II.

Analysis of Hoa Phat Group’s Receivables and payables

2019 2018 Difference %

A. Total receivables 3.588 3.232 356 11.01

I. Short term receivables 3.561 3.210 351 10.93
Accounts receivable to customers 2.699 2.281 418 18.32
Prepayment to suppliers 757 810 -53 -6.5
Other receivables 139 150 -11 -7.33
II. Long term receivables 27 22 5 22.73
Long-term loan receivables 5 - 5 -
Other long-term receivables 22 22 0 0

B. Total payable 15.559 11.655 3.904 33.50

I. Short term payables 8.422 9.521 -1.099 -11.54
Accounts payables to suppliers 7.507 8.707 -1.200 -13.78
Payables to employees 248 252 -4 -1.58
Short-term accrual expenses 430 262 168 64.12
Other short-term payables 237 300 -63 -21
II. Long term payables 7.137 2.134 5.003 234.44
Long-term accounts payables to
suppliers 6.652 1.647 5.005 303.88
Long-term accrual expenses 427 451 -24 -5.32
Other long-term payables 58 36 22 61.11

2019 2018 Difference %

Receivable ratio 0.0352 0.0413 -0.0060 -14.68%
Irrecoverable receivable ratio 0.0103 0.0114 -0.0011 -9.92%
Overdue receivables to receivable
0.0035 0.0056 -0.0021 -37.2%
ratio
Payables ratio 0.1528 0.1489 0.0038 2.60%
Bad payables ratio 0.0002 0.0005 -0.0003 -60.00%
Receivable-to-payables ratio 0.2306 0.2773 -0.0467 -16.84%

Receivable collection ratio 18.8 11.43 7.37 64.48%

Receivable collection period 19.15 31.50 -12.35 -39.20%
Payables payment ratio 5.85 5.97 -0.12 -2.01%
Payables payment period 61.55 60.29 1.26 2.09%

1. General:
Based on the analysis table, the total receivables and payables of Hoa Phat
Group have changed significantly. The total receivables of the group in
2019 were 3.588 billion VND; an increase of 3.566 billion VND compared
to 2018 (3.232 billion VND), corresponding to an increase rate of 11,01%.
Similar to the total receivables, the total payables of Hoa Phat Group tend to
increase strongly. In 2018, this figure reached 11.655 billion VND; by 2019
it was 15.559 billion VND, an increase of 3.904 billion VND,
corresponding to an increase of 33,50%.

2. Detail:
 Receivables
- Size:
According to the analysis table of the debt situation above, the total
receivables of Hoa Phat Group at the end of 2019 is 3.588 billion VND, at
the beginning of 2019 is 3.232 billion VND, the end of the year compared to
the beginning of the year increased by 356 billion VND with an increase rate
of 11,01%. With the increase in the above receivables, the amount of capital
that the Group’s shares are occupied at the end of the year compared to the
beginning of the year has increased, mainly increasing the short-term
occupied capital. Receivables increased due to an increase in almost items,
but mainly due to receivable to customers at the end of the year compared to
the beginning of the year increased by 418 billion VND, from 2.281 billion
VND to 2.699 billion VND with a corresponding increase rate of 18,32%.
Next is the short-term prepayment for supplier in 2019 compared to 2018
was decreased by 53 billion VND from 810 billion VND to 757 billion VND
along with a decrease rate of 6,5%, mainly including prepayments for
suppliers and contractors to develop the Group’s projects and to buy assets,
goods and other services. Short-term receivables also decreased very
quickly, at the end of the year compared to the beginning of the year
decreased by 11 billion VND from 150 billion VND to 139 billion VND
with a corresponding decrease rate of 7,33%. Long-term receivables in 2019
is still stable.

- Ratio

The receivable ratio of Hoa Phat Group in 2019 is 0,0352 times, in 2018 it
was 0,0413 times, at the end of the year compared to the beginning of the
year it decreased by 0,00660 times, corresponding to a decrease of 14,68%.
Thus, at the time of 2018, in the total assets of the Group, there was 0,0413
part of the capital being occupied, but by 2019, in the total assets of the
Group 0,0060 part of the capital being occupied was reduced. This ratio
decreases because the rate of increase of receivables is slower than the rate
of increase of total assets. This shows that in 2019 compared to 2018, the
level of capital occupied in total assets has decreased. This could be the
result of loosening commercial credit policies to increase the company’s
revenue within the Group. However, if the control of receivables is not good,
this increases the risk of loss for the Group. Among them, the provision ratio
for difficult-to-collect receivables of the group in 2019 is 0,0103 times, in
2018 it is 0,0114 times, in 2019 compared to 2018 it has decreased by
0,0011 times corresponding to a decrease of 9,92%. This means that, at the
time of 2018, with 1 VND of receivable, the Group set up a provision of
0,0114 VND, but by 2019, with 1 VND of receivable, the Group set up a
provision of 0,0103 VND. This proves that the Group has good control
policies for occupied items, showing that the level of payment discipline has
been improved. Thus, the provision ratio for difficult-to-collect receivables
shows that the risk of asset loss of the Group has decreased, and at the same
time the management of receivables of the Group has a direct impact on
business results and financial capacity of the Group, if the provision is less,
the actual assets will be larger than the value in the books, then the operating
results will be higher. The overdue receivables ratio in 2019 was 0.0035
times, while in 2018 it was 0,0056 times, when comparing the two years we
see a decrease of 0,0021 times, with a decrease rate of 37,2%. This means
that the overdue receivables compared to the total receivables of the
corporation have decreased compared to the beginning of the year. The
reason is that the corporation has increased its receivables in the year to 356
 billion VND, with a growth rate of 11,01%, while the corporation’s overdue
receivables in 2019 compared to 2018 decreased by 0.554 billion dong, with
a decrease rate of 30,47%, so this rate was slower than the growth rate of
total receivables so this ratio decreases.

