Final report analysis of the financial situation at bibica joint stock company

DA NANG UNIVERSITY VIETNAM – KOREA UNIVERSITY OF INFORMATION AND COMMUNICATION TECHNOLOGY FACULTY OF DIGITAL ECONOMY & E – TRADE FINAL REPORT ANALYSIS OF THE FINANCIAL SITUATION AT BIBICA JOINT STOCK[.]

DA NANG UNIVERSITY VIETNAM – KOREA UNIVERSITY OF INFORMATION

AND COMMUNICATION TECHNOLOGY

FACULTY OF DIGITAL ECONOMY & E – TRADE

- -FINAL REPORT:

ANALYSIS OF THE FINANCIAL SITUATION AT

BIBICA JOINT STOCK COMPANY

Instructor: Ph.D NGUYEN THI THU DEN

Student group made: PHAM SY DUC TRI

TRAN THI ANH TUYET

DO THI CAM VAN PHAN QUE CAM XUAN NGUYEN THI YEN

Da Nang, January 2023

DA NANG UNIVERSITY VIETNAM – KOREA UNIVERSITY OF INFORMATION AND

COMMUNICATION TECHNOLOGY FACULTY OF DIGITAL ECONOMY & E – TRADE

- -FINAL REPORT:

ANALYSIS OF THE FINANCIAL SITUATION AT

BIBICA JOINT STOCK COMPANY

Student group made: PHAM SY DUC TRI

TRAN THI ANH TUYET

DO THI CAM VAN PHAN QUE CAM XUAN NGUYEN THI YEN

Da Nang, January 2023

CHAPTER 1: BIBICA COMPANY OVERVIEW 2

1.1 History of formation and development 2

1.2 Organizational structure 5

1.3 Core values, vision and mission 6

1.4 Business sectors 6

CHAPTER 2: ANALYSIS OF THE FINANCIAL SITUATION OF BIBICA COMPANY 8

2.1 Block analysis and index analysis 8

2.2 Parameter analysis 10

2.2.1 Solvency 10

2.2.2 Debt parameters 12

2.2.3 Profitability 18

2.2.4 Market Specs 21

CHAPTER 3: CONCLUSION 24

3.1 Financial results 24

3.2 Finincial constraints 25

3.3 Some solutions to improve the financial strength of the company 26

LIST OF TABLES

Table 2 1: Block and index analysis with company balance sheet 8

Table 2 2: Block and index analysis with the company's income statement 9

Table 2 3: Bibica's solvency parameter 10

Table 2 4: Analysis table of debt parameters for the period of 2019-2021 12

Table 2 5: Return on total assets 19

Table 2 6: Return on equity 19

Table 2 7: Return on sales 20

Table 2 8: Market parameters 21

LIST OF FIGURES

Figure 1 2: Organization structure 5

Figure 1 3: Business products 7

Figure 2 1: Debt-to-equity parameters of Bibica 2019 – 2021 13

Figure 2 2: Bibica's debt-to-asset ratio 2019 – 2021 15

Figure 2 3: Long-term debt to long-term capital ratio of Bibica 2019 – 2021 16

Figure 2 4: Number of times to guarantee loan interest 18

CHAPTER 1: BIBICA COMPANY OVERVIEW

1.1 History of formation and development

In 16/01/1999, Bien Hoa Confectionery Joint Stock Company with the brandname Bibica was established from the equitization of three workshops: Cake, Candyand Malt of Bien Hoa Sugar Company Charter capital is 25 billion VND Expand andincrease the capacity of the soft candy production line to 11 tons/day

Figure 1 1: Bibica's logo

2000: develop distribution system according to new model Establish branches inHanoi, Da Nang, Ho Chi Minh City, Can Tho; Invest in a production line ofIndonesian origin snacks with a capacity of 2 tons/day The company is honored to bethe first unit in the confectionery industry in Vietnam to be granted the certificate ofISO 9001 standard by the British organization BVQI

2001: increased charter capital from VND 25 billion to VND 35 billion fromaccumulated capital after 2 years of operation with a joint stock company legal entity.July: Raised charter capital to 56 billion dong September: Invest in a production line

of mooncakes and cookies with a capacity of 2 tons/day with a total investment of 5billion VND November: The company was licensed by the State SecuritiesCommission to list on the stock market and officially traded at the Ho Chi Minh City

Stock Exchange Center from the beginning of December 2001 At the end of 2001, theCompany installed the production line of high-class Hura cream sponge cake withEuropean origin, with a capacity of 1,500 tons/year, with a total investment of up toVND 19.7 billion.

