Organizational structure
The board of directors holds the authority to appoint the general director and vice directors of the company They are responsible for establishing both current and future strategies, as well as overseeing financial management.
The director holds the ultimate responsibility for the company's activities and development, possessing the authority to restructure teams beneath the vice directors They make informed decisions based on reports from vice directors and have the power to terminate employees across all departments Additionally, the director bears legal responsibility for company decisions and is authorized to sign contracts.
The Vice General Director oversees several key departments, including the Business Department, Project Management Department, Office of Administrative Organization, Planning and Engineering Department, and Financial-Accounting Department This role involves making decisions on new ideas proposed by staff, ensuring they are communicated effectively to the director, and analyzing contracts to support the organization's objectives.
- Business department: conducting market analysis, building business networks, negotiating and sending the contracts to vice general directors
- Project management department: organizing construction activities, consulting on issues related to the project’s processing management At the same time, searching and finding the most effective plans to develop projects
The Engineering Department plays a crucial role in advising on the progress of production and business plans, ensuring alignment with the company's development objectives It is responsible for investment planning and construction activities, organizing the necessary vehicles, tools, and staff to facilitate efficient operations.
- Financial-accounting department: advising and assisting in the fields of finance and accounting; capital and asset management; internal inspection and control; cost management and economic performance analysis
The Office of Administrative Organization is responsible for the systematic organization and training of personnel, overseeing all company activities It focuses on planning, arranging, and methodically training staff to align with the specific tasks required during each period.
2.1.4 Business orientation of SONG MINH Development Investment
Join Stock Company toward 2030 luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si
Aiming to establish itself as a reputable leader in construction, technical infrastructure, and transportation, the company is committed to delivering high-quality and effective products The COVID-19 pandemic significantly slowed progress on the "Nam Cum 4" project; however, the company is actively working to expedite the completion of this and three other remaining projects Once finished, the company will be well-positioned to engage in additional projects or residential construction.
The company is diversifying its operations by venturing into tea production, environmental treatment, and agricultural land improvement using Japanese BiO technology, while primarily focusing on distributing Japanese iron paint in Vietnam Staff members have conducted extensive research on Japanese iron paint, comparing it with local products, although further testing under harsh conditions is required Once finalized, product samples will be distributed to local shops for feedback and to identify potential retailers Transportation logistics will be influenced by the construction site of Song Minh, and the company's website is currently under development, with plans to launch the products in 2028.
On the other hands the company also have a big side project is the
SongMinh tea is a premium Vietnamese specialty known as "Shan Tuyết" tea, characterized by its large gray-white buds and a fine layer of white fluff, earning it the nickname "snow tea." This tea features a soothing aroma, a yellow hue, and a honey-like consistency It is traditionally processed using manual methods by the ethnic Tay, H'mong, and Dao communities The SongMinh tea product line is diverse, including varieties such as Dragon-tail tea and "Bach tra."
Source: Song Minh profile’ documents
Business orientation of SONG MINH
Investment Join Stock Company in the period of 2018-2020
The world’s economy according to the United Nation (2018, 2019, 2020):
In 2018, over half of the world's economies experienced accelerated growth, with developed economies achieving a steady growth rate of 2.2% Several nations approached their potential growth, leading to significantly low unemployment rates Meanwhile, East and South Asia, as developing regions, demonstrated strong growth trajectories of 5.8% and 5.6%, respectively Additionally, many commodity-exporting countries, especially those exporting gasoline, began to show signs of gradual improvement.
Finishing the large unfinished projects
Japanese iron paint in Vietnam Song Minh Tea
“Shan Tuyet’’ tea research on the paint on some iron surfaces comparing to local products
Construction on housing and others big infrastructure projects
Developing a website luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si
In 2018, global economic growth was stable at 3.1%, driven by fiscal measures in the United States, which balanced out slower growth in other major economies, despite ongoing vulnerabilities to price volatility.
Global economic activity is projected to grow at a solid 3% in 2019, but signs indicate that this growth may have peaked Since early 2018, there has been a slowdown in global industrial output and merchandise trade, especially in the capital and intermediate goods sectors Many countries are expected to experience economic slowdowns in 2019 due to escalating trade conflicts, financial stress, and geopolitical concerns Additionally, several developed economies are reaching capacity limits, which may hinder short-term growth.
In 2019, the global economy experienced its slowest growth since the financial crisis, with a coordinated downturn affecting nearly all major economies Annual growth declined across all regions, with the exception of Africa, and it is anticipated that around two-thirds of countries worldwide recorded lower GDP growth compared to previous years.
