Financial Performance and Financial Flexibility in Mining Service Companies (A Case Study of PT XYZ)
DOI:
https://doi.org/10.59261/bustechno.v7i3.734Keywords:
Corporate Transformation, Corporate Performance, Financial Flexibility, Autoregressive Distributed LagAbstract
Background: The rapid expansion of Indonesia’s coal mining industry requires mining service companies to maintain strong financial performance and financial flexibility to support investment and sustainable growth. Corporate transformation may improve operational performance but can also increase capital expenditure and debt.
Objective: This study evaluates the financial performance of PT XYZ before and after its corporate transformation and examines the effects of financial performance indicators on financial flexibility.
Methods: This quantitative time-series study uses quarterly financial data from PT XYZ for 2013–2023, comprising 44 observations. Financial performance is measured using Return on Assets (ROA), Current Ratio (CR), Debt to Asset Ratio (DAR), Total Asset Turnover (TATO), and Investment Activity (INV), while financial flexibility is measured using the Cash Debt Coverage Ratio. The Autoregressive Distributed Lag (ARDL) approach is employed to examine short- and long-run relationships.
Results: Financial performance and financial flexibility improved after the transformation, although leverage increased. ARDL results show that ROA has a significant positive effect on financial flexibility in both the short and long run. DAR has a significant negative effect in both periods, while INV has a significant positive effect. CR has a significant negative effect only in the short run, whereas TATO has no significant effect. The bounds test confirms a long-run cointegration relationship (F-statistic = 8.97).
Conclusion: Corporate transformation improved PT XYZ’s financial performance and financial flexibility. Profitability and productive investment strengthen financial flexibility, whereas higher leverage constrains it. Sustainable financial resilience therefore requires a balance between profitable growth, and productive investment.
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