2002: April: Established Bien Hoa II Confectionery Factory at Sai Dong BIndustrial Park, Long Bien, Hanoi October: Put into operation the chocolate line withmodern British technology Bibica's Chocobella products quickly became familiar withdomestic consumers At the end of 2002: The company implemented the project ofexpanding the Snack line to increase the capacity to 4 tons/day

2004: Invested in the overall enterprise management system ERP Cooperatewith the Vietnam Nutrition Institute to coordinate research and production ofnutritional products, meeting the desire to use healthy products of consumers

In the first year of 2005, with the advice of the Vietnam Institute of Nutrition, theCompany launched a line of nutritional products for children, pregnant and lactatingwomen, dieters, and people with diabetes

In 2006: built a new factory on an area of 4 hectares in My Phuoc I industrialzone, Binh Duong province Phase 1 The company invests in a production line toproduce high-class Hura cream cakes of European origin with a capacity of 10tons/day

2007: Bien Hoa Confectionery Joint Stock Company officially changed itsname to "Bibica Joint Stock Company" since January 17, 2007 At the ExtraordinaryGeneral Meeting of Shareholders on September 22, 2007, the Company adjusted andsupplemented the plan to issue 9.63 million shares in phase 2 out of a total of 11.4million additional shares issued in 2007 of the company On October 4, 2007, thesigning ceremony of the strategic cooperation contract between Bibica and Lotte tookplace According to the cooperation program, Bibica transferred to Lotte 30% of thetotal shares (about 4.6 million shares) )

2008: Bibica invested in building 443 Ly Thuong Kiet, HCMC This locationbecame the official headquarters of the Company from the beginning of 2008 In

March 2008, Bibica's Annual General Meeting of Shareholders was held, with theparticipation of Lotte major shareholders for the first time The meeting approved thenew Board of Directors, in which: o Mr Dong Jin Park represents Lotte's capital aschairman of the Board of Directors Mr Truong Phu Chien has held the position ofVice Chairman of the Board of Directors cum General Director of Bibica Joint StockCompany since March 1, 2008 to present.

2009: In March 2009, Bibica's Annual General Meeting of Shareholders washeld, the meeting approved a new management board, in which: Mr Jung Woo, Leerepresenting Lotte's capital holding the position of Chairman of the Board of Directors

In April 2009, the Company started construction of a high-class Chocopie productionline in Eastern Bibica, this is a line invested on the basis of the cooperation of Bibicaand strategic partner Lotte Group Korea In October 2009, the Company invested inbuilding a dormitory for employees in Bibica Mien Dong, in My Phuoc 1 IndustrialPark, Ben Cat, Binh Duong with an investment capital of about 5 billion VND, putinto use within a month 03/2010; In November 2009, the Company boldly investedand put into use the M-Office electronic office system to improve managementefficiency and minimize administrative costs and stationery

2010: Chocopie line officially came into operation at the end of February 2010;2011: comprehensively reformed the sales system, opened more distributors, andincreased the number of sales personnel Sales in 2011 reached over 1,000 billion forthe first time

2012: invest in a DMS sales management system and complete the evaluationsystem for the sales force and distributors; Upgraded the overall ERP businessmanagement system to ERP R12 version with a cost of 4 billion VND and officiallycame into operation in December 2012

2014: Invested in sales support tools with PDA devices, in order to control andmotivate employees to visit online stores and transfer orders to Distributorsimmediately; Invest in an information technology safety system and put it into usesince September 2014 to ensure the operational safety of the information technologyinfrastructure system in case of power failure, fire or explosion

In 2015: successfully applied MFCA in production, controlling waste inproduction more effectively and thoroughly - 2016: For the first time, sales reachedover 1,250 billion VND and continued to be voted by consumers as high qualityVietnamese goods for 21 consecutive years.

