Track: Business Management

Abstract

Making investment decisions can refer to a financial report because it provides important information regarding the financial position at a particular moment and company performance during a specific period. Information in financial statements gives an overview of the performance and prospects of the companies. Financial activities are essential to economic activities. The same applies to financial analysis, where the investigation results have targeted to achieve meaningful answers to important questions, such as investment decision. In case of investment in stocks, many capital market investors assume that stock investment provides a higher return than precious metal investment and investment in the form of deposits. Thus, financial statement analysis is the most important analysis before making a careful investment decision. This study aimed to determine the predictive financial performance of future PT. Bank Syariah Indonesia (the merger bank comprises Bank BRI Syariah, Bank Syariah Mandiri, and Bank BNI Syariah) for 2015-2019. The primary analytical tool was the modified DuPont system of financial analysis based on the Return on Equity model analysis. The return on equity model decomposes performance into three components: net profit margin, total assets turnover, and the equity multiplier. Based on the original DuPont model, the results found that Bank BNI Syariah was the best among other legacy banks merged into Bank Syariah Indonesia in terms of Return on Assets. While the modified DuPont Method in term of Return on Equity, the best performer was achieved by the BNI Syariah. On the opposite, Bank BRI Syariah was the worst performer among other legacy banks merged into Bank Syariah Indonesia. Based on the analysis using the modified Du Pont method, BNI Syariah was in the worse off position, since the performance of merger bank was less than standalone BNI Syariah Ratios. For other banks, the merger would be favourable to leverage their financial performance.

Keywords: Financial statements, Modified DuPont method, investment decisions, company performance