(TIỂU LUẬN) financial statement analysis company KIDO corporation

Figure 1: Sources and uses of cash in 2019 - 2020Figure 1 shows us sources and uses of cash and its changes in total assets and totalliabilities and equity of Kido Group in the period of

Financial statement analysis

Student’s name: Phạm Khánh Vy Student’s ID: 11208521

Class: LSIC 62 Lecturer: Dr Trần Tất Thành

Table of Contents

Preface 3

I INTRODUCTION: 4

II ANALYSIS OF FINANCIAL STATEMENT: 5

1 Sources and uses of cash analysis 5

a In 2019 – 2020 period 5

b In 2020 – 2021 period 6

2 Standardized balance sheets: 7

3 Standardized income statements: 9

4 Financial ratios analysis: 12

a Liquidity ratios: 12

b Financial leverage ratios: 13

c Turnover ratios: 14

d Profitability ratios: 15

e Market value ratios: 16

5 Dupont analysis 17

III CONCLUSION 18

Table of Figures

Figure 1: Sources and uses of cash in 2019 - 2020 6

Figure 2: Sources and uses of cash in 2020 - 2021 7

Figure 3: Common-size balance sheet in 2019 - 2021 (Assets) 8

Figure 4: Common-size balance sheet 2019 - 2021 (Liabilities & Equity) 9

Figure 5: Kido Group's 2019 common-size income statement 10

Figure 6: Kido Group's 2020 common-size income statement 11

Figure 7: Kido Group's 2021 common-size income statement 12

Figure 8: Liquidity ratios in 3 years and Ind 13

Figure 9: Financial leverage ratio 14

Figure 10: Turnover ratio from 2019 to 2021 and Ind 15

Figure 11: Profitability ratio from 2019 - 2021 and Ind 16

Figure 12: Market value ratio in 2019 - 2021 and Ind 17

Figure 13: Dupont equation in 2019 - 2021 and Ind 18

One of the factors that helps the business reach its objectives is financial activity.Poor financial performance will hold back the rest of the department, preventingthe organization from accomplishing its goals The expansion of an enterprise'scommercial activity is therefore dependent on solid financial management Toassess whether a company's financial performance is robust or bad, financialanalysis is crucial Through financial analysis, the company's financial state will berevealed, and from there, corrective action will be implemented

My understanding of Kido Group's financial situation has improved as a result of

my research, which also allowed me to identify the sources and extent of the issuesaffecting Kido Group's finances Using such data, comment, assess, and suggestsome improvements to the company's operations

I INTRODUCTION:

Company’s background:

KIDO Corporation was established in 1993 and has become one of the leadingFood & Flavor companies in Vietnam In its 22-year history, KIDO Group hasremained the market leader in confectionary across a wide array of products such

as confectionery, cookies and ice - cream under the KIDO brand name

In 2015, aiming to expand and develop into essential food, KIDO Group wasofficially established By promoting existing platforms, KIDO continues tomaintain and develop its leading position in the frozen industry with Ice-Cream,Milk & Dairy products and expands its product portfolio to the food and beverageindustry mainly with cooking oil, instant noodles, seasoning seeds, sauces, coffee,convenient packaged foods to take care of Vietnamese family kitchens and meetcustomers’ needs throughout the day

Currently, KIDO is leading the ice cream market with 43.5% market share(According to Euromonitor) and over 30% market share in cooking oil (According

to internal data)

All the staff at KIDO share a common mission and goal – to “Flavor your life” –and to become the leading foodstuff group in Vietnam and the Southeast Asiaregion Aiming to gain an immediate foothold in the foodstuff and spice markets,

as well as to meet consumer requirements, KIDO has invested continuously infactories and on research into new products The group has also signed Mergers &Acquisitions and strategic partnerships in a bid to expand its operations Whenever

a new product is launched onto the market or a partnership is signed, it marks astep forward in KIDO's development, brings the KIDO brand and essential foodproducts closer to Vietnamese consumers

The food product industry:

The vast majority of the food consumed by the world's population is produced through an extensive network of farmers and businesses that make up the food industry The entire spectrum of food production and distribution is included in thefood industry Agriculture and animal husbandry, the manufacture of farm

machinery and agrochemicals, food processing, labeling and packaging,storage, and distribution, regulatory frameworks, finance, marketing, retailing,catering, and research and development are all included.

