FINAL EXAM OF

CORPORATE FINANCE –
INS3007
Semester 1 (2021 – 2022)

LÃ MINH NGỌC
18071385
AC2018A
General information:
1, Brief information
- Full name: An Pha Petroleum Group Joint Stock Company
- Company is part of the Chemical and Allied Products Merchant Wholesalers
Industry
- Subsidiary: MT Gas JSC
- The company sells and distributes LPG for both residential and commercial
use. It also provides LPG and petroleum transportation and storage services
by sea, as well as the manufacturing of LPG cylinders. In addition, the
company installs petroleum storage tanks, repairs maritime boats, and leases
specialist petroleum equipment.
- Head office: 3 Nguyen Luong Bang Street, Saigon Paragon Building, Floor
Room 805, Floor 8, Ho Chi Minh, Ho Chi Minh Vietnam
- Revenue: $82.15 million ( USD)
- Fiscal Year End: DEC

Question 1: What are the three important questions of corporate finance you will need to
address in your company? Please briefly explain them and indicate how they are related
to the areas in the balance sheet of your company
- 3 main questions is about Capital budgeting, capital structure and working capital
management
- For capital budgeting we must answer what long-term investment or project
should the business take on? As in the balance sheet, we can see that long term
investment on other entities give company bigger profit than other investment
- For capital structure we must answer how should we pay for our assets? Should
we use debt or equity? We should pay our assets by debt
- For working capital management we must answer how do we manage the day-to-
day finances of the firm?

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Question 2: Calculate Cash flow to creditor, Cash flow to stock holder, and Cash flow
from the assets for the company in the last three years (2018-2020) based on company
financial statement published in its website?
Particulars Formulas Year 2018 Year 2019 Year 2020
Cash flow to Interest paid - ending -119,489,264 92,893,603 64,515,112
creditors = long-term debt +
beginning long term
debt
Cash flow to Dividend paid - -481,415,303 -47,476,823 -30,787,592
stockholders = ending equity +
beginning equity
Cash flow from Cash flow to -600,904,567 45,416,780 33,727,520
asset = creditors + Cash flow
to stockholders
Indicators ( unit: thousand dong)
Long-term debt 321,449,291 260,077,008 222,666,941

Dividends paid  
profit distributed -22,284,303 -33,617,826 -18,642,492
to owners
Interest paid   27,398,616 31,521,320 27,105,045
Owner's equity   481,415,303 495,274,300 507,419,400
         

 Cash flow to creditors increased sharply from 2018 to 2019 but felt in 2020, which
shows a decrease in the value profit paid to creditors -> The Company is growing lowlier
 Cash flow for stockholders increasing strongly over the years, showing that the
company’s cash source increased.
 Cash flow from asset increased sharply from 2018 to 2019 but felt a bit in 2020

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Question 3: Assume that risk free rate was 5%, market risk premium was 4.6%, calculate
required return of company’s common stock (hint: looking for company’s beta,
remember cite the source of data and using CAPM model for calculation)
Year Year Year Year
Valuation ratios 2017 2018 2019 2020
Trailing EPS   1,181 1,525 1,064 894
Book value per share (BVPS)   11,358 12,893 13,264 13,589

P/E Times   6.06 4.07 6.75 7.11

P/B Times   0.63 0.48 0.54 0.47

P/S Times   0.14 0.09 0.1 0.09

Dividend
%   0.03 0.1 0.07 0.08
yield
Beta Times   0.6 0.35 0.3 0.48
EV/EBIT Times   10.46 9.83 9.56 13.82

EV/EBITDA Times   8.99 8.16 6.08 7.76

We have CAPM model: E ( R )=RFR + βstock x ( Rmarket−RFR )

E(R) = Required rate of return, or expected return

RFR = Risk free rate
βsock =Beta coefficient for stock

Rmarket = Return expected from the market

(Rmarket- RFR) = Market risk premium, or return above the risk-free rate to
accommodate additional unsystematic risk

Year 2017: E(R) = 5% + 0.6x4.6% = 0.0776 (= 7.76%)

Year 2018: E(R) = 5% + 0.35x4.6% = 0.0661 (= 6.61%)
Year 2019: E(R) = 5% + 0.3x4.6% = 0.0638 (=6.38%)
Year 2020: E(R) = 5% + 0.48x4.6% = 0.07208 (= 7.21%)

