DECOMPOSING FINANCIAL PERFORMANCE RECOVERY: RETURN ON EQUITY, ECONOMIC VALUE ADDED, AND CAPITAL STRUCTURE IN INDONESIA'S TRANSPORTATION SECTOR

Abstract

This study examined whether Blue Bird's reported recovery in return on equity (ROE) after the 2020 pandemic shock reflected genuine economic value creation. PT Blue Bird Tbk was examined across six fiscal years (2020–2025), with PT Adi Sarana Armada Tbk as a comparative reference at the two most recent fiscal year-ends, using a descriptive-comparative design applied to audited consolidated financial statements. ROE was decomposed through DuPont analysis into net margin, asset turnover, and the equity multiplier; Economic Value Added (EVA) was calculated using a weighted average cost of capital built from Bank Indonesia's policy rate and Indonesia's equity risk premium; and liquidity and leverage were tracked through the current ratio and the debt-to-asset ratio. ROE moved from -3.12% in 2020 to 10.17% in 2025, yet EVA remained negative throughout, including 2025. The divergence was already visible in 2021, when net income turned marginally positive while operating profit after tax remained negative. Net margin and asset turnover drove the recovery through 2022; thereafter, further ROE gains came mainly from a rising equity multiplier, alongside a falling current ratio and a rising debt-to-asset ratio. Adi Sarana Armada posted a higher ROE than Blue Bird in 2024–2025 but carried roughly double the leverage and a current ratio below 1.0x in both years. Reported profitability alone overstated the extent of recovery from as early as 2021 and should be read alongside a capital-charge-adjusted measure once leverage begins driving ROE more than margin or turnover.