BUSINESS ADMINISTRATION DEPARTMENT PRINCIPLES OF CORPORATE FINANCE (FIN202) GROUP ASSIGNMENT Thieu Nien Tien Phong Plastic Joint Stock Company Team members 1 Nguyễn Ngọc Minh Châu HS150227 2 Nguyễn Diệu Tú 150490 3 Nguyễn Thu Uyên 153194 4 Trần Hoài Anh 150639 5 Bùi Hồng Quân HS153133 Class IB1602 Team 6 Lecturer Hoàng Văn Tưởng Date Fall 2021 1 I Describe the company’s business operations 1 1 Current market strategy Currently, in the North alone, NTP is holding about 70 80% of the market sh.
Trang 1-*** -BUSINESS ADMINISTRATION DEPARTMENT
PRINCIPLES OF CORPORATE FINANCE
Class: IB1602 - Team 6
Lecturer: Hoàng Văn Tưởng
Date: Fall 2021
Trang 2I.Describe the company’s business operations
1.1 Current market strategy
Currently, in the North alone, NTP is holding about 70-80% of the market share of pipesand fittings plastic parts On a national scale, NTP's products account for about 30% of totalconsumer demand Under the pressure of maintaining market share as well as revenue growthwhile ensuring benefits to shareholders, NTP's plans need to be very careful in execution
NTP's Board of Directors has set a goal to compete with other competitors in domesticmarkets domestic and foreign, mainly by building and developing effective distributionchannels,at the same time applying information technology in the management and control ofthe system distribution channels to optimize business efficiency, timely supply products tocustomers
Regarding the value chain, NTP actively participates in closed value chain models from the
"raw" stage materials – production – distribution” to ensure the brand reputation of thecompany and bring benefits best for customers and shareholders
1.2 Competitive advantage
a) Production and distribution capacity
• Production of plastic pipes and spare parts: Currently, the company owns 06 factories acrossthe country with a total workshop area of nearly 450,000 m2 and nearly 1,900 employees,with a total annual output of about 112,000 tons of products Specifically:
Factory 04 factories with a
total area of about350,000 m2
01 factory with a totalarea of about 62,000
m2
01 factory with totalarea about37,000 m2
Year output 80,000 tons of
products 15,000 tons ofproducts 17,000 tons ofproducts
Total employees 1,400 people 125 people 347 people
Besides, NTP also has a nationwide consumption network including 09 distribution centers,about 400 agents and 15,000 sales points nationwide
• Real estate: With about 20ha of land in the old factory area at No 2 An Da, Ngo QuyenDistrict, City Hai Phong, NTP are implementing projects of commercial complexes, officesfor rent and high-class apartments
Trang 3b) Partnerships
c) Financial resources
• Low cost of capital:
With a background as an equitized state-owned enterprise, NTP is given relatively favorableincentives: capital sources with low interest rates and high credit lines with short-terminterest rates on average only about 6% with short-term loans and 9% with long-term loans
• Stable cash flow:
The clearest proof for this point is the fact that NTP has been listed on HNX since 2006
Up to now, NTP has never offered shares to new investors or existing shareholders and onlyCurrently increasing charter capital from profit after tax Another point worth noting is thatNTP is still continuous pay regular dividends to shareholders
d) Competitive advantage
• Brand: owning a huge distribution network and a market share of 70-80% in the regionNorthern, Tien Phong Plastic Youth brand has become an affirmation of quality for plasticpipes and fittings
• Research and development: NTP has always been a pioneer in investment, research andapplication using new products with top quality in the region
✓ In 2004: NTP was the first company to produce standard PP-R heat-resistant pipes
DIN8077-2008-09 and DIN8078-2008-09
✓ 2016: The company put into operation the DN2000 HDPE pipe production line
and HDPE/PP pipes with 2 layers of corrugated iron up to DN800 according to Europeantechnology with a total amount of 150 billion VND investment This is 1 of 8 lines that canproduce HDPE pipes diameter as large as 2,000 mm is available in the world, NTP is the firstenterprise from Vietnam and Asia to invest in this chain
✓ In 2017 – 2018: NTP continues to spend more than 100 billion VND to invest inmachinery and equipment for PVC pipe production lines; HDPE and PP-R pipes; PVC pipefittings production and PP-R; laboratory equipment and product quality control; chaininvestment
