Analysis of The Health of Financing Companies

— This study aims to determine and analyze the soundness of the case study financing company PT Astra Sedaya Finance (ASF) for the period 2020-2021 in terms of governance ratios, risk profiles, profitability and capital. The non-bank financial institution that is the main focus of this research is the financing company PT Astra Sedaya Finance (ASF). This research uses descriptive analytic method. The data used uses the financial statements of PT Astra Sedaya Finance (ASF) for 2020-2021. The results of this study indicate that PT Astra Sedaya Finance (ASF) during 2020-2021 in terms of governance factors, the results of self-assessment research get a value of 1, in accordance with applicable regulations to support the implementation of good corporate governance principles in every line of work. and operations of the Company. The results of the second factor research are the risk profile has inherent risk which is dominated by credit risk, has a strong risk management application, from the active supervision of the Board of Directors, Board of Commissioners, and DPS, as well as the completeness of policies and units in identifying, controlling, and monitoring management. risk in all functions, including the existence of three lines of defense in risk management. Thus, the risk profile of PT Astra Sedaya Finance is considered quite good. The results of the research on the third factor are profitability as long as, in terms of performance, it is very good, the ability of profits to increase capital and the prospect of future profits is still high with a value of 1 or very good. And the fourth factor, namely capital, as well as the profitability factor, has been very good.


INTRODUCTION
Finance companies are one of the non-bank financial industries that can provide financial services such as credit facilities to their customers.In Indonesia, finance companies are the second largest industry in the financial services sector after banking.The total financing disbursed in 2020 through finance companies is more than IDR 452.85 trillion with a total of 176 finance companies [1].According to data from the Association of Indonesian Finance Companies (APPI) at the end of 2016 there were around 170 finance companies registered with the association.While there are dozens of financing companies that have not been registered.
The size of the market and opportunities for finance companies in Indonesia have also attracted many investors, both domestic and foreign.With the existence of the Financial Services Authority (OJK) Regulation as outlined in OJK Circular Letter No.11/SEOJK.05/2020concerning the Level of Financial Soundness of Financing Companies, companies can assess the level of their financial soundness in a more measurable manner because it is in line with the references set by OJK.The letter states that the assessment of the level of financial soundness of finance companies is weighted by 4 factors, namely the ratio of good corporate governance, risk profile, profitability and capital.The results of the calculation and summation of each of these factors, the finance company can be classified as a very healthy, healthy, unhealthy and unhealthy finance company.Finance companies are required to meet the requirements for the level of financial soundness with a minimum healthy condition, the following is a description of each factor as follows: The first component factor assessment is good corporate governance.The principles of good corporate governance are guided by the Financial Services Authority Regulation regarding good corporate governance for finance companies in accordance with POJK Number 35 of 2014 and its implementing regulations, while taking into account the characteristics and complexity of the company's business.The governance process assessment aims to assess the effectiveness of the process of implementing the principles of good corporate governance supported by the adequacy of the structure and infrastructure of good corporate governance so as to produce outcomes that are in line with the expectations of the company's stakeholders.
For the assessment of the second component factor, namely the assessment of inherent risk, is an assessment of the risks inherent in the company's business activities, both quantifiable and nonquantifiable, which have the potential to affect the Company's financial position.The risk profile assessment aims to further regulate the implementation of risk management, the organizational structure of the committees and risk management for the development or expansion of business activities.
The third component factor is profitability, which is the company's ability to generate profits from the capital invested in total assets.In this factor the ratios used to measure earnings are the ratio on assets (ROA), ratio on equity (ROE) and operating expenses and operating income (BOPO).The purpose of using profitability ratios for financing companies and external parties is to measure or calculate the profit earned by the finance company in a certain period and assess the profit position of the previous year's financing with the current year.Meanwhile, the benefits obtained are to find out the level of profit earned by finance companies in one period.
The fourth component factor is capital, which shows the minimum capital required to cover the risk of losses that may arise from investing in risky assets and financing fixed assets and the financial ratio used to measure this factor is the Capital Aquency Ratio (CAR).To be able to carry out its functions properly, a finance company must have sufficient capital, maintain the quality of its assets properly, be managed properly and operated based on prudential principles, generate sufficient profits to maintain business continuity, and maintain liquidity so that it can fulfill its obligations at any time.

