Group Assignment: TOPIC: The Business Performance Analysis

UNIVERSITY OF DANANG ECONOMICS
----------
GROUP ASSIGNMENT
TOPIC: The business performance analysis
of Tuong An Company
Teacher: Ha Phuoc Vu
Class: 42K06.2
Group: 2
Members: Nguyen Thi Kim Hoa
Huynh Thi Tham
Vo Thu Tuyen
Nguyen Thi Ly Na
Da Nang, 2019
Contents
Contents............................................................................................................................. 1
Tables................................................................................................................................. 4
1. Introduction.................................................................................................................... 3
2. INDUSTRIAL ANALYSIS...........................................................................................4
2.1. Macro environment..................................................................................................4
2.1.1. Politics............................................................................................................... 4
2.1.2. Economic........................................................................................................... 5
2.1.3. Social................................................................................................................. 5
2.1.4. Technology........................................................................................................5
2.1.5. Legal.................................................................................................................. 6
2.1.6. Environment......................................................................................................6
2.1.7. Threat from Substitute Products........................................................................6
2.1.8. Bargaining Power of Buyers..............................................................................7
3. FINANCIAL STRUCTURE ANALYSIS.....................................................................7
3.1. Assets structure analysis ( Table 3.1).......................................................................7
3.1.1. Proportion of cash & equivalent........................................................................7
3.1.2. Proportion of account receivable short-term......................................................7
3.1.3. Proportion of inventories...................................................................................8
3.1.4. Proportion of other current assets......................................................................8
3.1.5. Proportion of fixed assets:.................................................................................8
3.1.6. Proportion of other non-current assets...............................................................8
3.2. Resource structure analysis ( Table 3.2)..................................................................3
3.2.1. Financial autonomy...........................................................................................3
3.3. Analysis of funding stability (Table 3.3).................................................................4
3.3.1. Short-term resources..........................................................................................4
3.3.2. Long-term resources..........................................................................................4
3.3.3. Owner’s equity/ Long- term resources ratio......................................................5
3.4. Financial balance analysis.......................................................................................6
3.4.1. Long-term financial balance..............................................................................6
3.4.2. Short-term financial balance..............................................................................7
3.4.3. Cost of capital....................................................................................................7
4. Analysis of assets use efficiency....................................................................................8
1
4.1. Assets turnover ratio................................................................................................8
4.2. The fixed asset turnover ratio..................................................................................9
4.3. Days of working capital turnover...........................................................................10
4.4. Inventory turnover period......................................................................................13
4.5. Account receivable from customer turnover period...............................................14
5. Analysis of operating profitability...............................................................................15
5.1. Return on sale (ROS) (Table 5.1)..........................................................................15
5.2. Return on asset (ROA) (Table 5.1).......................................................................15
5.3. Disaggregating ROA.............................................................................................18
5.4. Return on equity (ROE).........................................................................................19
5.5. Return on asset variance (RE)................................................................................19
6. Impact factors to ROE..................................................................................................20
6.1. ROS and asset turnover..........................................................................................20
6.2. Self-fund ratio........................................................................................................21
6.3. Debt to equity ratio................................................................................................22
6.4. Interest coverage ratio............................................................................................24
7. Profitability analysis....................................................................................................26
7.1. Return on capital employed (ROCE).....................................................................26
7.2. Earnings per share (EPS):......................................................................................27
7.3. Price/earning ratio (P/E)........................................................................................28
7.4. Book value per share (BV/BVPS).........................................................................28
8. Indicator from cash flow (Table 8.1)...........................................................................29
8.1. Cash flow margin ratio..........................................................................................29
8.2. Cash flow from operating to net income................................................................29
8.3. Cash flow per share...............................................................................................30
8.4. Cash flow return on asset.......................................................................................30
9. Business risk analysis...................................................................................................31
9.1. Variance................................................................................................................. 31
9.2. The degree of operating leverage (DOL)...............................................................33
9.3. Risk ratio...............................................................................................................34
9.4. The degree of finacial leverage (DFL)...................................................................34
10. Insolvency risk...........................................................................................................35
10.1. Short term liquidity risk.......................................................................................35
10.1.1. Current liabilities coverage ratio....................................................................35
2
10.1.2. Current assets turnover..................................................................................38
10.1.3. Days of working capital required:.................................................................40
10.1.4. Days of accounts capital financing provided:................................................40
10.1.5. Cash to cash cycle / cash operating cycle......................................................42
10.2. Long-term solvency risk......................................................................................42
10.2.1. Debt ratio.......................................................................................................42
10.2.2. Interest coverage ratio (Times interest earned)..............................................44
10.3. Credit rating.........................................................................................................46
11. Business valuation......................................................................................................48
3
Tables
Table 3.1.Asset structure analysis..................................................................................3
Table 3.2.Resource structure analysis...........................................................................4
Table 3.3. Analysis of funding stability..........................................................................5
Table 3.4.Short-term financial balance.........................................................................6
Table 3.5.Long-term financial balance..........................................................................7
Table 3.6.Cost of capital................................................................................................8
Table 4.1.Assets turnover ratio......................................................................................9
Table 4.2. The fixed asset turnover ratio.....................................................................10
Table 4.3.Analysis of assets use efficiency...................................................................12
Table 4.4. Inventory Turnover Period..........................................................................13
Table 5.1.Analysis of operating profitability................................................................17
Table 5.2. Disaggregating ROA...................................................................................18
Table 5.3.Return on equity (ROE)...............................................................................19
Table 5.4. Return on asset variance (RE)....................................................................20
Table 6.1. ROE is affected by ROS and asset turnover................................................21
Table 6.2.ROE is affected by Self-fund ratio................................................................22
Table 6.3.ROE is affected by Debt to equity ratio........................................................23
Table 6.4.ROE is affected by Interest coverage ratio...................................................25
Table 7.1. Return on capital employed (ROCE)..........................................................26
Table 7.2. Earnings per share (EPS)...........................................................................27
Table 7.3. Book value per share..................................................................................28
Table 8.1. Indicator from cash flow.............................................................................31
Table 9.1.Sales, Profit, ROS, ROA, ROE.....................................................................32
9.2. Variance, Standard deviation, and Coefficient of variation..................................32
Table 9.3.The degree of operating leverage.................................................................33
Table 9.4.Risk ratio......................................................................................................34
Table 9.5.The degree of finacial leverage....................................................................35
Table 10.1.Current liabilities coverage ratio...............................................................36
Table 10.2.Current assets turnover..............................................................................38
Table 10.3.Days of working capital required...............................................................40
Table 10.4.Days of accounts capital financing provided.............................................41
Table 10.5.Additional days obtained financing............................................................42
4
Table 10.6.Debt ratio...................................................................................................44
Table 10.7.Interest coverage ratio...............................................................................45
Table 10.8.Altman Z-score...........................................................................................47
Table 10.9.Altman Z-score...........................................................................................48
Table 11.1.The earnings valuation of the company.....................................................49
5
The business performance analysis Class 42k06.2
Group 2
1. Introduction
Name: Công ty cổ phần Dầu thực vật Tường An – Tuong An Vegetable oil
Joint Stock Company.
Address: F10 Empress Tower 138-142 Hai Ba Trung Street Đa Kao District 1
Ho Chi Minh City.
The manufacturing sector: Food-processing
Authorized capital: 205.935.160.000 VND
Weighted of listed securities: 33.879.648 shares
Weighted of shares outstanding: 33.876.148 shares
The growth:
Before 1795 the predecessor of Tuong An was Tuong An manufacturing

facility which owned by a Chinese. After liberation Tuong An was taken over by
government and was known as Tuong An vegetable Oil condominium factory.
On 04/06/2004 move Tuong An vegetable oil factory under Vietnam Vegetable

Oils Industry Corporation to Tuong An Vegetable Oil Joint Stock Company
26/12/2006 IPO in Ho Chi Minh Stock Exchange
26/12/2006 listed on Ho Chi Minh Stock Exchange with code TAC
In 2016 Tuong An merged with Kido.
Tuong An Company has products such as fried oil premium oil nutritional oil
and solid oil.
Pan-fried Oils: Cooking Oil. Longevity Oils Refined Olive Oil Refined
Vegetable Oils
Premium Oil: Extra Virgin Olive Oil Canola Oil (Refined Canola Oil) Refined
Sunflower Oil Refined Soybean Oil Refined Sesame Oil Refined Peanut Oil.
Nutritional Oil: Food supplements Baby Olive Oil Season – Margarine

