Abstract
One impact of global crisis, is increasing foreign currency rate of Indonesian IDR. Company with foreign debt exposures will suffer financial losses, if the exchange rate of the foreign currency becomes stronger. These losses will reduce the company Economic Value Added (EVA), and reduce the financial performance. Then, the purpose of this research is to calculate the effect of changes in foreign currency rates on the company’s economic value added. Research method used in this study is Causal method. This study used company secondary data, based on Indonesian Stock Exchange. Based on research conducted, the result of this research proves that the changes in foreign currency rates on foreign liabilities affected significantly (with α = 5%) on company’s economic value added. In PT. KF case, revenues earned by the company could cover all cost incurred including cost to cover the loss of exchange rate gap of foreign debt and capital cost
Highlights
The impact of technological progress gave very positive effect in the business world
KF from periods of 31 March 2004 – 30 June 2006, we found out that all value of Economic Value Added (EVA) is positive
Correlation coefficient value equals to negative 0.690, which means the relation between variable EVA and foreign debt is fluctuating in the moderate level correlation
Summary
The impact of technological progress gave very positive effect in the business world. Transactions can be done between buyers and sellers, or between producer – distributors – and consumers (Marshall, 2012). It is the competition in business increasingly sharp both domestically and overseas; this fact encouraged companies to increase their efficiency. Increasing volume of foreign transactions will increase macroeconomic growth (Kompas, 02.03.17: 17). Kurniasari’s research (2017) concluded that one factor that can be influenced economic growth is foreign loan. In economic growth could be increased productivity of the company and created value added and welfare of the society in general
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