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Question 4: Assume that your company financed its activities by issuing corporate bond
with total value is 15% of total company’s assets in the 31 December 2020 and you want
to issue 10-year bonds for this purpose. Suppose that required return on your bond issue
will be 9%, and you are evaluating 2 issue alternatives: a semiannual coupon bond
with a coupon rate of 9% and a zero-coupon bond, you company’s tax rate is 20%, both
bonds will have a par value of VND 100,000.
a) How many the coupon bonds would you need to issue to raise the capital needed? (0.5)
b) How many zero-coupon bonds would you need to issue? (0.5)
c)In the 10 years, what will your company’s repayment be if you issue the
coupon bonds? What if you issue the zeroes? (1)
d) Based on your answer in the a), b) and c), why would you ever want to issue the
zeroes? To answer, calculate the firm’s after-tax cash outflows for the first year under the
two different scenarios. Assume the IRS amortization rules apply for the zero-coupon
bonds. (1)
Company‘s total asset in the 31 December 2020: 1,796,057,651 VND
a, Issuing corporate bond with total value is 15% of total company’s assets in the 31
December 2020
Since required return = coupon rate, price of bond will be its pair value
Price of coupon = par value = 100,000
No. of coupon bonds = 1,796,057,651 x 15%/100,000 = 2694.08648
 2,694.1 Bonds
Par value
b, Price of zero-coupon bonds =
(1+ r )n

Par = 100,000
r = semi annual return = 9%/2 = 4.5%
n = No. of semi annual periods = 10 years x 2 = 20
100,000
Price =
[ ( 1+ 4.5 % )20 ] = 41,464.29 $
1,796,057,651
No. of zero coupon to issue =
41,464.29
= 43315.77 = 43316 bonds

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c, Repayment for coupon bonds
= No. of bonds x Par value x (1 + semi annual coupon rate)
= 2,694.1 x 100,000 x (1 + 4.5%)
= 281,533,450 $
Repayment of zero coupon bonds
= No. of bonds x Par value
= 43316 x 100,000
= 4,331,600,000 $
d, After tax CF for coupon bonds of Year 1
= No. of bonds x Par value x coupon rate x (1 – tax rate)
= 2,694.1 x 100,000 x 9% x (1-20%)
= 19,397,520 $ Outflow

After tax CF for Zero coupon bonds of Year 1

Price of bond at year 0 = 41,464.29 (calculated at b,)
N = No. of semi annual periods = 9 years x 2 = 19
Parvalue 100,000
Price of bond at year 1 = n
= = 45,280.04
( 1+r ) ( 1+4.5 % )18

Interest for year 1 of zero coupon bonds = 45,280.04 – 41,464.29 = 3815.8

After tax CF for zero coupon bonds of Year 1
= No. of bonds x Interest of ZCB Year 1 x Tax rate
= 43316 x 3815.8 x 20%
= 33,057,038.56$ In flow
As shown above, a coupon bond has a cash outflow of approximately 19,397,520 dollars,
whereas zero coupon bonds have no coupon payment. Instead, because of notional
interest, there will be a tax savings, which will be an inflow. In contrast to coupon bonds,

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which had an outflow of 19,397,520 dollars, zero coupon bonds saw an inflow of
33,057,038.56 dollars. That is why Coupon bonds are preferred.

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APPENDIX:
Balance Year Year Year
Year 202001/01-
201701/01- 201801/01- 201901/01-
Sheet 12/31KT/HN 12/31KT/HN 12/31KT/HN
12/31KT/HN

ASSETS        
A. SHORT-TERM
ASSETS 537,338,181 510,273,040 559,148,656 599,690,210
I. Cash and cash
equivalents 61,960,539 56,788,635 34,152,786 47,248,112
1. Cash 61,960,539 56,788,635 34,152,786 47,248,112
2. Cash equivalents
       
II. Short-term
financial investments 127,860,000 49,533,338 3,595,420 39,118,358

1. Available for sale

securities        
2. Provision for
diminution in value of
available for sale        
securities (*)
3. Held to maturity
investments 127,860,000 49,533,338 3,595,420 39,118,358
III. Short-term
receivables 268,148,069 301,107,958 319,189,788 395,681,719
1. Short-term trade
accounts receivable 194,949,429 275,562,256 237,247,293 299,004,087

2. Short-term
prepayments to 17,514,082 11,524,779 20,650,265 14,733,138
suppliers
3. Short-term inter-
company receivables        

4. Construction contract
progress receipts due
from customers        

5. Short-term loan
receivables 10,600,000 400,000 3,000,000 3,000,000
6. Other short-term
receivables 48,445,077 22,354,696 66,234,328 85,038,009

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7. Provision for short-
term doubtful debts (*) -3,361,719 -11,390,859 -10,599,185 -6,097,163

