ANALYSIS OF FINANCIAL STATEMENTS AT HOA PHAT GROUP JOINT STOCK COMPANY IN 2019 2020

The analysis of financial statements aims to generally assess the financial situation, business performance, potentials as well as financial limitations of enterprises in general and hoa

NATIONAL UNIVERSITY OF ECONOMICS

PRACTICE REPORT SUBJECT: SECURITIES INVESTMENT ANALYSIS

PHAT GROUP JOINT STOCK COMPANY IN 2019-2020

GRADE: CLC 61A CORPORATE FINANCE NAME: TRAN HO NAM

STUDENT CODE: 11193600 TEACHER: NGUYEN MINH HUE

Table of contents

INTRODUCTION 3

PART I 3

THEORETICAL BASIS FOR ANALYSIS OF FINANCIAL STATEMENTS 3

1 Goals and meaning of financial statements 3

2 Sources of information used for financial statement analysis 4

3 Methods in financial statement analysis 6

4 Content of financial statement analysis 9

PART II 27

ABOUT HOA PHAT GROUP JOINT STOCK COMPANY 27

1 Company name and address 27

2 Main business lines 27

3 History of formation and development 27

4 Organization chart 29

5 Shareholder structure 29

6 Board of Directors 30

PART III 31

ANALYSIS OF HOA PHAT GROUP'S FINANCIAL STATEMENTS 2019-2020 31

1 Assessing the efficiency of hoa Phat's fixed capital use in 2019 and 2020 31

2 Assessing the efficiency of hoa Phat's working capital use in 2019, 2020 33

3 Capital structure and capital formation sources in 2020 34

4 Capital financing plans for the company 38

5 Ros, ROA, ROE targets in 2019 and 2020 of Hoa Phat 40

PART III 42

CONCLUSION 42

REFERENCES 43

The analysis of financial statements aims to generally assess the financial situation, business performance, potentials as well as financial limitations of enterprises in general and hoa Phat Group Joint Stock Company (HPG) in particular The analysis of financial statements of Hoa Phat Group Joint Stock Company is in the general condition of economic groups, state-owned corporations in Vietnam is still very new, sketchy and exists many limitations Therefore, I chose the topic:

"Completing the analysis of financial statements at Hoa Phat Group Joint Stock Company" to

study.

The thesis in addition to the introduction, conclusions and list of references, the list of abbreviations, diagrams, accompanying annexes are presented in three chapters with the following basic contents:

PART I THEORETICAL BASIS FOR ANALYSIS OF FINANCIAL

STATEMENTS

1 Goals and meaning of financial statements

Objectives of the financial statements:

The basic purpose of the topic is a system of theoretical issues on the financial data ofHoa Phat Group Joint Stock Company to analyze the basic financial statements on theanalysis of corporate financial statements in the market economy, relying on Hoa Phat GroupJoint Stock Companyand analyzing the causes affecting the company's financial situation andassessing the reality the state of the financial situation at Hoa Phat Group Joint StockCompany, specifying the advantages and limitations that exist in terms of the financialsituation at the Company From there, propose solutions to improve and propose financialcapacity at Hoa Phat Group Joint Stock Company

The meaning of financial statements:

Financial activities have a direct relationship with production and business activities.Therefore, all production and business activities have an impact on the finances of thebusiness On the contrary, good or bad financial situations have a driving or inhibiting effect

on the production and business process Therefore, the analysis of financial statements isimportant for the business owner himself and external objects related to the finances of thebusiness

For business managers:

Financial research activities in the enterprise are called internal financial analysis, socomplete information and understanding of the business, financial analysts in the businesshave many advantages to be able to analyze finance best Therefore, corporate managersmust also pay attention to various goals such as creating jobs for workers, improving thequality of goods and services, lowering the lowest costs and protecting the environment.Businesses can only achieve this goal when the business is profitable and pays off debts.Therefore, more than anyone else, business managers need to have enough information toimplement financial balance, in order to assess the past financial situation to conductfinancial balance, profitability, solvency, repayment of debts, financial risks of the business.Besides, orienting the decisions of the financial management board, investment decisions,financing, analysis of dividend yields

For investors:

Their concerns are primarily in payback, profitability, capital insolvency and risk.Therefore, they need information about financial conditions, operating situation, businessresults and the potential of the business Investors are also interested in managingmanagement This creates safety and efficiency for investors