Children's Nutrition ViO Extra and Seasonal Oil.
3
Group 2
Solid Oil: Margarine and Shortening.
Fields:
Manufacturing and exporting pre-packaged products which made from oil

animal fat oil seeds and coconut.
Trading importing and exporting all kinds of machines materials and raw
materials for production and processing of vegetable oil.
Producing and trading spices in the food processing industry sauce instant food
products.
Trading and consigning agent; trading entertainment area; cultural activities and
rental premises houses.
2. INDUSTRIAL ANALYSIS
2.1. Macro environment
Vietnam is originally an agricultural country with abundant agricultural

resources from provinces and cities nationwide, so Tuong An has minimized the cost
of importing input materials. Thereby, the price of products from Tuong An Company
can encounter to a high risk of competition. In particular, Tuong An has applied the
methods of pollution control such as using high technology oil pressing the residue of
peanuts sesame soybeans sold as food for tutors. Moreover, Tuong An also uses
wastewater treatment technology, cans and bottles that are used once can be recycled.
These favorable conditions have made Tuong An become a leading enterprise

in domestic cooking oil production and a potential competitor to dairy companies in
the world.
2.1.1. Politics
In the era of openness free trade and exchange, the government is also
interested in many aspects of businesses. With preferential tax policies and new
business laws, business mechanism has enabled businesses to trade with domestic and
4
Group 2
foreign partners simply. This is also a favorable condition for businesses in general
and Tuong An in particular to expand the market.
2.1.2. Economic
After the government abolished the subsidy mechanism and shifted to the
market mechanism opening up of integration with the world economy, the Vietnamese
economy had a dramatic change. Previously we tied ourselves up with the mechanism
of "self-sufficiency - now", this "open" mechanism is a cool breeze blowing on
Vietnamese businesses stomping when there is no opportunity to bring Vietnamese
goods. Vietnam became more vibrant than ever. Tuong An Company does not stand
outside not only meet the domestic market but Tuong An products are also present in
many countries globally.
2.1.3. Social
Vegetable oil has been increasingly replaced animal fat. In fact, vegetable oil
has met the needs of cooking ensuring health especially for the elderly because
vegetable oil lowers the level of cholesterol in the blood that is harmful to the heart. In
decades of operation and striving tirelessly, Tuong An is also making a small
contribution to bringing generations who have gone through health and belief in old
age.
2.1.4. Technology
Technology is a creative factor. This is a very dynamic factor that contains

many opportunities. Today, the process of industrialization - modernization is
happening extremely strong and technological changes quickly changes the world
economy.
Enterprises in general and Tuong An in particular have increasingly approached

vs new and more modern technologies contributing to improving product quality.
Catching the market demand from 1994-2000, Tuong An boldly invested in a Japanese
PET bottle blowing machine an automatic oil bottle extraction line with a capacity of
5000 bottles / liter and a self-refining oil line capacity of 45000 tons / year of
5
Group 2
Germany. They also make Tuong An keep up with the state-at-the-art technological
trend.
2.1.5. Legal
WTO accession has forced Vietnam to comply with its tariff commitments and
export-related commitments. At present, the Vietnamese legal system still incomplete
that requires to create favorable conditions for businesses. For processing enterprises,
there are legal risks as follows:
-Vietnam's import tax policy must be implemented in accordance with

commitments made to strong import oil products into Vietnam.
-Regulations and policies on food safety trademarks competition and dumping

land policies domestic and international investment incentives are incomplete so that it
is very difficult to operate.
-Equitized firms are also affected by the legal system of the stock market. The
legal system still incomplete, especially the lack of legal guiding documents.
2.1.6. Environment
In Vietnam, because the weather conditions and soils are mostly not suitable for
palm oil production. Therefore, the production of cooking oils is mainly imported raw
materials from mainly imported palm oil from Malaysia, Indonesia, thus leading to the
rise in cost.
What’s more, the factory which is in Phu My I Industrial Zone, Ba Ria Vung
Tau, is located near the seaport, will facilitate the company in import and export. Then
we can save transportation costs and input costs. In addition, the company can use
natural gas instead of imported fuel to reduce costs.
2.1.7. Threat from Substitute Products
It is clear that health is one of the most important concerns in life. However,
due to the specific nature, many products checked are detrimental for health. This is
the main reason for many health problems, so many customers tend to reduce the
usage of Tuong An Company’s products. However, Tuong An's products are still
6
Group 2
popular because Tuong An Company’s products are high-regarded and safe. In

addition, with the degree of competition, Tuong An's other products may be replaced
by similar products of other companies sold with lower price.
2.1.8. Bargaining Power of Buyers
From 1996, Tuong An Company has focused on marketing and advertising to

promote and expand the distribution network across the provinces and in the world.
After years of implementation of this policy, the firm has over 200 distributors,
dealers, 100 industrial customers, 400 supermarkets, restaurants, hotels, cafes, schools
and kindergartens. For overseas markets, Tuong An has contract with many countries
such as Japan, Taiwan, the Philippines, Eastern Europe, Australia, Hong Kong, Middle
East, Poland, Ukraine, and so on. The company is expected to expand the scale of
consumption in order to occupy a certain market share in the ASEAN.
3. FINANCIAL STRUCTURE ANALYSIS
3.1. Assets structure analysis (Table 3.1)
The general indicator:
Net value of asset i

Proportion of asset i= ∗100 %
Total assets
3.1.1. Proportion of cash & equivalent
We can see that cash and cash equivalent decreased steadily and bottomed out
at 10.4% until 2018. It means that this firm’s liquidity was getting in trouble. In 2016,
they could pay off 29.3% of their current liabilities compared to a merely 10.4% in
two years.
3.1.2. Proportion of account receivable short-term
It is clear that short-term receivables experienced an upward trend between

2016 and 2018. In detail after a slight increase short-term receivables in 2018 was
three as many as that in 2017. As the result, the company's turnover rate could be
affected.
7
Group 2
3.1.3. Proportion of inventories
Generally, the proportion of inventories decreased slightly from 2016 to 2018.

As a consequence, the company’s inventory efficiency increases.
3.1.4. Proportion of other current assets
Proportion of other current assets anticipated an downward trend from 2016 to

2017. Thereafter proportion of other current assets seemed to be stable at 1.8% and
1.9% respectively. It indicates that besides using current asset the company also used
other current asset, including short-term investment, and securities.
3.1.5. Proportion of fixed assets:
Generally, non-current assets decreased over three years. From 2016 to 2018,
this item decreased by 13,234,098,009 VND, equivalent to 8.35% decrease rate.
Mainly due to fixed asset reduction.
The fixed assets is the main factor in the long-term assets at 11.6%, 7.3%, and
4.7% respectively. During the three-year period, the fixed assets decreased by nearly
7%, this means that the company almost had no more fixed asset investment.
3.1.6. Proportion of other non-current assets
The ratio of other long-term assets increased slightly. Particularly, from 2016 to
2017, this ratio only increased by 0.1% (from 1.6% to 1.7%) and 0.2% (from 1.7% to
1.9%) in 2018.
Summary, the structure of assets of enterprise tended to increase current assets

and reduced non-current assets.
8
2016 2017 2018
Items
No Value Proportion Value Proportion Value Proportion
1,035,437,560,726 86.7% 1,423,014,730,537 90.8% 1,890,371,054,646 92.9%

1 A. Current asset
349,902,332,846 29.3% 295,382,117,621 18.8% 210,766,277,286 10.4%
2 Cash & cash equivalents
- - 353,000,000,000 22.5% 135,000,000,000 6.6%
3 Short term financial investments
116,293,525,685 9.7% 164,464,953,552 10.5% 663,521,152,873 32.6%
4 Short term receivable
541,756,313,649 45.4% 581,645,608,624 37.1% 842,799,373,413 41.4%
5 Inventories
27,485,388,546 2.3% 28,552,050,740 1.8% 38,284,251,074 1.9%
6 Other current asset
158,445,081,120 13.3% 145,021,411,067 9.2% 145,210,983,111 7.1%
7 B. Non-current asset
138,018,427,809 11.6% 114,848,263,615 7.3% 96,065,602,058 4.7%
8 Fixed asset
- - - - - -
9 Long term financial investment
18,474,205,720 1.6% 26,256,795,437 1.7% 39,370,922,645 1.9%
10 Other non current assets
1,193,882,641,846 100% 1,568,036,141,604 100% 2,035,582,037,757 100%
11 Total asset
Table 3.1.Asset structure analysis
3
3.2. Resource structure analysis (Table 3.2)
3.2.1. Financial autonomy
3.2.1.1. Debt ratio
Total liabilities
Debt ratio= ∗100 %
Total resources(assets)
Overall, the debt ratio per total asset was quite high with 59.26% in 2016 and
69.21% (2018). This ratio demonstrates that the company was dependent from other
debt and excessive debt can lead to a heavy debt repayment burden. Besides, the
company has made good use of benefits of the tax shield but it would be under a lot of
pressure to pay its debt when it was due, thus leading to high insolvent risk.
3.2.1.2. Self-fund ratio
Total owne r ' s equity

Self −fund ratio= ∗100 %
Total resources(assets )
Self-fund ratio only accounted for 40.74% in 2016. After droping by 2.18% in
2017, that figure continued to decrease by 7.77% in 2018. Hence, financial autonomy
of the company had been weak.
3.2.1.3. Debt/ Owner’s equity ratio
' Total liabilities

Debt /Owne r s equity ratio= ∗100 %
Total owne r ' s equity
We can see that Debt/ Owner’s equity ratio increased over three years.
Particularly, from 2106 to 2018, this ratio increased nearly 80%.
This could mean that investors did not want to fund the business operations
because the company was not performing well. Lack of performance might also be the
reason why the company was seeking out extra debt financing. The increase in Debt/
Owner’s equity indicated that the company was facing a high risk of debt.
N Ratio 2016 2017 2018

o
1 Liabilities 707,487,802,152 963,390,285,677 1,408,806,050,638
3
2 Total resource 1,193,882,641,846 1,568,036,141,604 2,035,582,037,757
3 Debt ratio
59.26% 61.44% 69.21%
(1/2)
4 Total owner’s
486,394,839,694 604,645,855,927 626,775,987,119
equity
5 Total resource 1,193,882,641,846 1,568,036,141,604 2,035,582,037,757
6 Self – fund
40.74% 38.56% 30.79%
ratio (4/5)
7 Total
707,487,802,152 963,390,285,677 1,408,806,050,638
liabilities
8 Total owner’s
486,394,839,694 604,645,855,927 626,775,987,119
equity
9 Debt/Owner’
145.46% 159.33% 224.77%
s equity (7/8)
Table 3.2.Resource structure analysis
3.3. Analysis of funding stability (Table 3.3)
3.3.1. Short-term resources
Total value short −term resources

Short−term resources ratio= ∗100 %
Total resources
From the table, we can see that the total value of short-term resources per total
resources increased quickly in the last three years. It means TAC had been
increasingly using current liabilities to business activity which demonstrates TAC
makes use of the benefit of tax shield well but the company must face pressure
payment in short future and so it has much risk.
3.3.2. Long-term resources
Total valuelong−term resources

