III. CASH FLOWS FROM FINANCING ACTIVITIES
1.3.1. Net cash flow from operating activities
Based on the table data “Cash flow statement for the period of the quarter 1/2020 - the quarter 3/2021” and the chart above, we can see that in general, the cash flow from Sabeco's business activities fluctuates and increased, and decreased unevenly over the quarters and showed signs of decreasing over the quarters. Particularly for quarter 2/
2020, the cash flow reached the highest level of VND 2,671 billion, ranked second in the second quarter of 2021 with a net cash flow of VND 1,948 billion. On the contrary, from the third quarter of 2020 onwards, there were signs of a sharp decrease, culminating in the first quarter of 2020 the cash flow reached the lowest level of about -1,097 billion VND.
The fact that the first quarter of 2020 has a very large negative amount is due to the double impact of the outbreak of the COVID-19 pandemic and Decree 100/2019/ND-CP (Decree 100) on sanctioning administrative violations in the field of road traffic and railway, revenue and profit of Saigon Beer - Alcohol - Beverage Corporation (Sabeco)
plummeted by 47% and 44% respectively in the first quarter of 2020. This is also the largest decrease of this Corporation in recent years.
Detail:
We can see that the net cash flow from business activities in the second quarter of 2020 increased sharply compared to the first quarter of 2020, increasing from -1,097 trillion VND to 2,671 billion VND, an increase in value of about 2,672 billion VND, this is a good sign for the business and worth the investment during this period.
But from the third quarter of 2020 to the first quarter of 2021, this index decreased significantly, from 2,671 to about -407 billion VND, the total value decreased by about 3,078 billion VND, although the decrease was not equal to the first quarter of 2020, In general, the situation at any time is also at an alarming level. Because of the reasons listed in the financial statements such as Sabeco’s receivables during this period increased significantly from VND 209 billion to -99 billion because Sabeco had to spend money to buy products and sell them products to customers, however, customers have not paid, causing receivables to increase, resulting in negative cash flow. Similar to inventory, the company had to spend money to buy goods, so its cash flow was negative. From this we can see that although the company reported high profit, the net cash flow was significantly reduced, proving that this cash source did not come from the company's business activities.
In the second quarter of 2021, net cash flow from operating activities had a good change and not only increased significantly, from -407 billion VND, but it also increased suddenly to 1,948 billion VND. Although payables increased in the second quarter of 2021, Sabeco's receivables decreased significantly from -99 billion VND to -35 billion VND, customers have already paid for the company. Moreover, Sabeco’s inventory has been strictly controlled. It proves that in this period the company is doing well, has a stable business model, maintains profits, and maintains a competitive advantage in the market.
For the third quarter of 2021, Sabeco’s net cash flow from business activities did not
still an acceptable positive number in the context of the current Covid situation, which proves that the company can still control and manage cash flow well and generate profits for the company.
1.3.2. Net cash flow from investing activities
According to the table data, we see that the first quarter of 2020 was also a volatile year of the Covid-19 pandemic, but because the business still controlled the company's situation well, the profit continued to be kept at a good level. Having a very large revenue from net profit from investment activities in the first quarter of 2020 can also be explained because, during this period the company has invested in machinery equipment, Sabeco has improved improve, reduce the use of raw materials and energy consumption; Installing solar panels at 4 breweries and will continue to do so this year, saving costs and energy.
Although the performance is unstable, the implementation of clear investment plans is still a good sign for the company to invest more in fixed assets to expand production and help the company grow more in the future.
However, for the second quarter of 2020, net profit from investment activities decreased slightly but not to a serious extent, specifically from 1.65 billion VND to -36 billion VND. This shows a sign that the cash flow is unstable and the value of the cash flow tends to decrease in the future. Because the cash flow invested in term deposits has increased and this money has gone out of the company increased from -1857 billion VND to -4283 billion VND.
This figure continued to decrease to -3,149 billion VND in the third quarter of 2021 but by the fourth quarter, this figure had increased to about -67 billion.
With the constant fluctuation of cash flow from investment activities, in the first quarter of 2021, it increased from -67 billion to 1,533 billion VND, this proves that in the first quarter of 2021 while the cash source from operations Sabeco’s business fell and recorded a negative level, while the cash flow from financing activities increased, which proves that in this period the company focused on investment rather than the business. But it can
be said that it is a significant transformation of the company after a period of severe influence of the Covid-19 epidemic.
By the second quarter of 2021, we see that the net cash flow from investment activities has changed rapidly, decreasing sharply from 1,533 billion to -1.466 billion, down 2,999 but increasing in the third quarter of 2021 to 103 billion VND is an amount that represents a good growth of cash flow in investment when Sabeco still had a very large negative number last quarter.
According to the table data, we see a very large positive cash flow in the first quarter of 2021 specifically with a positive amount of VND 1,533 billion. This is an amount that clearly shows the very good growth of cash flow from investment activities when the previous quarter still carried a very large negative number.
1.3.3. Net cash flow from financing activities
We can see that the value of net cash flow from financing activities from Q1 2020 to March 2021 is all negative, which may indicate a sign of a process of restructuring the company’s capital. the company or it could be a sign of downsizing as the business reaches saturation.