- Managment:
The receivables collection ratio of the corporation in 2019 was 18,80 times,
in 2018 it was 11,43 times, in 2019 compared to 2018 it increased by 7,37
times with a growth rate of 64,48%. As a result, the receivables
collectionperiod of the corporation in 2019 was 19,15 days, in 2018 it was
31,50 days, a decrease of 12,35 days, with a decrease rate of 39,20%. Thus,
in 2018, on average, short-term receivables turned 11,43 times, and one turn
of receivables in the year ended in 31,50 days, but by 2019, on average,
short-term receivables turned 18,8 times, and one turn of receivables in the
year ended in 19,15 days. As a result, the turnover rate of short-term
receivables of the Corporation in 2019 was faster than in 2018, proving that
the effectiveness of debt management in 2019 was better than in 2018.

 Payables
Through the analysis, the total payables of Hoa Phat Group at the end of
2019 is 15.559 billion dong, at the beginning of 2019 is 11.655 billion dong,
an increase of 3.904 billion dong with a rate of 33,50%. With the increase in
the aforementioned payables, it is evident that the amount of capital
appropriated by the Group at the end of the year compared to the beginning
of the year has increased, mainly due to an increase in the amount of capital
appropriated during the term. The increased liabilities are not yet due to be
repaid, so it makes perfect sense because these are capital appropriations by
 the corporation and not interest. Payables increased because short-term
payables increased faster while long-term payables decreased. But mainly
Short-term payable at the end of 2019 is 8.422 billion dong, at the beginning
of 2019 is 9.521 billion dong, drop 1.099 billion dong at the rate of 11,54%,
mainly including Accounts payable to suppliers at the end of 2019 decreased
by 1.200 dong billion with an decrease of 11,54% due to buyers prepaying
for steel production business activities, undelivered production shipments,...
In addition, it can be seen that Other short-term payables decreased by 63
billion dong, equivalent to a decrease of 21%. Long-term payables at the end
of 2019 were 7.137 billion dong, at the beginning of the year was VND
2.134 billion dong, up to VND 5.003 billion, equivalent to a increase rate of
234,44%. Mainly Long-term accounts payable to suppliers at the beginning
of 2019 is 1.647 billion dong, at the end of 2019 is 6.652 dong, with an
increase of 5.005 billion dong with an increase of 303,88%. The reason is
that Hoa Phat Group has not paid off orders for Long-term expenses supplies
since 2018. The reason for this increase is due to a sharp increase in the cost
of industrial park land and infrastructure maintenance costs. Other long-term
payables surged by 22 billion dong with an increase of 61,11%. The reason
for the increase was that the apartment maintenance fund and other payables
decreased compared to the beginning of 2019.

- Structure:
Payable ratio at the end of 2019 was 0,1528 times, at the beginning of 2019
it was 0,1489 times, up to 0,0038 times with an increase of 2,60%. This
means that at the beginning of 2019, the Group's total assets had 0.1489
parts of capital financed from misappropriated capital and by the end of the
year, the Group's total assets was increased by 0,0038 parts of assets
 financed from appropriated capital. As a result, at the end of the year
compared to the beginning of the year, the level of capital financed from
appropriated capital has increased.

 Payables payment:
The group's payables repayment ratio in 2018 was 5,97 times, in 2019 it was
5,85 times, a decrease of 0,12 times compared to the beginning of the year
with a decrease of 2,01%. As a result, the Group's average debt repayment
period in 2019 was 61,55 days, in 2018 it was 60,29 days, an increase of
1,26 days with an increase of 2,09%. In 2018, the average short-term
payables rotated 5,97 rounds and 1 turnover in the year expired 60,29 days,
but by 2019, the average short-term payables rotated 5.85 rounds and 1
turnover in the year ended 61,55 days. As a result, the group's payables
turnover rate in 2019 was slower than 2018, demonstrating that the group's
liabilities management efficiency in 2019 was less effective than 2018,
increasing the group's insolvency risk.

 Receivable-to-payable ratio:
The year-end receivable-to-payable ratio was 0,2306 times, the beginning of
the year was 0,2773 times, a decrease of 0,0467 times compared to the
beginning of the year, equivalent to a decrease of 16,84%. This decrease is
due to the fact that, at the end of the year compared to the beginning of the
year, reveivables increased at a rate of 11,01% while payables also increased
at a rate of 33,50%, the growth rate of receivables was slower than that of
payables, so this multiplier decreased. In addition, this coefficient at both
times < 1, proving that the corporation benefits because the amount of
capital appropriated is greater than the amount of capital appropriated.
3. Conclusion
The size of receivables and payables both increased, and the level of
corporate occupancy and occupancy both tended to increase. Basically, the
group has not done a good job of managing receivables as well as liabilities.

4. Solution
In the next business period, to improve the management of payables and
receivables. Hoa Phat Group should:
- Review details of receivables, payables according to each object, ensure
payment progress to improve the reputation of the corporation in the
market. - For receivables. The Group needs to classify debts and analyze the
financial capacity of customers before making a selling policy. diversified
forms of semi-tolerant,...