Long−term resources ratio= ∗100 %
Total resources
Table shows that long-term resources ratio decreased significantly over three
years but still relatively high. It also means that although company borrowed a lot, it
had plenty of regular capital to balance the capital.
3.3.3. Owner’s equity/ Long- term resources ratio
' Total Owne r ' s equity

Owne r s equity /long−term resources ratio= ∗100 %
Long−term resources
4
In general, the table illustrates the total value of owner’s equity resources per
total long-term resources rose constantly for three years, approximately 100%. This
ratio was high because of the high owner’s equity. This capital did not need to be
repaid, so the higher this ratio was, the higher value of the enterprise was evaluated.
Besides, it pointed out the stability of funding.
No Items 2016 2017 2018

1 Short-term resources 695,306,904,930 946,465,212,389 1,392,948,587,888
2 Long-term resources 498,575,736,916 621,570,929,215 642,633,449,869
3 Total resources 1,193,882,641,846 1,568,036,141,60 2,035,582,037,757
4
4 Owner's equity 486,394,839,694 604,645,855,927 626,775,987,119
5 Short-term resources 0.58 0.60 0.68
ratio (1)/(3)
6 Long- term 0.83 0.78 0.62
resources ratio
(2)/(3)
7 Owner’s equity/ 0.98 0.97 0.98
Long- term
resources ratio
Table 3.3. Analysis of funding stability
3.4. Financial balance analysis
3.4.1. Long-term financial balance
Net working capital requirement
= Inventories + Short-term account receivable & other current asset – Short-term liabilities
Net fund = Cash & cash equivalent + Short-term financial investments – Short-term borrowing
2016 2017 2018
1 Inventory 541,756,313,649 581,645,608,624 842,799,373,413

Short-term account
2 116,293,525,685 164,464,953,552 663,521,152,873
receivables
3 Other current assets 27,485,388,546 28,522,050,740 38,284,251,074
5
4 Short-term liabilities 695,306,904,930 946,465,212,389 1,392,948,587,888
Short-term
5 350,523,774,208 320,563,610,411 551,234,673,057
borrowing
6 Current assets 1,035,437,560,726 1,423,014,730,537 1,890,371,054,646
NWC requirement
7 340,752,097,158 148,731,010,938 702,890,862,529
(1)+(2)+(3)-(4)+(5)
8 NWC (6)-(4) 340,130,655,796 476,549,518,148 497,422,466,758
9 Net fund (8)-(7) -621,441,362 3,278,185,07,200 -205,468,395,800

Table 3.4.Short-term financial balance
Because of the increase in long-term liabilities and the decrease in long-term
assets, the net working capital had the positive value and rose over 3 years. In other
words, long-term resources/ long-term assets ratio was higher than one. This means
that it not only sponsors for non-current assets but a part of current assets. To sum up,
the company got the good and safe long-term financial balance.
3.4.2. Short-term financial balance
2016 2017 2018
1 Long-term resources 498,575,736,916 621,570,929,215 642,633,449,869
2 Long-term assets 158,445,081,120 145,021,411,067 145,210,983,111
3 Net working capital 340,130,655,796 476,549,518,148 497,422,466,758

(1)-(2)
4 Long term resources/ 3.15 4.29 4.43
Long-term assets
Table 3.5.Long-term financial balance
From the table, the net working capital cannot meet the capital needs in the
short – term in 2016 and 2017 because net fund was negative. Therefore, the company
had to borrow money in the short-term to meet the needs of funding. This show the
finance was not balanced in those years. But in the next year, net fund was positive,
which means that net working capital can meet the capital needs in the short term. The
6
excess can be used to invest in the high liquid securities in order to increase the
efficiency of employed capital.
3.4.3. Cost of capital
WACC is calculated as follows:
WACC = (E/E+D) *Ke + (D/E+D) *Kd *(1-Tc)
Where:
Ke: cost of equity
E: market value of the firm’s equity
D: market value of the firm’s debt
Kd: cost of debt; Tc: corporate income tax rate
No Items 2016 2017 2018

1 E 339,917,493,267 584,334,936,615 599,827,296,683
2 D 350,523,774,208 320,563,610,411 551,234,673,057
3 E+D 690,441,267,475 904,898,547,026 1,151,061,969,740
4 Market risk premium 10% 10.27% 10.96%
5 Rf 6.1% 4.4% 4.3%
6 Beta 0.06 0.06 0.06
7 Ke (4)*(6)+(5) 6.7% 5.02% 4.96%
8 Kd 6.9% 7% 6.4%
9 Tax rate 20% 20% 20%
9 WACC 6.1% 5.22% 5.04%
Table 3.6.Cost of capital
We assumed that Market risk premium of Vietnam (Country default spreads
and risk premium, January 2019) is 10,96%, Kd changed in three years, the tax rate is
20%, risk-free rate of return in three years is 6.1%, 4.4%, and 4.3% respectively (Cổng
thông tin điện tử Kho bạc Nhà nước, November 26th 2019). The WACC shows that this
firm used a combination of debt and equity to finance their business. However, the
WACC in 2016 was the highest and this figure decreased in two-year time.
7
4. Analysis of assets use efficiency
4.1. Assets turnover ratio
N Items 2016 2017 2018

o
1 Total revenue 3,998,633,592,308 4,370,120,657,900 4,435,017,859,792

& sales
2 Total assets in 1,193,882,641,846 1,568,036,141,604 2,035,582,037,757

current year
3 Total assets in 1,225,982,336,700 1,193,882,641,846 1,568,036,141,604

last year
4 Total average 1,209,932,489,273 1,380,959,391,725 1,801,809,089,681

assets [(2+3)/2]
5 Asset turnover 3.3 3.16 2.46

ratio (1/4)
Table 4.7.Assets turnover ratio
The asset turnover ratio is an efficiency ratio that measures a company’s ability
to generate sales from its assets by comparing net sales with average total assets. In
other words, this ratio shows how efficiently a company can use its assets to generate
sales.
8
We see that asset use efficiency decreased from 2016 to 2018. It is a negative
sign to show that the company's assets are inefficiently used.
4.2. The fixed asset turnover ratio
No Items 2016 2017 2018

3,977,927,992,052 4,337,772,721,063 4,408,696,880,121
1 Net sales
138,018,427,809 114,848,263,615 96,065,602,058

2 Total fixed asset in
current year
170,792,917,968 138,018,427,809 114,848,263,615

3 Total fixed asset in
last year
154,405,672,889 126,433,345,712 105,456,932,837

4 Average fixed asset
[(2+3)/2]
25.89 34.31 41.8

5 The fixed
asset turnover ratio
(1/4)
Table 4.8. The fixed asset turnover ratio
The fixed asset turnover ratio is a measure of the efficiency of a company and is
evaluated as a return on their investment in fixed assets such as property, plant and
equipment. In other words, it assesses the ability of a company to efficiently generate
net sales from its machines and equipment.
The fixed asset turnover ratio increased over the years. Specific, The fixed

asset turnover ratio in 2016 was the lowest at 25.89. It means that one dong of invest
9
fixed asset will create 25.89 dong of net sales and revenue. However, in 2017, this
ratio decreased by 8.42 when compared with 2016. This ratio also dramatically
increased between 2017 and 2018. As a result, this phenomenon reveals that this firm
used their fixed assets during this period efficiently.
4.3. Days of working capital turnover
Days of working capital expresses how much of net operating working capital
is invested for achieving one dong of daily sales. From opposite angle, we can also
express it as how many days a company takes to convert its working capital into
revenue. Lower the days of working capital, better is the efficiency of working capital
management and vice versa.
The days of working capital turnover significantly increased between 2016 and
2018 from 94 days in 2016 to 102 days in 2017 and 133 days in 2018. This ratio is not
positive signal to show that the company used working capital efficiently.
10
Variance
No Items 2016 2017 2018 between 2017 Variance between
and 2016 2018 and 2017
1 Net sales 3,977,927,992,052 1,327,755,422,476 108,846,003,290 359,845 154,964
2 Average working capital 1,042,555 1,229,225 1,656,692 186,670 427,467
3 Working capital turnover

3.82 3.53 2.71 -0.29 -0.82
(1/2)
4 Days of working capital

94 102 133 8 31
turnover (360/3)
Table 4.9.Analysis of assets use efficiency
11
4.4. Inventory turnover period
Inventory turnover is a ratio showing how many times a company has sold and
replaced inventory during a given period. Calculating inventory turnover can help
businesses make better decisions on pricing, manufacturing, marketing and purchasing
new inventory.
Cost of goods sold

Inventory Turnover =
Average Inventory
360
67
Inventory Turnover Period =

Inventory Turnover
No Items 2016 2017 2018
1 Cost of goods sold 3,603,759,875,433 3,773,926,331,144 3,846,447,929,113
2 Inventory in the
609,292,126,278 541,756,313,649 581,645,608,624
beginning
3 Inventory in the end 541,756,313,649 581,645,608,624 842,799,373,413
4 Average
inventory 575,524,219,964 561,700,961,137 712,222,491,019
[(2+3)/2]
5 Inventory Turnover 6.23 6.72 5.40
6 Inventory
turnover period 58 54 67
[360/(5)]
Table 4.10. Inventory Turnover Period
As can be seen from the table, the inventory turnover period of this firm
fluctuated during this give period. However, the inventory turnover period in 2018 was
the highest and the lowest number of inventory turnover was in 2017. It indicates that
a company has sold and replaced inventory 67 times in 2018 and 54 times in 2017.
Hence, the performance in 2016 and 2017 of this firm experienced a downward trend
before an increase until 2018. This cisumstance shows that this firm’s current
strategies were pretty good.
12
4.5. Account receivable from customer turnover period
Net sale+VAT
Account receivable ¿ customer turnover= customer ¿
Average Account receivable ¿
360
Account receivable ¿ customer turnover period=
Average Account receivable turnover
No Items 2016 2017 2018
1 Net sales 3,977,927,992,052 1,327,755,422,476 108,846,003,290
2 Tax VAT 25,722,396,150 2,576,323,547 35,856,615,313
3 Receivable in the
87,486,275,024 274,738,606,805 166,505,245,254
beginning
4 Receivable in the
116,293,525,685 166,505,245,254 665,561,444,575
end
5 Average
Receivable 101,889,900,355 220,621,926,030 416,033,344,915
[(3+4)/2]
6 Accounts
receivable 39 6 0.3
turnover [(1+2)/5]
7 Accounts
receivable
9 60 1,200
turnover period
(360/6)
Table 2.5. Account receivable from customer turnover period
The accounts receivable turnover ratio measures how many times a business
can collect its average accounts receivable during the year. This ratio shows how
efficient a company is at collecting its credit sales from customers.
In this case, accounts receivable turnover period is used to estimate how many
times a business can collect its average accounts receivable during 360 days. It is clear
that the accounts receivable turnover and the accounts receivable turnover period have
an opposite direction. For instance, accounts receivable turnover in 2016 was the
lowest
13
while accounts receivable turnover period was the highest in three years. Meanwhile,
the number of accounts receivable turnover period rose significantly during this period
due to the increase in average accounts receivable from customers.
5. Analysis of operating profitability
5.1. Return on sale (ROS) (Table 5.1)
Return on sales (ROS) is a ratio used to evaluate a company's operational

efficiency. This measure provides insight into how much profit is being produced per
dollar of sales. An increasing ROS indicates that a company is growing more
efficiently, while a decreasing ROS could signal impending financial troubles.
Profit after tax