Comparing the third quarter of 2020 with that of January 2020, we can see that although the amount in the periods was recorded at a negative level, from the first quarter of 2020 this number has changed positively and increased from -2,223 billion VND in the first quarter of 2020 to -48 billion VND in the third quarter of 2020, this is a positive sign that businesses are on the way to recovering their financial situation, which has been heavily affected by the Covid-19 epidemic in the past year.
But by the fourth quarter of 2020, this number has become a serious decline, decreasing from -48 billion dong in the third quarter of 2020 to -1,495 billion dong, the severity in which businesses are having difficulty in spending products, goods and services; in the collection of sales and service provision.
VN to -88 Billion VND (equivalent to 16%). Although it is still quite negative, in general, the business is still mastering the financial situation of the business.
In general, from the first quarter of 2020 to the fourth quarter of 2021, the cash flow from financing activities was negative but there were positive changes, this is a good sign, which proves that the enterprise was able to pay to get more principal each year and greatly reduce the burden on interest intervals and be more autonomous in terms of financial autonomy of the business.
General comment on the company’s cash flow position
From Sabeco’s cash flow table over the past 7 quarters, it can be seen that, although cash flow fluctuates unevenly, it is recorded in positive numbers each quarter and shows signs of growth and development. The main source of money of Sabeco Company mainly comes from business activities.
For the quarters of 2020, the company’s main source of cash is cash from operating activities, while net profit from financial activities is unstable. This is a good expression of the company, SABECO focuses its expenditures on essential items and constantly looks for opportunities to bring about high efficiency as soon as possible, at the same time, also ensures that we have can make the best use of market opportunities.
In 2021, the company’s cash flow has performed much better than the previous year, the values of cash flow tend to improve, showing that the company is gradually controlling the difficulties caused by the Covid-19 epidemic. Covid 19 has brought and beyond that Sabeco will continue to promote the development of brands through improving brand recognition, distribution, and consumption systems.
1.4. Analyze financial ratios
Table 4.1: Analysis of financial indicators
Index Unit Q1/2020 Q2/2020 Q3/2020 Q4/2020 Q1/2021 Q2/2021 Q3/202 1 Ability to
pay short- term debt Short-term
solvency Time 3.39 3.3 3.42 3.77 3.97 3.83 4.15
Quick payment
ability Time 2.93 3.02 3.13 3.49 3.54 3.53 3.88
Possibility to
pay in cash Time 0.51 0.87 0.54 0.53 0.57 0.58 0.66
Ability to pay long- term debt Liabilities to
total assets Time 4.49 3.46 3.53 3.56 3.27 2.86 2.67
Liabilities to
equity Time 26.05 28.23 27.73 24.38 22.88 23.93 27.02
Loan interest
payment ratio Time 53.39 90.21 143.52 115.47 88.43 102.93 54.92 Indicators of
performance evaluation Inventory
turnover Ring 1.58 2.58 3.42 3.43 2.38 2.69 2.08
Average inventory
days Day 231.01 141.48 106.86 106.54 153.64 135.69 175.48
Accounts
Average collection
period Day 24.07 95.9 105.64 111.12 112.35 135.21 121.17
Total asset
turnover Ring 0.2 0.28 0.3 0.29 0.22 0.26 0.15
Profitability Index
Return on net
sales % 14.61 17.04 18.26 19.5 16.83 14.82 11.02
Return on average assets
(ROAA) % 2.74 4.63 5.17 5.32 3.39 3.6 1.56
Average long- term return on capital
(ROCE)
% 4.79 7.45 8.65 8.57 5.62 5.82 2.62
Return on Average
Equity (ROEA)
% 3.63 6.09 6.83 6.94 4.34 4.61 1.99
Table 4.2: Industry average index table
Index Q
1/2020
Q 2/2020
Q 3/2020
Q 4/2020
Q 1/2021
Q 2/2021
Q 3/2021
Current ratio (short
term) 2.82 2.7 2.93 3.33 3.54 3.28 3.53
Quick payout ratio 1.93 2.01 2.21 2.55 2.58 2..48 2.69
Instant payout ratio 0.4 0.68 0.49 0.48 0.49 0.48 0.54 Liabilities/Total
Assets 5.63 4.7 4.28 4.7 4.52 4.24 4.22
Liabilities/Equity 28.41 32.87 30.67 26.74 24.44 23.22 21.17
Inventory turnover 1.19 2.1 2.59 2.59 1.61 2.04 1.64
Customer Receivables Turnover
6.46 11.02 10.25 18.74 11.62 12.95 7.15
Total asset turnover 0.2 0.29 0.32 0.3 0.23 0.27 0.19
Return on Net Sales
(ROSA) 10.14 15.02 15.89 17.42 12.85 12.89 9.39
Return on Average
Equity (ROEA) 2.69 5.84 6.84 6.72 3.62 4.32 2.21
Average long-term return on capital (ROCE)
4.85 9.44 11.39 10.7 6.23 7.28 3.84
Return on Average
Assets (ROAA) 1.95 4.28 5.01 5.04 2.79 3.29 1.68