8. Assets awaiting
resolution 1,200 2,657,086 2,657,086 3,649
IV. Inventories 62,082,766 74,190,470 174,865,436 77,653,639
1. Inventories 62,082,766 74,190,470 174,865,436 77,653,639
2. Provision for decline
in value of inventories        

V. Other short-term
assets 17,286,807 28,652,638 27,345,226 39,988,382
1. Short-term
prepayments 6,576,599 9,853,239 13,360,896 8,649,550
2. Value added tax to
be reclaimed 9,453,297 17,763,651 12,915,914 30,951,457
3. Taxes and other
receivables from state 1,256,911 1,035,748 1,068,415 387,375
authorities
4. Government bonds
       
5. Other short-term
assets        
B. LONG-TERM
ASSETS 808,894,222 1,060,902,150 1,067,856,517 1,196,367,441
I. Long-term
receivables 89,507,755 84,293,623 60,866,690 52,367,555
1. Long-term trade
receivables        
2. Long-term
prepayments to        
suppliers
3. Capital at inter-
company        
4. Long-term inter-
company receivables        

5. Long-term loan
receivables 27,631,204 18,337,320 18,337,320 18,337,320
6. Other long-term
receivables 61,876,551 65,956,303 42,529,370 34,030,235
7. Provision for long-
term doubtful debts        

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II. Fixed assets 61,792,174 102,756,460 99,307,345 164,433,506
1. Tangible fixed assets
49,987,385 86,711,775 77,716,128 90,402,398
- Cost 168,566,646 247,168,871 253,180,014 263,407,071
- Accumulated
depreciation -118,579,261 -160,457,096 -175,463,886 -173,004,673
2. Financial leased
fixed assets        
- Cost 328,437 328,437    
- Accumulated
depreciation -328,437 -328,437    
3. Intangible fixed
assets 11,804,788 16,044,685 21,591,216 74,031,108
- Cost 14,745,213 20,668,595 27,650,650 77,931,705
- Accumulated
depreciation -2,940,424 -4,623,910 -6,059,433 -3,900,597
III. Investment
properties        
- Cost        
- Accumulated
depreciation        
IV. Long-term assets
in progress 1,024,044     2,547,654

1. Long-term
production in progress        

2. Construction in
progress 1,024,044     2,547,654
V. Long-term
financial investments 72,965,792 87,282,038 114,754,565 146,365,626

1. Investments in
subsidiaries        
2. Investments in
associates, joint- 43,094,492 32,410,738 18,516,265 24,775,626
ventures
3. Investments in other
entities 29,871,300 55,351,300 71,718,300 16,590,000
4. Provision for
diminution in value of
long-term investments   -480,000 -480,000  

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5. Held to maturity
investments     25,000,000 105,000,000
6. Other long-term
investments        
VI. Other long-term
assets 405,352,252 538,457,267 511,320,182 725,722,494
1. Long-term
prepayments 405,352,252 538,457,267 511,320,182 725,648,122
2. Deferred income tax
assets       74,372
3. Long-term
equipment, supplies,
spare parts        

4. Other long-term
assets        
VII. Goodwill 178,252,206 248,112,762 281,607,736 104,930,605
TOTAL ASSETS 1,346,232,404 1,571,175,190 1,627,005,172 1,796,057,651
OWNER'S EQUITY
       
A. LIABILITIES 922,115,035 1,089,759,887 1,131,730,872 1,288,638,251
I. Short -term
liabilities 747,553,625 768,310,596 871,653,865 1,065,971,310
1. Short-term trade
accounts payable 212,282,647 236,818,206 266,231,547 314,796,115
2. Short-term advances
from customers 5,752,166 1,498,779 9,607,370 3,764,485

3. Taxes and other

payables to state 14,278,992 12,043,196 22,239,324 13,795,730
authorities
4. Payable to
employees 7,967,087 11,096,718 9,836,110 14,198,527
5. Short-term acrrued
expenses 2,657,781 21,573,693 4,730,732 10,331,335
6. Short-term inter-
company payables        
7. Construction contract
progress payments due
to suppliers        

8. Short-term unearned
revenue     4,535,200  

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9. Other short-term
payables 5,098,940 7,120,965 133,515,904 58,767,965
10. Short-term
borrowings and 498,953,878 477,596,905 420,395,545 649,755,021
financial leases
11. Provision for short-
term liabilities        

12.. Bonus and welfare

fund 562,134 562,134 562,134 562,134
13. Price stabilization
fund        
14. Government bonds
       