In 2019, GDP growth slowed across both developed and developing regions, primarily due to decreasing trade activity and subdued domestic investment This decline was mirrored by a slowdown in world industrial production and a significant drop in the Global Manufacturing Purchasing Managers' Index, reaching its lowest point since 2012 Despite this, private consumption remained relatively strong in many countries, supported by tight labor markets and low inflation However, signs of declining household spending emerged as consumer optimism waned in several global economies.
In 2020, the global GDP is projected to decline by 4.3 percent, marking the most significant decrease since the Great Depression This downturn surpasses the economic challenges faced during the Great Recession of 2009.
In 2020, global output declined by 1.7 percent, significantly impacting developed economies due to stringent lockdown measures implemented by many European governments and certain U.S states It is projected that output in these developed economies will decrease by 5.6 percent, but a recovery is anticipated with a growth rate of 4.0 percent in 2021.
Vietnam’s economy according to General Statistics (2018, 2019, 2020):
In the fourth quarter of 2018, the gross domestic product (GDP) surged by 7.31%, marking a 3.90% increase year-on-year The agricultural, forestry, and fishing sectors, along with construction and industry, experienced a notable growth of 8.65%, while the service sector expanded by 7.61% Although this growth was lower than in 2017, it surpassed the figures from the fourth quarter of 2011-2016 Final consumption rose by 7.51%, gross capital formation increased by 9.06%, and exports of goods and services grew by 10.69%, with imports also rising by 9.5%.
In 2018, GDP growth reached 7.08 percent, the highest since 2008, highlighting the effectiveness of government initiatives and decisive actions across all levels of authority The agricultural, forestry, and fishing sectors contributed 3.76% to the overall growth rate, accounting for 8.7%, while the industrial and construction sectors experienced a growth of 8.85%, representing 48.6% of the total Additionally, the service sector made up 42.7% of the overall growth.
The economy's current-price size was 5,535.3 trillion VND in 2018; GDP per capita was estimated at 58.5 million VND (equal to 2,587 USD), a gain of
In 2018, the agricultural, forestry, and fishing industries accounted for 14.57% of the GDP, highlighting their significant role in the economic structure.
In the economic structure, the industry and construction sector accounted for 34.28%, while the service sector represented 41.17% The product tax less production subsidies was recorded at 9.98% Comparatively, the same figures in the overall economic structure were 15.34% for industry and construction, 33.40% for services, and 10% for product tax less production subsidies.
In 2019, Vietnam's socio-economic landscape was influenced by a slowing global economy, marked by trade conflicts between the United States and China and various geopolitical challenges that undermined global trade and business confidence Fluctuations in international financial markets and oil prices affected credit growth and market sentiment While the macroeconomic system in Vietnam remained stable, the country faced significant challenges, including adverse weather impacting productivity and crop yields, as well as the African swine fever outbreak affecting the livestock industry across all provinces, which hindered the growth of key export products.
In 2019, GDP experienced a notable increase of 7.02%, surpassing the national assembly's target of 6.6% to 6.8% The GDP growth rate reached 7.48% in the third quarter and 6.97% in the fourth quarter Although this growth was higher than the period from 2011 to 2017, it was slightly lower than the 2018 figure of 7.08% The agricultural, forestry, and fishery sector contributed 4.6% to the overall growth, expanding by 2.01% The industrial and construction sector saw a growth of 8.90%, accounting for 50.4% of total growth, while the service sector increased by 7.3%, contributing 45% to the overall growth.
In 2020, the GDP experienced an overall increase of 2.91 percent, with quarterly growth rates of 3.68 percent in the first quarter, 0.39 percent in the second quarter, and 2.69 percent in the third quarter.
In the fourth quarter of 2020, Vietnam experienced a growth rate of only 4.48 percent, marking the lowest rate from 2011 to 2020 Despite the challenges posed by the Covid-19 crisis, which significantly impacted various socio-economic sectors, this achievement is noteworthy Vietnam's development rate in 2020 remains one of the highest globally, highlighting the country's resilience during difficult times.
Assets, Liabilities and Owners' Equity structure of Song Minh
2018 2019 2020 current assets long-term assets liabilities owners'equity luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si
In the balance sheets for 2018, 2019, and 2020, the company reported no long-term assets, primarily due to its small capital size and recent establishment The company was launched to focus on existing projects owned by the founder, leveraging their extensive network and connections for efficiency This strategy allowed the company to rely solely on current assets, eliminating concerns about depreciation Additionally, the owner's evolving mindset and the diverse industries the company can engage in further explain the absence of long-term asset commitments.