ROS= ∗100 %
Net sales∧revenue
In year 2016 return on sales was 2.10%. it means that 100 dong sales could
create 2.10 dong profit after tax. This number shows that the company had managed
the cost good, however this ratio increased in 2017 and decreased until 2018. This
problem was probably due to the increase in materials cost.
5.2. Return on asset (ROA) (Table 5.1)
Return on assets (ROA) is an indicator of how profitable a company is relative

to its total assets. ROA gives a manager, investor, or analyst an idea as to how efficient
a company's management is at using its assets to generate earnings. Return on assets is
displayed as a percentage.
profit before tax

ROA= ∗100 %
Average total assets
The ratio of return on asset fluctuated over the years 2016 to 2018. Particular,
ROA in 2017 was higher than 2016 by 5,09%. However, in the year 2018 this ratio
decreased by 4.47% when compared with 2017. In comparison with the ROA of food
industry, 14% (Cophieu68.vn on Oct 17th, 2019), this ratio shows that this firm should
improve their strategies to use its assets to generate earnings better.
14
No Ratio 2016 2017 2018
1 Average total assets 1,209,932,273 1,380,959,391,725 1,801,809,08
2 Profit before tax 83,840,768,767 166,145,329,163 136,231,70
3 Return on asset ROA 6.94% 12.03% 7.56%

(2/1)
4 Profit after tax 66,948,928,851 132,755,422,467 108,846,00
5 Net sales 3,977,927,992,052 1,327,755,422,476 108,846,00
6 Return on sales ROS 2.10% 3.80% 3.07%

(4/5)
Table 5.11.Analysis of operating profitability
15
The business performance analysis Class
42k06.2
Group 2
5.3. Disaggregating ROA
Profit before tax Total sales∧revenues

ROA= ×
Total sales∧revenues Average total assets
ROA=Return on sales × Assets turnover
2016 2017 2018
1.Profit before
83,840,768,767 166,145,329,163 136,231,705,406
tax
2.Total sales and 3,998,633,592,30

revenues 8 4,370,120,657,900 4,435,017,859,792
3.Return on
2.10% 3.80% 3.07%
sales (ROS) (1/2)
4.Total sales and 3,998,633,592,30

revenues 8 4,370,120,657,900 4,435,017,859,792
5.Average total 1,209,932,489,27

assets 3 1,380,959,391,725 1,801,809,089,680.5
6.Assets
3.30 3.16 2.46
turnover (4/5)
7.Return on
assets ROA 6.93% 12.03% 7.56%
(3*6)
Table 5.12. Disaggregating ROA

The company's ability to make a profit from sales is quite low, indicating that
the company does not have an effective sales policy. The return on sales in 2016 was
2.10% before decreasing by 3.07% until 2018.
The rate of generating revenue from assets was also low and decreased slightly
over 3 years. In short, if Return on Sales and Assets turnover is low, ROA is low.
Certificate the business did not maintain the efficiency in the use of its assets.
16
42k06.2
Group 2
5.4. Return on equity (ROE)

Return on equity (ROE) is a profitability ratio that measures the ability of a firm
to generate profits from its shareholders investment in the company. That mean how
many dong of profit after tax can be generated using 100 dong of shareholders
investments.
profit after tax

Return on equity −ROE= ∗100 %
Average owner ' s equity
N
Items 2016 2017 2018
o
1 Profit after tax 66,948,928,851 132,755,422,467 108,846,003,290
2 Average owner's
467,025,994,514.5 545,520,347,810.5 615,710,921,523
equity
3 ROE (1/2) 14.34% 24.34% 17.68%
Table 5.13.Return on equity (ROE)

The ratio of return on equity tended to fluctuate over the years 2016 to 2018.
Especially, ROE in 2017 stood at 24.34%. It means that 100 dong shareholder
investment can be created 24.34 dong profit after tax. This percentage increased
significantly by 10% compared to 2016. However, in the year 2018, this ratio
decreased considerably by 6.66% when compared with 2017 although the company
tried to improve this ratio.
Currently, the ROE of food industry is 26% (Cophieu68.vn on Oct 17th, 2019).
Hence, in comparison with ROE of food industry, this circumstance shows that this
firm should offer strategies to improve its performance.
5.5. Return on asset variance (RE)
RE excludes the effect of the funding policy. RE expresses the asset use
efficiency without the use of debt-equity. RE is compared with the interest rate to
17
42k06.2
Group 2
determine whether the company should borrow money from banks or raise equity from
owners
profit before tax+interest expense

ℜ= ∗100 %
Average total assets
No Items 2016 2017 2018
1 Profit before tax 83,840,768,767 166,145,329,163 136,231,705,406
2 Interest expense 16,010,915,372 15,891,432,551 17,868,306,034
3 Average total 1,209,932,489,27 1,380,959,391,72

assets 3 5 1,801,809,089,680.5
4 RE (1+2)/3 8.25% 13.18% 8.55%
Table 5.14. Return on asset variance (RE)

As can be seen from the table, generally, return on asset variation increased.
Although this ratio rose in 2017 and 2018, it was still relatively low. It demonstrates
that the company operates ineffectively.
6. Impact factors to ROE
6.1. ROS and asset turnover
profit after tax

Return on equity −ROE= ∗100 %
Average shareholder equity
Profit before tax

∗Net sales∧revenue
Net sales∧revenue
∗Total averrage assets
Total averrage assets
ROE= ∗(1−T )
Total average equity
turnover∗Total averrage asset

ROE=ROS∗Assets ∗(1−T )
18
42k06.2
Group 2
N
Items 2016 2017 2018
o
1 ROS 2.10% 3.80% 3.07%
2 Asset turnover 3.30 3.16 2.46
3 Average total
1,209,932,489,273 1,380,959,391,725 1,801,809,089,680.50
assets
4 Average
467,025,994,514.50 545,520,347,810.50 615,710,921,523
owner's equity
5 ROE 14.36% 24.32% 17.68%
Table 6.15. ROE is affected by ROS and asset turnover

From the formula above, ROS and assets turnover are direct proportion to ROE.
ROS shows that 100 dong of net revenue needs how much profit. Asset turnover
demonstrates that the efficiency of asset exploitation of enterprises. The lower the
asset turnover is, the lower ROE is.
In this case, one hundred dong of net revenue from 2016 to 1018 will generate
14.36; 24.34; and 17.68 dong of profit respectively. The more ROS, the greater
efficiency of the business. In 2017, ROS increased slightly by 3.8%. Compared to
2017, ROS in 2018 decreased slightly by 6.64%. This shows company boosted the
performance of the business, but the percentage is very small negligible.
6.2. Self-fund ratio
Profit before tax∗(1−T )

∗1
Total average assets
ROE= ∗100 %
selffund ratio
19
42k06.2
Group 2
No Items 2016 2017 2018
2 Tax 20% 20% 20%
3 Total assets in
1,193,882,641,846 1,568,036,141,604 2,035,582,037,757
current year
4 Total assets in last

1,225,982,336,700 1,193,882,641,846 1,568,036,141,604
year
5 Total average
1,209,932,489,273 1,380,959,392,725 1,801,809,090,680.5
assets [(3+4)/2]
6 Self- fund ratio 40.74% 38.56% 30.79%
7 ROE 13.60% 24.96% 19.64%
Table 6.16.ROE is affected by Self-fund ratio

Self-fund ratio is a term that indicates the enterprise's ability to finance planned
investments from its own resources.
As can be seen from the table, it is clear that the self-fund ratio and ROE have
an opposite direction. In other words, when the enterprise's ability to finance planned
investments from its own resources decreases, the amount of profit that common
stockholders can receive increase. For instance, in 2016, the self-fund ratio was the
highest while ROE bottomed out, at 13.60% in three years. It means that while the
Tuong An's ability to finance planned investments in 2016 was the strongest, Tuong
An’s common stockholders could received only 13.6 dong/ 100 dong of equity.
Similarly, during this period, while the self-fund ratio dropped by 9.95%, Tuong An’s
common stockholders increased by 6,04 dong of profit.
6.3. Debt to equity ratio
Profit after tax

ROE= ∗100 %
Average shareholder quity
20
42k06.2
Group 2
Profit before tax∗( 1−T )

¿ ∗(1+ Debt ¿ equity ratio)
Year 2016

Debt ¿ equity ratio=
Debt + equity (707,487,802,152+778,325,187,365)/2
¿ = =1.59
Total average equity (486,394,839,694+ 447,657,149,335)/2
Year 2017