Research Review
Research by [2] used 12 samples of finance companies in Indonesia to analyze the capital profile, quality of financing receivables, profitability and liquidity of the financial health of each company.Through the finance company's financial reports are then analyzed according to the rules of the OJK to see the profile of each of these factors on the level of financial soundness.Based on the financial statements of 12 finance companies that explicitly suffered losses and had a very minimum level of liquidity, this shows an early signal that there are several finance companies whose financial condition is not sound.
Research [3] which aims to determine and to analyze the effect of debt policy, dividend policy, and company growth on firm value with profitability as an intervening variable in finance companies.The population of this study were all finance companies listed on the Indonesia Stock Exchange (IDX) in 2015 and 2016.Using a purposive sampling technique, out of a total population of 15 finance companies, only 12 companies were used as research samples.The data used in this research is financial data available on the IDX website.Data were analyzed using path analysis with two equations, namely the factors that affect firm value and the factors that affect profitability.The results of this research show that debt policy, dividend policy, company growth, and profitability have no significant effect on firm value.Meanwhile, between debt policy, dividend policy, and company growth, only dividend policy has a significant effect on profitability.
[4] aims to analyze risk management disclosures carried out by Non-Bank Financial Services Institutions (LJKNB) with the aim of (a).disclosure of company risks that have been managed by the company, and (b).disclosure of what the company is doing in controlling risk in the future.Disclosure of risk management can be used as a solution in managing corporate uncertainty and is expected to prevent risks that can cause losses to the company.This study aims to examine whether the effect of audit quality, audit committee size, independent board of commissioners, and company size has on risk management disclosures in Non-Bank Financial Services Institutions listed on the Indonesia Stock Exchange for the 2014-2018 period.The data used in this study were obtained from annual report data for the 2014-2018 period.The population in this study are Non-Bank Financial Services Institutions listed on the IDX.The sample selection technique used was purposive sampling, obtained by 24 companies with a 5 year period so as to obtain 120 research sample units.The data analysis method used is panel data regression analysis using Eviews version 10.The results of this study indicate that the board of commissioners is independent, and company size has an effect on risk management disclosure.Partially independent board of commissioners and company size have a positive effect on risk management disclosure, while audit quality and audit committee size have no effect on risk management disclosure.
[3] research aims to determine the factors that influence the profitability of finance companies in Indonesia with a sample 6 companies listed on the Indonesia Stock Exchange for the 2007-2012 period that complied with the provisions of the Minister of Finance Regulation Number 84/PMK.012/2006concerning finance companies.Return on Assets and Return On Equity are used as profi tability proxies.Debt to Equity Ratio, Net Receivable Assets, Operating Efficiency, Size and Growth are used as a measure of the company's internal factors and Gross Domestic Product as a macroeconomic factor.The results of the study show that finance companies are experiencing a difficult situation in generating profits from the provision of financing receivables.The use of debt and cost efficiency can provide benefits to shareholders, while company size and asset growth do not affect profitability.Macroeconomic factors were found to affect the profitability of multifinance companies.
[4] aims to analyze the effect of debt policy, dividend policy, and company growth on firm value with profitability as an intervening variable in finance companies.The population of this study were all finance companies listed on the Indonesia Stock Exchange (IDX) in 2015 and 2016.Using a purposive sampling technique, out of a total population of 15 finance companies, only 12 companies were used as research samples.The data used in this research is financial data available on the IDX website.Data were analyzed using path analysis with two equations, namely the factors that influence firm value and the factors that affect profitability.The results of this research show that debt policy, dividend policy, company growth, and profitability have no significant effect on firm value.Meanwhile, between debt policy, dividend policy, and company growth, only dividend policy has a significant effect on profitability.
According to [5] NBFIs (Non-Bank Financial Institutions) are one of the important sectors in every economy.NBFI is a type of financial institution that provides certain types of banking services, but does not have a banking license.NBFIs can offer banking services such as loans and credit facilities, retirement planning, money markets, underwriting and merger activities.Currently, there are 33 NBFIs, three owned by the government, eleven joint ventures and nineteen privately owned.The aim of this study was to explore the health of NBFIs in Bangladesh using the CAMELS model and estimate their future ranking points with the CAMELS model.[5] uses the most popular method for evaluating NBFI performance, namely the CAMELS framework.The CAMELS ratio primarily shows capital adequacy, asset quality, management efficiency, revenue, liquidity conditions and market risk sensitivity.After our research we found that out of 33 NBFIs 1 was "1 or Strong", 15 was "2 or Satisfactory", 13 was "3 or Fair" and 3 was "4 or Marginal" according to the CAMELS rating at the end of June 2016.
According to [6] the implementation of enterprise risk management (ERM) used more dummy variables.Until now, studies using maturity risk management as a real variable are still limited.Therefore, this study intends to determine the maturity level of the implementation of enterprise risk management (ERM) in non-financial companies listed on the Indonesia Stock Exchange during the 2015 period and the effect of total company assets, number of employees, leverage and public ownership on enterprise risk management maturity.ERMs).The method used is qualitative analysis and multiple regression.The results of data analysis show that the implementation of enterprise risk management (ERM) in selected samples during 2015 was still low (the majority at the initial and repeatable levels).In addition, of the determinant factors, only total assets have a significant effect on enterprise risk management (ERM) maturity.This result implies that listed non-financial companies are vulnerable to risks.Management must consider the future benefits of mature enterprise risk management (ERM), not just to comply with regulations.waiting period for independent commissioners, duties and membership of the audit committee, duties and membership the risk monitoring committee, the duties and membership of the remuneration and nomination committee, the transparency of share ownership, and the mechanism for imposing sanctions.This improvement to the Financial Services Authority Regulation is expected to improve good corporate governance so as to create a healthier, more reliable, trustworthy and competitive company in the future.

