CAPITAL MOBILIZATION OF PV OIL

LUBRICANT JOINT STOCK COMPANY IN

2010-2014

DateCreated
Subject Of Assignment
Code: By
INS2007
Subject Name:
LươngFinancial
Thị Ninh
13/06/2021 Management
ID Student: 18071166
 TABLE OF CONTENT

.
PART I: COMPANY SELECTION AND FINANCIAL DECISIONS.............................................................3
1. Selected company & financial decision.......................................................................................................3
2. Financial activities selected for description
PART II : REQUEST FOR TOPICS
Section A : How the 'Raise capital' decision is made……………………………………………………...…...3
1. Business results of PV Oil Lubricant Joint Stock Company in 2010-2014……………………………….3

2. Situation of business capital at the company……………………………………………………………..5

3. Purpose of capital mobilization……………………………………………………………………………
6
4. Evaluatiy the effectiveness of business capital use………………………………………………………..6
Sectin B : Explain why the business made that decision?
What principles are decision-making based? ………………………………………………………………….7
1. Reasons for the company's decision on capital mobilization………………………………………………
9
2. Principles applied in financial decisions…………………………………………………………………..9
Section C : Look for Alternative financial decisions…………………………………………………………12
REFERENCES …………………………………………………………………………………………………12

TABLE LIST

Table Name Page number

1.1 Business results of PV Oil Lubricant Joint Stock Company in 2010-2014 3

2.1 Business capital mobilization of PV Oil Lubricant Joint Stock Company in 5

2010-2014
2.2 Total short-term and long-term assets of the company in 2010-2014 6

3.1 Working capital results of PV Oil in 2010-2014 7

3.2 Tax savings in 2010-2014 9

3.3 Financial index to evaluate the efficiency of capital use of PV Oil in 2010- 11
2014

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 PART 1: COMPANY SELECTION AND FINANCIAL DECISIONS

1. Selected company : PV Oil Lubricant Joint Stock Company

-         New address : No. 201 - Dien Bien Phu Street - Ward 15 - Binh Thanh District - HO CHI MINH

CITY

-          August 7, 2015: Company shares were approved for trading on Upcom with stock code PVO

-          January 12, 2016: The first trading day of PVO on Upcom.

-          Charter capital: VND 89,000,000,000

-          Business: Gas production, gas fuel distribution by pipeline , producing refined petroleum products,

wholesale of solid, liquid, gaseous fuels and related products,...

2. Financial activities selected for description

The company's capital mobilization in 2010-2014. Including equity and liabilities.

PART 2 : REQUEST FOR TOPICS

Section A : How The 'Raise Capital' Decision Is Made

1. Business results of PV Oil Lubricant Joint Stock Company in 2010-2014.

Table 1.1: Business results of PV Oil Lubricant Joint Stock Company in 2010-2014.

2010 2011 2012 2013 2014

1. Sales revenue and

227,580,391,775 446,490,328,527 409,978,104,945 512,421,458,143 529,193,011,757
service provision

2. Revenue deductions 379,745,085 2,511,038,355 4,287,719,969 21,634,241,999 20,760,461,655

3. Net revenue in sales and

227,200,646,690 443,979,290,172 405,690,384,976 490,787,216,144 508,432,550,102
service provision

4. Cost price of goods sold 198,562,568,078 402,593,905,212 372,513,862,258 440,374,824,082 450,986,985,634

5. Gross profit on sales 28,638,078,612 41,385,384,960 33,176,522,718 50,412,392,062 57,445,564,468

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and service provision

6. Revenue from financial

4,182,244,867 4,633,056,394 1,248,883,515 2,667,342,470 3,725,340,989
activities

7. Financial expenses 197,272,945 641,513,699 371,729,832 317,204,790 2,134,230,285

- In which: Interest
0 0 0 186,500,828 1,742,759,445
expenses

8. Selling costs 8,903,499,954 16,965,924,207 18,668,308,871 28,583,095,387 30,401,941,487

9. Business management
11,237,552,344 11,360,135,179 15,607,747,572 21,584,875,419 25,041,477,251
costs

10. Net profit from

12,481,998,236 17,050,868,269 -222,380,042 2,594,558,936 0
business activities

11. Other income 2,000,425,615 2,041,769,555 2,579,519,972 6,176,751,927 3,593,256,434

12. Other expenses 19,811,971 750,007,668 306,821,029 5,445,969,802 647,918,465

13. Other profits 1,980,613,644 1,291,761,887 2,272,698,943 730,782,125 906,353,078

14. Profit (net loss) in joint

0 0 0 0 -258,434,613
venture/affiliated company

15. Total accounting profit

14,462,611,880 18,342,630,156 2,050,318,901 3,325,341,061 3,334,821,821
before tax