MVPC pipes DN110 – DN355; PP-R pipe production line DN20 – DN63; cord productionline for single-walled corrugated pipes for electrical cable conduit 500kg/h; production linedouble-walled corrugated pipe for drainage 1,000kg/h; equipped with 250T, 350T andinjection molding machines 650T; grain dryer, PP-R spare parts packing machine; tube weldinspection ultrasonic machine HDPE;…
Trang 4II.Financial statement analysis
1 Common-size analysis for Balance sheet and Income Statement
a) Balance sheet
Total assets:
In general, NTP's total assets decreased gradually over the years Specifically, year
2019 compared to 2018, it decreased by 323,975,511,919 VND, corresponding to a decrease
of 7.12% By 2020 compared to 2019 it will be reduced by 656,900,810,903 VND, equivalent
to a decrease of 16.86% The reason that the company's total assets tend to decrease rapidly isdue to the decrease in short-term assets In 2018 total assets are 54.61%, in 2019 total assetsare 51.91% and in 2020 total assets are 43.10%
Short-term assets and long-term assets
Chart comparing short-term assets and long-term assets
Through the comparison chart of short-term assets and long-term assets above, it can be seenthat short-term assets and long-term assets have a change in the period 2018-2020.Specifically, in the period 2018-2020, short-term assets decreased and long-term assetsincreased
+ About short-term assets:
* Period 2018-2019: 54.61% in 2018 and 51.91% in 2019 down 2.7%
* Period 2019-2020: 51.91% in 2019 and 43.10% in 2020 down 8.81
Trang 5+ About long-term assets
* Period 2018-2019: 45.39% in 2018 and 48.09% in 2019 up 2.7%
* Period 2019-2020: 48.09% in 2019 and 56.90% in 2020 up 8.81%
=> Firms tend to invest more in long-term assets
The fluctuations in the size of current assets and long-term assets are due to the impact
of the following components:
Cash and cash equivalents:
In 2019 increased by 213,956,975,033 VND compared to 2018 respectively, an increase of
257.6 percent The reason for the rapid increase is that the company is saving costs for thepurchase of input materials or the enterprise has recovered its debt The company'smaintenance of a large amount of cash has the advantage of the company's solvency isalways guaranteed, the company always has a high amount of liquid assets such as cash andcash equivalents to secure due debts However, storing a lot of cash also makes the companylose business opportunities when it always maintains a large amount of cash in the fund
In 2020, a decrease of VND 84,852,237.244 compared to 2019 corresponding to a decrease
of 28.6% The reason for the decrease is that the company spends on some of its activities
Short-term accounts receivables:
Short-term accounts receivables tend to decline over three years In 2018, short-termreceivables were VND 1,549,583,689,783, accounting for a relatively high proportion ofshort-term assets However, in 2019 it decreased to 958,486,969,352 VND, down591,096,720,431 VND compared to 2018 respectively, down 38.15% And in 2020 it willdecrease to 813,391,481,075 VND, down 145,095,488,277 VND compared to 2019respectively, down 15.14% The decrease in short-term receivables shows that the company
is not misappropriating capital and they are tightening credit policy, enhancing debtcollection
Inventory
Inventories are not stable The increase in 2019 was 78,289,174,862 VND higher than in
2018, equivalent to an increase of 7.86% An increase in inventory is a sign that the company
is in a state of capital backlog At that time, the company needs to take measures to increasethe speed of inventory turnover and reduce the amount of goods stored in the warehouse.Such as improving product designs, diversifying products, bringing products abroad, etc.However, in 2020 inventory has decreased compared to 2019 by VND 429,624,312,403equivalent to a decrease of 40% This shows that the company's capital stagnation, reducedgoods, good and favorable product consumption activities of the company
Fixed assets
The company's fixed assets fluctuate In 2019 decreased by 15,792,741,641 VND compared
to 2018 respectively, a decrease of 1.02% and in 2020 increased by 263,198,816 VNDcompared to 2019 respectively, an increase of 0.02& In general, the company's fixed assets
Trang 6in the period 2018-2020 increased and decreased insignificantly The company still maintains
stable fixed assets
Long-term financial investment
Long-term financial investments can be seen steadily increasing over three years.