Risk Profile Factors Against the Level of Financial Soundness of Financing Companies
The risk profile is the main and largest portfolio in the assets of a finance company.The quality of financing receivables is a strong indicator of how the value of financing provided to consumers (debtors) will return, including interest to the company through monthly installments in a timely manner.Based on Circular Letter Number 11/SEOJK.05/2020concerning the Level of Financial Soundness of Financing Companies, the value of financing receivables in the quality category of non-performing financing receivables (non-performing financing) after deducting the allowance for possible write-offs of mandatory financing receivables is the highest at 5% (five percent) of the total accounts receivable financing.This means that the smaller the quality of problematic financing receivables owned by a finance company, the better the level of soundness of the company.

Profitability Factor on the Level of Financial Soundness of Financing Companies.
The amount of profit generated by a company in its normal business activities can indicate that the company is on the right and healthy track.The company's ability to manage operating expenses against operating income also shows how skilled the company's management is in carrying out the company's operational activities.Positive results certainly indicate the company is in good health.Based on OJK circular letter No.1/SEOJK.05/2016concerning the level of financial health of finance companies, the profitability factor is measured through Return on Assets, Return on Equity, BOPO and Net Interest Margin.The greater the Return on Assets, Return on Equity and Net Interest Margin owned by a finance company, the better the soundness of the company.Conversely, the smaller the BOPO owned by a finance company, the better the soundness of the company.

METHOD
This research is an analytic descriptive method that assesses and looks at the profile of the level of financial soundness of financing companies through the financial statements that are included in each assessment factor.

Financing Company Health
The level of financial soundness of a company is a strong indication of where the company will operate in the long term.Financial ratios are a representation of a company's financial performance that assesses the company's financial condition and achievements in carrying out its operational activities.The soundness level of a finance company is needed to see whether the company is in good health or not.This can be done by analyzing the four factors that determine the soundness of a finance company, namely: (a) governance, (b) risk profile, (c) profitability and (d) a company's capital in a certain period.Based on POJK Number 28 of 2020 and OJK Circular Letter Number 11/SEOJK.05/2020concerning the Level of Financial Soundness of Financing Companies, all finance companies are required to comply with the provisions for a level of financial soundness with a minimum healthy condition at any time.