In 2017: put Hifat premium candy production line into operation, launchingAHHA premium milk candy to the market The company is deploying software tosupport business management: Production moderation on ERP, BI leadership reportand Sales App for Shop key

4 - K.HC: Administration and Human Resources Division

5 - K.KT: Accounting and Finance Division

6 - K.MT: Marketing Division

7 - CÔNG TY BBC BIÊN HÒA: Bibica Bien Hoa One Member Co., Ltd

8 - CÔNG TY BBC MIỀN ĐÔNG: Bibica Mien Dong Co., Ltd

9 - CÔNG TY BBC HÀ NỘI: Bibica Hanoi One Member Co., Ltd

10 - CÔNG TY BBC MIỀN TÂY: Bibica Mien Tay Co., Ltd

1.3 Core values, vision and mission

Core values of Bibica:

- Providing customers with products with nutritional value, ensuring food safetyand hygiene, beautiful and attractive appearance, all for the health and preferences ofcustomers

- Continuously improve the management to improve the quality of products andservices to get the best products and services at the best prices

- Maintain mutually beneficial relationships with agents, distributors, suppliersand other business partners

- Comply with state regulations, ensure food hygiene and safety conditions forproducts manufactured at the company

- Be socially responsible, make positive contributions to society, protect theenvironment for the quality of life of the community

Vision: Vietnam's leading confectionery company

Mission:

- Consumer benefits: nutritional value and food safety and hygiene

- Social benefits: 100 classrooms, 1000 scholarships

-Import equipment, technology and raw materials for production of the Company.Invest in and develop production of new product groups: cereal powder, nutritionalpowder, beverage powder, candies and tablets.

Figure 1 3: Business products

Bibica currently has 117 distributors, agents and 250 supermarket chains in allprovinces and cities nationwide and exports to all markets in Asia, Europe andAmerica

CHAPTER 2: ANALYSIS OF THE FINANCIAL SITUATION

OF BIBICA COMPANY 2.1 Block analysis and index analysis

In addition to analyzing financial figures over time, presenting the balance sheetand income statement as a percentage provides a wealth of useful information to the

analyst The percentage number can be placed in relation to a total, such as total assets

or total sales, or relative to the base year Although part of the financial picture has

been formed from the analysis of financial parameters, these trends can be better

understood by expanding the analysis of omissions In addition, these two new

analytical methods are particularly useful when comparing companies of different

sizes because each item in the financial statements is placed on a relative or standard

basis

Block analysis and method of representing balance sheet items as a percentage

of total assets and income statement items as a percentage of sales Expressing

financial statement items as a percentage of totals helps analysts see structural trends

Block analysis for balance sheets will give you a very clear picture of changes in asset

structure and capital structure

Index analysis is a method of analyzing financial statements in such a way thatmanagers compare the items in the statements to historical values Analysts can use

this method to compare trends over time for each item in a report

Table 2 1: Block and index analysis with company balance sheet

Currency unit (Dong) Block analysis (%) Index analysis (%) ASSETS 2019 2020 2021 2019 2020 2021 2019 2020 2021

Cash and cash

equivalents 403.522.192.255 112.811.737.101 202.816.924.776 25,69 7,31 12,37 100 27,96 50,26Short-term

financial

investments

133.326.721.

731 97.438.671.054 5.383.495.065 8,49 6,31 0,33 100 73,08 4,04Short-term

receivables 152.453.251.292 348.649.851.196 208.097.331.170 9,71 22,5 12,69 100 228,69 136,50Inventories 116.077.819.258 126.216.676.633 85.603.515.584 7,39 8,18 5,22 100 108,73 73,75 Other short-term

assets 36.152.641.425 32.473.522.128 76.329.585.168 2,30 2,10 4,66 100 89,82 211,13