Debt + equity (963,390,285,677+ 707,487,802,152)/2
¿ = =1.53
Total average equity (604,645,855,927+486,394,839,694)/2
Year 2018

Debt + equity (1,408,806,050,638+ 963,390,285,677)/2
¿ = =1.93
Total average equity (626,775,987,119+ 604,645,855,927)/2
No Items 2016 2017 2018
2 Tax 20% 20% 20%
4 Total average
1,209,932,489,273 1,380,959,392,725 1,801,809,090,680.5
assets [(3+4)/2]
5 Debt to equity
1.59 1.53 1.93
ratio
6 1+ Debt to
equity ratio 2.59 2.53 2.93
7 ROE 14.36% 24.35% 17,72%
Table 6.17.ROE is affected by Debt to equity ratio

The debt to equity ratio is a financial, liquidity ratio that compares a company’s
total debt to total equity. A higher debt to equity ratio indicates that more creditor
21
42k06.2
Group 2
financing (bank loans) is used than investor financing (shareholders). The debt to
equity ratio of food industry is 98% and ROE of food industry is 26% (Cophieu68.vn
on Oct 17th, 2019).
The debt to equity ratio from 2016 to 2017 decreased because total average
equity in 2017 was higher than that in 2016. Conversely, this ratio in the next year was
larger than 2017 due to the decrease of total average equity.
This ratio fluctuates over the years. However, from 2017 to 2018, the
relationship between debt to ratio and ROE was in reverse order. In detail, when debt
to equity ratio increases, ROE will decrease. It means that the large amount of debt
that company borrowed from banks or creditors makes the profit of shareholders
decrease. Besides, compared to debt to equity ratio of food industry, the debt to equity
ratio of this firm was extremely low and this is a positive sign. Meanwhile, in
comparison with ROE of food industry, this circumstance shows that this firm should
offer strategies to improve its performance.
6.4. Interest coverage ratio
Income before tax + Interest expenses

ICR=
Interest expenses
Income before tax+ Interest expenses
ℜ=
1 debt
ROE= 1−( ICR )
∗(1−T )∗ℜ∗(1+
equity
)* 100%
22
42k06.2
Group 2
No Items 2016 2017 2018
2 Interest
expenses 16,010,915,372 15,891,432,551 17,868,306,034
3 Tax 20% 20% 20%
4 Total average
1,209,932,489,273 1,380,959,392,725 1,801,809,090,680.5
assets
5 Debt/equity 145.46% 159.33% 224.77%
6 ICR [(1+2)/2] 6.24 11.46 8.62
7 RE [(1+2)/4] 8.25% 13.18% 8.55%
8 ROE 13.60% 24.96% 19.64%
Table 6.18.ROE is affected by Interest coverage ratio

The interest coverage ratio is a debt ratio and profitability ratio used to
determine how easily a company can pay interest on its outstanding debt. The interest
coverage ratio (ICR) may be calculated by dividing a company's earnings before
interest and taxes (EBIT) during a given period by the company's interest payments
due within the same period. The lower the ratio, the more the company is burdened by
debt expense. Lenders, investors, and creditors often use this formula to determine a
company's riskiness relative to its current debt or for future borrowing.
As you can see from the table, during the given time, this company's riskiness
relative to its current debt or for future borrowing in 2016 was the highest because ICR
in this year was the lowest. However, this situation was improved in two years time.
From 2016 to 2017, ICR increased because interest expense that this firm had to pay in
2017 decreased significantly rather than 2016. Interest expense in 2018 was higher
23
42k06.2
Group 2
than 2017, making ICR in this year declined slightly by 3.34%. Meanwhile, RE in
three years fluctuated slightly.
Therefore, ICR, RE and ROE have the same direction. In other words, when
ICR and RE increased, ROE rose. In contrast, ROE decreased if ICR and RE dropped.
As a result, the higher risk is, the more shareholders’ profit is.
7. Profitability analysis
7.1. Return on capital employed (ROCE)
Return on capital employed is a profitability ratio that measures how efficiently

a company can generate profits from its capital employed by comparing net operating
profit to capital employed. In other words, return on capital employed shows investors
how many dong in profits each dong of capital employed generates.
ROCE is a long-term profitability ratio because it shows how effectively assets

are performing while taking into consideration long-term financing. This is why
ROCE is a more useful ratio than return on equity to evaluate the longevity of a
company.
EBIT
ROCE= ∗100 %
Capital employed
EBIT
¿ ∗100 %
Total assets – Short term liabilities
No Items 2016 2017 2018

3 EBIT(1+2) 99,851,684,139 182,036,761,714 154,100,011,440
4 Total assets 1,193,882,641,846 1,568,036,141,604 2,035,582,037,757
Short term
5 695,306,904,930 946,465,212,389 1,392,948,587,888
liabilities
6 ROCE(3/(4-5)) 20.03% 29.29% 23.98%
24
42k06.2
Group 2
Table 7.19. Return on capital employed (ROCE)

Return on capital employed fluctuated over 3 years. The return on capital ratio
shows that each dong of used capital generated VND 20.03, 29.29, and 23.98 of profit
corresponding to 2016, 2017 and 2018. This shows that 2017 was a more favorable
year than in 2016 and 2018. In 2017, the company used capital more efficiently than
the above two years.
7.2. Earnings per share (EPS):
EPS is the monetary value of earnings per outstanding share of common stock
for a company. The resulting number serves as an indicator of a company's
profitability. It is a tool that market participants use frequently to gauge the
profitability of a company before buying its shares.
Profit after tax−Dividend on Preferred Stock

EPS= ∗100 %
Weight averagenumber of common shares outstanding
No Items 2016 2017 2018
Profit after tax
attributable to
1 shareholders 63,212,482,408 127,445,205,578 105,580,623,191
holding ordinary
shares
Dividends on
2 0 0 0
Preferred Stock
Weight average
number of
3 32,266,332 32,654,233 33,877,932
common shares
outstanding
4 EPS((1-2)/3) 1959.08 3902.87 3116.50
Table 7.20. Earnings per share (EPS)
EPS shows that in 2016 the company earned VND 1959.08 dong for each of its
shares, similar to 2017 at VND 3902.87 and in 2018 of VND 3116.50. In 2017, this
higher ratio means that the company has more profit to distribute to its shareholders. In
2018 the EPS dropped, which means the company made less profit. It can be seen that
25
42k06.2
Group 2
the reason for the decline of EPS is the increase in the number of outstanding shares or
the company issuing more shares to the market.
7.3. Price/earning ratio (P/E)
market price per share

P/E = earnings per share
Table shows that P/E ratio declined sharply over 3 years. P/E in 2016 was the
highest in 3 years and was equal to 20.26 times. It means that 2016 stock price was
about 20 times higher than earnings on that stock. In other words, investors had to pay
about 20 VND per 1 VND profit. P/E in 2018 was lowest, which indicates that the
company's stock price was undervalued. Besides, earnings per share was at a high
level. The low P/E might be due to the rapid decline in the stock market price, EPS
increased but not significantly. It can be a bad sign when assessing the performance of
the business.
7.4. Book value per share (BV/BVPS)
Total shareholder equity− preferred equity

BV =
Total outstanding shares
No Items 2016 2017 2018
Market price per

1 share 39,680 40,690 26,570
2 Earnings per share 1,959 3,903 3,117
3 P/E (1)/(3) 20.26 10.43 8.52
Total shareholder
4 equity 486,394,839,694 604,645,855,927 626,775,987,119
5 Preferred equity 0 0 0
Total outstanding
6 shares 18,980,200 33,879,648 33,876,148
7 BV [(4)-(5)]/(6) 25,626.43 17,846.88 18,501.99

Table 7.21. Book value per share
26
42k06.2
Group 2
The value of BV had volatility through 3 years . From 2016 to 2017, BV

decresed but when compared to the market price of the stock, it was still much higher,
which shows that the operation of the company was still relatively stable and investors
still needed to buy shares of the company because the company had no treasury shares.
In 2018, BV slightly increased.
8. Indicator from cash flow (Table 8.1)
8.1. Cash flow margin ratio
CFO
CF margin = Total revenue
CF margin fluctuated sharply through 3 years. From 2016 to 2017, CF margin

had a positive value and increased lightly because of the increase in CFO. The increase
in CF is triggered off by the increase in provisions. From then, it shows that the firm's
ability to translate sales dollars into profits was better. But next year, CF margin was
negative owing to CFO because reversal of provision and receivables, inventories
increased. More inventories show that business have to spend more cash. Higher
receivables indicated that customers were appropriating capital and thus business had
less cash. In other words, the liquidity of the organization declined. If this trend is
prolonged, it will lead to the insolvency of the finance, the inability to pay due debts,
and the risk of bankruptcy.
8.2. Cash flow from operating to net income
CFO
CF from operations to net income = Net income
CF from operations to net income fluctuated widely over 3 years, caused by the
strong volatility of CFO. The reasons for the unstable CFO mentioned above. Between
2016 and 2017, the index was higher than one and increased rapidly. It means that the
amount of cash that the company’s profit was increasing and it was able to finance its
performance at the expense of the operating activity. In 2018, the company’s profit
was still high but lower than in 2017 and CFO was negative. It indicates that over 1
dong of revenue earned on an enterprise that doesn't get any cash at all. In the year,
27
42k06.2
Group 2
because the receivables from customers was too big and the business still did not
recoverred the money, the business was profitable but the money at the unit was not
available.
8.3. Cash flow per share
CFO
CF per share = Average number of common shares of outstanding
CF per share in 2017 was much higher than 2016, illustrating that the
company's finance was relatively strong and cash was created from common share
increased dramatically. But in 2018, this ratio was bad because of the value of CFO.
Thereby, it shows that cash created from common share falling dramatically.
8.4. Cash flow return on asset
CFO
CF return on assets = Total assets
This ratio rose in 2017 and fell in 2018. It tells that in 2017, the company made
relatively efficient use of its assets. This is may a good signal for the company because
they have more cash flow to reinvest for growth and to return to shareholders. And for
2018, assets increased sharply due to new investments in some machinery, equipment,
software, capital construction investment completed, accounts receivable too much.
Besides, capital construction investment completed and put into use, accounts
receivable rose too much. In sum, the company did not effectively use its assets in
2018.
28
42k06.2
Group 2
No Items 2016 2017 2018
1 CFO 86,107,485,747 336,500,494,719 -254,219,672,195
3,977,927,992,05
2 Total revenue 2 4,337,772,721,063 4,408,696,880,121
Cash flow margin

