The Impact of IFRS 16 (PSAK 73) Implementation on Key Financial Ratios: An Evidence from Indonesia

DOI

10.2991/aebmr.k.210507.045How to use a DOI?

Keywords

IFRS 16 (PSAK 73), operating lease, financial ratios

Abstract

IFRS 16 was issued to overcome the criticism of IAS 17, especially regarding the fact that many lease transactions on lessee are not included in the statement of financial position (off-balance-sheet), making it difficult for users to get an accurate view of the assets and liabilities of the leasing company, as well as being difficult to estimate the amount that is off-balance-sheet. After the adoption of this standard, companies with significant operating leases are likely to experience an increase in assets, an increase in liabilities, and a decrease in equity, which can significantly affect their financial ratios. This research objective was to determine the impact of the application of IFRS 16 (PSAK 73) on the financial statements and key financial ratios of an airline company in Indonesia. This research focused on the airline operator company, PT Garuda Indonesia Tbk, which utilizes a lot of lease financing in the procurement of their aircraft fleets. This research has a very appropriate momentum considering that 2020 is the beginning of the implementation of IFRS 16 (PSAK 73) for all public companies in Indonesia. This research used a case-study approach. The results show that the level of profitability (ROA), solvency, and efficiency in the use of assets experience a decline, but the liquidity ratio and profitability (ROE) increase.

Copyright

© 2021, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Merry Susanti
AU  - I Cenik Ardana
AU  - Sufiyati
AU  - Sofia Prima Dewi
PY  - 2021
DA  - 2021/05/09
TI  - The Impact of IFRS 16 (PSAK 73) Implementation on Key Financial Ratios: An Evidence from Indonesia
BT  - Proceedings of the Ninth International Conference on Entrepreneurship and Business Management (ICEBM 2020)
PB  - Atlantis Press
SP  - 295
EP  - 303
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.210507.045
DO  - 10.2991/aebmr.k.210507.045
ID  - Susanti2021
ER  -