Specifically, in 2019 an increase of VND 53,822,933,803, equivalent to an increase of 11.8%,
and an increase of VND 17,358,831,905 in 2020 compared to 2019 respectively, an increase
of 3.4% This shows that the company is actively making long-term financial investments
that will bring long-term results for the company
Funding situation:
Liabilities
Liabilities tend to decrease steadily over three years In turn, 2019 decreased by
638,889,202,261 VND compared to 2018 respectively, down 24.3% and in 2020 decreased
by 678,770,094,288 VND compared to 2019 respectively, down 34.2% Liabilities decreased
as short-term debt and long-term debt both decreased in three years Short-term debt in 2019
decreased by 533,263,299,950 VND compared to 2018 respectively, down 22.3% and in
2020 decreased by 583,436,466,406 VND compared to 2019 respectively, down 31.5%
Long-term debt in 2019 decreased by 105,625,902,311 VND compared to 2018 respectively,
down 44.68%, and in 2020 it decreased by 95,333,627,882 VND compared to 2019
respectively, down 72.89%
Equity
Equity tends to increase over three years In 2019, an increase of 314,913,690,342 VND
compared to 2018 respectively, an increase of 13.98% and in 2020 an increase of VND
21,869,283,385 compared to 2019 respectively, an increase of 0.85% In addition, equity
always accounts for a high proportion of total capital, especially in 2019 it is 56.40% and in
2020 it is 66.47% A high proportion of equity indicates that the company has a high degree
of financial independence and financial autonomy
The relationship between assets and capital
The three-year debt-to-assets ratio is low, the three-year expenses are all less than 1 It shows
that the company has used a lot of equity to purchase operating assets, making the company
Trang 7more financially autonomous and actively in business activities because it is heavilydependent on debt capital In 2019 compared to 2018 decreased by 0.1 with a reduction rate
of 18.52% 2020 compared to 2019 decreased by 0.1 with a decrease rate of 22.73%
The three-year general solvency ratio is both greater than 1 It proves that the company hasexcess solvency, strong financial position, has a positive impact on business activities In
2019 compared to 2018 increased by 0.43 with an increase rate of 23.12% 2020 compared to
2019 increased by 0.69 with an increase rate of 30.13%
The three-year asset-to-equity ratio is close to 1, showing that the company's assets areinvested mainly with equity In other words, the company is financially independent 2019compared to 2018 decreased by 0.39 with a reduction rate of 18.06% 2020 compared to 2019decreased by 2.27% with a reduction rate of 15.25%
Ability to pay short-term debt
b) Income statement
Revenue from sales of goods
In general, the period 2018-2020 tends to be unstable In 2019 compared to 2018 increased
by 254,069,099,506 VND, equivalent to an increase of 5.60% This shows that the sales andproducts of the company are very good and convenient The company has effective plans,policies and business plans from which to bring growth in sales revenue from providing salesand services during the above period However, 2020 compared to 2019 decreased by VND142,503,633,540, equivalent to a decrease of 2.98% It shows that in the period of 2019-2020the company is facing difficulties in sales and services The reason is that the Covid-19epidemic caused the company to stall, it was difficult to supply goods and services to themarket, and the demand and use of products during this period was limited
Net sales
There was a fluctuation in net sales over the three years In 2019 compared to 2018increased by 154,227,935,920 VND, corresponding to an increase of 3.41% In 2020compared to 2019 it decreased by VND 187,762,390,827, equivalent to a decrease of 4.02%
In the period of 2018-2020, net revenue is not stable In the period of 2018-2019, the increaseshows that the company is profitable, operating effectively and bringing profits to the
Trang 8company The decrease in the period of 2019-2020 shows that the company is facingdifficulties in operation and needs solutions to improve the situation and stabilize thecompany.
