Asset structure In general, as you can see, the company's total assets fluctuated during the period from 2019 to 2021.. long-term assets due to a relatively high proportion of investment
Trang 1NATIONAL ECONOMIC UNIVERSITY
School of Advanced Education Program
*** -***
CORPORATE FINANCE TEAM PROJECT REPORT
Financial Statement Analysis
of FPT Telecom from 2019 to 2021
Tutor: PhD Pham Van Tue Nha
Group 6 - Marketing Management 63C Student’s Name Role Student’s ID
I INTRODUCTION
II HORIZONTAL ANALYSIS
Hanoi, 05/23
Trang 21 Revenue analysis
2 Expenses analysis
III.VERTICAL ANALYSIS
1 Asset structure
a, Current asset
b, Long-term Asset
2 Liabilities & Equity Structure
IV CASH FLOWS ANALYSIS
1 Cash flows from operating activities
2 Cash flow from investing activities
3 Cash flow from financing activities
V RATIO ANALYSIS
1 Liquidity Ratios
a, Current Ratio
b, Quick Ratio
2 Long-term Solvency Ratios
a, Leverage Ratio
b, Coverage Ratio
3 Turnover Ratios
a, Inventory Ratio
b, Receivables turnover Ratio
c, NWC Ratio
d, Total assets turnover Ratio
4 Profitability Ratios
a, Profit Margin
b, Return on assets (ROA)
c, Return on equity (ROE)
5 Market Value Ratios
a, Earning per share (EPS)
b, Price-earnings Ratio (P/E Ratio)
c, Price-to-book-ratio (P/B Ratio)
VI RECOMMENDATION
References
Member’s Performance Review
I INTRODUCTION
As a member of Vietnam's leading technology corporation FPT, FPT Telecom is currently
one of the reputable providers of telecommunications and internet services that are beloved
by customers in Vietnam and the region After 25 years of operation, FPT Telecom has
Trang 3grown significantly with more than 8,984 employees, and nearly 316 transaction officesbelonging to over 90 branches in 63 provinces and cities nationwide With a mission topioneer bringing the Internet to Vietnamese people and a desire for every Vietnamesefamily to use at least one service from FPT Telecom, in line with the motto "Customer isthe focus", we constantly strive to invest in infrastructure, upgrade product and servicequality, enhance new technology applications to bring customers superior product andservice experiences.
II HORIZONTAL ANALYSIS
1 Revenue analysis
- Revenue from sales of goods and rendering of services in 2020 increased by 13.86%compared to 2019, corresponding to an amount of 1.170.971.384.379 In 2021 alsoincreased slightly compared to 2020 with an increase rate of 6.43% corresponding to anamount of 618.727.043.721 Thereby, showing us that the business is operating effectively
We see that the company's revenue deductions have grown over the years, which meansthat the business has effectively applied sales policies to capture revenue growth over theyears
- Revenue from financial income in 2019 compared to 2020 declined by 19.20%corresponding to approximately VND 79 billion and revenue from financial income in
2020 compared to 2021 went up to 106.54% corresponding to about 354 billion
- Net operating profit gradually increased from 2019 and doubled in 2021 compared to
2020 with a figure of 24.44% This growth was largely driven by financial income as Grossprofile from sales of goods and rendering of services increased by only 1.71% in 2021compared to 17.27% in 2020
=> As we can see, FPT also has an investment in the financial sector and brings a profit forthe business, but in terms of value, this profit is still small, showing that in 2021 theinvestments are still small Short-term financial investments have not yet yielded profits
- In terms of other income, we see a growth in 2020 compared to 2019 up to 47.15%,equivalent to more than 2 billion And strongly increased to 144.17% in 2021 compared to
2020 This increase is also worrisome if this increase is mainly from Proceeds fromdisposals of fixed assets Therefore, we consider that the Proceeds from disposals of fixed
Trang 4assets and other long-term assets in 2019 were only about 38 million, but by 2021 thisfigure reached approximately 973 million However, this 973 million compared to other
income in 2020 of 16 billion is not significant Therefore, the growth of other income is not
-> In general, FPT Telecom in 2021 compared to 2020 and 2019 still increased stronglyduring the Covid season because the business after stabilizing equitization have investedand expanded to large markets, doing business in several other industries, so it can be seenthe business had reasonable and effective policies
III.VERTICAL ANALYSIS
1 Asset structure
In general, as you can see, the
company's total assets fluctuated
during the period from 2019 to 2021
Through the charts showing the
structure of assets, current assets
accounted for a larger proportion than
Chart 1 Asset Structure
Trang 5long-term assets due to a relatively high proportion of investments in equity of subsidiariescompany.
