Apply financial statement analysis on traphaco joint stock company tra

NATIONAL ECONOMICS UNIVERSITY CENTER FOR ADVANCED EDUCATIONAL PROGRAMS ---ASSIGNMENT APPLY FINANCIAL STATEMENT ANALYSIS ON TRAPHACO JOINT STOCK COMPANY TRA Subject: Financial Reporting a

NATIONAL ECONOMICS UNIVERSITY CENTER FOR ADVANCED EDUCATIONAL PROGRAMS

-ASSIGNMENT

APPLY FINANCIAL STATEMENT ANALYSIS ON TRAPHACO JOINT

STOCK COMPANY (TRA)

Subject: Financial Reporting and Analysis

Hanoi, 2018

TABLE OF CONTENT

INTRODUCTION 1

I An overview of TRAPHACO 2

II Financial statement analysis 5

1 The liquidity of short-term assets and the short-term debt-paying ability 5

2 The long-term debt-paying ability 8

3 Profitability 9

4 Appendix 11

INTRODUCTION

Financial analysis is the process of reviewing and evaluating a company’s financialstatements to get acknowledged of the financial health of the company and assist in moreeffective decision making of investors, creditors, management and other users

I am using the case of TRAPHACO to apply financial analysis The analysis will befocusing on TRAPHACO’s liquidity of Short-Term Assets; Related Debt-Paying Ability,Long-Term Debt-Paying Ability and Profitability through presentation of financialstatement and calculation of financial ratios

Products Pharmaceutical and Medical

Country of origin Vietnam

May 16,

1994

First used the name TRAPHACO and served as pharmaceutical &medical material - equipments Company - Ministry of Communicationsand Transport

September

27, 1999

Equitized into a joint stock company: Pharmaceutical and medicalmaterial and equipments Joint Stock Company - Ministry ofCommunications and Transport

July 5, 2001 Changed the company’sCompany. name into TRAPHACO Joint Stock

2006 Set up Traphaco High-Technology Joint Stock Company (Traphaco CNC).

2009 Traphaco was recognized as the No 1 pharmaceutical brand in Vietnam.

Received National Quality Gold Award 2015

Be in top 40 and top 50 listed companies in Vietnam

Be in top 10 Prestigious Pharmaceutical Company of Vietnam 2016 Be selected as National Brand – Vietnam Value

TRAPHACO’S BUSINESS SCOPE

» Produce and trade pharmaceutical products, chemicals and medical equipment, liquors, beers and beverages (excluding bar operation)

» Purchase, cultivate and process pharmaceutical herbal ingredients

» Manufacture prescription medicines

» Import and export pharmaceutical materials and products

» Produce and trade cosmetics and foods

» Provide consulting services and technology transfer in medical and pharmaceutical fields

II Financial Statement Analysis

1 The liquidity of short-term assets and the short-term debt-paying ability

1.1 Financial ratios analysis

131,074+4,8191,870,442/365

2 Accounts Receivable Turnover (b)

=Average Gross Receivables Net Sales

1,998,334[147,048+233,843

1,870,442

[135,893+147,0482 ]

3 Accounts Receivable Turnover in Days=

Average Gross Rece ivables

Net Sales/365 =

365(2)

36510.49

36513.22

334,029829,784/365

3653.24

3652.63

745,856380,753

Cash Equivalents+ Marketable Securities

Current Liabilities

12 Sales to Working Capital=

Sales Average WorkingCapital

1,998,334(636,599+486,814)/2

1,870,442(486,814+365,103)/2

Days’ Sales in Receivables

Years Ended December 31, 2017 and 2016

Accounts Receivable Turnover

Years Ended December 31, 2017 and 2016

Provision for doubtful debts:

End of 2017 4,819

End of 2016 3,975

End of 2015 5,339

 The decrease in Days’ Sales in Receivable from 26.86 days at the end of 2016 to 26.52 days

at the end of 2017 indicates a positive trend in the control of receivables

 The turnover of receivables increased between 2016 and 2017 from 10.49 times per year to 13.22 times per year For Traphaco, this would be a positive trend

 The number of days’ sales in inventory has increased from 111.40 days at the end of 201 to 146.93 days at the end of 2017 This represents a negative trend

 Inventory turnover indicates the liquidity of the inventory For Traphaco, the inventory turnover decreased from 3.24 to 2.63

 There was an increase in inventory turnover in days for Traphaco from 112.65 days in 2016

to 138.78 days in 2017 This represents an unfavorable trend

 For Traphaco, the operating cycle increased, which is a negative trend The 2017 Traphaco data produced a days’ sales in ending receivables of 26.52 days and a days’ sales in ending inventory of 146.93 days, for a total of 173.45 days In this case, there is an increase,

considering the year-end number This indicates less liquidity at the end of year than during the year

 Traphaco had approximately 486,814,000,000 VND in working capital in 2016 and

 The cash ratio was 0.61 at the end of 2016 and 0.45 at the end of 2017 Traphaco’s cash ratio decreased materially at the end of 2017 in relation to the end of 2016

 The sales to working capital ratio increased from 2016 to 2017, 3.56 and 4.39 times

respectively This tentatively indicates a slightly more profitable use of working capital in

2017 in comparison to 2016

 In summary, most of the ratios had a negative trend, it means that Traphaco JSC may not

be in a good position liquidity as indicated by the ratios, so it is necessary for the firm to improve its liquidity

2 The long-term debt-paying ability

2.1 Financial ratios analysis

Ratios 2016 2017

1 Times Interest Earned=

Recuring Earnings , Excuding Interest

Expense , Tax Expense , Equity Earnings

¿Noncontrolling Interest Interest Expense , Including Capitalized Interest

283,179+898898

322,649+2,5832,583

¿Noncontrolling Interest +Interest Portion of Rentals

Interest Expense , Including Capitalized Interest +Interest Portionof Rentals

283,179+898+1,938898+1,938

322,649+ 2,583+2,8972,583+2,897

390,8541,118,848

390,8541,118,848−44,463

3 Profitability

3.1 Financial ratios analysis

1 Net Profit Margin

=

Net Income Before Noncontrolling Interest ,

Equity Income∧Nonrecurring Items

Net Sales

210,5961,998,334

241,1031,870,442

2

Total Asset Turnover

=Average Total Assets Net Sales

1,998,334(1,296,523+1,377,454

1,870,442(1,377,454+1,509,702

2

241,1031,377,454+1,509,702

323,6631,870,442

2

1,870,4421,172,947+1,348,799

2

323,6631,172,947+1,348,799

2

8 DuPont Return on Operating Assets =

Operating Income Margin× Operating Asset Turnover

= (5) × (6)

9 Sales to Fixed Assets =

Net Sales Average Net

¿ Assets(Exclude Construction¿¿Progress)¿

1,998,334240,255

1,870,442465,325

10 Return on Investment

Net Income before Noncontrolling Interest

¿Nonrecurring Items

+[(Interest Expense )× (1−Tax rate)]

Ave rage (Long−term Liabilities+Equity)

Net Income before Nonrecurring Items−¿÷idends on Redeemable Preferred Stock

Average Total Equity

210,596990,8092

241,1031,066,806

241,1031,066,806

1,870,442−829,7841,870,442

3.2 Comments

Most of the ratios in 2017 of Traphaco JSC are higher than previous year except Total Asset Turnover and Operating Asset Turnover ratio These result express the fact that this company run this operation better than that of 2016 and it should maintain this.

APPENDIX

1 Balance Sheet at the end of 2017

12

2 Income Statement at the end of 2017

14

3 Balance Sheet at the end of 2016

16

4 Income Statement at the end of 2016

20