called Indosat Ooredoo provides internet service, multimedia, data communication, communication line for prepaid or behind telephone or phone named IM3 Ooredoo. So, the needs of main modality with a short period should always be ready to develop operational activities of the company to make more profit. In other words, PT Indosat Tbk should always have a good financial performance to keep the existence of the company to have a good profitability in order to invest as a modality.
The study focuses on financial ratios applied in Du Pont System Analysis which are Net Profit Margin (NPM), Return on Invesment (ROI), Return on Equity (ROE), Total Asset Turnover (TATO), dan Equity Multiplier (EM). Financial statements used by company to analyze go public telecommunication company as an object and sample which is on the list of Indonesia Stock Exchange (IDX) in 2016-2018.

METHOD
The researchers use the data of financial statements on the company website in 2016-2018 and it is also used as object and sample of the study. The data comes from company which is in the list of IDX website on level stock and obligation of telecommunication sub sector.
The study employs a telecommunication company which is in the list of BEI as a population by using random sampling technique. According to that, the researchers decide PT. Indosat Tbk as the sample of the study whereas PT. Telekomunikasi Indonesia Tbk, PT. XL Axiata Tbk, and Smartfren Telecommunication Tbk as the comparison.  (Data processed, 2019) The data shows that in 2016 the company reaches TATO score 0.57 means that the company sells 0.57 time from the total assets. In 2017, the company reaches 0.59. While in 2018, the TATO ratio decreases to 0.44. from the formula, it is showed that the maximal score of Total Asset Turn Over is in 2017 and the minimal score is in 2018.  (Data processed, 2019) According to the data above, in 2016 ratio of the company reaches 3,59 meaning that the company could produce total assets of 3,59 times from the equity. While in 2017, the company decreases 0,17 times with the total EM score 3,42 times. But in 2018 the company increases 0,96 times in which the ratio is in 4,38 times. From the data, it indicates that the highest Equity Multiplier score is in 2018 and the lowest percentage is in 2017.     The above data shows that PT Telekomunikasi Indonesia Tbk is on the highest position with the means ROE Du Pont score 26,65% in 2016 -2018, while Smartfren Telecommunication Tbk is on the lowest position with the means ROE Du Pont score -31,59%. PT Indosat Tbk is on secondary position compared to the competitor with the means ROE Du Pont score 0,13% during the last three years.

Summary of Calculation Result of Du Pont System Analisys between PT Indosat Tbk and the Competitor Company in 2016-2018
According to the above summary, the researchers draw a conclusion that during 2016 -2018 PT Indosat Tbk has a good financial performance compared to the other similar competitor companies listed in Indonesia Stock Exchange (IDX).
The hardest competitor for PT Indosat Tbk is PT Telekomunikasi Indonesia Tbk because it has ROE score far above the average industry means.

CONCLUSION
This chapter gives a brief summary of topic which has been discussed in the previous chapters regarding Du Pont System Analysis to measure financial performance of PT Indosat Tbk in 2016-2018. It covers the conclusion:

PT Indosat Tbk Financial Performance in 2016-2018
By using Du Pont System Analysis to measure financial performance of PT Indosat Tbk, it indicates that the financial performance is not as good as it should be. It is shown as in the following results; Considering the result of the research in 2016 -2018 NPM score has decreased. It is because net sale revenue performed by the company is greater than the net profit. Considering the result of the research in 2016 -2018, it indicates that TATO score fluctuates. It is because fluctuation between total assets score and company sale are not stable in exploiting all the assets to achieve sale targets. Considering the result of the research in 2016 -2018, it indicates that EM score of the company fluctuates. It is because the equity and total assets performed by the company fluctuate. Considering the result of the research in 2016 -2018, it indicates that ROI score fluctuates. It is because NPM score tends to decrease and TATO score fluctuates. Considering the result of the research in 2016 -2018, it indicates that Return on Equipment performed by the company tends to decrease in the last three years. In other words, the company has not been able to reduce costs to make a big profit. On the other hand, the company has not also been able to generate sales volume and profit by using all assets they have in all companies and equity shareholders as an investment.

Financial Performance of PT Indosat Tbk Compared to Other Similar Companies in 2016-2018
Considering the Net Profit Margin result in 2016 -2018, it indicates that financial performance of PT Indosat Tbk is not good but the company also having a good financial performance because it is on the second position compared to the other similar companies which are PT Telekomunikasi Indonesia, PT XL Axiata Tbk, and Smartfren Telecommunication Tbk. Considering the result of the research in 2016 -2018, it indicates that Return on Equipment of PT Indosat Tbk shows a bad financial performance because it decreases in the last three years. On the other hand, PT Indosat Tbk has a good financial performance because it is on the second position compared to the other similar companies which are PT Telekomunikasi Indonesia, PT XL Axiata Tbk, and Smartfren Telecommunication Tbk.

SUGGESTION
PT Indosat Tbk as the owner and the financial performance publisher should have pay more attention to the components that have a great impact on Return On Equipment (ROE) such as Total Asset Turn Over (TATO) and Equity Multiplier (EM) especially Net Profit Margin (NPM). It is because Net Profit Margin (NPM) plays a major role in increasing sales and reducing costs incurred by the company to have maximum efficiency that impacts on the Return On Equipment (ROE) and other ratios.
It is suggested to have more periods in conducting research in order to draw a greater conclusion and to gain a better result if other researchers deciding to have different or similar theme and method.