Cost of goods sold
Cost of goods sold over the years has not been stable In 2019 compared to 2018 itincreased by 136,684,801,182 VND, corresponding to an increase of 4.29%, showing that thecost of raw materials and workers directly used to create goods chemical increase In 2020compared to 2019 it decreased by 227,437,030,546 VND, equivalent to a decrease of 6.84%,due to the decrease in the price of plastic input materials
Financial activities income
Financial activities income tends to increase steadily in the period 2018-2020 Specifically,the increase in 2019 compared to 2018 is VND 1,727,001,858, an increase of 11.47%, anincrease of VND 4,526,068,099 in 2020 compared to 2019 is VND 4,526,068,099, anincrease of 26.97% This shows that the company is focusing on financial activities and thecompany's financial investment activities in this period are good, favorable, and highlyeffective with investment policies and plans thoroughly effective
Selling expenses & General and Administrative expense
Selling expenses of the company tended to decrease steadily over the past three years, whilegeneral and administrative expenses fluctuated Specifically in terms of selling expenses, thedecrease in 2019 compared to 2018 was VND 73,371,641,445, equivalent to a decrease of10% The decrease in 2020 compared to 2019 is VND 77,634,520,465, equivalent to adecrease of 11.77% This shows that the reduction in selling expenses will save some moneyfor the company, but this reduction in selling costs also affects the company's sales activitiessuch as limiting service provision such as limited service delivery Product introduction,advertising, etc For business administration expenses, in 2019 the decrease compared to
2018 was 12,113,103,214 VND, equivalent to 8.18% decrease The increase in 2020compared to 2019 is 79,809,874,219 VND, equivalent to an increase of 58.71% The reason
is that the company has expanded a number of new factories in Tien Phong in the South and anew factory in Binh Duong
Gross profit
In general, the company's gross profit in this period tended to increase steadily.Specifically, in 2019 the increase compared to 2018 is 17,543,134,738 VND, equivalent to anincrease of 1.32% The increase in 2020 compared to 2019 is 39,674,639,719 VND,equivalent to an increase of 2.94% The reason for the strong increase in gross profit is thatthe increase in net sales is larger than the increase in cost of goods sold
Other income
Other income in this period generally tends to increase and decrease unstable The increase
in 2019 compared to 2018 is 3,504,323,366 VND, equivalent to an increase of 62.05% Thedecrease in 2020 compared to 2019 is 5,019,798,026 VND, equivalent to a decrease of
Trang 954.85% This shows the instability in profits and other income of the company during theperiod when it increased very quickly but when it decreased very quickly.
Profit before tax
Profit before tax tends to increase steadily over the years The increase in 2019 compared to
2018 is 91,341,114,234 VND, equivalent to an increase of 24.05% The increase in 2020compared to 2019 is 52,232,242,143 VND, equivalent to an increase of 11.09% This showsthat the company's profit is still increasing steadily over the years and this is really a goodsign for the company's business
Net income
After deducting incurred expenses and paying taxes to the state in full, the company's finalbusiness results in the three years of 2018, 2019 and 2020 achieved positive and stablegrowth Specifically, in 2019 the increase compared to 2018 is VND 77,508,948,948,equivalent to an increase of 23.38% The increase in 2020 compared to 2019 is38,163,029,980 VND, equivalent to an increase of 9.33% It can be seen that the companyhas been profitable over the years with quite stable profit growth and this is a good sign andshows that the company's business results in the period 2018-2020 are very effective
c, General comments
Through the above analysis, we can see that in the period of 2018-2020 the economy facedmany difficulties, but the company's production and business results were still very positive.The company's business results show that the company's ability to expand production andbusiness, make use of good resources, and policy guidelines and wise leadership havebrought about a successful financial year of the company The results of revenue and profitshow that the company's growth rate is good, meets the expectations of the leadership andneeds to continue to try harder in the future
And through that, when comparing the company with companies in the same industry such
as Binh Minh Plastic Company or some other companies in the industry, in general, TienPhong Plastic Company has indicators as well as financial business situation stable,efficiency is evaluated better than other companies in the same industry
Trang 102020 will reach 1.32 times This shows that the enterprise is able to pay its debts andincreasingly ensures its ability to pay its short-term debts with short-term assets such as cash,inventory, and receivables The financial situation of the enterprise is stable and can beassessed as gradually improving.