According to the company's total market share of the entire industry, which ranges from 29% to 30%, KIDO will continue to occupy the No 2 spot in Vietnam's entire industry in 2020 and 2021 KIDO Group Joint Stock Company (KIDO) still reached KIDO's net sales of VND 10,497 billion in 2021 despite the Covid-19 pandemic's effects, an increase of 26.1% over the same period in the previous year

In comparison to 2020, KIDO's after-tax profit increased by 97.3% to VND 653 billion The company's overall industry market share ranges from 30% to 32%, demonstrating that KIDO's market share is still growing year after year

1 Sources and uses of cash analysis

a In 2019 – 2020 period

Figure 1: Sources and uses of cash in 2019 - 2020

Figure 1 shows us sources and uses of cash and its changes in total assets and totalliabilities and equity of Kido Group in the period of 2019 – 2020 Overall, it iscrystal clear that the total assets and the total liabilities and equity of 2019 have anincreased compared to that of 2020

The total assets of Kido Group have increased by nearly 5 thousand billion dongfrom 2019 to 2020 In more detail, there was an significant increase in cash,inventory, other current assets and other non-current assets by about 577, 303, 80and 30 billion dong, respectively, which contribute to the total uses of cash.However, the decrease in account receivables and net FA also made a contribution

to the total uses of cash Although the current account receivables and the term receivables reduced slightly by about 400 billion dong, Kido Group still spent

long-a lot on long-account receivlong-ables (long-approximlong-ately 2328 billion)

Moreover, increase in A/P (244 billion dong), N/P (12 billion dong) and other CL(863 billion dong) also contribute to the sources of cash At the same time, LT debtand C/S decreased, contribute to the uses of cash, but C/S was still spentapproximately 7699 billion dong.

b In 2020 – 2021 period

Figure 2: Sources and uses of cash in 2020 - 2021

Figure 2 also illustrates the sources and uses of cash as well as the changes inKido’s assets and liabilities and owner’s equity in the 2020 – 2021 period Ingeneral, it is clear that there is a significant grow in the total assets and totalliabilities and equity in 2021 compared to that of 2020

In particular, the total assets grew remarkably from about 12,349 billion to 14,072billion in the period between 2020 and 2021, which increase by nearly 1,800billion in 2 years In this period, it is witnessed that there were remarkable increase

in A/P (212 billion dong), N/P (381 billion dong), other CL (997 billion dong) and

LT debt (936 billion dong), which played an important role in increasing thesources of cash Moreover, there were decreases in other current assets (150 billiondong), Net FA (135 billion dong), which also contribute to the sources of cash.Besides, cash, account receivables (both long- term and short-term), inventory andother non-current assets all experienced slight increase in during this time period,

by about 179, 231, 1283, 316 billion donng, respectively These increases made asignificant impact on the uses of cash Moreover, reduced common stock value (by

804 billion dong) was one of the uses of cash

 General comment:

On the whole, the total assets and total liabilities and equity of Kido Group grewsteadily in from 2019 (11,932 billion) to 2021 (14,072 billion), resulting a shift ofabout 2,140 billion dong Moreover, the sources of money and the uses of money

in the period 2020-2021 are more than 1,000 billion higher than the period

2019-2020 In which, in the period of 2020-2021, due to the Covid-19, the company wasexperiencing expenses and debts as well as increasing storage of goods in order tokeep firm running and compete with other rivals in the industry As a result, theincreases in long-term debts and inventory had led to the more cash use

2 Standardized balance sheets:

Figure 3: Common-size balance sheet in 2019 - 2021 (Assets)

Figure 4: Common-size balance sheet 2019 - 2021 (Liabilities & Equity)

From Figure 3 and Figure 4, from 2019 to 2021, the assets and liabilities andequity makeup altered, and each item is calculated as a percentage of the totalassets Overall, it is witnessed remarkable changes in the percentage of cash,inventories, net FA and other assets (both current and non-current) which led tochanges in total current and non-current assets

Cash and cash equivalent increased notably from 2019 (4,40%) to 2020 (8,92%),then grew slightly to 9,10% in 2021 This is related to Kinh Do reducing theproportion of investment in short- term and long-term assets, instead choosing tostore cash and cash equivalents In which, the ratio of other current assets increasedslightly by 0.44% in 2020, but decreased by 1.90% in 2021 Besides, the ratio ofother non-current assets also decreased steadily from 2019 to 2021, from 34 42%down to 31.65% Reducing the ratio of short-term assets also shows thatenterprises reduce the scale of production

The proportion of short-term receivables in total assets from 2019 to 2021 issomewhat positive because it continuously decreased from 22.83% to 18.14%.This proves that the company has quite good control over debt management andhas effective trade credit policies during this period

Inventory accounts for a large proportion of total assets The inventory ratioincreased slightly in 2019-2020, from 7.61% to 9.81% However, from 2020 to

2021, the inventory ratio nearly doubled, to 17.73%, although most of Kinh Do'sproducts are seasonal and have a short shelf life This shows that the company isnot really using capital effectively In addition, the increase in inventory ratio is

also due to the impact of Covid-19, causing the demand for goods to decrease andincrease the inventory of Kinh Do.

