UNIVERSITY OF BEDFORDSHIRE FOREIGN TRADE UNIVERSITY

SCHOOL OF BUSINESS HO CHI MINH CITY CAMPUS

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MID-TERM ASSIGNMENT
Module: INTRODUCTION TO FINANCE
Code:

VINAMLIK FINANCIAL ANALYSIS

Student: BUI QUYNH ANH FOR EXAMINERS ONLY

Student ID: 2105025008 Grade (in number):
Cohort: K59BFC
Semester: II Grade (in words):
Academic year: 2022 – 2023 K59 BFC
Headteacher: NGUYEN QUOC Examiner 1
TRUNG (Signature & Fullname)
Submission date: 27 May 2022 …………………….
Student’s signature: Examiner 2
(Signature & Fullname)
…………………….
 UNIVERSITY OF BEDFORSHIRE FOREIGN TRADE UNIVERSITY
SCHOOL OF BUSINESS HO CHI MINH CITY CAMPUS
----------***---------- ----------***----------

MID-TERM ASSIGNMENT

Module: INTRODUCTION TO FINANCE

Code:

VINAMLIK FINANCIAL ANALYSIS

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 Student’s fullname: BUI QUYNH ANH
Student ID: 2105025008
Cohort: K59BFC
Semester: II Academic year: 2022 - 2023
Lecturer: Assoc. Prof. Nguyen Quoc Trung

Ho Chi Minh City, May 2022

STATEMENT OF AUTHORSHIP
Except where reference is made in the text of the end-module assignment, this
assignment contains no material published elsewhere or extracted in whole or in part
from an assignment which I have submitted or qualified for or been awarded another
degree or diploma.
No other person’s work has been used without due acknowledgements in the end-
module assignment.
This end-module assignment has not been submitted for the evaluation of any
other modules or the award of any degree or diploma in other tertiary institutions.

Ho Chi Minh City, 27 May 2022

Bui Quynh Anh

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 TABLE OF CONTENTS
Statement of Authorship…………………………………………………………….. 3

Table of Contents…………………………………………………………………….
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I. Introduction
II. Evaluation of the performance and value of the company
1. Data
2. Financial ratio calculation
3. Ratio analysis
III. Conclusion

References
Data appendix

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 I. Introduction
The global economy is expected to suffer as a result of the outbreak of Covid19, but the
dairy industry in Vietnam is still growing and seems not to be significantly affected.
However, the consumers’ demand for organic fresh milk has increased by approximately
305 million liters according to the VFA. As can be seen, Vietnam’s diary market has
great potential with a high population growth rate (1.2%).
The GDP growth rate leads to the increase in living-standard of humans, therefore, they
start to follow the trend of improving their health and stature. And milk is one of the
articles of daily necessities, which makes an opportunity for many corporations or
companies to join the dairy industry. However, Vietnam Dairy Products Joint Stock
Company (VNM) seems to be an outstanding brand in this competitive market to supply
various nutrients and health products such as milk, yogurt or ice-cream.
This essay will analyze common financial ratios of a Vinamilk and point out
examinations about its potential as well as position in the dairy industry.

II. Evaluation of the performance and value of the company

1. Data

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 Year 2017 2018 2019 2020
Data
Current assets 20,307,435 20,559,757 24,721,565 29,665,726

Current 10,195,563 10,639,592 14,442,852 14,212,646

liabilities
Inventory 4,021,059 5,525,846 4,983,044 4,905,069

Cost of goods 26,806,931 27,950,544 29,745,906 31,967,663

sold
Sales 51,134,900 52,629,230 56,400,230 59,722,908

Accounts 4,591,703 4,639,448 4,503,155 5,187,253

receivable
Net income 10,278,175 10,205,630 10,554,332 11,235,732

Total assets 34,667,319 37,366,109 44,699,873 48,432,481

Total equity 23,873,058 26,271,369 29,731,255 33,647,122

Price per share 87,222 144,861 100,000 97,083

Earnings per 5,296 5,295 5,478 4,770

share
Market value
per share
Book value per 16,448 15,084 17,070 16,099
share

2. Financial ratio calculation

Year 2017 2018 2019 2020 Average Average

Ratios VNM industry
Liquidity ratios

+ current ratio 1.99 1.93 1.71 2.09 1.93 1.68

+ quick ratio 1.60 1.41 1.37 1.74 1.53 1.26

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 Asset
management
ratios
+ inventory 6.67 5.06 5.97 6.52 6.06 5.19
turnover
+ receivables 11.14 11.34 12.52 11.51 46.51 26.82
turnover
+ total asset 1.48 1.41 1.26 1.23 1.35 0.97
turnover
Profitability
ratios
+ ROA 0.30 0.27 0.24 0.23 0.26 13.93

+ ROE 0.43 0.39 0.35 0.33 0.38 23.53

Market value
ratios
+ price- 29.41 18.04 19.17 17.8 21.11 17.2
earnings ratio
+ market-to- 0.0079 0.0061 0.0054 0.001 0.0051 4.31
book ratio

3. Ratio analysis

a. Liquidity ratios
*Current
The current ratio is a liquidity ratio that measures a company's ability to pay short-term or
one-year obligations. As can be observed from the edited date board that the current ratio
for Vinamilk slightly increased by 0.1 (from1.99 to 2.09) during a four-year period
starting from 2017. Simultaneously, the company had a lower current ratio than the
industry average, which raises the question of how efficiently the management was
utilizing the assets, because this number illustrates a higher risk of distress for investors
and a lower probability of paying its current debt and other liabilities.