● Quick Ratio
Current asset 2,663,120,671,142 2,363,188,726,746 1,678,805,704,398Inventory 995,457,074,011 1,073,746,248,873 644,121,936,470Current liabilities 2,387,372,889,586 1,854,109,589,636 1,270,673,123,230
Trang 11Although short-term debt payments increased, in 2019 the ability to make quick paymentsdecreased by 0.003 times compared to 2018 and increased again in 2020 (up 0.119 times) In
2019, because the company had a little difficulty in importing raw materials from abroad, inwhich the company's inventory of raw materials and materials increased in price, making thetotal value of inventory also increase As a result, the company's quick payment abilitydecreased slightly Quick solvency of the company for 3 consecutive years 2018-2020 is lessthan This proves that the Company will not be able to immediately pay all short-term debts
or in other words, the enterprise will face difficulties if it has to pay short-term debts Thisdemonstrates that the Company will be unable to pay all short-term obligations quickly, or, inother words, that the company will have difficulties if it must pay short-term loans
It can be observed that NTP still has sufficient current payment capacity and the ability tomake quick payments These liquidity ratios, however, do not appear to be completely safe,
in our opinion Although the amount of cash and cash equivalents held by businesses hasrisen, it still accounts for a small percentage of total assets (in 2018, it was 3.12 percent; in
2019, it was 12.57 percent; in 2020, it was 12.64 percent) If debt levels rise, NTP may faceliquidity issues
b) Efficiency Ratios
● Inventory Turnover
Average inventory 924,215,724,081.5 1,034,601,661,442 858,934,092,671.5Cost of goods sold 3,188,696,872,956 3,325,381,674,138 3,097,944,643,592
Inventory Turnover Business 2018-2020
Trang 12In general, NTP's inventory and receivables management is superior From 2018 to 2019, theinventory turnover ratio remained relatively stable, but rose from 2019 to 2020 Furthermore,the receivables turnover ratio rose from 2.91 to 5.51.
● Account receivable turnover
Net sales 4,519,645,454,137 4,673,873,390,057 4,486,110,999,230Accounts receivable 1,549,583,689,783 958,486,969,352 813,391,481,075Accounts receivable
to purchase on credit in order to grow the market and compete with other companies
in the same sector Minh Hai Import-Export Trading Co., Ltd is the distributioncenter with the highest percentage of receivables, as well as a distribution center withmany major project clients, therefore payment speed cannot be as fast as retailcustomers However, Tien Phong Plastic is in charge of all client debts, includingMinh Hai's, and Minh Hai's debt is falling, which is the major cause for the decline inreceivables in 2019 and 2020
Receivable’s turnover has risen steadily over time, indicating that the corporation issticking to its discounting agents and distribution channels policy while retainingsales income The fact that receivables turnover is steadily increasing indicates thatconsumers are using the company's money for a shorter period of time This will have
a positive impact on the company's capacity to transform money into profit However,
in a still-developing economy, allowing consumers to take control of capital aids their
Trang 13development, and the firm gains more new partners to expand production andcommerce.