II. Long-term
liabilities 174,561,411 321,449,291 260,077,008 222,666,941
1. Long-term trade
payables        
2. Long-term advances
from customers        

3. Long-term acrrued
expenses        
4. Inter-company
payables on business        
capital
5. Long-term inter-
company payables        
6. Long-term unearned
revenue        
7. Other long-term
liabilities 33,547,351 61,232,714 45,976,618 49,530,093
8. Long-term
borrowings and 139,340,060 257,885,416 211,693,571 169,625,928
financial leases
9. Convertible bonds
       
10. Preferred stock
(Debts)        
11. Deferred income
tax liabilities 1,674,000 2,331,161 2,406,819 3,510,920

12. Provision for long-

term liabilities        

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13. Fund for
technology        
development
14. Provision for
severance allowances        

B. OWNER'S
EQUITY 424,117,368 481,415,303 495,274,300 507,419,400
I. Owner's equity 424,117,368 481,415,303 495,274,300 507,419,400
1. Owner's capital 373,399,290 373,399,290 373,399,290 373,399,290
- Common stock with
voting right 373,399,290 373,399,290 373,399,290 373,399,290
- Preferred stock        
2. Share premium 1,433,420 1,433,420 1,433,420 1,433,420
3. Convertible bond
option        
4. Other capital of
owners        
5. Treasury shares -3,640 -3,640 -3,640 -3,640
6. Assets revaluation
differences        

7. Foreign exchange
differences        

8. Investment and
development fund 1,768,794 2,230,235 2,232,720 306,228
9. Fund to support
corporate restructuring        

10. Other funds from

owner's equity   356,546 358,510  

11. Undistributed
earnings after tax 44,927,297 80,397,044 101,339,245 117,966,637
- Accumulated retained
earning at the end of
the previous period 727,000 -31,895,312 40,741,783 86,551,853

- Undistributed
earnings in this period 44,200,297 112,292,356 60,597,463 31,414,785

12. Reserves for

investment in        
construction

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13. Minority's interest
2,592,207 23,602,407 16,514,754 14,317,464
14. Financial reserves
       
II. Other resources
and funds        

1. Subsidized not-for-
profit funds        
2. Funds invested in
fixed assets        
C. MINORITY'S
INTEREST        
TOTAL OWNER'S
EQUITY AND
LIABILITIES 1,346,232,404 1,571,175,190 1,627,005,172 1,796,057,651

Year Year Year Year

Income Statement 201701/01- 201801/01- 201901/01- 202001/01-
12/31KT/HN 12/31KT/HN 12/31KT/HN 12/31KT/HN
1. Revenue 1,959,197,339 2,778,802,119 2,706,376,013 2,766,643,337
2. Deduction from revenue
49,255,525 136,869,966 148,023,810 43,193,473
3. Net revenue 1,909,941,814 2,641,932,152 2,558,352,203 2,723,449,863
4. Cost of goods sold
1,501,059,087 2,141,536,139 2,037,430,159 2,288,765,535
5. Gross profit 408,882,727 500,396,013 520,922,044 434,684,329
6. Financial income 4,142,412 6,295,822 2,142,023 102,893,759
7. Financial expenses
20,956,310 41,039,985 35,758,170 32,222,308
Of which: Interest expenses
19,205,603 27,398,616 31,324,026 27,105,045

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8. Share of associates and joint
ventures' result 9,342,976 3,285,805 3,664,093 5,572,214

9. Selling expenses 279,257,846 332,759,366 338,591,137 313,598,787

10. General and administrative
expenses 83,396,783 78,266,141 111,136,594 157,520,697

11. Operating profit 38,757,176 57,912,149 41,242,260 39,808,510

12. Other income 22,998,854 10,314,961 20,457,703 14,795,793
13.Other expenses 66,965 609,074 685,636 7,626,243
14. Other profit 22,931,889 9,705,888 19,772,067 7,169,550
Share of associates and joint
ventures' result        

15. Profit before tax 61,689,065 67,618,036 61,014,327 46,978,061

16. Current corporate income
tax expenses 16,638,833 9,677,960 20,235,709 13,214,910

17. Deferred income tax

expenses (*) 900,000 2,907,161 732,819 1,762,548

18. Net profit after tax

44,150,232 55,032,915 40,045,800 32,000,603
Minority's interest 40,189 -1,913,021 299,376 -1,368,262
Profit after tax for shareholders
of parent company 44,110,043 56,945,936 39,746,424 33,368,864

19. Earnings per share (VND)

1,181 1,525 1,064 880
20. Diluted earnings per share
       

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