THE ANALYSIS OF COMPANY'S FINANCIAL PERFORMANCE BEFORE AND AFTER THE MERGER (CASE STUDY OF MANUFACTURING COMPANIES LISTED IN INDONESIA STOCK EXCHANGE FOR THE PERIOD OF 2006)

Abstract

This research is titled "The Analysis of Company's Financial Performance Before And After The Merger (Case Study of Manufacturing Companies Listed In Indonesia Stock Exchange For The Period of 2006)". Mergers are a known phenomenon and develop not only in Indonesia, but throughout the world in line with the development of the business world. The purpose is to exploit synergies and achieve the expected positive, but a lot of mergers and acquisitions that would not result in financial gain as expected or desired by the company. This is what motivates this study to analyze the effect of mergers on the financial performance of the company whether to increase or decrease after the mergers. The aim of this research is to obtain the impact on the company's financial performance before and after the merger. Financial performance of the company is measured by using the analysis of each financial ratio before and after the merger: Current Ratio, Total Asset Turnover, Debt Ratio, Debt to Equity Ratio, Net Profit Margin, Return on Asset, Return on Equity and Earnings per Share. The researcher will analyze the condition of each financial ratio two years before the merger and two years after the merger. This study takes the sample from all population which are three manufacturing companies that doing merger activity in period 2006. The ratios of this secondary data are obtained manually from the calculation based on the data in the financial statements two years before the merger and two years after the merger. The analysis used to test the hypothesis of this research is quantitative analysis with inferential statistical methods with the use of Paired Sample T-Test. The test results using the Paired Sample T-Test to each of the three companies generally showed that there was no significant difference for each of the ratio after the merger activity in all periods of observation and testing. Even though there are some increases and decreases on each of the financial ratios, the movements are not significant enough to indicate that there is a significant difference. These results indicated that merger does not give impact to the company performance because there is no significant difference in the eight financial ratios before and after the merger happened.