● DSI and DSO
DSI: With inventory turnover, analyzing inventory turnover also gives us a better idea of the
time from when a business buys goods to when it is sold out We see the number of rotations
in 2018 is 105.8 days That is, one batch of inventory takes 105.8 days to be consumed In
2019, the inventory turnover time trend increased to 113.7 days or 7.5% In 2020, the trend isdown to 101.1 days corresponding to 11.08% This shows that the company's sales situation
is faster than previous years, which is the result of the policy of supporting discount agentsand distribution channels, creating business development opportunities for partners
DSO: In 2018, the company's DSO index was higher than in 2019, and in 2020, it was125.43 The average number of days it takes for a firm to get money for a sale is125.43 days, according to this measure This is a high DSO, indicating that TienPhong is facing payment delays, which might result in cash flow issues The DSOindex reduced considerably in 2019 and 2020 compared to 2018, owing to Tien PhongCompany progressively recovering a big number of receivables from Minh Hai PlasticCompany (one of Tien Phong's key distributors) improves revenue and decreasesreceivables The account receivable index rose, but DSO fell dramatically
Furthermore, a high DSO score indicates that the company and the distributor have aworking connection Tien Phong Plastic Company's index is high because thecompany has regulations that allow major distributors to pay faster and has a long-term cooperative connection with enterprises These figures will steadily decline in
2019 and 2020 as Tien Phong Plastic Enterprise gradually recovers earlier receivablesfrom distributors as the payment deadline approaches
● Asset Turnover Ratios
Net sales 4,519,645,454,137 4,673,873,390,057 4,486,110,999,230Total assets 4,876,295,184,157 4,552,319,672,238 3,895,418,861,335Net fixed assets 1,552,279,210,843 1,536,486,469,202 1,536,749,668,018
Trang 14Total asset turnover 0.99 1.01 1.06
Total asset turnover: The asset turnover index of the pioneering teen plastic firm in 2018
was 0.99, which implies that for every dong spent on assets, the company only got 0.99dong
in revenue The total asset turnover ratio in 2019 and 2020 is 1,01 and 1.06, respectively,indicating that the corporation is earning more revenue per dollar of assets The corporation iscorrectly allocating its assets and reaping greater benefits from them The asset turnover ratio
is improving, which might indicate that Tien Phong is steadily growing its capacity
Fixed asset turnover: The fixed asset turnover index of Tien Phong Plastic Company did not
very much in general Due to the substantial growth in net revenue from sales and serviceprovision in 2019, the fixed asset turnover index was greater than in 2018 and 2020, althoughnet fixed asset declined compared to the previous two years Tien Phong Plastic said in 2019that it will invest in a new facility in the Binh Duong and Nghe An districts, where it haspreviously invested and successfully exploited The new industrial investment plan is basedprimarily on earnings, with investment expenses amortized over time rather than all at once,ensuring the company's risk protection
Fixed assets rise as a result of this process, but revenue and profit suffer as a result and areunable to break out rapidly It can be observed that Tien Phong Plastic Company continues toinvest and utilise its long-term assets at a consistent pace The corporation is taking great care
in making spending decisions for these long-term expenditures in order to avoidunderperformance
c) Leverage Ratios
Total debt to Total assets
Total assets 4,876,295,184,157 4,552,319,672,238 3,895,418,861,335Total debt 2,623,789,620,930 1,984,900,418,669 1,306,130,324,381Total equity 2,252,505,563,227 2,567,419,253,569 2,589,288,536,954
Total debt ratio: The debt-to-assets ratio of the firm is on the decline in 2018-2020, and it is
at a safe level, indicating that the company is less financially risky In 2018, the debt ratiowas 0.54 times, suggesting that debt funded the majority of the company's assets Thisreduced to 0.44 times in 2019 and 0.34 times in 2020, indicating that equity financed themajority of the company's assets As a result, we envision the company's potential to be self-sufficient and financially independent growing The corporation has more assets thanliabilities and, if necessary, can satisfy its commitments by selling its assets
Debt-to-equity ratio: The company's debt-to-equity ratio in 2018 was 1.16, meaning it had
$1.16 in debt for every $1 in equity This indicates that the corporation owes more money
Trang 15than it owns The corporation is depending increasingly on outside finance, thus increasingthe risk of debt payback This index has improved over time, with the company's debt-to-equity ratio falling to 0.77 in 2019 and 0.504 in 2020, indicating that the company's equity issufficient to cover obligations since liabilities are less than half of equity.