Assets structure remained stable with 100% of the total asset is current assets and experienced a slight changes and Capital structure over the time:
- The current assets declined 6.68% in 2019 from 11,773,087,591 to 10,986,718,921 After that in 2020, the company witnessed a significant rise in current assets up to 21.96%, which was 13,399,207,284
- The growth rate of equity in 2019 was faster than its liabilities so that makes the equity bigger than the liabilities The figure for liabilities in
In 2018, the company's liabilities were at 16.1%, but this figure decreased to 9.6% in 2019, primarily due to a reduction in short-term advances from customers This decline in short-term advances contributed to the overall decrease in liabilities for that year However, in 2020, there was a significant increase in short-term trade payables, statutory obligations, and other short-term payables, leading to a rise in total liabilities As a result, the company had to rely on short-term loans and debts, causing liabilities to increase to 22.8% of total equity.
The rise in liabilities indicates the company's growing capital requirements Although the liabilities were not substantial, they highlighted the challenges faced when undertaking several large projects simultaneously.
Source: Song Minh balance sheet
Current assets structure of Song Minh
The current asset structure of Song Minh exhibits significant fluctuations Additionally, the company lacks short-term financial assets and inventories, which is attributed to its operations in the construction services sector.
In 2018, cash constituted a significant 83.4% of total current assets for the company, primarily due to its recent establishment and the need for liquidity to ensure smooth operations This focus on cash management enhanced the company's liquidity efficiency However, in 2019 and 2020, Song Minh restructured its current assets, resulting in a decrease in cash holdings to 23.3% in 2019 and further to 20.7% in 2020.
In 2018, short-term account receivables constituted only 16.6% of current assets due to a significant cash surplus However, this figure dramatically increased in the following years, reaching 76.1% in 2019 and 79.1% in 2020.
2018 2019 2020 cash short-term financial assets short-term account receivable inventories other current assets luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si
The transition from cash to other short-term receivables indicates that the company is undergoing equitization, a strategy that may not be ideal given the capital shortfall reflected in its short-term loans and debts in 2020 Although the company remains fully owned by its original owner, this equitization process could prove beneficial once the company demonstrates its operational efficiency, potentially attracting more capital From the owner's perspective, the short-term receivables, while not cash, allow for the possibility of reallocating funds to other investments, thereby maintaining the company's perceived value among investors despite several incomplete projects.
2.2.2.3 Liabilities and equity structure analysis
Source: Song Minh’s balance sheet
Liabilities and Owners’ Equity structure of Song Minh structure of
2018 2019 2020 owners'equity current liabilities long-term liabilities luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si
The company has no long-term liabilities, as Song Minh determined that several projects will be completed within a year, allowing profits to easily cover any debts Consequently, the company aims to avoid any long-term effects on future cash flow.
Over a three-year period, the Owner's equity experienced fluctuations, hitting its lowest point at 77.2% in 2020 Despite this decline, the share capital of total Owner's equity in 2020 peaked at 10,350,334,907, representing only 77.2% of the total equity.
In 2020, current liabilities represented 22.8% of total equity, reflecting a significant increase of 1.88 times from 2019, rising from \$1,060,108,325 to \$3,048,872,377, primarily due to the emergence of short-term loans and debts This surge was attributed to cash flow challenges faced by the company while managing multiple large projects Notably, in 2018, the proportion of current liabilities peaked at over 20%, largely driven by short-term advances from customers.
At the end of 2020, Song Minh's owner's equity saw a modest increase of only 4.27% compared to 2019 and 4.73% compared to 2018 This indicates that while the company has been able to grow its funds over the past two years, the growth has been minimal The rise in owner's equity primarily stemmed from undistributed earnings rather than an increase in owner’s capital, as the company does not possess any common or preferred stock.
2.2.3 Income statement analysis luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si
1 Revenue from sale of goods and services
3 Net revenue from sale of goods and services
4 Cost of goods sold and services rendered
5 Gross profit from sale of goods and rendering of services
(Source: Song Minh financial statement)
In 2019, the company's revenue from the sale of goods and services reached \$4,927,691,500, marking a substantial increase of 484.85% compared to 2018, driven by the successful completion of a major project.