For lenders and suppliers of goods to businesses:

Their concerns are directed at the ability of the business to repay debts By analyzingthe financial statements of the business, they pay special attention to the amount of moneyand assets that can be converted into money quickly so that they can compare and know theinstant solvency of the business

For state agencies such as tax and finance agencies and employees for enterprises:

The analysis of financial statements will show the financial situation of the business

On the basis that it will accurately calculate the tax rate that the company must pay, theFinance Agency and the governing body will take more effective management measures.Besides business owners, investors, Workers have the same basic information needs as they

do because it relates to rights and responsibilities, to their current and future customers

From the above meanings, we see that the analysis of financial statements plays animportant role for every manager in the market economy that is closely related to each other

It is a useful tool used to determine economic value, assess the strengths and financialweaknesses of the business On that basis, discover objective, subjective causes that helpeach manager choose and make decisions that are consistent with the goals they areinterested in Therefore, financial statement analysis is a powerful tool for business managers

to achieve the highest results and efficiency

2 Sources of information used for financial statement analysis

2.1 Sources of information from the balance sheet

Concept: A balance sheet is a composite accounting statement that reflects the general

situation of the assets of the enterprise at a certain time, in the form of currency according tothe value of assets and sources of asset formation

Meaning: The CSC table is an important document to analyze and evaluate in a general

way the situation and business results, the level of capital use and the financial and economicprospects of the enterprise

By reviewing the "Assets" section, it allows for a general assessment of the capacity andlevel of use of assets Legally, the asset portion represents the "potential number" that theenterprise has the right to manage and use long-term associated with the purpose of obtainingfuture benefits When considering the "Capital" section, economically, users see the financialsituation of the business Legally, the user sees the responsibility of the enterprise for thetotal amount of capital registered for business with the State, the number of assets formed bybank loans, borrowing other objects as well as the responsibility to pay debts to employees,with shareholders, with suppliers, with the Budget

Content and structure: The SSC is structured in the form of a balance sheet, full of

accounting accounts and arranged targets according to management requirements Thefinancial statement consists of two parts: the asset part: reflecting the value of the assets andthe capital part: reflecting the source of asset formation The two parts "Assets" and "CapitalSources" can be divided between the sides (left and right) or one side (top and bottom) Eachsection has a total number and the total number of the two parts is always equal because thesame amount of assets reflects the same amount of assets according to the accountingequation principle

2.2 Sources of information from business results reports

The report on business results reflects the situation and results of the business activities

of the business, including results from the main business activities and results from otherfinancial activities and activities of the business

The report on business results has the following effect:

- Analyze and evaluate the implementation of the plan, estimate of production costs,capital price, revenue of consumption of goods products, cost situation, income ofother activities as well as the corresponding results of each activity

- Assess the development trend of the business, take measures to exploit the potential aswell as limit overcoming future existences

* Information provided by the business results report The business results report thebusiness results report presents information on revenues, expenses, profits (or losses) arisingfrom ordinary business activities and activities outside the normal business activities of theenterprise during a business period, division of the cost of corporate income tax and the netprofit of the enterprise in that period

2.3 Sources of information from the cash flow statement

Cash flow statements are a component of the corporate financial reporting system,providing information that helps users assess changes in net assets, financial structure, ability

to convert assets into money, solvency and ability to generate cash flows during the operation

of the business

The cash flow report is used to check the status of the cash flow of the enterprise, assessprevious predictions about cash flows; examine the relationship between profitability and netcash flow and predict the likelihood of the magnitude, duration, and speed of future cashflows, thereby providing information to management entities

* The main effect of the cash flow statement is:

- Provide information to assess the ability of the business to generate money, cashequivalents and needs in the use of funds

- Provide information to the subjects using the analysis report evaluating the time aswell as the certainty of generating funds in the business

- Provide information on sources of money formed from business activities, financialinvestment activities to assess the impact of such activities on the financial situation ofthe business

- Provide information to assess the solvency and determine the money needs of thebusiness in the next period of operation

3 Methods in financial statement analysis

3.1 Comparison method

This is a method that is widely used in economic analysis in general, financial analysis

in particular When using the comparison method, it is necessary to pay attention to thefollowing issues