The proportion of net fixed assets gradually decreased over the years, decreasingfrom 23.90% (2019) to 21.67% (2020) and 18.06% (2021)

Account payables increased from 2019 to 2020 by 1.86%, but it rose by 0.86% inthe period of 2020-2021 Note payables grew 2.13% throughout the 3 years Long-term debt ratio accounted for a fairly high ratio in 2021 Although in 2019-2020,the debt ratio decreased slightly from 9.15% to 6.84%, but increased sharply in

2021 with 12.65% C/S from 68.35% in 2019 to 48.99% in 2021 The proportion

of liabilities tends to increase over the years but is still under control, showing thatthe company is having smart business policies

3 Standardized income statements:

Figure 5: Kido Group's 2019 common-size income statement

Figure 6: Kido Group's 2020 common-size income statement

Figure 7: Kido Group's 2021 common-size income statement

For the income statement, each line item is converted to a percentage of net sales

In general, managers and investors want costs as a proportion of net sales to godown over time while earnings as a percentage of net sales rise Kido's Cost ofGood Sold (COGS) increased with time, going from 73.18% in 2019 to 78.40% in

2021, as shown by Figures 5, 6, and 7 This cost component accounts for themajority of the company' overall cost The cost of goods sold for the businessincludes both the price of delivered services and finished goods Due to theCOVID-19 pandemic that occurred in the latter part of 2019, more items wereconsumed, the company's production capacity was increased, and themanufacturing requirements were raised, all of which raised the cost of goodssupplied Sales increased as a result of the increase in COGS Additionally, thecosts of doing business, such as selling charges, administrative costs, and otherexpenditures, significantly decreased in 2021 to 13.56%, whereas they stayed at17.36% and 21.09% in 2020 and 2021, respectively Reduced costs for clienttransportation, employing sales employees, buying equipment, and acquiring salestools all contributed to this decline Additionally, the decreased cost of outsourcingservices, recruiting managerial staff, and depreciating physical assets used in theoffice all made a significant contribution to the cost reduction It is also important

to note that the figure for interest expense decreased slightly over the three-yearperiod, from 2.01% (2019) to 1.65% (2021) But during the past three years,Earning Before Interest and Taxes has significantly increased, going from 5.73% in

2019 to 8.04% in 2021 This is so that the increase in COGS does not stand out asmuch as the decrease in costs Again, though, the rise in Earnings Before Interestand Taxes was so notable in comparison to the decline in interest expense that itcaused Taxable Income to rise continuously over time Additionally, taxes weredrastically reduced from 1.0% in 2019 to 0.32 in 2021, which caused a net incomegrowth that was more than twice as large in 2021 as it was in 2019 (6.06% vs.2.72%)

To summarize, the business has consistently produced excellent results,particularly during the Covid-19 epidemic of 2021 Regarding costs, cost of goodssold, and taxes, the corporation revenue has been sharply rising.

4 Financial ratios analysis:

2020 and 1,30 in 2021 of current assets were secured The current liquidity ratios

of the firm were much lower compared to the Industry average which was 2,08 times This could indicate that the business may be at risk of default

do hàng tồn kho tăng và các khoản nợ lưu động tăng nhanh So sánh với trung bình

ngành, tại năm 2019, tỷ lệ thanh toán nhanh nằm ở ngưỡng đẹp, cao hơn mức trungbình ngành (1,43 times) là 0,06 times Tuy nhiên, trong 2 năm tiếp theo, tỉ lệ thanhtoán nhanh của doanh nghiệp giảm nhanh còn 1,12 times ở năm 2020 và 0,84 times

ở năm 2021, đều thấp hơn trung bình ngành là 1,43 times (by 0,31 times (2020) and 0,56 times (2021)) Điều này cho thấy khả năng Công ty với các tài sản ngắn hạn không tính đến hàng tồn kho, không đủ để thanh toán cho các khoản nợ ngắn hạn Thecompany need either increase current assets or reduce current liabilities

b Financial leverage ratios:

Figure 9: Financial leverage ratio

Total Debt ratio:

Total Debt ratio = Total debt ( TD ) = TA−TE – Total Debt to total assets is a ratio

Totalasset (TA) TA

which visualize how financially stable a company is Throughout the period from

2019 to 2021, the Kido’s debt tends to increase, from 0,316 to 0,510 However, theratio still remained at a safe level, still around 0,5 and below industry average Itdemonstrates that the corporation had a large degree of financial independence,and the majority of its assets were funded by stock

Equity Multiplier:

Equity Multiplers (EM) = TA TE =1+TD

TE – The equity multiplier is a risk

indicator that measures the portion of a company’s assets that is financed bystockholder’s equity rather than by debt The equity multiplier ratio of Kinh Do in

2019, 2020 was lower than the industry average, which is 1,77 In 2021, however,the ratio grew to 2,04, 0,27 times higher than the industry average The ratioindicates that the company is using a high amount of debt to finance assets andmore reliance on debt As a result, Kido carried more financial leverage, whichcould be financially riskier