16. Current corporate

3,710,080,142 4,720,804,182 538,718,616 848,497,028 737,367,801
income tax expenses

17. Profit after corporate

10,752,531,738 13,621,825,974 1,511,600,285 2,476,844,033 2,597,454,020
income tax

  From the above statistics of business results, we see the instability in the business activities of PV Oil

Company. This is evident in the instability of the company's revenue and profit through the years 2010-2014. In

2014, revenue increased sharply compared to 2013 but the total cost also increased as a result, causing profits to

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plummet by 67%. Although the company's business results in this period are relatively good, it is accompanied

by a negative fluctuation of after-tax profits over the years, which has not yet promoted all the resources of the

company.

2. Situation of business capital at the company

a) Business capital mobilization

Table 2.1 : Business capital mobilization of PV Oil Lubricant Joint Stock Company in 2010-2014

2010 2011 2012 2013 2014

I - LIABILITIES 70,622,660,937 77,048,499,942 81,181,840,812 156,288,769,704 128,834,276,063

1. Short-term
70,622,660,937 77,048,499,942 81,181,840,812 156,288,769,704 128,834,276,063
debt

2. Long-term
0 0 0 0 0
debt

II - OWNER'S
101,654,401,597 105,216,157,630 95,575,575,317 97,659,699,293 97,810,110,745
CAPITAL

1. Equity 101,654,401,597 105,216,157,630 95,575,575,317 97,659,699,293 97,810,110,745

Total funding 172,277,062,534 182,264,657,572 176,757,416,129 253,948,468,997 226,644,386,808

From here we see the financial autonomy of the units is decreasing. Thus, the financial risk of the

company is increasing, moreover, the economy is being volatile, the credit of banks and credit institutions is

tightening, interest rates are increasing, to ensure capital for production and business, the company needs to

consider its business ability and financial situation to organize its activities.

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 b) Investment and use of business capital

Table 2.2 : Total short-term and long-term assets of the company in 2010-2014

ASSETS 2010 2011 2012 2013 2014

I - SHORT-

TERM 132,096,999,379 136,237,258,299 123,894,914,468 203,417,083,720 180,523,234,196

ASSETS

II - LONG-

TERM 40,180,063,155 46,027,399,273 52,862,501,661 50,531,385,277 46,121,152,612

ASSETS

Total assets 172,277,062,534 182,264,657,572 176,757,416,129 253,948,468,997 226,644,386,808

3. Purpose of capital mobilization

For the economic situation of PV Oil in the period of 2010-2014, through the above data tables, we see that

the company's business results are unstable, and financial autonomy is reduced, so the capital mobilization here

is essential, to help the company increase its size and organize economic activities effectively. , while

increasing payment capacity and increasing the prestige of the company. From there, the company will

confidently develop and compete with rival companies

4. Evaluatiy the effectiveness of business capital use

In general, the efficiency of using business capital of PV Oil company tends to decrease. But there is no

denying the company's efforts in overcoming difficulties from the economic and internal forces of the company

are still limited. Therefore, in the past 5 years, the company has always maintained profitable business

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activities, with revenue and profit after tax. To get such a result is thanks to the orientation, the right decision of

the company in raising capital to increase the company's ability to develop sustainably in the future.

Sectin B : Explain why the business made that decision? What principles are decision-making based?