The "Repairing Ministry of Domestic Affairs" project collected all associated funds In 2020, revenue from the sale of goods and services experienced a slight decline of 18.57% compared to 2019 Over the three-year period from 2018 to 2020, all revenue generated was solely from services, with no contributions from other sources.
45 revenue deductible in three years so Net revenue from sale of goods and services depend on Revenue from sale of goods and services
Over the past three years, the cost of goods sold and services rendered has shown significant variation In 2018, ThanhHung Investment and Construction Joint Stock Company did not initiate any major projects, resulting in a relatively low cost of goods sold and services rendered However, in 2019, the commencement of a project led to a dramatic increase of 472.20% in these costs, reaching a total of 776,606,088.
In 2020, the company experienced a slight decline of 17.75% due to the impact of Covid-19 Both costs and revenues increased significantly, with costs rising by 472.20% and revenues by 484.85% The decreases in 2020 were closely aligned, with costs dropping by 17.75% and revenues by 18.57% This situation highlighted poor pricing negotiations, as the cost-to-revenue ratio was 92.17% in 2018, decreased to 90.18% in 2019, but then rose again to 91.09% in 2020.
Despite an increase in both revenue and costs, the gross profit from the sale of goods and services remains relatively low In 2018, gross profit was \$65,947,546, representing only 8.49% of the cost of goods sold and services rendered Although this figure surged by 633.89% in 2019, it still accounted for just 10.89% of the costs In 2020, gross profit declined by 26.16%, with the proportion falling to 9.78% of the costs These figures highlight a concerning trend of low interest rates and inefficiencies in investment.
Song Minh Development Investment Joint Stock Company has limited financial income, primarily derived from interest related to academic thesis downloads.
In 2019, the company's finance income saw a significant decline of 25.74%, but rebounded in 2020 with a remarkable increase of 75.80%, reaching a total of 21,667 The company utilizes its banking deposits primarily for the secure storage of cash.
General and administrative expenses are a key indicator of a company's operational efficiency In 2018, these expenses amounted to $176,707,280 In 2019, they surged by 148.77% due to the initiation of a major project However, in 2020, these expenses decreased significantly, dropping by 36.75% compared to the previous year.
The company's operating profit has been significantly impacted by high costs of goods sold, services rendered, and general administrative expenses In 2018, the operating profit was negative, resulting in a loss of \$110,743,136 during the first year of operation Although the operating profit turned positive in 2019, it remained minimal.
In 2019, the Cost of Goods Sold (COGS) and services rendered accounted for only 1.00% This figure saw a significant increase in 2020, rising by 75.80%, yet it represented just 2.13% of COGS The Net Profit After Tax mirrored the operating profit; however, in 2020, the company incurred additional expenses of 4,309,364 due to transportation penalties As a result, the Net Profit After Tax experienced a notable increase of 66.07% compared to 2019.
Table 2.3 Cash flow statement (unit: VND)
I Cash flows from operating activities
2 Cash paid to people providing goods and services
Net cash flows from operating activities
II cash flows from investing activities
III cash flow from financing activities
Net cash flow from financing activities 0 0 1,399,993,316
Net increase in cash and cash equivalents for the period
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
(Source: Song Minh financial statement) luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si
In the cash flow from operating activities segment, the profit before tax in
In 2018, the figure was 2,015,219,850 The following year, 2019, saw a significant increase of 49.05% However, in 2020, the number dropped sharply by 33.41% compared to 2019, marking it as the lowest figure among the three years.
Short term solvency ratios
Over the past three years, the company's current ratio has consistently remained above 1, indicating financial stability In 2019, the current ratio surged by 66%, rising from 6.22 in 2018 to 10.36 However, in 2020, it fell to 4.39, a decrease of 58% compared to the previous year This increase in 2019 was primarily due to a significant amount of current assets relative to current liabilities, despite a slower growth rate of current assets compared to current debts In 2020, the company maintained 4.39 current assets for every unit of current debt, demonstrating sufficient asset security for liabilities While this reflects a strong asset position, it also indicates that the company may have over-invested in current assets, which is a positive sign for future financial management.
2 Construction industry: https://www.stockbiz.vn/Industries.aspx?Code#50&view=1
2018 2019 2020 industry current ratio quick ratio cash ratio luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si
The company's ability to meet its current debt obligations is strong, significantly reducing business risk With no inventory on hand, the quick ratio aligns with the current ratio, reflecting a high level of solvency that has been consistent over the years The absence of inventory limits cash flow sources for immediate payments, yet the company's financial health remains robust.