Long-term

unfinished assets 192.505.155.285 2.450.489.091 201.918.522.924 12,26 0,16 12,32 100 1,27 104,89Long-term

liabilities 18.407.532.761 16.535.537.926 137.833.705.658 1,17 1,07 8,41 100 89,83 748,79LIABILITIES 566.570.957.632 447.380.119.508 658.073.870.149 36,08 28,99 40,14 100 78,96 116,15 Equity 154.207.820.000 154.207.820.000 154.207.820.000 9,82 9,99 9,41 100 100 100 Share premium 302.726.583.351 302.726.583.351 302.726.583.351 19,28 19,62 18,46 100 100 100 Development

investment funds 452.168.025.639 542.830.667.221 579.101.429.954 28,79 35,18 35,32 100 120,05 128,07Undistributed

post-tax profits 94.774.947.709 95.956.985.973 21.740.870.771 6,03 6,22 1,33 100 101,25 22,94OWNER’S

EQUITY 1.003.877.376.699 1.095.722.056.545 981.464.266.337 63,92 71,01 59,86 100 109,15 97,77

TOTAL

CAPITAL 1.570.448.334.331 1.543.102.176.053 1.639.538.136.486 100 100 100 100 98,26 104,40

Table 2 2: Block and index analysis with the company's income statement

Currency unit (Dong) Block analysis (%) Index analysis (%)

sold 1.019.916.536.412 889.301.451.589 770.006.470.567 67,83 72,98 70,57 100 87,19 75,50Gross profit from

goods and 483.644.701.907 329.254.876.537 321.167.969.567 32,17 27,02 29,43 100 68,08 66,41

services sold

Revenue from

financial activities 19.814.936.319 24.488.490.348 13.011.769.079 1,32 2,01 1,19 100 123,59 65,67Net profit from

business activities 110.079.032.781 28.366.706.524 23.912.383.265 7,32 2,33 2,19 100 25,77 21,72Other incomes 11.261.771.012 97.421.443.406 10.333.029.013 0,75 7,99 0,95 100 865,06 91,75 Other expenses 798.992.720 2.938.754.298 4.352.824.162 0,05 0,24 0,40 100 367,81 544,79 RESULTS

FROM OTHER

ACTIVITIES

10.462.778.2

92 94.482.689.108 5.980.204.851 0,70 7,75 0,55 100 903,04 57,16Profit before tax 120.541.811.073 122.849.395.632 5.980.204.851 8,02 10,08 0,55 100 101,91 4,96 Current income

tax expense 25.583.425.425 27.067.868.419 5.427.013.527 1,70 2,22 0,50 100 105,80 21,21Deferred income

rapidly converting cash assets to meet its short-term financial obligations With that in

mind, we compare short-term debt obligations with the short-term resources available

to meet these obligations At the same time, we also consider the correlation between

low-yielding fixed assets that can be converted into cash quickly on the one hand and

low-cost liabilities that the borrower must regularly use on the other deal with the

payment of due debts This parameter group includes 6 indicators as follows:

Table 2 3: Bibica's solvency parameter

INDICATORS FORMULA

JOINT STOCK COMPANY BIBICA BRANCH

Customer

receivables

turnover

Credit revenue Average receivables¿customers¿ 9.86 3.50 10.49 5.18 4.49

1 dong of short-term debt, the company will have 1.54 dong of short-term assets tofinance that one short-term debt and by 2020 it will increase 1.67 dong This parameterover 3 years is greater than 1, this period shows the company's high debt repaymentability

Usually, a higher current ratio gives the impression of a greater ability to repay,but this parameter does not take into account the transferability of each asset in theCurrent Assets group Therefore, we turn to another more rigorous tool to check thecompany's solvency, which is the quick ratio

This parameter focuses mainly on assets that are more convertible to cash such ascash, negotiable securities and trade receivables From Table 2.3, we can see thatBibica's quick solvency fluctuates over the years From 1.32 in 2019 increased to 1.37

in 2020, by 2021, it decreased to only 0.95 In 2019, one dong of the company's term debt is being secured by 1.32 dong of short-term assets after deducting inventory

short-Or it can be said that for every VND of short-term debt, there will be VND 1.32 of

highly convertible assets to finance This number increased the following year with anindex of 1.37.