3 (1)/(2) 0.02 0.08 -0.06
4 Net income 66,948,928,851 132,755,422,476 108,846,003,290
Cash flow from

operations to net
5 income (1)/(4) 1.29 2.53 -2.34
Average number of
common shares of
6 outstanding 18,980,200 33,879,648 33,876,148
Cash flow per share

7 (1)/(6) 4,536.70 9,932.23 -7,504.39
1,193,882,641,84
8 Total assets 6 1,568,036,141,604 2,035,582,037,757
Cash flow return on

9 assets (1)/(8) 0.07 0.21 -0.12
Table 8.22. Indicator from cash flow

9. Business risk analysis
9.1. Variance
n
2
Var (k) = δ = ∑ ( ki−k ¿ ) x pi
2
i=1
n
δ= √∑
i=1
2
( ki−k ¿ ) x pi
δ
Hbt =
k¿ ¿
29
42k06.2
Group 2
NO Items 2016 2017 2018
1 Sales 3,978 billion VND 4,338 billion VND 4,409 billion VND
2 Profit 67 billion VND 133 billion VND 109 billion VND
3 ROS 2.10% 3.80% 3.07%
4 ROA 6.94% 12.03% 7.56%
5 ROE 14.34% 24.34% 17.68%
Table 9.23.Sales, Profit, ROS, ROA, ROE
N Items Variance Standard deviation Coefficient of variation
o
1 Sales 35,600 188.6796 0.0445
2 Profit 744 27.2764 0.2648
3 ROS 0.4849 0.6963 0.2329
4 ROA 5.1415 2.2675 0.2565
5 ROE 17.279 4.1568 0.2212

Table 9.24. Variance, Standard deviation, and Coefficient of variation
The table shows that the variance, standard deviation and coefficient of
variation of sales, profit, ROS, ROA, ROE of TAC in three years. The variance and
standard deviation is used to measures dispersion, variability, diversity of the dataset
and considered the difference with the mean of the values. But standard deviation only
measures variability for a single dataset. To compare two or more datasets, we will use
coefficient of variation. It is also used to analysis the business risk.
From the table, we can see that TAC’s sales had low coefficient, which means
that sales didn’t change much in the last three years. Coefficient of variation of profit,
ROS, ROA, ROE was higher than sales. It indicates that the variability of those
indicators was higher due to the fluctuation of profit. This also shows the relative level
of risk. (Because there are insufficient data for three years of industry average’s
indicators, it is not possible to assess how high or low the risk is relative to the
industry average).
30
42k06.2
Group 2
9.2. The degree of operating leverage (DOL)
% change∈EBIT Total contribution margin

DOL= = costs ¿
% change∈sales Total contribution margin−Total ¿
Where:
EBIT ∈the Beginning−EBIT ∈the Ending
% change ∈EBIT =
EBIT ∈the Beginning
Sales∈the Beginning −Sales∈the Ending
% change ∈Sales=
Sales∈the Beginning
No Items 2016 2017 2018

1 EBIT 99,851,684,139 182,036,761,714 154,100,011,440
2 % change in
EBIT 82.31% -15.35% -1%
3 Sales 3,995,040,191,032 4,427,714,235,206 4,492,736,545,601
4 % change in
total sales 10.83% 1.47% -1%
5 DOL 7.6 -10.45 1
Table 9.25.The degree of operating leverage
The Degree of Operating Leverage (DOL) is the leverage ratio that sums up the
effect of an amount of operating leverage on the company's earnings before interests
and taxes (EBIT). Operating Leverage takes into account the proportion of fixed costs
to variable costs in the operations of a business. DOL helps in determining how the
change in sales volume would affect the profits of the company. If the operating
leverage is high, then a smallest percentage change in sales can increase the net
operating income.
As can be seen from the table, the Degree of Operating Leverage (DOL)

fluctuated wildly due to the change in EBIT and sales during this period. To be
specific, the highest and lowest DOL was in 2016 and 2017, at 7.6 and -10.45
respectively. Although from 2017 to 2018, the DOL increased significantly, this ratio
was over low. As a result, in three years, the EBIT in 2016 was the largest volatile and
31
42k06.2
Group 2
unpredictable while the EBIT in 2017 was the most stable. This circumstance reveals
that this firm’s operating policies should be improved to maintain the EBIT stably.
9.3. Risk ratio
Sales
Risk ratio = Sales−Break even sales
Where:
Break even sales = Cost of good sold + Selling costs + Administrative costs
No Items 2016 2017 2018

1 Sales 3,977,927,992,052 4,337,772,721,063 4,408,696,880,121
2 COGS 3,603,759,875,433 3,773,926,331,144 3,846,447,929,113
3 Selling costs 224,458,410,617 354,659,920,515 379,187,209,434
Administrative
70,027,190,718 59,283,185,179 52,269,101,500
4 costs
Break even
sales 3,898,245,476,768 4,187,869,436,838 4,277,904,240,047
5 (2)+(3)+(4)
Risk ratio
49.92 28.94 33.71
6 (1)/[(1)-(5)]
Table 9.26.Risk ratio
From the table, we can see that in three years, sales were always greater than
break even sales, so the company was always profitable. The volatility of break even
sales also affected the risk ratio. In 2017, the break even sales decreased and sales
increased, so the risk ratio decreased. But in 2018, the break even sale increased, so
the risk ratio had increased slightly. In general, the company was capable of
controlling costs and the sensitivity of low profit.
9.4. The degree of finacial leverage (DFL)
% change∈ROE Profit before tax+interest expense

DFL =% change∈EBIT = Profit before tax
The degree of finacial leverage (DFL) measures the sensitivity of a company’s

return on equity (ROE) to fluctuations in its operating income, as a result of changes in
32
42k06.2
Group 2
its capital structure. The effect of finacial leverage emerges if a company uses debt
financing.
A company's DFL represents the riskiness of its capital structure, which

includes its debts and equity. When a company's fixed financial costs account for a
large percentage of its earnings, its DFL will be high. The higher a company's DFL,
the more risky its capital structure.
No Items 2016 2017 2018

3 DFL (1+2)/1 1.19 1.10 1.13
Table 9.27.The degree of finacial leverage
In general, during three years, the company had a DFL greater than one,
proving that all three years had financial leverage.
In 2016, the company had a high interest expense but a low profit before tax so
the company had a high probability of insolvency. In 2017, interest expense decreased
and profit before tax increased, so the probability of insolvency decreased. In 2018, the
probability of insolvency increased slightly due to lower profit before tax and
increased interest expense.
10. Insolvency risk
10.1. Short term liquidity risk
10.1.1. Current liabilities coverage ratio
+) Current ratio = Current assets/Current liabilities
+) Quick ratio = (Current assets - Inventory – Other current assets)/Current

liabilities
+) Cash ratio = Cash & cash equivalents/Current liabilities
+) Cash flow ratio = Net cash flow from operations/Current liabilities
33
42k06.2
Group 2
No Ratio 2016 2017 2018

1 Current assets 1,035,437,560,726 1,423,014,730,537 1,890,371,054,646
2 Current
707,487,802,152 963,390,285,677 1,408,806,050,638
liabilities
3 Current ratio
1,46 1,48 1,34
(1/2)
4 Current assets
- Inventories - 466,195,858,531 812,847,071,173 1,009,287,430,159
other
5 Current
707,487,802,152 963,390,285,677 1,408,806,050,638
liabilities
6 Quick ratio
0.66 0.84 0.72
(5/6)
7 Cash and cash
349,902,332,846 295,382,117,621 2,107,662,772,865
equivalents
8 Current
707,487,802,152 963,390,285,677 1,408,806,050,638
liabilities
9 Cash ratio
0.49 0.31 1.5
(8/9)
10 Net cash flow
from 86,107,485 336,550,494,719 (254,219,672,195)
operations
11 Current
707,487,802,152 963,390,285,677 1,408,806,050,638
liabilities
12 Cash flow
0.00012 0.34934 (0.18045)
ratio(11/12)
Table 10.28.Current liabilities coverage ratio
 Current ratio
The current ratio is a liquidity ratio that measures a company's ability to pay
short-term obligations or those due within one year. It tells investors and analysts how
34
42k06.2
Group 2
a company can maximize the current assets on its balance sheet to satisfy its current debt
and other payables.
Current ratio of the company fluctuated wildly from 2016 to 2018. From 2016 to
2017, current ratio increased before decreasing again until 2018. Besides, the
company's short-term liquidity ratio was greater than 1, indicating that the company
was still able to pay its short-term debts. This shows that the payment risk of the firm
was low, the firm increased investment in short-term assets, and reduced short-term
debt. As a result, it created a peace of mind for investors and creditors.
 Quick ratio
The quick ratio is an indicator of a company’s short-term liquidity position and

measures a company’s ability to meet its short-term obligations with its most liquid
assets.
As well as with the current ratio, the company's quick ratio also fluctuated. From
2016 to 2017, this figure fell from 0.66 to 0.84. Quick ratio shows the company's
ability to pay immediately by short-term assets was high liquidity, ensuring the ability
to pay more than the current ratio. We see that the ratio of fast pay was always high, it
was similar to the current ratio. In summary, it can be seen that the company's ability
to pay short-term debt in the period 2016 - 2018 was at a good level.
 Cash ratio
The cash ratio is a liquidity ratio that measures a company's ability to pay off

short-term liabilities with highly liquid assets. Compared to the current ratio and the
quick ratio, this is the most conservative measure of a company's liquidity position.
From 2016 to 2018, cash ratio experienced a wild fluctuation. In 2017, cash ratio
was 0,31. This means that business only had enough cash and equivalents to pay off 31
percent of business current liabilities. It is infrequent for an enterprise to had sufficient
cash and cash equivalents to meet short-term liabilities. Therefore, this ratio less than 1
also not significant effect. Businesses could take advantage of the extant part to invest
35
42k06.2
Group 2
to get higher sales. However, in year 2018, this ratio was 1,5. It dramatically increased
compared to 2016. It means that all the current liabilities could be paid with cash and
equivalents, the creditor would be assured of loans for business.
10.1.2. Current assets turnover
+) Inventory turnover = Cost of goods sold/Average inventories
+) Accounts receivable turnover = (Sales + VAT output)/Average accounts receivable
+) Accounts payable turnover = Purchases/Average accounts payable
+) Days Inventory Held = 360/ Inventory turnover
+) Days Accounts receivable outstanding = 360/ Accounts receivable turnover
+) Days Accounts payable turnover = 360/ Accounts payable turnover
+) Days Other Financing Required = Days Inventory Held + Days Accounts

receivable Outstanding - Days Accounts payable turnover.
N Target
2016 2017 2018
o
1 Cost of goods sold 3,603,759,875,433 3,773,926,331,144 3,846,447,929,113
2 Average inventories 575,524,219,964 561,700,961,137 712,222,491,019
3 Inventory turnover
6.23 6.72 5.4
(1/2)
4 Sales 3,977,927,992,052 1,327,755,422,476 108,846,003,290
5 VAT output 25,722,396,150 2,576,323,547 35,856,615,313
6 Average accounts
101,889,900,355 220,621,926,030 416,033,344,915
receivable
7 Accounts
receivable 39 6 0.3
turnover (4+5/6)
8 Purchases 3,536,224,062,804 3,813,815,626,119 4,107,601,693,902
36
42k06.2
Group 2
9 Average accounts
742,906,494,759 821,939,043,915 1,172,598,168,158
payable
10 Accounts payable
5 5 4
turnover (8/9)
Table 10.29.Current assets turnover
 Inventory turnover
Inventory turnover is a ratio showing how many times a company has sold and
replaced inventory during a given period. A company can then divide the days in the
period by the inventory turnover formula to calculate the days it takes to sell
the inventory on hand.
In general, inventory turnover and accounts receivable turnover fluctuated in a period

from 2016 to 2018. The sharp decrease in 2018 led to a significant reduction in
inventory turnover period. As a result, the company had a good sales policy, making
the number of sales increased sales.
 Receivables turnover
The accounts receivable turnover ratio is an accounting measure used to

quantify a company's effectiveness in collecting its receivables or money owed by
clients. The ratio shows how well a company uses and manages the credit it extends to
customers and how quickly that short-term debt is collected or is paid.
We can see that accounts receivable turnover in 2016 was 39 and then this ratio
decreased from 6 to 0.3. It indicates that the company had policies in order to collect
money from customers quite effective. This help company could use this money so as
to invest.
 Accounts payable turnover
Accounts payable turnover is a ratio that measures the speed with which a
company pays its suppliers. ... If a company is paying its suppliers very quickly, it may
mean that the suppliers are demanding fast payment terms, or that the company is
taking advantage of early payment discounts.
37
42k06.2
Group 2
Accounts payable turnover tends to decrease slightly over the three years. This
shows that the company had higher debt pressure and had to pay faster before raising
capital promptly.
10.1.3. Days of working capital required:
Days of working capital required=Days of inventory held+ Days accounts receivable outstanding
No Items 2016 2017 2018

1 Days of inventory held 58 54 67
2 Days accounts receivable outstanding 9 60 1,200
3 Days of working capital required (1+2) 67 114 1,267
Table 10.30.Days of working capital required
Days working capital describes how many days it takes for a company to
convert its working capital into revenue. The more days a company has of working
capital, the more time it takes to convert that working capital into sales. The days
working capital number is indicative of an inefficient company and vice versa.
It is clear that days of inventory held fluctuated wildly while days of accounts
of receivable outstanding experienced an upward trend during this period.
Consequently, days of working capital required increased significantly from 2016 to
2018. It means that this firm’s inventory and accounting receivables were not efficient.
10.1.4. Days of accounts capital financing provided:
Days of accounts capital financing provided=Days of accounts payableoutstanding + Days of working capi
Days of account payable outstanding = 360 / Accounts payable turnover ratio
Where:
Purchases = Cost of sales + Ending inventory – Starting inventory
Accounts payable turnover ratio = Total purchases / Average accounts payable
No Items 2016 2017 2018
38
42k06.2
Group 2
1 3,536,224,062, 3,813,815,626,11 4,107,601,693,90

Total Purchase
804 9 2
2 Average accounts 742,906,494,75 1,172,598,168,15
821,939,043,915
payable 9 8
3 Accounts payable
5 5 4
turnover ratio (1/2)
4 Days of account payable
76 78 103
outstanding [360/(3)]
finacing needed from 94 102 133
other sources
170 180 236
finacing provided (4+5)
Table 10.31.Days of accounts capital financing provided
Days of account payable outstanding of this firm rose in the given period due to
the decrease in accounts payable turnover ratio. It means that suppliers believed in this
firm, so Tuong An was allowed to pay in a longer term. Nevertheless, this can be
explained by the problematic performance, making this firm could not pay until
majurity.
Meanwhile, days of working capital financing needed from other sources

increased, showing a negative sign of the ability of converting working capital into
other sources.
The rise in Days of account payable outstanding and days of working capital financing
need from other sources triggered off the upward trend of Days of accounts capital
financing provided, indicating the inefficiency of using working capital.
10.1.5. Cash to cash cycle / cash operating cycle
Additional days obtained financing=Days of working capital required+ Days of accounts capital financing p
39
42k06.2
Group 2
N Items 2016 2017 2018

o
1 Days of working capital required 67 114 1,267
2 Days of accounts capital financing provided 170 180 236
3 Additional days obtained financing (1-2) 237 294 1,503
Table 10.32.Additional days obtained financing
The additional days obtained financing is utilized to estimate the short-term risk in
a firm. The shorter the number of days of of needed financing, the larger CFO/current
liabilities ratio and less dependent on short-term borrowing.
As can be seen from the above table, there was an increase in both Days of
working capital required and Days of accounts capital financing provided, thus
boosting the additional days obtained financing in three years.
This revealed that the CFO/current liabilities ratio decreased gradually and this
firm had to depend on short-term borrowing. As a result, this firm was encoutering a
high risk during this term.
10.2. Long-term solvency risk
10.2.1. Debt ratio
Total liabilities
Liabilities to assets ratio = Total assets
From the table, it is apparent that liabilities to assets ratio of TAC experienced
an upward trend over 3 years. This indicator shows that most of the company's assets
were financed through debt (in which short-term debt was more than long-term debt).
Particularly for 2016, liabilities to assets ratio of the industry average was 45.33%, so
this rate is 13.92% higher than the industry average. If it keeps going up, it is likely
that the company's ability to borrow money will decrease.
Total liabilities
Liabilities to shareholder’s equity ratio =
Total shareholde r ' s equity
40
42k06.2
Group 2
The table shows that liabilities to shareholder’s equity ratio was higher than 1
and increased steadily for 3 years. Compared to the industry average in 2016, this
index is 62.52% higher. It indicates that the company was financed by creditors rather
than from shareholders, which might be a dangerous trend. Because the company's
ability to use shareholder’s equity to pay debts decreased. It also means that the degree
of leverage of the company was high and so it will face with many risks.
Long-term debt to long-term capital ratio
Long−term debt
¿
Long−term debt +Total shareholde r ' s equity
This ratio is a measure of the level of financing of regular capital by long-term

debt. This ratio was small and had a slight fluctuation in 3 years. In 2016, it was also
much smaller than the industry average. It is only one-11th of the industry index. (The
industry average in 2016 was equal to 26.98%, in cophieu68.com). That is to say, the
company was less dependent on long-term debt. The company tends to use short-term
debt rather than long-term debt. Thus, the company has to face less payment risk in the
long term, or in other words, the company has a relatively low level of long-term
solvency risk.
Long−term debt
Long-term debt to shareholder’s equity ratio =
Total shareholde r ' s equity
This indicator indicates that the company uses what percentage of long-term
debt to equity as a long-term financing. The table shows that this ratio had very small
value and fluctuated slightly over 3 years. In comparison with the industry average in
2016, it only accounted for 6.78% (The industry average in 2016 was 36.95%, in
cophieu68.com). Thereby, it shows the low risk of solvency in long-term.
N
o Items 2016 2017 2018
1 Total liabilities 707,487,802,152 963,390,285,677 1,408,806,050,638
41
42k06.2
Group 2
1,568,036,141,60
1,193,882,641,846 2,035,582,037,757
2 Total assets 4
Total
shareholder's 486,394,839,694 604,645,855,927 626,775,987,119
3 equity
4 Long-term debt 12,180,897,222 16,925,073,288 15,857,462,750
Liabilities to
assets ratio 0.5926 0.6144 0.6921
5 (1)/(2)
Liabilities to
shareholder's 1.4546 1.5933 2.2477
equity ratio
6 (1)/(3)
Long-term debt
to long-term 0.0244 0.0272 0.0247
capital ratio (4)/
7 [(3)+(4)]
Long-term debt
to shareholder's 0.0250 0.0280 0.0253
equity ratio
8 (4)/(3)
Table 10.33.Debt ratio
10.2.2. Interest coverage ratio (Times interest earned)
The interest coverage ratio (ICR) is a debt ratio and profitability ratio used to
determine how easily a company can pay interest on its outstanding debt.
- The interest coverage ratio is used to see how well a firm can pay the interest on
outstanding debt.
- Also called the times-interest-earned ratio, this ratio is used by creditors and
prospective lenders to assess the risk of lending capital to a firm.
- A higher coverage ratio is better, although the ideal ratio may vary by industry.
 Formula:
42
42k06.2
Group 2
EBIT (Profit before tax+ Interest expense)