The fact that these coefficients are progressively and modestly improving further indicatesthat the firm has struck a balance between assuring debt repayment with equity and usingexternal loans to finance its debt assist with business tasks
Equity multiplier: The company's asset-to-equity ratio has been more than one over the
previous three years, from 2018 to 2020 Tien Phong Plastic Company's asset-equity ratiowas 2.16 times in 2018, indicating that current owners own less assets than current debtors.The company's leverage ratio is high, indicating that it is largely reliant on debt and otherliabilities Because the company's equity ratio is low, it must rely heavily on debt to fund itsoperations This coefficient likely to drop gradually in 2019-2020, with a fall of 18.05 percent
in 2019 compared to 2018, and a decrease of 15.25 percent in 2020 compared to 2019 Thislower index indicates that this firm is less reliant on debt financing and, unlike highlyleveraged enterprises, does not need to spend additional cash flow to repay debt The firm israpidly becoming more financially self-sufficient
● Coverage Ratio
Interest Expenses 107,149,414,700 114,690,167,705 66,756,127,721EBITDA 620,912,431,370 735,702,295,638 739,464,547,707EBIT 486,994,735,392 585,876,602,631 590,174,804,790
Trang 16has a good credit management system in place, since it can consistently improve earningswithout incurring extra debt This speaks for itself, making it a safer investment for debtsuppliers Furthermore, we can observe that the interest coverage ratio is increasing year overyear, indicating that the company is effectively managing its creditworthiness by being able
to expand revenues without taking on extra debt
Tien Phong Plastic Company has a somewhat high interest payment percentage whencompared to other firms in the same sector, just slightly lower than Binh Minh PlasticCompany Binh Minh Plastics has a stronger ability to pay interest than other firms in thesame sector since it has a lower interest expenditure and a larger pre-tax revenue
Pioneer Plastics is doing a better job of managing financial leverage than companies withlower profit margins Vanguard Plastics is a generally safe investment in the business;therefore investors are more inclined to lend money to the company
Cash coverage: The pioneer plastic firm's cash coverage ratio from 2018 to 2020 is all
greater than 1, indicating that the company can cover its present debts with cash alone.Pioneer Plastic Firm's excellent cash coverage ratio of 5.8 times in 2018 indicates that thecompany is completely capable of paying 5.8 times its existing debt with its cash positionalone Similarly, to 2019, the corporation has adequate cash to pay down 6.4 times itsexisting debt in 2019, and 11.1 times its current debt in 2020 These indices have risengreatly over time as the company's interest expenditures have decreased dramatically and itscapital performance has improved If the firm must pay its short-term debts promptly,creditors may be certain that their loans will be returned and that the company will satisfy itsfinancial responsibilities must be able to pay interest and make money without selling orliquidating other assets
d.Profitability Ratios
● Gross profit margin
Net sales 4,519,645,454,137 4,673,873,390,057 4,486,110,999,230Cost of goods sold 3,188,696,872,956 3,325,381,674,138 3,097,944,643,592
It can be observed that the company's gross profit margin has been rather consistentthroughout time Tien Phong Plastics' gross profit margin in 2018 was 0.3 times, 0.29times in 2019, and 0.31 times in 2020 This reveals that in 2018, the firm made aprofit of 0.3 dong vs 1 dong of gross profit from cost of goods sold, 0.29 dong versus
1 dong of gross profit from cost of goods sold in 2019, and 0.31 VND versus grossprofit from cost of goods sold in 2020 The company's Gross Profit Margin isincreasing by 2% from 2019 to 2020, showing that it is profitable based on sales andCOGS To increase profits, the corporation is selling its inventory However, we canobserve that the company's gross profit margin hasn't improved significantly Thereason for this is because income is made up of a big percentage of cost of productssold Businesses may minimize COGS by finding lower-cost raw material suppliers,boosting the company's gross profit ratio
Trang 17● Operating profit margin
EBIT 486,994,735,392 585,876,602,631 590,174,804,790Net sales 4,519,645,454,137 4,673,873,390,057 4,486,110,999,230
Operating profit margin businesses 2018-2020
Tien Phong Plastic's operational profit margin is comparable to those of significantfirms in the same sector such as Binh Minh Plastics (BMP) and Dong Nai Plastics(DNP) It also outperforms Tan Dai Hung Plastic Company (TPC) and An Phat XanhPlastic in various ways (AAA) The company's profitability is improving, andoperational costs are being properly controlled
● Net profit margin
Net income 331,517,043,394 409,025,992,342 447,189,022,322Net sales 4,519,645,454,137 4,673,873,390,057 4,486,110,999,230
Net profit margin 2018-2020