The firm's current and quick ratios are notably high due to the absence of long-term assets, resulting in a favorable comparison of short-term assets to short-term liabilities However, when analyzed against industry standards, the ratios for 2018, 2019, and 2020 reveal that Song Minh is not utilizing its current assets efficiently, which poses a risk to its financial stability The lack of long-term assets means the company relies on renting essential resources, including office space and construction tools, further complicating its financial situation.
The current and quick ratios do not fully represent the company's payment capacity, necessitating an analysis of additional indicators for accurate conclusions Therefore, we should examine the company's cash ratio.
Between 2018 and 2020, the company experienced a notable decline in its cash ratio, starting at 5.19 in 2018 and dropping to 2.41 in 2019, before plummeting to just 0.9 in 2020 This significant decrease indicates serious financial difficulties, primarily due to the company's efforts to complete multiple ongoing projects, which resulted in increased financial loans Furthermore, this trend reflects the process of equitization Ultimately, pursuing such a strategy amid substantial project commitments and financial challenges proved to be a misguided decision for the company.
2.2.5.2 Long-term solvency or financial leverage ratios
Table 2.5: Long-term solvency ratios
Source: Song Minh’s financial statements and Stocbiz
Source: Song Minh’s financial statements and Stocbiz
Long term solvency ratios
The company primarily relies on owner’s equity, with a significant portion of its financing coming from current liabilities, resulting in the absence of a Times Interest Earned ratio and Cash Coverage ratio From 2018 to 2020, the total debt ratio remained relatively low, starting at 0.16 in 2018, indicating that 16% of the company’s assets were financed by debt This figure decreased to 0.096 in 2019, showing that only 9.6% of assets were financed through debt However, in 2020, the total debt ratio rose significantly to 0.23, marking the highest level during this period.
In 2020, the company financed only 23% of its total assets through debt, indicating a lack of capital exacerbated by significant projects and delays from Covid-19, necessitating short-term borrowing However, when compared to industry standards, the company's total debt was relatively low, signaling a missed opportunity to leverage financial resources for enhanced profitability.
In 2018, the debt-equity ratio of the company was 0,19 The figure for
In 2019, the company's debt-equity ratio slightly declined to 0.11, a 44% decrease from 2018 However, in 2020, it experienced a significant increase to 0.29, marking a 176% rise compared to the previous year Historically, the company maintained a debt-equity ratio below 1, indicating a reliance on equity rather than debt for financing assets, which reduced its dependence on debt Nevertheless, during the equitization process in 2019, the company faced cash flow challenges, leading to a greater reliance on debt in 2020 The financial autonomy and ability to manage debt effectively, which were evident in 2018 before the equitization process, diminished as the company navigated its new financial landscape.
The equity multiplier has shown an upward trend over time, with a slight decline from 1.19 to 1.11 in 2019, followed by a strong rebound to 1.29 in 2020 Despite remaining above 1 for three consecutive years, the multiplier is still relatively low This low leverage ratio indicates that the company faces reduced risk of default on its debts and enjoys greater financial flexibility Additionally, the company has the potential to take on more debt if necessary However, it also faces challenges such as the higher cost of equity compared to debt and a lack of sufficient capital to meet its requirements.
2.2.5.3 Turnover ratios luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si
Source: Song Minh’s financial statements and Stocbiz
Source: Song Minh’s financial statements and Stocbiz
Asset utilization ratios
The company does not have inventory so the inventory turnover cannot be calculated
In 2018, the company's asset turnover was a mere 0.071 VND, but it surged to 0.44 VND in 2019, reflecting a more than fivefold increase However, in 2020, this figure dropped to 0.29 VND, indicating a 33% decline and highlighting inefficiencies in asset management As a relatively new company, these figures suggest challenges in effectively managing assets Additionally, the company's receivable turnover was notably low, which is typical for a construction firm; in 2018, it stood at only 0.43, with an average collection period of 848 days.
In 2020, the company's receivable turnover decreased to 0.37, the lowest recorded, with an average collection period extending to 964 days This prolonged collection period indicates that the company is experiencing challenges with credit sales, as it suggests that credit is being extended to customers with poor credit risks and that collection efforts are not effective In contrast, the turnover slightly increased to 0.59, highlighting ongoing issues with long credit durations.