Short-term receivables of FPT Telecom Company in 2019 accounted for 37.01% andincreased gradually over 2 years, namely 47.72% (in 2020) and increased to 59.64% (in2021) An increase in short-term receivables may indicate that the business has beensuccessful in generating more sales or providing more services to its customers
Besides, Inventories of the company also fell from 4.70% in 2019 to 2,98% in 2021, whichmeans that the company is optimizing business activities
b, Long-term Asset
Long-term assets recorded a decline and plummeted in 2021, from 53.14% to 36.59% In
2021, due to the impact of the Covid 19 epidemic, some investment projects of thecompany had to be postponed
2 Liabilities & Equity Structure
The company's capital structure is
biased towards liabilities In
general, the company's liabilities
account for a relatively high
proportion, about more than
two-thirds of the capital structure in
the years 2019 and 2020, which
makes the company's financial
reputation in the financial market
low, high financial risk, low
Chart 2 Liabilities & Owner's Equity Structure
Trang 6profitability, and financial autonomy, because the company mainly uses external capital,
depend on capital from outside
In the structure of Liabilities, the
structure of short-term liabilities
accounted for most, the highest is in
2021 with the figure of 111.02%,
equivalent to 14 thousand 402 billion
VND This may cause pressure on
managers because if using financial
leverage is short-term liabilities, the
time to bring profit must be short and
effective because of the short-term
debt repayment period
Owner's equity in 2019 and 2020 has not changed significantly but has grown more in
2021 with the proportion of 46.71% This mainly comes from retained earnings after tax
IV CASH FLOWS ANALYSIS
1 Cash flows from operating activities
The company's cash flows from operating activities have been fluctuating over the past
three years (2019-2021)
Net accounting profit before tax increased by12.30% from 2019 to 2020, and then furtherincreased by 24.59% from 2020 to 2021 Thisindicates that the company has been generatingmore profit in the past two years
Operating profit before changes in working capital also
increased over the same period, rising by 16.91% from 2019
to 2020, and then by a smaller 3.85% from 2020 to 2021
Chart 3 Value Comparison
Chart 4 Net accounting profit before tax
Chart 5.Operating profit before changes in WC
Trang 7Discover more from:
Test Bank for Fundamentals of Corporate Finance 10th Edition by Ross
Trang 8This suggests that the company has been managing its operating expenses and costseffectively.
However, we can also see that the increase in
payables between 2019 and 2020 was very
significant, with the figure rising from a negative
amount in 2019 to a positive amount in 2020 This
suggests that the company may have been delaying
payments to suppliers or creditors in order to
improve its cash flow position The subsequent
decrease in payables from 2020 to 2021 may
indicate that the company has caught up on its
outstanding payments
BIT (Business Income Tax) paid also increased
significantly from 2019 to 2020, by 39.22% This
may be due to the higher profits generated by the
company during that period However, BIT paid
then decreased by 38.30% from 2020 to 2021,
which may indicate that the company has implemented tax-saving measures or has hadlower profits
Overall, we can see that the company'snet cash inflows from operating activitiesincreased substantially by 135.66% from
2019 to 2020, but then decreased by8.69% from 2020 to 2021 This suggeststhat the company may have experiencedsome challenges in generating cash fromits operations in 2021, despite its higherprofits It may be worth further analyzingthe company's cash flows to understand the reasons behind this trend
Chart 6 Increase in payables
Chart 7 BIT paid
Chart 8 Net cash inflows from operating activities
Ebook Tài chính doanh nghiệp căn bản (Lý thuyết & thực hành quản lý ứng dụng cho các doanh nghiệp Việt Nam)…
148
Trang 92 Cash flow from investing activities
In 2019, the company had net cash outflows
of VND 1.494 trillion from investing
activities, which increased by 81.31% to
VND 2.709 trillion in 2020 In 2021, the net
cash outflows from investing activities
decreased to VND 5.045 trillion, a decrease
of 86.22% from the previous year
The major reason for the increase in net
cash outflows from investing activities in 2020 was the significant increase in loansgranted, which increased by 269.62% compared to the previous year This indicates thatthe company may have invested heavily in long-term assets, such as property, plant, andequipment, or acquired other companies during the year
However, in 2021, the net cash outflows from investing activities decreased significantly,indicating that the company may have reduced its investments in long-term assets ordivested some of its assets during the year The increase in dividends and interest received
in 2021 may also suggest that the company may have invested in financial instruments togenerate additional income
In conclusion, the company's cash flow from investing activities shows that it has beenactively investing in long-term assets, as well as financing its investments through loans It
is important to note that while investing in long-term assets may lead to higher returns inthe future, it also comes with higher risks and requires a careful evaluation of thecompany's financial position and prospects
3 Cash flow from financing activities
In 2019, the company had net cash inflows
from financing activities of VND 618.5
billion, which decreased slightly to VND
Trang 10increase could be due to various factors, such as a successful fundraising campaign or anincrease in investor confidence.