Good Corporate Governance
The following is a guideline for determining the factors of good corporate governance: Assessment of the governance structure aims to assess the adequacy of the structure and infrastructure of good corporate governance so that the process of implementing the principles of good corporate governance produces outcomes that are in line with the expectations of the company's stakeholders.Included in the structure of good corporate governance are the directors, board of commissioners, committees and work units in the company.The infrastructure for good corporate governance includes, among others, Company policies and procedures, management information systems as well as the main tasks and functions of each organizational structure, namely (i) Assessment of the governance structure and (ii) Assessment of the results of implementing corporate governance governance (governance structure).

Risk Profile
In contrast to the good corporate governance factor which has only one value component, the risk profile factor is divided into 8 (eight) values which are divided from each risk factor for finance companies, namely strategic risk, operational risk, credit risk, market risk, liquidity risk, legal risk, compliance risk and reputation risk.The eight risk profiles are then averaged to become a composite rating/value of all risk profile factors.In addition, there is a rating for inherent risk or inherent risk for each risk profile, then a rating for the quality of implementing risk management which means how the company implements risk management so that the inherent risk can be managed properly, so that in the end there is a risk level rating as a result of inherent risks that have been implemented in the implementation of risk management.

Profitability
The profitability ratio is closely related to how management's strategy and effectiveness in carrying out its business activities maximizes profits.In general, the higher the profitability ratio of a finance company, it can be said that the strategy and management effectiveness have been going well.This means that the goals and targets to be achieved by the company have been carried out properly by all lines of the company's organization.There are 4 profitability ratios used to assess the profitability factor of finance companies and each has a weight of 25% of the overall profitability ratio.The formula used in calculating the profitability ratio is as follows:

Capital
The capital ratio is the first thing that must be fulfilled by a finance company, where the higher the capital ratio of a finance company, the stronger the company's ability to bear the risk of troubled productive assets.This also means that a high capital ratio also indicates that a finance company is capable of operating the company's operations.The formula used in calculating the capital ratio is as follows:

Method of collecting data
The data collection technique that will be used in this study is the Document Study Method and Interview Method

Data analysis method
The stages in conducting data analysis in this study are as follows: Assessment of Good Corporate Governance Parameters; Assessment of Risk Profile Parameters; Assessment of Profitability Parameters; and Assessment of Capital Parameters.
Based on the value of the level of financial soundness, then the criteria for the level of financial soundness are determined for each company in 2020 -2021.

RESULT AND DISCUSSION
The research object studied is the soundness level of the financing company as well as the inhibiting and supporting factors.The subject of this research is PT Astra Sedaya Finance whose head office is at Tb Simatupang No.90 Jagakarsa, South Jakarta.

Analysis of Research Results
In testing the hypothesis regarding the influence of good corporate governance ratios, risk profile, profitability and capital on the level of financial soundness of financing companies, each factor that becomes a variable in this study will be calculated and described.
An analysis of the overall condition of the company is reflected in the four factors for assessing the soundness of the company as follows in 2020-2021:

Good Corporate Governance (Strong)
The company has implemented the principles of good corporate governance very well.This is reflected in adequate fulfillment of the structure, process and results of implementing governance.If there are weaknesses in the implementation of the principles of good corporate governance, then in general these weaknesses are not significant and can be resolved by normal actions by the company.