First, comparison conditions

- At least two quantities must exist

- Quantities (indicators) must ensure comparison It is the unity of economic content, onthe method of calculation, the agreement on time and units of measurement

Second, identify the original root comparison of comparative origin depending on thepurpose of the analysis Concrete:

- When determining the trend and speed of development of the analysis target, theoriginal comparison is determined as the value of the analysis target in the previousperiod or a series of previous periods (the previous year) At this time, we willcompare this mid-term target with the previous period, this year with the previous year

or a series of previous periods To detect the law of the transformation of eachfinancial phenomenon, analyze based on the data source of many years of thatphenomenon and choose a typical year to root, comparing the remaining years withthe original year, based on the law of large numbers to consider fluctuations over time,

If it is cyclical, it means the law of volatility

- When assessing the implementation of the set objectives and tasks, the originalcomparison is the number of plans, estimates and norms of the analytical targets Atthat time, make a comparison between the reality and the plan, estimate, norms of thetarget This result not only examines the implementation of the objectives but alsoassesses the quality of forecasting and financial planning

- When determining the position and ranking of enterprises, the original comparison isdetermined as the value of the average financial indicators of the industry, thestandards and rating standards of the evaluation organization, professional rankingpublished or analytical indicators of competitors

Third: The commonly used comparison technique is absolute numerical comparison, relativenumerical comparison, vertical comparison, horizontal comparison

- Compare by absolute number to see the absolute numerical fluctuation of theanalytical indicator (CTPT)

- Compare by relative numbers to see how much the rate or rate of increase or decrease

of CTPT increase or decrease In fact, it is common to use relative numbers to studyindicators in relation to other indicators to evaluate the economic relations ofenterprises through the ratio system In order to assess the financial situation andoperational efficiency of enterprises if only comparing the information available in thefinancial statements of enterprises is not enough but it is necessary through theanalysis of financial ratios (coefficients) and economic indicators Financial ratiosinclude: ratios reflecting solvency, operability, profitability, efficiency of using assets,speed of capital rotation These indicators show the relationship between differentitems in financial statements When comparing financial coefficients or ratios, we cangive us more useful information

- Vertical comparison (also known as vertical analysis technique) is the comparison bythe relative number of each department with the whole, or one part with another of thewhole to evaluate the structure, proportional relationship of the elements in the wholewith 2 or more components

- Horizontal comparison (also known as horizontal analysis technique) is thecomparison of each indicator over time or in different dimensions that havesimilarities

3.2 Method of exclusion

The exclusion method is applied to determine the degree of influence of eachindependent factor on the research target When determining the effect of one factor on theanalytical indicators, it is assumed that the remaining factors do not change This methodconsists of two forms: the continuous replacement method and the difference numbermethod

3.3 Application of Dupont financial model - ROA

The Dupont financial model is often used to analyze the link between factors that affectfinancial indicators to be analyzed Thanks to the analysis of the relationship between thefactors, it is possible to detect the factor that has influenced the analytical target in a strictlogical sequence and the analyst will be aware of the causes and improve the possibleweakness.

The Dupont financial model is often used to analyze the return on total assets (ROA),return on equity (ROE) If you analyze the return on assets (ROA), it takes the followingform:

From the above model it can be seen that, in order to improve the profitability of a

co-measures are available for the continuous improvement of the profitability of revenue and themovement of assets.

Thus, financial analysis under the Dupont model has great significance for corporategovernance, not only evaluating business performance in a deep and comprehensive way, butalso fully and objectively evaluating the factors affecting business performance Thereby, thesystem of meticulous and authentic measures to strengthen the improvement of the businessmanagement organization, contributing to constantly improving the business efficiency of thebusiness in the next business periods

3.4 Balanced contact method

The balanced relationship method is the method based on the balance of quantitybetween the two sides of the elements and of the business process When factor indicators arerelated to analytical indicators are expressed as totals or differences The balanced contactmethod is used to determine the influence by the difference of each factor between periods(the actual period compared to the planned period, the current period compared to theprevious period), between independent factors

4 Content of financial statement analysis

4.1 General analysis of the financial situation of the enterprise

A general analysis of the financial situation is the consideration and general assessment

of the financial situation of the enterprise This work will provide the user with information about whether the financial situation of the business is positive or not The general

assessment of the corporate financial situation is carried out through the following basic criteria:

4.1.1 General assessment of the capital mobilization situation of enterprises

The fluctuation (increase or decrease) of the total capital sources at the end of the yearcompared to the beginning of the year and compared to previous years adjacent is one of theindicators used to assess the ability of enterprises to organize and raise capital in the year.However, due to the increase and decrease of the capital of the enterprise due to variousreasons, the fluctuation of the total capital sources does not fully reflect the financialsituation of the enterprise, so when analyzing, it should be combined with the consideration

of the capital structure and the fluctuation of capital sources to have appropriate comments

To analyze the growth trend of capital, the analysts used a method of comparing theoriginal relative number (yi/y0; i=1,2, ,n) to compare the growth rate over time of the totalcapital with a fixed root period:

To find out if the pace of capital growth (capital mobilization) is consistent between periods,analysts use a relatively continuous numerical comparison method (yi/y(i-1)." From there,contact the actual situation to assess the situation of capital mobilization of the enterprise.

4.1.2 General assessment of the level of financial independence of enterprises

The level of independence and financial autonomy of the enterprise reflects the ability

of the enterprise to make decisions about the financial and operational policies of theenterprise as well as the control over such policies To generalize the level of financialindependence of the business, analysts often use the following indicators:

Funding coefficient: is a criterion that reflects the financial self-assurance and the level

of financial independence of the business This indicator indicates that, of the total capitalsources of the enterprise, equity accounts for some parts The greater the value of the target,the higher the financial self-assurance, the greater the level of financial independence of theenterprise and vice versa, when the value of the target is smaller, the lower the financial self-assurance capacity of the enterprise, the level of financial independence of the businessdecreases

Long-term asset self-financing ratio (or equity-to-long-term asset ratio): is an indicator thatreflects the ability to cover long-term assets with equity This indicator is determined:

The higher the long-term TS self-financing coefficient, indicating that the greater theequity invested in long-term assets This helps the business to ensure itself financially but thebusiness efficiency will not be high because the capital invests mainly in long-term assets,less used in the revolving business for profitability

Fixed asset self-financing coefficient (Equity-to-fixed asset ratio): is a criterion thatreflects the ability to meet the fixed asset division (already invested) with equity

Since fixed assets are long-term assets that mainly reflect the entire facilities andtechniques of the company, it is not easy to cede or liquidate, so in cases the company needs

to consider the most feasible option

4.2 Analysis of financial structure and the situation of ensuring capital sources for production and business activities

Financial structure analysis is the evaluation of the rationality of the capital structure inrelation to the asset structure of the enterprise Analyzing capital funding policies helps the

users of information to be aware of the capital mobilization policy in relation to the businessstrategy of the enterprise.

For internal enterprises, financial structure analysis is the basis for corporate

managers to identify the strengths and weaknesses of the current financial structure, therebyfinding ways to achieve the optimal financial structure In addition, analyzing financialstructures also helps business managers see financial risks, so that there are timely solutions

to take businesses away from unnecessary risks

For those outside the business, they analyze the financial structure to assess the level

of credit risk before making a loan decision On the other hand, analyzing the relationshipbetween capital and assets helps lenders assess their ability to compensate for debts in casethe business is at risk of bankruptcy Or for state managers, analyze the financial structure ofenterprises to limit the instability of the economy due to inefficient enterprises and excessivedebt, there is a risk of default, bankruptcy

Financial structure analysis includes:

- Analysis of asset structure

- Analysis of capital structure

- Analyze the relationship between assets and capital sources

4.3 Analysis of debt shape and solvency

The freedom to compete in the market economy is increasingly driving the developedeconomy, financial relationships arise more and more, the diversity leading to theappropriation of each other's capital in the market is often the case Therefore, analyzing thesituation of receivable and payable debts is important in the process of detecting signs ofpossible financial risks In addition, in the market economy, most enterprises are self-reliant

in financial activities, collecting compensation and carrying out an expanded re-productionprocess, so that the analysis of receivable and payable debts is more important in providinginformation about the receivable structure to come up with appropriate recovery measures

At the same time, it is seen that the structure of payables introduce timely payment measures

to improve the efficiency of capital use

 Analysis of receivable debts:

Analysis of receivables

Receivables of the enterprise include: Receivables of customers, upfront payments tosellers, other receivables, When analyzing receivables, using a vertical comparison method,

take each specific receivables in turn divided by the total receivables to determine theirproportion of the total receivables:

In addition, in order to be specific and consider the change of each factor in the analysis

of asset structure, we can combine vertical and horizontal analysis, making an analysis of thestructure of each receivable amount similar to the asset structure analysis table template Through the analysis, it is possible for managers to come up with policies to recoverdebts in a timely manner and in accordance with each receivable, reducing the amount ofcapital misappropriated, contributing to improving business efficiency

Customer receivable analysis

In receivables, receivables of customers often account for a large proportion and haveimportant implications for the asset situation of the business When analyzing customerreceivables, analysts often compare the end-of-term number with the number of thebeginning of the period or through many times to see the scale and speed of fluctuations ofcustomer receivables, the structure of customer receivables Through this, managers canmake appropriate decisions such as strengthening the supervision of receivables of eachcustomer, making appropriate promotional and discount policies for each specific audience, Customer acquisition analysis, analysts often use the following indicators:

 Number of rounds receivable to customers:

In it:

 Average customer receivable debt is calculated as follows:

Net revenue derived from the target code 03 of the business results report The target ofthe number of rounds to be collected by customers said that in the analysis of how manyrounds of receivables are collected, the higher this target shows that the business recoversgoods in a timely manner, less capital is misappropriated However, the number of roundsreceivable to customers is too high is also not good because it can affect the output of goodsconsumed because the payment method of the business is too strict.

 The time of a rotation must collect customers:

This indicator indicates how long it takes to recover the debts that have to be collected

by the business The shorter this target demonstrates that the faster the return of capital, theless likely the business is to be misappropriated On the contrary, the longer the time of arotation demonstrates that the slower the rate of capital recovery, the more capital thebusiness is being misappropriated However, this quota is too short is also not good forbusinesses because it is too rigid and inflexible, leading to poor consumption of goods Theduration of the analysis period is calculated in years of 365 days

When analyzing this indicator, analysts can compare the average collection period ofthe analysis period with the original period to see the situation of debt recovery so that thereare debt recovery measures to contribute to stabilizing the financial situation

- Analysis of liabilities:

Analysis of payables

The payables of the enterprise include paying the seller, having to pay employees,having to pay loans, When analyzing accounts payable, it is common to use a verticalcomparison method with the total payables, taking the value of each specific payable amountdivided by the total value of the payables, determining their proportion The formula iscalculated as follows:

In addition, to be specific and consider the change of each factor in the analysis of thestructure of liabilities, it is possible to combine vertical analysis and horizontal analysis,making a breakdown of the structure of each payable amount similar to the form of the AssetStructure Analysis Table

Analysis of the amount payable to the seller

In accounts payable, having to pay the seller has important implications for thesolvency and reputation of the business When the accounts payable to the seller are unable

to pay, signs of financial risk appear, the reputation of the business decreases When thepayments to sellers are paid on time, the reputation of the business is enhanced, contributing

to improving the brand When analyzing the situation of paying the seller, we use thefollowing indicators:

 Number of spins payable to the seller:

In it:

 Average customer receivable debt is calculated as follows:

The cost of goods sold is derived from the target code 11 of the business results report.The round-trip target payable to the seller reflects in the analysis of how many rounds theseller pays This target is higher, proving that the enterprise pays the goods in a timelymanner, less misappropriation of the capital of the objects However, if this target is too high,

it is not good because it is possible that the business is overpaying money always pay ahead

of time, affecting

Effective use of capital

 The time a spin must be paid to the seller:

The shorter this target demonstrates the faster the ability to pay money, the less thebusiness will misappropriate the capital of its partners On the contrary, this target is higher,the higher the business shows that the ability to pay slowly, the amount of capital occupied

by the enterprise is more can affect the reputation and brand of the business in the market.The duration of the analysis period is 365 days

When analyzing this target, it is possible to compare the time of an analysis cycle withthe original period to see the situation of payment of debts of the enterprise so that there aremeasures to mobilize capital, contributing to stabilizing the financial situation