ICR=
Interest expense
The interest coverage ratio at one point in time can help tell analysts a bit about
the company’s ability to service its debt, but analyzing the interest coverage ratio over
time will provide a clearer picture of whether or not their debt is becoming a burden on
the company’s financial position. A declining interest coverage ratio is something for
investors to be wary of, as it indicates that a company may be unable to pay its debts in
the future.
No Items 2016 2017 2018

3 ICR [(1+2)/2] 6.24 11.46 8.62
Table 10.34.Interest coverage ratio
Generally, the company's interest coverage ratio over the past three years was
quite high, proving that the company was able to pay interest on its debts. This ratio
was particularly high in 2017 by 11.46% as profit before tax doubled compared to
2016. This shows that the company was performing very well in 2017. However, the
interest coverage ratio of 2018 decreased compared to 2017, because profit before tax
reduced and interest expense increased, but still higher than in 2016.
However, it is difficult to accurately predict a company’s long-term financial

health with any ratio or metric. Moreover, the desirability of any particular level of this
ratio is in the eye of the beholder to an extent. Some banks or potential bond buyers
may be comfortable with a less desirable ratio in exchange for charging the company a
higher interest rate on their debt.
10.3. Credit rating
Credit rating is an evaluation of the credit risk of a prospective debtor,

predicting their ability to pay back the debt, and an implicit forecast of the likelihood
of the debtor defaulting.
+ Use Altman z-score for predicting bankruptcy

43
42k06.2
Group 2
 Bankruptcy prediction model: Edward I. Altman in 1968
The Altman Z-score is the output of a credit-strength test that gauges a publicly
traded manufacturing company's likelihood of bankruptcy. The Altman Z-score is
based on five financial ratios that can calculate from data found on a company's annual
report. It uses liquidity, cumulative profitability, return on assets, market leverage,
sales generating potential of assets to predict whether a company has high probability
of being insolvent.
 Formula:
Z = 1,2 T1 + 1,4T2 + 3,3T3 + 0,6T4 + 1T5
Where:
NWC
T1 =
Total Assets
Retained Earning
T2 =
Total Assets
EBIT
T3 = Total Assets
Market value of equity
T4 =
Book value of total liabilities
Sales
T5 = Total Assets
Use Z to predict whether the company is likely to go bankrupt.
 If Z > 2.99: “non- bankrupt sector”
 If 1.81< Z < 2.99: “gray area”
 If Z < 1.81: “bankrupt sector”
Z” =3,25 +6,56T1 +3,26T2 +6,72T3 +1,05T4
Use Z '' to predict whether to invest in the company or not.
 Z '' > 5.65 should invest
 4.75 <Z '' <5.65 can invest but will face high risk.
 Z '' <3.75 should not be invested.
44
42k06.2
Group 2
Use the data of the company in 2018 to calculate the Altman Z-score: (Market price
per share in 2018 are got at Web cophieu68.com)
No Items Year 2018
1 Net Working Capital 497,422,466,758
2 Total Assets 2,035,582,037,757
3 T1 =Net Working Capital /Total Assets 0.2444
4 Retained Earnings 233,818,999,683
5 Total Assets 2,035,582,037,757
6 T2=Retained Earnings/ Total Assets 0.1149
7 EBIT 154,100,011,440
8 Total Assets 2,035,582,037,757
9 T3=EBIT/Total Assets 0.0757
10 Market Value of Equity 900,089,252,360
11 Book Value Of Total Liabilities 1,408,806,050,638
T4=Market Value of Equity/Book Value Of Total
12 0.6389
Liabilities
13 Sales 4,408,696,880,121
14 Total Assets 2,035,582,037,757
15 T5=Sales/ Total Assets 2.166
16 Z= 1.2T1 + 1.4T2 + 3.3T3 + 0.6T4 + 1.0T5 3.25
17 Z”=3,25 +6,56T1 +3,26T2 +6,72T3 +1,05T4 6.41
Table 10.35.Altman Z-score
From the table we can see:
 Z= 3.25 > 2.99: "non-bankrupt sector": The company had a healthy finance, no
business problems, the company was not at risk of bankruptcy.
 Z’’ = 6.41
Z’’ ADJUSTMENT S&P MOODY’S

Safe area 6.40 – 6.65 A- A3 Investable
Table 10.36.Altman Z-score
45
42k06.2
Group 2
The company was in a safe area. The company had the ability to repay its debts
and financial commitments were quite strong. The investors could invest in this
company.
11. Business valuation
With this assumption, in order to valuate the TAC’s company in 2018, group 2
will apply the Earnings - residual income valuation approach. Because this approach
aligns more closely to the capital markets and company management’s focus.
Moreover, it requires fewer steps than free cash flows valuation approach. Besides,
this approach also helps to evaluate the performance of enterprises and measure wealth
created for shareholders by the firm. To calculate the residual income valuation of the
business, the formula will be used:
T
¿t −(R E∗BV t −1)
V0 = BV0 + ∑
t =1 (1+ R E)t
Where:
V0: The earnings valuation of the company.
BV0: Book value in year 2016; BVt-1: Book value in year 2017
RE: Required rate of return. Assume that RE does not change within 3 years.
NIt: Net income value of the company at the end of the year 2018.
NIt – (RE * BVt-1): the residual income value of the company in 2018
t: Number of years (3 years)
Items 2016 2017 2018
BV0 25,626.43 17,846.88 18,501.99
Re 6.7% 6.7% 6.7%
NIt 150,115,493,267 218,232,139,615 233,818,999,683
NIt – (RE * BVt-1) - - 233,818,998,487
V0 - - 192,480,436,787
Table 11.37.The earnings valuation of the company
46
42k06.2
Group 2
We cannot compute V0 in 2016 and 2017. Because this is a discount from 2016
to 2018, we can only compute the V 0 in 2018. Compared to companies operating at the
same sector, the earnings valuation of TAC in 2018 was pretty appreciated
(finance.vietstock.vn). It means that this firm’s performance was good and wealth
created for shareholders by the firm was high.
47

Group Assignment: TOPIC: The Business Performance Analysis

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Group Assignment: TOPIC: The Business Performance Analysis

Uploaded by

Copyright:

Available Formats

UNIVERSITY OF DANANG ECONOMICS

The manufacturing sector: Food-processing

Authorized capital: 205.935.160.000 VND

Weighted of listed securities: 33.879.648 shares

Weighted of shares outstanding: 33.876.148 shares

Before 1795 the predecessor of Tuong An was Tuong An manufacturing

On 04/06/2004 move Tuong An vegetable oil factory under Vietnam Vegetable

26/12/2006 IPO in Ho Chi Minh Stock Exchange

26/12/2006 listed on Ho Chi Minh Stock Exchange with code TAC

In 2016 Tuong An merged with Kido.

Nutritional Oil: Food supplements Baby Olive Oil Season – Margarine

Solid Oil: Margarine and Shortening.

Manufacturing and exporting pre-packaged products which made from oil

2.1. Macro environment

Vietnam is originally an agricultural country with abundant agricultural

These favorable conditions have made Tuong An become a leading enterprise

Technology is a creative factor. This is a very dynamic factor that contains

Enterprises in general and Tuong An in particular have increasingly approached

-Vietnam's import tax policy must be implemented in accordance with

-Regulations and policies on food safety trademarks competition and dumping

2.1.7. Threat from Substitute Products

popular because Tuong An Company’s products are high-regarded and safe. In

2.1.8. Bargaining Power of Buyers

From 1996, Tuong An Company has focused on marketing and advertising to

3. FINANCIAL STRUCTURE ANALYSIS

3.1. Assets structure analysis (Table 3.1)

The general indicator:

Net value of asset i

3.1.1. Proportion of cash & equivalent

3.1.2. Proportion of account receivable short-term

It is clear that short-term receivables experienced an upward trend between

3.1.3. Proportion of inventories

Generally, the proportion of inventories decreased slightly from 2016 to 2018.

3.1.4. Proportion of other current assets

Proportion of other current assets anticipated an downward trend from 2016 to

3.1.5. Proportion of fixed assets:

3.1.6. Proportion of other non-current assets

Summary, the structure of assets of enterprise tended to increase current assets

1,035,437,560,726 86.7% 1,423,014,730,537 90.8% 1,890,371,054,646 92.9%

3.2.1. Financial autonomy

3.2.1.1. Debt ratio

3.2.1.2. Self-fund ratio

Total owne r ' s equity

3.2.1.3. Debt/ Owner’s equity ratio

' Total liabilities

N Ratio 2016 2017 2018

3.3.1. Short-term resources

Total value short −term resources

3.3.2. Long-term resources

Total valuelong−term resources

3.3.3. Owner’s equity/ Long- term resources ratio

' Total Owne r ' s equity

No Items 2016 2017 2018

3.4.1. Long-term financial balance

Net working capital requirement

2016 2017 2018

1 Inventory 541,756,313,649 581,645,608,624 842,799,373,413

9 Net fund (8)-(7) -621,441,362 3,278,185,07,200 -205,468,395,800

3.4.2. Short-term financial balance

2016 2017 2018

1 Long-term resources 498,575,736,916 621,570,929,215 642,633,449,869

2 Long-term assets 158,445,081,120 145,021,411,067 145,210,983,111

3 Net working capital 340,130,655,796 476,549,518,148 497,422,466,758

WACC = (E/E+D) Ke + (D/E+D) Kd *(1-Tc)