Source: Song Minh’s financial statements and Stocbiz
Source: Song Minh’s financial statements and Stocbiz
Profitability ratios
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In 2018, the company experienced its lowest net profit margin in three years at -13.14%, indicating a loss from sales However, in 2019, the profit margin rebounded significantly to 0.9%, and by 2020, it increased further to approximately 1.94%, representing a 1.16 times growth from the previous year Despite this improvement, the construction industry faced challenging conditions, with its net profit margin falling below the company's lowest point Song Minh was not immune to these industry struggles; its relatively high net profit margin was largely attributed to short-term debts, as noted in the cash flow statement Additionally, the company's smaller size within the industry made its losses less pronounced, and several projects were already signed and underway.
The graph highlights a three-year trend in return on assets (ROA), revealing a significant low of -0.94% in 2018, the lowest point in the period In 2019, ROA improved to 0.40% and further increased to 0.55% in 2020; however, these figures remained well below the industry average of 3.91% This indicates that Song Minh has been ineffective in utilizing its assets to generate sales and profits, operating less efficiently than its competitors Such performance is a concerning indicator for the company's future.
Song Minh's Return on Equity (ROE) has historically been low, closely mirroring the company's Return on Assets (ROA) due to minimal liabilities In 2018, the company's ROE was negative at -1.12%, indicating a loss for the owner on their investment However, there was a positive shift in 2019, with ROE rising to 0.45%, and further increasing to 0.71% in 2020, reflecting a commendable upward trend Despite this improvement, Song Minh's ROE remains significantly lower than the industry average, which is over 14 times higher.
Ineffective capital utilization makes the company less appealing to investors, especially when seeking funding This situation can be perceived as a negative signal for investors, owners, and the company as a whole.
Source: Song Minh’s financial statements
The DuPont analysis of Song Minh for 2020 reveals key insights into the company's financial performance, particularly regarding its return on equity (ROE) After experiencing a weak ROE of -1.12% in 2018, the company showed a positive trend, with ROE rising to 0.45% in 2019 and further to 0.71% in 2020 This indicates that Song Minh has been utilizing owner-provided equity more effectively over the three years, especially in 2020 The equity multiplier remained constant due to a single owner, while the profit margin steadily increased, reaching its highest point in 2020, contributing to the gradual improvement in ROE.
Song Minh is facing challenges with its return on equity compared to industry standards, indicating a decline in performance relative to competitors This issue may stem from decreasing sales and the company's relatively recent entry into the market.
In conclusion, the company is actively working to enhance its Return on Equity (ROE), which is influenced by three key factors: equity multiplier, profit margin, and total asset turnover Over the past three years, both the equity multiplier and profit margin have shown significant improvement.
Year ROE Profit margin Total asset turnover Equity multiplier
2020 0.71% 1.84% 0.30 1.29 luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si
58 period (2018-2020) showing the intension of the company, however the total asset turnover increased significantly in 2019 but decreased in 2020
The assets turnover in 2020 declined 33% compared to 2019, the assets of the company had not been used properly in 2020 The company faced the struggle on managing the assets
In 2019, the profit margin saw a remarkable rise from -13.14% to 0.90% This upward trend continued in 2020, with the profit margin increasing by 1.16 times compared to 2019, reaching approximately 1.94% This indicates a significant improvement in net revenue.
2020 generated 1.19 dong in profit With the small amount of profit, the company still tried to improve its ROE
The equity multiplier also increased over time The figure for 2018 was 1.19, equity multiplier declined slightly to 1.11 however, due to the struggle in
2020, the number increased by 17%, get the number from 1.11 to 1.29 This growth was mainly from a short-term debt in 2020
The growth of Return on Equity (ROE) was driven by two key factors: profit margin and equity multiplier The improvement in profit margin indicates that the company is generating profits despite initial challenges Conversely, the rise in the equity multiplier, primarily due to increased debt, signals a significant risk potential for the company.
LITERATURE REVIEW ON FINANCIAL STATEMENT
Overview of financial statements
The financial statement, as defined by the Institute of Certified Public Accountants (AICPA), serves to periodically assess and report on investment conditions and outcomes This system integrates recorded events, accounting principles, and evaluations focused on documenting these events.
According to the Vietnam Accounting System (2010), financial statements are essential accounting reports that provide a comprehensive overview of a firm's assets, capital, and business performance over a specific period These statements serve as crucial information for external stakeholders, such as investors, creditors, and tax authorities, while also aiding company managers in evaluating and analyzing the financial health and production outcomes of the firm A financial statement typically includes a balance sheet, income statement, cash flow statement, and accompanying notes.
According to the scope of the study, the author applies the definition for financial statements from Viet Nam Accounting system (2010) in this thesis
Financial statements are crucial for analyzing a company's financial activities and are essential for effective business operations, as highlighted by Nguyen Nang Phuc (2009).
The financial statement offers a comprehensive overview of the economy and finance, facilitating the analysis of productivity outcomes and the current financial status of the company.
Financial statements play a crucial role in monitoring capital usage and assessing productivity growth over time They also evaluate the effectiveness of a company's financial and economic policies.
Financial statements serve as a crucial foundation for analysis, revealing the potential of the economy and enabling forecasts on a company's productivity and development trends This essential information guides operational and productivity decisions for the company while also assisting investors, creditors, and future shareholders in making informed choices.
Financial statements offer valuable insights into a company's asset and equity status, productivity outcomes over a specific timeframe, and its current financial health They reveal key information about the company's asset movement, capital structure, and payment capacity, aiding in comprehensive financial analysis.
Financial statement data serves as a crucial foundation for calculating various economic ratios, which are essential for evaluating and analyzing productivity efficiency and capital utilization.
In the realm of financial statements, various reports and sheets exist, but four key types stand out for their widespread use among investors and managers.
The balance sheet serves as a snapshot of a firm's financial position, reflecting the company's resources through its assets, which are funded by owner’s equity and liabilities.
5 a specific period of time, this “picture” can be as the firm stand stood The balance sheet has three parts, which can be represented by the equation:
A balance sheet, as outlined in “FSA Gibson 12e,” offers crucial insights into a company's assets and liabilities over a specific period, facilitating an analysis of its current financial status It highlights the scale and structure of assets, the sources generating these assets, and the company's payment situation and capacity Furthermore, the balance sheet is instrumental in assessing the company's potential to attract capital based on its future productivity.
The income statement, as described in "FSA Gibson 12e," serves as a comprehensive overview of a firm's activities over a specific period, detailing revenues, expenses, gains, and losses, ultimately culminating in the net income The accounting equation relevant to the income statement is also essential for understanding its financial implications.
The income statement, as outlined in "FSA Gibson 12e," provides crucial insights into a company's productivity over a specific period and its current financial obligations to the government By analyzing the income statement, management can assess the company's potential for economic growth, evaluate profit generation, and determine the effectiveness of resource utilization.
The cash flow statement is a crucial component of financial statements, as highlighted in "FSA Gibson 12e." It emphasizes cash and cash equivalents, detailing the inflow and outflow of cash within a company Cash flows are categorized into three primary groups: operating activities, investing activities, and financing activities.
The cash flow statement, as outlined in "FSA Gibson 12e," offers insights into a company's financial fluctuations, enabling the analysis of its investment, financial, and business activities This statement is essential for assessing the firm's capacity to generate future cash flows and cash equivalents, as well as for understanding how these resources can be utilized for ongoing business operations and financial investments.
Overview of the financial statements analysis
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1.2.1 Definition of financial statements analysis
Financial statement analysis, as defined by Nguyen Nang Phuc (2009), involves examining and comparing current financial data with historical data This analysis offers users valuable insights into assessing a firm's potential, operational efficiency, and future financial risks.
1.2.2 Roles of financial statements analysis
Financial statement analysis serves the essential purpose of providing users with critical information to objectively assess a firm's financial strength, profit-generating capabilities, and potential for future growth (Nguyen Nang Phuc, 2009) This analysis attracts a diverse range of stakeholders, including board members, investors, creditors, suppliers, current and prospective stockholders, customers, insurers, and employees, each with unique informational needs Consequently, different stakeholders focus on various aspects of the firm's financial landscape, highlighting the multifaceted nature of financial data interpretation.
In order to achieve the basic purpose of the financial statements analysis, the role of it is reflected to several following aspects:
Analyzing financial statements is essential as it delivers comprehensive information that aids investors, lenders, and other stakeholders in making informed decisions regarding investments and loans.
Analyzing financial statements is essential for providing comprehensive insights to a company's owners, investors, and lenders This analysis evaluates the firm's cash flow dynamics, asset utilization efficiency, financial condition, and payment capacity, ensuring stakeholders can make informed decisions.
Analyzing financial statements is essential for understanding a company's owner's equity, liabilities, and the outcomes of its production activities It also highlights events and circumstances that could impact the firm's capital and debt levels.
