Abstract:
A construction and building company is service company that requires loan as a
source of capita! to meet the company's operation. Most of construction and
building companies are financed by advance payment services, and debt both of
short term debt to meet working capital and or long-term debt. During the
construction of project and building, companies should raise another loan. In
order to be able to get that loan, such companies should have a good credit
history include the history to pay-off its debt and ability to pay off current and
j'uture debt.
This study is intended to assist creditors in assessing the ability to pay off debt.
Some previous researches indicate that the ability to pay debt can be analyzed
from financial statement.s. Results of the study revealed that the company's ability
to pay off debt can be assessed on the company's financial performance to utilize
its assets and generate profit, and cash flow, include cash flow available for
creditors.
In conclusion this study indicates that ability of the construction and building
companies listed in BEI is good enough to meet their obligation to pay the interest
and loan installment.