Table 3.1: Working capital results of PV Oil in 2010-2014

SHORT TERM 2014

2010 2011 2012 2013
ASSET

1. Cash and cash

29,858,419,929 30,226,554,836 48,705,193,999 78,110,695,149 9,666,460,847
equivalents

1.1.Money 29,858,419,929 14,826,554,836 36,605,193,999 78,110,695,149 9,666,460,847

1.2.Cash equivalents 0 15,400,000,000 12,100,000,000 0 0

2. Short-term
11,110,000,000 4,195,146,709 462.635,972 20,000,000,000 55,000,000,000
financial investments

3. Short-term
35,947,357,664 28,039,797,137 35.029,035,378 44,266,715,100 49,006,311,889
receivables

3.1.Receivables
25,377,425,813 23,822,973,283 30,186,448,044 41,347,196,331 24,234,822,606
from customers

3.2.Payment to the
10.051,094,090 1,179,084,131 1,157,508,711 1,263,834,272 1,559,084,170
seller in advance

3.3. Other
931,674,565 3,614,642,601 4,359,860,096 3,051,408,408 26,893,612,230
Receivables

3.4. Provision for
-412,836,804 -576,902,878 -674.781,473 -1,395,723,911 -3,681,207,117
short-term bad debts

4. Inventory 54,481,301,901 69,643,529,730 36,538,946,405 58,306,858,760 65,032,013,778

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5. Other current assets 699,919,885 4,132,229,887 3,159,102,714 2,732,814,711 1,818,447,682

5.1. Short-term
0 286,509,747 912,255,394 821,484.885 566,437,348
prepaid expenses

5.2. Value added tax

658,608,696 815,162,926 215.439,151 1,100,691,222 356,311,899
deducted

5.3. Other current
41,311,189 3,030,557,214 2,031,408,169 810,638,604 895,698,435
assets

II. FIXED ASSETS 15,468,270,979 13,823,917,868 12,531,705,940 13,813,661,021 13,813,661,01

2.1. Tangible fixed
13,704,758,284 12,162,637,793 10,837,658,485 11,746,596,186 11,746,596,16
assets

- Original price 51,400,799,790 51,403,202,937 51,153,826,086 54,306,194,852 54,306,194,852

- Accumulated
-37,696,041,506 -39,240,565,144 -40,316,167,601 -42,559,598,666 -42,559,598,666
depreciation value

2.2. Intangible fixed
1,763,512,695 1,661,280,075 1,694,047,455 1,567,064.835 1,567,064.835
assets

- Original price 3,066,978,600 3,066,978,600 3,201,978,600 3,201,978,600 3,201,978,600

- Accumulated
-1,303,465,905 -1,405.698.525 -1,507,931,145 -1,634,913,765 -1,634,913,765
depreciation value

1. Reasons for the company's decision on capital mobilization

 The reason the company makes a decision to raise capital is because the company has financial difficulties and

limitations - here are some of the company's limitations - the reason for the financial decision

* Restrict:

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 -         Capital mobilization and use of working capital:

The company's ability to pay debts is not guaranteed, decreasing year by year. Leading to capital management

with money is not really good. Besides, the sharp increase in rem repossesses affects the debt recovery, a large

amount of the company's capital is backlogged in warehouses causing high capital waste. Also the profitability

of working capital is low .

-         Mobilization and use of fixed capital:

The proportion of fixed assets in total long-term assets is relatively low compared to the size of the company.

The investment in fixed assets has not really been focused , most fixed assets are quite deductible, affecting

productivity and output products. The profitability of fixed capital is also low.

-         The rate of profit after tax on equity decreases over the years and carries a very small value.

2. Principles applied in financial decisions

a) Tax Consideration

Lubricant Joint Stock Company when mobilizing capital took into account factors to save tax.

The tax savings that the company has applied are depreciation of fixed assets and interest expenses, inventory:

Table 3.2: Tax savings in 2010-2014

2010 2011 2012 20132 2014

Depreciation

of fixed 4,264,856,236 2,562,203,622 2,051,996,698 1,848,488,450 2,370,413,685

assets

Interest
0 0 109,396,845 186,500,828 1,742,759,445
expenses

Inventory 54,481,301,90 69,643,529,730 36,538,946,405 58,306,858,76 65,032,013,778

1 0

Current CIT 3,710,080,142 4,720,804,182 538,718,616 848,497,028 737,367,801

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 expenses

The savings from depreciation is Current CIT expenses that company due to the effect of depreciation expense.
 We have the formula : Savings from depreciation = Depreciation * Current CIT expenses
 Formula to calculate savings interest expenses = interest expenses * collection ofcorporate income
b ) Cash flow principle ( Cash is King )

The above financial decision, applying short-term capital mobilization to liabilities, is used to finance the

investment in mobile assets, and due to the difference in the size of the company's money in and out.

