III. CASH FLOWS FROM FINANCING ACTIVITIES
1.4.1 Analysis of short-term debt solvency
Graph 4.1: Changes in short-term ratio, quick ratio and instant ratio in the period Q1/2020 – Q3/2021
1.4.1.1. Analysis of short-term solvency ratio
Through graph 4.1, we see that the short-term solvency coefficient in the first quarter of 2020 is 3.39, which means that for every VND 1 short-term debt will be covered by VND 3.39 short-term assets. In the second quarter of 2020, this ratio decreased slightly by 0.09 times, or 2.65%, to 3.3 VND of short-term assets to cover 1 VND of short-term debt. The reason is that short-term assets and short-term liabilities in the second quarter of 2020 both increased but not too strongly, but short-term liabilities increased faster than short-term assets, but the difference is not high, so this coefficient not significantly reduced.
By the third quarter of 2020, this ratio has increased significantly, increasing 1.2 times or 3.63% to 3.42 VND of assets to cover 1 VND of short-term debt, this can be solved because the ratio of short-term assets has increased higher than the ratio of short- term debt, so this ratio has increased higher than the previous quarter. By the fourth quarter of 2020 this coefficient continued to increase to 3.77 times, equivalent to 10.2%
and until the first quarter of 2021, the coefficient continued to increase and reached 3.97 times, or 5.3%. By the second quarter of 2021, the number decreased slightly by 3.83 times, equivalent to a decrease of 3.66%. However, by the third quarter of 2021, this figure reached 4.15 times, an increase of 8.35%.
The above figures show that the company's short-term debt solvency is still at a good level; However, in the first quarter of 2020 and the second quarter of 2020, the first quarter of 2021 and the second quarter of 2021, the coefficients tend to decrease because the situation of the Covid-19 epidemic has significantly affected the financial plan of the Company. The company and Decree 100/2019/ND-CP heavily penalizing drinking and driving are factors that are having great impacts on SAB's growth, so the company's indexes are on a downward trend , implemented social distancing for a long time and due to investment in projects, borrowed too much short-term debt. Besides, the short-term solvency ratio of the company in all 7 quarters was higher than the industry average. This shows that the company's short-term solvency ratio is very good compared to the average of other companies in the same industry.
Solution
Therefore, the company needs to have policies to develop and use the following capital appropriately, contributing to maintaining a stable financial situation and improving the short-term solvency of the company.
1.4.1.2. Quick ratio analysis.
Through graph 4.1, we see that quick ratio tends to increase gradually over time. In the first quarter of 2020, the company's quick solvency ratio was 2.93, which means that every 1 dong of short-term debt will be guaranteed by 2.93 dong of highly liquid short- term assets. In the second quarter of 2020, this ratio increased to 3.02, in the third quarter of 2020 this coefficient continued to increase to 3.13 and in the fourth quarter the quick ratio reached 3.49. By 2021, the coefficient will continue to increase and reach high values in the indexes above 3.54 in the first quarter of 2021. In the second quarter of 2021, this number decreased slightly to 3.53, but in the third quarter of 2021, this figure reached the highest level of 3.88.
In both years, the company's quick ratio reached a high level, well above the industry average in the preceding quarters. When all of the coefficients are larger than one, the company's capacity to pay short-term obligations and store cash is at a high level.
You maintain a high level of performance at all times. As a result, the corporation must continue to keep this ratio at a high level, indicating that the company's capacity to pay quickly is excellent.
1.4.1.3. Analysis of instant solvency ratio
The company's instant ratio in the first quarter of 2020 was 0.51 and increased sharply to 0.87 in the second quarter of 2020, however, in the third quarter of 2020, the ratio decreased quite a lot to 0.54 and continued to decrease slightly in the quarter. April 2020 down to 0.53. By the first quarter of 2021, the instant ratio has increased, but not much, reaching 0.57. Continuing in the second quarter of 2021, this number continued to increase slightly with 0.58 and increased by 0.66 in the third quarter of 2021.
The company's solvency ratio has been relatively low in the past, indicating that it is having difficulty repaying debt with its available cash. Because the firm invests in initiatives to transition Sabeco 4.0 teams to comprehensively digitize work in 2020 and quarters 1,2,3/2021, as well as community-oriented projects such as arranging follow-up programs. The organization need a sizable sum of money in order to help personnel who have been seriously impacted by the Covid-19 crisis. The immediate ratio is also low,
which would have a negative impact on the firm since it shows that the company's capacity to utilize cash to meet short-term obligations is limited.
Solution