Risk Profile (Strong)
PT Astra Sedaya Finance's risk rating is Low.This rating is the result of PT Astra Sedaya Finance's Inherent Risk Rating which is at the Moderate Low level and is supported by the Risk Management Implementation Quality Rating which is at the Strong level.
PT Astra Sedaya Finance's Inherent Risk is at a Moderate Low level as a result of calculating the parameters for each type of risk.
In reporting for the position of December 2020-2021, significant risk exposures are Credit Risk, Operational Risk and Market Risk with the following analysis: 1) Credit Risk is at level 3 (Medium) because there is an increase in the value of risk in several ratios/indicators which are within the parameters.The first cause is not achieving the Business Plan on NPAT, Amount Finance (AF) and Actual Loss values.
2) Operational Risk is at level 2 (Medium Low) because there is an increase in the risk value in the "Human Resources" parameter.This parameter has several ratios or indicators whose achievements have not reached the target, including: the number of employees required to have certification and the employee turn over rate.
3) Market risk is at level 2 (Medium Low) due to adjustments where the parameter "Domination of LJK portfolios in Financial Conglomerates and complexity of financial instruments" is not taken into account in SEOJK Number 11/SEOJK.05/2020.

Quality of Risk Management Implementation: 1 (Strong)
The quality of PT Astra Sedaya Finance's Risk Management Implementation in the December 2020 reporting position compositely is at level 1 (Strong), in this case there are minor weaknesses, these weaknesses can be ignored.

Profitability: 1 (Strong)
The final conclusion regarding the Company's profitability performance is very adequate and supports capital growth.

a.
The Company's performance in generating profits (profitability) is still very adequate; b.
The main source of profitability that comes from financing business activities is very dominant; c.
Profit ability to increase capital and future profit prospects is still high; And d.
The Company's ability to manage profitability is very adequate.

Capital: 1 (Strong)
The final conclusion regarding the Company's capital performance has very adequate quality and capital adequacy relative to the risk profile accompanied by very strong capital management in accordance with the characteristics, business scale and complexity of the Company's business.a.The company has a very adequate level of capital, is very capable of anticipating all the risks it faces, and supports the company's business expansion going forward; b.
The quality of the capital component is generally very good, permanent and able to absorb losses; c.
The company has carried out stress testing with results that are able to cover all the risks faced very adequately; d.
The company has very good capital management and/or has a very good capital adequacy assessment process in accordance with the strategy and business objectives as well as the business complexity and scale of the company; And The company has access to very good sources of capital and/or has capital support from a business group or parent company.

Conclusion
Based on the descriptions described above, this study has the following conclusions: Corporate governance at PT Astra Sedaya Finance during 2020-2021, even though on a selfassessment basis it received a score of 1, although the results of this research can be debated because there are several values that are subjective, PT Astra Sedaya Finance already has a good governance structure and infrastructure complete and in accordance with applicable regulations to support the implementation of the principles of good corporate governance in every line of work and operations of the Company.
The risk profile of PT Astra Sedaya Finance during 2020-2021 has inherent risk which is dominated by credit risk, considering that PT Astra Sedaya Finance is engaged in the financing business which has quite large financing receivables.However, PT Astra Sedaya Finance considers itself to have strong risk management implementation, from the active supervision of the Board of Directors, Board of Commissioners and DPS, as well as the completeness of policies and units in identifying, controlling and monitoring risk management in all functions, including the three line of defense in risk management.
Profitability at PT Astra Sedaya Finance during 2020-2021, in terms of performance, is indeed very good, the profit ability to increase capital and future profit prospects is still high, so even though the Financial Services Authority has a different threshold in assessing profitability from PT Astra Sedaya Finance.
Capital, at PT Astra Sedaya Finance during 2020-2021, is the same as the profitability factor, where PT Astra Sedaya Finance's capital in 2020-2021 is already very good in terms of capital.

Suggestions
Based on the results of the analysis as described in chapter 4 (four) regarding tax savings, then: It is better for the company to evaluate the decisions taken related to fixed assets.The company must pay attention to the tax rate and useful life determined by the company and must also always follow the development of applicable tax regulations, so that it can carry out other tax plans besides depreciation of fixed assets in order to minimize the company's tax burden.Companies should consider making decisions and solving problems which include how much tax must be paid, how to make tax payments efficient, how to avoid taxes that do not violate tax provisions, and how the results of tax savings are used and for what purposes.
Tax Function Provisions for the Type of Activities of Financing companiesAll financing carried out by finance companies must refer to the business activities stipulated in POJK Number 35/POJK.05/2018,which include: investment financing, working capital financing, and working capital financing.