Solvency analysis

Solvency is the ability to reflect the financial potential of the business to pay off debts,these debts include both short-term and long-term debt Therefore, solvency analysis not onlyhelps corporate managers have appropriate financial plans to improve the efficiency ofcurrent and future financial activities, but also provides useful information that investors andlenders are interested in assessing the financial quality and operational efficiency of thebusiness to bring Decide whether to invest or lend money When assessing solvency, theanalyst usually through the data on the Balance Sheet and The Financial StatementExplanation is expressed through indicators such as current solvency coefficient, fastsolvency, general solvency, After calculating these indicators, make a table for evaluation

by comparing the analysis period and the planning period to comment and make thenecessary assessments

General solvency analysis: General solvency coefficient: is a indicator that reflects the

general solvency of the enterprise in the reporting period This indicator indicates: with thetotal number of assets available, the enterprise is guaranteed to cover the liabilities or not Ifthe target value "General solvency coefficient" of the enterprise is always ≥1, the enterpriseensures general solvency and vice versa; this value <1, the enterprise does not guarantee theability to cover debts The smaller the value of the "General Solvency Coefficient" than 1,the more the business loses its solvency

This indicator also indicates whether or not all existing assets will ensure the ability topay the liabilities of the enterprise This target is higher, proving that the solvency of thebusiness is good, which is an important factor attracting lenders to lend Conversely, if thistarget is too low and prolonged, it can lead to bad prospects for the business of dissolution orbankruptcy

Short-term solvency analysis: Short-term solvency analysis is an assessment of the

ability to meet debt payment obligations for a period of less than one year from the date ofincurred by the business Short-term debts include accounts payable to sellers, payable toemployees, short-term loans, The short-term solvency analysis includes the followingcontents: Short-term debt solvency coefficient, fast solvency coefficient, and instant solvencycoefficient

 Short-term debt solvency coefficient:

This indicator indicates whether or not the total value of short-term assets currentlyexists that the business guarantees short-term solvency The higher this indicator shows theability of the business to pay short-term debt as possible and vice versa This high indicatorshows that a part of the short-term asset is invested from stable capital sources, indicatingautonomy in financial activities If this target is low, i.e short-term assets do not compensatefor short-term debt, indicating that the business is having difficulty repaying debts due toadversely affect business performance

 Quick solvency factor:

This indicator measures the liquidity of the number of times that cash, receivables and term financial investments guarantee short-term debt Here, inventory is excluded whencalculating the quick solvency factor because they have a longer conversion time to money

short-than the remaining short-term assets This indicator, if too high and prolonged, is not good,can lead to reduced capital efficiency But this indicator is too low, lasts as long as possiblebecause there may be financial risks, the risk of bankruptcy may occur

 Instant payment coefficient (Instant solvency coefficient):

This indicator indicates the immediate solvency of money for overdue and due debts atany time This high target proves the solvency of the business is abundant, but if it is too highand prolonged, it shows that the business is having a large amount of idle money, stagnantleading to low capital efficiency This low and prolonged quota indicates that the businesscan no longer afford to repay the debt

Long-term debt solvency analysis: Long-term solvency analysis is an assessment of

the ability to meet debt payment obligations for a period of more than one year Long-termdebts include accounts payable to sellers, workers' payables, long-term loans, Long-termsolvency analysis includes the following contents: long-term debt solvency coefficient andinterest payment ability coefficient

 Long-term debt solvency ratio:

This indicator indicates the ability to pay long-term debt for the entire net value of fixedassets and long-term investments, This target is as high as possible to demonstrate the long-term solvency of the business in the future, contributing to the stability of the financialsituation If this target is low, it is not possible to confirm that the long-term solvency in thefuture of the business is bad However, businesses still need to take early action on thistarget

 Interest payment capacity ratio:

This indicator represents the level of profit guaranteed for the ability of the enterprise topay interest This coefficient proves the ability to offset interest expenses as much aspossible, thereby increasing the credibility of the business, lenders are willing to decide toprovide capital to the business

Net working capital analysis: Net working capital is the difference between regular

capital and fixed asset and long-term investment value

Net working capital = Regular capital sources – Fixed assets and long-term investments.Indicators showing the origin of working capital or external analysis of working capital:

- If Net Working Capital < 0 (i.e Regular Capital – Fixed Assets and Long-TermInvestments < 0) means that regular capital is not sufficient to fund Fixed Assets andLong-Term Investments, this shortfall is offset by a portion of temporary capital orShort-term Debt Financial balance in this case is not good because the business isalways under pressure on short-term debts Businesses need to make long-termadjustments to create a new balance towards sustainability