Specifically, lubricant company has debts such as liability to sellers, advance payments to buyers, taxes and

payables to the state ...

And the cash flow principle has shown the results of the use of mobile assets (shown in table 3.1 above), based

on which the company can make business decisions, pay dividends to shareholders and pay fees.

From there we can find Operating cash flow ( OCF) of company, for example in 2014:

OCF= Earnings before Interest & Taxes + Depreciation – Taxes

= 3,334,822+ 2,370,413,685-1,742,759,445= 1,401,271,086

c ) The principle of "Financial leverage"

PV Oil applies the principle of financial leverage to show the level of use of loans in the total capital of the

enterprise to increase the return on equity (ROE) or earnings per share (EPS).

Table 3.3 Financial index to evaluate the efficiency of capital use of PV Oil in 2010-2014

Financial indicators 2010 2011 2012 2013 2014

EPS (thousand dong) 1.21 1.53 0.17 0.28 0.29

ROE (%) 10.58 12.95 1.58 2.54 2.66

+ Financial leverage ratio:

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 Average total assets/Average equity

This figure shows the average loan and equity in the period 2010-2014

From the figures of tables 2.1 and 2.2, we can calculate the financial leverage ratio of PV Oil Company in the

period of 2010-2014:

Average total assets of 4 years = 202,378,398,408

Average equity of 4 years = 99,583,188,916

Coefficient = 202,378,398,408/99,583,188,916= 2.03

+ Earningsbefore Interest / Taxes

The loan interest payment rate shows the level of profit before tax and interest that ensures the ability of a

business to pay interest.

From table 3.2, we calculate the loan interest payment rate in 2014

= 3,334,822/1,742,759,445 = 0.0019

From here, the ability of the company to pay interest is quite low

Section C : Look For Alternative Financial Decisions.

Instead of capital mobilization from equity and liability, the company can be replaced by capital

mobilization through bond issuance. Bond issuance is a form of direct capital mobilization from individuals and

organizations. With the advantages of transferability, interest rates may vary depending on the situation. In

current conditions, with the development of financial markets, bond issuance facilitates the company to increase

its long-term funding. In order to issue bonds, the company also needs to carefully study the market and be well

prepared legally, choosing the right type of bond. In particular, the company needs to take into account the issue

costs and interest rate required by investors. To increase the liquidity of bonds, the company can issued bonds

with flexible interest rates, guaranteed in strong foreign currencies, so investors will be more assured. And the

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advantage of bond issuance that the company should note is that the issuance of bonds is not collateral;

Financial planning with bonds is cheaper than other loans.

REFERENCES

[1] PVOIL. 2021. [ONLINE] Available at: http://pvoillube.vn/vi/gioi-thieu.html. [Accessed 3 June 2021]

[2] CafeF.vn. 2021. PVO : Báo cáo tài chính | Kết quả hoạt động kinh doanh. [ONLINE] Available at:

https://s.cafef.vn/bao-cao-tai-chinh/PVO/IncSta/2020/0/0/0/ket-qua-hoat-dong-kinh-doanh-ctcp-dau-nhon-pv-

oil.chn [Accessed 3 June 2021].

[3] Vietstock.vn. 2014. PVO Báo cáo thường niên 2014.[ONLINE]. Available at:

https://static2.vietstock.vn/data/UPCOM/2014/BCTN/VN/PVO_Baocaothuongnien_2014.pdf.[Acessed at 5

June, 2021 ]

[4] PVO: CTCP Dầu nhờn PV Oil - PV OIL LUBE - Hồ sơ doanh nghiệp. 2021 . Available at:

https://finance.vietstock.vn/PVO/tai-chinh.htm.[Acessed at 5 June, 2021 ]

[ 5] Vitranet24.com .2019. 4 Nguyên tắc quản trị doanh nghiệp.[ONLINE]. Available at:

https://vitranet24.com/tin-quan-ly/4-nguyen-tac-quan-tri-tai-chinh-doanh-nghiep.html [Acessed at 7 June,

2021 ]

[6] Govalue.vn . 2019. Đòn bẩy tài chính.[ONLINE]. Available at: https://govalue.vn/don-bay-tai-chinh/

[Acessed at 11 June, 2021]

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