The net decrease in cash and cash equivalents in 2020 was a large negative amount ofVND 75.2 trillion, indicating that the company used more cash than it generated duringthat year However, in 2021, the company was able to increase its cash and cashequivalents by VND 95.7 trillion, indicating a positive cash flow for the year
The cash and cashequivalents at thebeginning of each yearalso show someinteresting trends In
2019, the company hadVND 90.1 trillion in cashand cash equivalents,which increased slightly
to VND 99.3 trillion in
2020 (+10.22%) However, in 2021, the company's cash and cash equivalents decreasedsignificantly to VND 24.1 trillion (-75.69%) The effect of foreign exchange differencesalso had a negative impact on the company's cash and cash equivalents in 2021
Overall, the company's cash flow from financing activities and its cash and cashequivalents shows some significant fluctuations over the three-year period It's important tofurther analyze the reasons behind these fluctuations, such as any major investments oracquisitions, changes in debt or equity financing, or any other significant factors that couldhave affected the company's cash flow
Chart 11 Cash and cash equivalents at the beginning of year
Trang 11Both FPT TELECOM and ELCOM have seen an increase in their current ratio over theyears However, ELCOM's current ratio is consistently higher than FPT TELECOM Thisindicates that ELCOM is in a better position to meet its short-term obligations using itscurrent assets compared to FPT TELECOM.
In terms of the components of the current ratio, FPT TELECOM has a higher level ofcurrent debt compared to its current assets, while ELCOM has more current assets thancurrent debt FPT TELECOM also has a higher level of inventory compared to ELCOM,which could affect its ability to pay off its short-term liabilities
Overall, while both companies have seen an improvement in their short-term solvencyratios over the years, ELCOM appears to be in a better position to meet its short-termobligations compared to FPT TELECOM
b, Quick Ratio
The quick ratio is a measure of a company's short-term solvency or its ability to meet itsshort-term obligations using its most liquid assets It is calculated by dividing a company'scurrent assets minus its inventory by its current liabilities A quick ratio of 1 or higher isgenerally considered a good indication of a company's ability to meet its short-termobligations
Trang 12FPT Telecom's quick ratio has been steadily increasing over the three years, from 0.58 in
2019 to 0.84 in 2021 This is a positive trend, indicating that FPT Telecom is becomingmore capable of meeting its short-term obligations using its most liquid assets
ELCOM, on the other hand, has had a much higher quick ratio than FPT Telecom in allthree years Furthermore, ELCOM's quick ratio has been increasing over the three years,from 1.46 in 2019 to 2.73 in 2021 This indicates that ELCOM has a much stronger short-term solvency position than FPT Telecom, and its ability to meet its short-term obligationsusing its most liquid assets is steadily improving
This can be explained because FPT Telecom only operates in the telecommunicationsindustry, which may require more investment in fixed assets and therefore a lower quickratio, while ELCOM also operates in the marine electronics industry, which may havelower fixed asset requirements and therefore a higher quick ratio
2 Long-term Solvency Ratios
a, Leverage Ratio
Table 3 Leverage Ratio
The total debt ratio measures the proportion of a company's assets that are financed bydebt A higher total debt ratio indicates that the company has taken on more debt to financeits assets In general, a total debt ratio above 1 means that a company has more debt thanassets, which can be a cause for concern
FPT TELECOM's total debt ratio has been increasing over the past three years, from 0.64
in 2019 to 0.82 in 2021 This indicates that the company has been relying more heavily ondebt to finance its assets On the other hand, ELCOM's total debt ratio has been relativelystable, decreasing slightly from 0.40 in 2019 to 0.22 in 2021