- If Net Working Capital = 0 (i.e Regular Capital – Fixed Assets and Long-TermInvestments = 0) means that regular capital is sufficient to fund all fixed assets andlong-term investments The financial balance in this case is more progressive andsustainable but also unsafe and there is a risk of loss of sustainability

- If Net Working Capital > 0 (i.e Regular Capital – Fixed Assets and Long-TermInvestments > 0), in this case The regular capital is not only used to finance FixedAssets and Long-Term Investments but also used to partially finance the workingassets of the enterprise's financial balance is very good and safe at the moment Full.However, in order to assess the long-term financial balance, we need to considerworking capital over the time series to estimate the prospects for future financialbalance Analyzing too many periods of net working capital has the following cases:

- If the net working capital decreases and is negative: the assessment of the financialsafety and sustainability of the Enterprise decreases, as the enterprise must usetemporary capital to finance fixed assets Businesses will be under pressure to makeshort-term payments and risk bankruptcy if they do not pay on time and have lowbusiness efficiency

- If net working capital is positive and increases over the years: assess the safety level

of the Enterprise is good because not only Fixed Assets but also Working Assets arefunded with regular capital However, for a thorough analysis it is necessary toconsider the parts that constitute regular capital sources In order to achieve such asafe level, enterprises must increase equity sources or increase long-term debt If theowner is increased, it will increase the financial independence of the enterprise butreduce the effect of debt leverage On the contrary, increasing long-term debt, thefinancial leverage effect will work but besides, it is at risk of using debt If working

capital is positive and increased due to the continuous liquidation of fixed assetsreduces the size of fixed assets, it is not possible to conclude that the financial safetymay be that the enterprise in the recession period must liquidate fixed assets

- If net working capital is stable: That is, net working capital does not increase, does notdecrease or has increased or decreased, it indicates that the activities of the Enterpriseare in a stable state However, in this case it is also necessary to consider the source offunding to obtain that stability In addition, Net Working Capital is also calculated asthe difference between Liquid Assets and Short-Term Investments and Short-TermDebt:

Net working capital = Liquid assets and Short-term investments – Short-term debt

This balance sheet clearly shows how net working capital is used: Working capital isallocated to inventory receivables or items such as money It emphasizes flexibility in the use

of Working Capital in the Enterprise Therefore, the analysis according to this indicator is anemphasis on the internal analysis of the enterprise In addition, the relationship between theelements of Liquid Assets and Short-Term Investment and Short-term Debt alsodemonstrates the solvency of the Enterprise

4.4 Analysis of production and business performance of enterprises

Business efficiency is an integrated economic indicator that reflects the level of use ofresources and finances of enterprises to achieve the highest efficiency Analyzing businessperformance helps interested subjects measure the profitability and effectiveness of businessmanagement of the business Therefore, improving business efficiency is one of theextremely important measures of businesses to promote a high-growth economy in asustainable way

Business performance analysis is the process of looking at the relationship between theoutput and the inputs, including the following contents: an assessment of asset utilizationefficiency including short- and long-term, profitability analysis, investment performanceanalysis, and capital efficiency analysis

4.4.1 Analysis of asset utilization efficiency

Asset utilization efficiency analysis not only analyzes the efficiency of total asset usebut also analyzes the performance of short- and long-term assets by building and analyzingaggregate, detailed indicators suitable for each asset group From the above analysis, it ispossible to introduce measures to improve the efficiency of using assets, making the most ofthe capacity of the asset

 Performance of total assets:

This indicator indicates the operation of the asset and the ability of the business to generatesales through the use of assets This indicator is higher and demonstrates that the asset is usedeffectively, contributing to increasing revenue, facilitating increased profits But if this target

is too low, the unit is wasting capacity, businesses need to take measures to improve

 The cost of assets compared to net revenue:

This indicator indicates that in an analysis period, the enterprise obtains a net revenue, howmany investment assets are needed, this target is lower to show that the enterprise uses assetseffectively, saving assets

 Inventory rotation:

This indicator said that in the analysis of how many rounds of investment capital forinventory spins, this target is higher to show that the inventory is constantly moving that is afactor to increase revenue, contributing to increasing profits for businesses

4.4.2 Profitability Analysis

 Ros-Return on Sales (ROS- Return on Sales) analysis: