Suara.com – PT Pertamina Geothermal Energy Tbk (PGEO) is faced with a number of major risks due to a negative working capital balance. This is stated in the performance of the company’s latest financial report.
According to PGEO’s financial statements, as of December 31 2022, the company had a negative working capital balance of USD 424,475. Negative working capital indicates that the company’s current debt is greater than its current assets.
At the same time, it was recorded that PGEO’s total debt reached USD 943.28 million consisting of long-term bank loans after deducting the portion that will mature within one year of USD 327.7 million. Meanwhile, the company’s short-term debt or current debt is still around USD 615.58 million.
Head of Research at Praus Capital Marolop Alfred Nainggolan said there were three risks faced by PGEO when experiencing negative working capital. The first is liquidity risk, in which the company will have difficulty dealing with external conditions such as collection of maturing debts.
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According to him, conditions like this can make the company’s condition worse. In other words, companies with negative working capital are more difficult to deal with turbulence than companies with positive working capital.
“When a company with bad liquidity, it will be more at risk of factors or risks in the future,” he told journalists, quoted Thursday (18/5/2023).
In fact, Alfred explained that companies with negative working capital are also more at risk of default. “Even though management claims to have support from the holding, still, on paper the risk of default is greater than when the company has positive working capital,” he said.
The second risk, continued Alfred, is the risk of operational funding that must be faced by PGEO following idle cash. “Negative working capital can also narrow the company from an operational standpoint, so that PGEO’s movement to run a business or expand is limited,” he added.
Meanwhile, the third risk, according to Alfred, is the negative perception of the company’s stakeholders, thus giving bad sentiment to market players and also risking having a negative impact on the performance of PGEO’s shares on the Exchange in the future.
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“Because the information related to this condition was self-reported by management and read by stakeholders. Of course they will see this negative working capital condition as a bad picture,” he explained.
Alfred also appealed to investors to continue to pay attention to the company’s current condition. “If the working capital condition is minus for longer, it will be a signal for investors to see the potential for other issuers who have healthier financial conditions,” he concluded.
Source: Suara.com – Berita Terbaru Bisnis, Ekonomi, Investasi Indonesia by www.suara.com.
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