Regular analysis of financial statements is essential for effective corporate governance, as it offers a clearer view of the current financial situation This process helps identify weaknesses and assess the impact of the firm's financial health Consequently, it enables the development of practical solutions to stabilize and improve the financial condition of the organization.
1.2.3 Process of financial statement analysis – EIC analysis
One of the most popular methods for analyzing financial statements is the EIC analysis, which stands for Economic Industry Company Analysis This approach involves examining the overall economy to identify the most attractive industries based on the current economic conditions Subsequently, the analyst focuses on highlighting the most promising companies within those appealing industries.
Economic analysis involves understanding key economic factors that influence business activities, industries, and regions from an expert perspective This process relies on real-world activities and overall economic conditions, enabling companies to make informed decisions.
The economy analysis provides information on several aspects like inflation rate, exchange rate, … Every firm can be impacted by external factors
To effectively identify external factors, whether they are opportunities or threats, a company must conduct a thorough evaluation of economic elements.
Many companies invest in developing strategic plans that consider multiple economic scenarios over a 2 to 3-year period They analyze these scenarios to determine their potential impact on the business By conducting economic analysis, companies can evaluate specific projects to ensure they align with the current economic conditions and financial feasibility.
The analysis provides company owners with a detailed understanding of the current economic landscape, enabling them to assess their development potential This insight allows for a clearer vision of the market's strengths and weaknesses.
Industry analysis involves evaluating a specific business sector by examining market supply and demand, competitiveness, future potential, and external factors This analysis is crucial in stock evaluation and selection, as it offers insights into the production environment, competitive advantages, growth opportunities, and financial risks associated with a firm.
Industry analysis has an important role in basic investment method:
Understanding a company's business structure and environment is crucial, as it offers insights into the production landscape, competitive advantages, growth opportunities, and financial risks Conducting credit and industry analyses is essential for assessing the firm's capacity to meet its debt obligations.
To maximize investment potential, investors should adopt a top-down approach by conducting thorough industry analysis This method allows for the identification of growth opportunities and profit potential within the industry, ultimately enhancing investment efficiency.
A diversified portfolio is essential for maximizing investments, and industry analysis plays a crucial role in helping portfolio managers select the most promising sectors and fields.
Company analysis is a process that includes financial situation analysis, goods and services analysis and the competitive strategy of the company
Company analysis will be started after the analyst figures out the external factors, macroeconomics, demographic, government, technology and society that can impact the industry competitively
The function of Company analysis is:
- Provide the overview of the company, including: the basic understanding about business activities, investment activities, corporate management and the strength and weakness of the company
- Explain characteristics relevant to the industry which the company operates in
- Analyze the need for goods and services of the company
- Analyze the goods and services supply, including analyzing the expenses
- Analyze the factors affecting the price of a company’s goods and services
- Explain the financial ratio, compare in time and competitors
Company analysis usually include forecasting the financial statement, especially when its purpose is the company valuation
1.2.4 Financial statements analysis methods 1.2.4.1 Common-Size analysis (vertical analysis)
Factors affecting financial statements analysis
External factors impacting a company's financial status, as noted by Michael (2016), encompass the political and social environment, economic growth rate, technological advancements, and monetary policy, which are collectively referred to as subjective factors.
Growth motivation and direct conduct are shaped by subjective factors, although objective factors also play a crucial role in influencing outcomes Three interconnected external factors—industry environment, national environment, and macroeconomic conditions—significantly impact these subjective impressions.
The industry analysis environment must assess the competitive structure of the industry, focusing on the company's competitive position This evaluation is crucial for understanding market dynamics and strategic planning.
21 and its main competitors, the trend in development of the industry This also help evaluate the impact of globalization on industry competitive
A national environment analysis enables a company to assess the conditions of the country in which it operates If the country aligns with the firm's competitive needs, it is beneficial to remain; otherwise, relocating to a more suitable location is advisable.
A comprehensive macroeconomic analysis is essential for the company, as it must take into account various factors such as the social environment, government regulations, national policies, international dynamics, and technological advancements that can significantly influence its operations.
Internal elements of a company, known as objective factors, play a crucial role in identifying its strengths and weaknesses (Michael, 2016) Analyzing these factors enables the firm to maximize benefits and leverage differences in capabilities, capital, and innovation to maintain a competitive advantage To achieve and sustain superior performance, a company must operate efficiently, continuously develop high-quality products, and uphold customer responsibilities While strengths can distinguish the company in its industry, weaknesses can hinder overall performance.