*Quick

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The quick ratio compares a company's available liquid assets to its current liabilities.
From that, we can see how a company with a quick ratio greater than one can get rid of
its current liabilities quickly. For example, a quick ratio of 1.41 of VNM in 2018
demonstrates that the company has $1.41 of available assets to cover $1 current payable.
However, when compared to the industry average of 2.03 calculated in the previous
section, it appears that the company did not operate as productively as other firms in the
dairy industry.

b. Assets management ratios

*Inventory turnover
Inventory turnover measures the speed of a company's inventory sold. Vinamilk's average
inventory turnover ratio by the end of 2020 was 6.52, which was minimally higher than
the industry average which is 5.19. We can also understand that the company had strong
sales shown by balancing between having enough inventory and not reorder too quickly
in a short-term period.

*Receivables turnover
It indicates how many turns of accounts receivable in a given reporting period to reach
sales in that time frame. In 2019, VNM receivables turnover ratio is 12.52, which was
one half smaller than that of the average industry.

*Total assets turnover

The asset turnover ratio is a metric that implies to investors how logically a company
uses its assets to generate revenue in comparison to other businesses in the same industry.
In spite of the four-year decline, we discovered that Vinamilk is still attempting to
maintain an average ratio that is greater than one.

c. Profitability ratios

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*ROA
This ratio measures the efficiency with which assets are used to produce and raise
revenue. Because it is calculated as net income divided by total assets, the higher the rate
of return, the more effectively the firm converts the money it invests into net income.
Vinamilk's ROA can still be considered high and earned more money Even though there
was a moderate fall over the given time frame.

*ROE
ROE is used to calculate a company's profitability related to its stockholders' equity.
Using the result of dividing net income by shareholders' equity. This coefficient is often
analyzed by investors to compare with stocks of the same industry in the market, thereby
referencing when deciding which company to buy shares. The higher the ROE ratio, the
more effectively the company's management is using the shareholders' capital, so it is
often an important criterion for considering a company's stock investment opportunities.
As can be seen, the ROE of VNM over a four-year period reduced (from 0.43 to 0.33)
and these numbers were even lower than the average one in 2020. Therefore, investors
may conclude that VNM's management has not effectively used shareholder capital to
generate above-average returns as it was.

d. Market value ratios

*P/E
The Price to Earning Ratio (P/E) is an indicator that measures the relationship between a
stock's market price (Price) and earnings per share (EPS).
The meaning of this index represents the price investors are willing to pay for a dollar of
profit earned on the stock. Or, how much you are willing to pay for the stock of a
business based on the profits (earnings) of that business. Based on calculated data for
P/E, we can conclude that VNM is a promising company because companies with a high
P/E ratio are frequently regarded as growth stocks.

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*M/B
The Price-to-Book ratio (P/B) is a ratio used to compare the price of a stock to its book
value. This ratio is calculated by dividing a stock's current closing price by its most recent
quarter book value. If a company's stock has a market value below its book value (P/B <
1), you can buy all of the company's outstanding shares, liquidate the assets, and earn a
profit on the asset. Net assets have a higher value than stock capitalization. But this is not
always a bargain. For instance, VNM stock that maintains a P/B<1 an all four years, this
may be thought that the company's asset value has been over-inflated.

e. Strengthens and weaknesses

While many businesses are facing difficulties because of loan interest rates, Vinamilk has
a fairly safe capital structure and good financial autonomy. Vietnam Dairy Products Joint
Stock Company Vinamilk announced its consolidated financial statements for the third
quarter of 2019 with both revenue and profit both increased. And according to the above
analysis, investors have not found any worrisome dangers when deciding to invest or buy
shares in Vinamilk. However, the number may be inflated, such as the M/B index, it will
be difficult for investors to draw the most accurate conclusions about the company's
management ability.

III. Conclusion
Overall, Vinamilk is regarded as Vietnam's most important dairy enterprise. Vinamilk is
working to produce and promote a variety of goods in order to increase the brand's worth,
so its shares have a high intrinsic value as well as a high market value. Despite all
calculations and evaluations, the corporation is unable to avoid making difficult decisions
As a result, the company must reduce potential risk by cutting expenses and focusing
more on its core competencies to increase customer confidence in the item's worth, and

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then forming a long-term development firm.

References

1. Báo Cáo Tài Chính. TVSI. (n.d.). Retrieved May 27, 2022, from
https://finance.tvsi.com.vn/Enterprises/FinancialStatements?symbol=VNM

2. Vietnam Dairy Products JSC (VNM) financial ratios. Investing.com. (n.d.). Retrieved May 27,
2022, from https://www.investing.com/equities/vietnam-dairy-products-jsc-ratios

3. Ma Trận Swot Của Vinamilk: Những Phân Tích, đánh Giá Chi Tiết. MarketingAI. (2022, May
26). Retrieved May 27, 2022, from https://marketingai.vn/ma-tran-swot-cua-vinamilk/

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