Continue with the accounts receivable turnover parameter Bibica's receivablesturnover ratio in the last 3 years has fluctuated Specifically, the number of timescustomer receivables were converted into cash in 2019 was 9.86, decreased to 3.50 in

2020 and increased sharply to 10.49 in 2021

For the average collection period parameter, it shows the number of days salesremain in receivables until it is collected and converted to cash This parameter ofBibica in the last 3 years has fluctuated strongly In 2019 it is 36.51 increasing to102.86 in 2020, in 2021 this index will decrease to 34.32

To understand the effectiveness of the company's inventory management, weconsider the inventory turnover parameter Bibica's inventory turnover numberfluctuates from 2019 to 2021 Specifically, in 2019 the inventory turnover is 8.79rounds, in 2020 it will decrease to 7.05 rounds and in 2021 it will increase to 9.00rounds This parameter shows the number of times the inventory converted intoreceivables through sales activities of Bibica during the year decreased year by year.Compared to the industry average, Bibica's receivable turnover is higher Thiscomparison shows that the company's inventory management in 2021 is more effectivethan in previous years and Bibica is maintaining inventory better than its peers

For the inventory conversion cycle, this parameter shows how many days thecompany's inventory holdings increase or decrease each year Looking at Table 2.3,

we see that there is not much difference In 2019 from 40.96 days increased to 51.06days in 2020, and in 2021 decreased to 40.00 days The daily trend reflects theincreasing length of inventory holding times, with the company having to storeinventory within 40 days This negatively affects cash flow and reduces the liquidity ofthe company

2.2.2 Debt parameters

Table 2 4: Analysis table of debt parameters for the period of 2019-2021

INDICATORS FORMULA

JOINT STOCK COMPANY BIBICA INDUSTRY AVERAGE

2.2.2.1 Debt-to-equity ratio

This indicator reflects the level of use of debt capital of the company Thisparameter also shows how many coins of financing are provided by creditors for eachdollar provided by shareholders Or how many dong of capital guarantees a loan,

The formula for calculating the debt-to-equity ratio:

Debt to Equity (RD/E) = Total Debt / Total Equity

Figure 2 1: Debt-to-equity parameters of Bibica 2019 – 2021

Looking at figure 2.1, we see that Bibica's debt-to-equity (RD/E) ratio hasincreased and decreased over the years and remained at less than 1 Normally, if thisratio is less than 1, the company's assets The company is financed mainly by equity,whereas the company's assets are financed mainly by debt Specifically:

- In 2019, for every dong of equity, there were VND0,564 long-term loans Inother words, creditors provide 0.58 dong of financing for every dollar of capitalprovided by shareholders

- This RD/E parameter's ratio is 0.408 in 2020 In other words, 0.408 is insured for

a loan for each and every dollar of equity

- In 2021, for every dong of equity, there will be 0.671 dong borrowed

- We can see that the company's RD/E parameter in 2020 is lower than in 2019,namely 0.156 lower And RD/E in 2020 is 0.263 lower than 2021

- The reason for the increase and decline over time is that long-term debtincreases while short-term debt, which includes payables to sellers and prepayment bypurchasers, drops, causing an uneven growth and fall in overall debt over time Equityrises from 2019 to 2020, then declines from 2020 to 2021 This demonstrates that thecorporation has enough of corporate capital from equity, little external debt, and is notunder a lot of strain from 2019 to 2020 The forces of business and finance are strong,

or, to put it another way, they tend to improve The company's external debt is higher

in 2021 than it was two years prior, and equity is also declining

Table 2.4 shows that the company's debt-to-equity ratio in 2020 and 2021 islower than the sector average In particular, in 2020 and 2021, the industry averageswill be 1,245 and 1,547, respectively This demonstrates that Bibica's debt-to-equityratio is below the industry norm and has remained below 1, leading one to theconclusion that Bibica's loan usage is better than its competitors This ratio reassurescreditors that the company is not using more debt than is typical for the industry

2.2.2.2 Debt-to-asset ratio

This ratio reflects how well the asset is financed from a four-borrowed source.This information shows how much of a company's assets are financed by debt That is,