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UEH UNIVERSITY
UEH COLLEGE OF BUSINESS
SCHOOL OF MANAGEMENT UEH
TOPIC
ANALYSIS OF THE FINANCIAL SITUATION OF
THANH THANH CONG - BIEN HOA
JOINT STOCK COMPANY
Lecturer
:
Ph.D Trần Dương Sơn
Subject
:
Finance For Managers
Class
:
DH47ADC04
Code
:
23D1MAN50213202
Ho Chi Minh City – June 14th, 2023
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MEMBER LIST
1
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31211025010
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Ngô Hoàng Thiên
Attitudes
MB1
MB2
MB3
MB4
MB5
MB1
X
7
7
7
7
MB2
7
X
7
7
7
MB3
7
7
X
7
7
MB4
7
7
7
X
7
MB5
7
7
7
7
X
Average
7
7
7
7
7
MB1
MB2
MB3
MB4
MB5
MB1
X
7
7
7
7
MB2
7
X
7
7
7
MB3
7
7
X
7
7
MB4
7
7
7
X
7
MB5
7
7
7
7
X
Average
7
7
7
7
7
Contribution
s
2
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TABLE OF CONTENT
CHAPTER 01. SUMMARY OF THE TOPIC – SIGNIFICANCE..........................................1
CHAPTER 02. GENERAL INTRODUCTION TO THE COMPANY....................................2
2.1. Background of the sugar industry..................................................................................................2
2.2. General Introduction.......................................................................................................................3
2.2.1. About the company...................................................................................................................3
2.2.2. Vision.........................................................................................................................................3
2.2.3. Mission......................................................................................................................................3
2.2.4. Core value.................................................................................................................................3
2.3. History of formation and development..........................................................................................3
2.4. Share and shareholder information...............................................................................................4
CHAPTER 03. BASIS – METHODS...........................................................................................6
3.1. Theoretical basis..............................................................................................................................6
3.1.1. The concept of financial analysis.............................................................................................6
3.1.2. Purpose of Financial Statement Analysis................................................................................6
3.1.3. Scope of Financial Analysis......................................................................................................7
3.2. Methods of Financial Analysis........................................................................................................7
CHAPTER 04. FINANCIAL RATIOS........................................................................................8
4.1. Liquidity...........................................................................................................................................8
4.1.1. Overall ratio..............................................................................................................................8
4.1.2. Current Ratio..........................................................................................................................10
4.1.3. Quick Ratio (QR)....................................................................................................................12
4.1.4. Instant Ratio...........................................................................................................................14
4.2. Assets Management Ratios...........................................................................................................16
4.2.1. Inventory Turnover................................................................................................................16
4.2.2 Receivables turnover and Days' sales in receivables.............................................................18
4.2.3 Fixed asset turnover................................................................................................................22
4.2.4. Total asset turnover (TAT)....................................................................................................24
4.3. Debt Management Ratios..............................................................................................................26
4.3.1. Debt-to-Total Asset Ratio (D/A)............................................................................................26
4.3.2. Debt-to-equity ratio (D/E)......................................................................................................28
4.3.3. Long-term debt to equity (LTD/E)........................................................................................30
Long-term debt to equity.................................................................................................................31
4.3.4. Interest Coverage Ratio (ICR)...............................................................................................32
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Interest coverage ratio.....................................................................................................................33
4.4. Profitability....................................................................................................................................34
4.4.1. Return on Sales (ROS)...........................................................................................................34
4.4.2. Basic Earning Power (BEP)...................................................................................................36
4.4.3. Return on total assets (ROA).................................................................................................39
4.4.4. Return on equity (ROE).........................................................................................................41
4.5. The evaluation ratios from the market perspective....................................................................43
4.5.1. P/E analysis.............................................................................................................................44
4.5.2. P/B analysis.............................................................................................................................45
4.5.3. P/S analysis..............................................................................................................................46
CHAPTER 05. BANKRUPTCY ANALYSIS...........................................................................48
5.1. Model Z-Score................................................................................................................................48
5.2. The balanced scorecard.................................................................................................................51
CHAPTER 06. RISK ANALYSIS..............................................................................................55
6.1. Analysis of relevant ratios.............................................................................................................55
6.1.1. Debt-to-equity ratio analysis..................................................................................................55
6.1.2. Debt-to-asset ratio analysis....................................................................................................55
6.1.3. Interest coverage analysis......................................................................................................56
6.1.4. Net profit margin analysis......................................................................................................57
6.2. Financial leverage analysis............................................................................................................57
6.2.1. Degree of Operating Leverage (DOL)...................................................................................57
6.2.2. Degree of Financial Leverage (DFL).....................................................................................58
6.2.3. Degree of Total Leverage (DTL)............................................................................................59
CHAPTER 07. GROWTH ANALYSIS.....................................................................................61
CHAPTER 08. FORECASTING & FIRM EVALUATION...................................................65
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CHAPTER 01. SUMMARY OF THE TOPIC – SIGNIFICANCE
Businesses and organizations must scramble to stake out their positions and maximize
their own inherent value in the face of an economy that is expanding quickly. As a result,
it is important for firms to comprehend their current state as well as the outcomes of their
commercial and production actions.
Regular financial analysis will assist businesses in fully and accurately identifying the
causes and effects of the information, as well as in seeing the present status of financial
operations, production, and business results over the course of the firm. Managers can
have the most objective perspective, identify the relevant issues, possess the necessary
skills, and be aware of any remaining constraints in the production and business processes
thanks to financial analysis of their organizations. At the same time, the analysis'
evaluation will make it easier to determine goals and business strategies that will be used
to provide the most obvious results. From there, it is possible to evaluate the enterprise's
potential, business and production efficiency, dangers, and future prospects in order to
develop efficient solutions and decisions that will increase the enterprise's efficiency.
Being well aware of the importance of analyzing the financial situation for the
development of the business, the team decided to analyze the financial situation of Thanh
Thanh Cong - Bien Hoa joint stock company. Use the methods and information you
learned to analyze business financial statements, including financial ratio analysis and
assessing the enterprise's past, present, and future financial health. In order to assist the
company in realizing its potential for future growth and development, the team
simultaneously examined the data from the financial statements and assessed the financial
policies in light of the business decisions made by the company.
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CHAPTER 02. GENERAL INTRODUCTION TO THE COMPANY
2.1. Background of the sugar industry
Analysts predict that enterprises in the sugar industry would recover and reclaim their
position by 2023. According to the International Sugar Organization's (ISO) research, the
price of raw sugar is currently at its highest level in five years, since 2017. Furthermore,
the impact of trade remedy measures such as measures against evasion of trade remedies,
anti-dumping measures, and governmental countervailing has limited a substantial
amount of imported cane sugar products. Following taxation, the uncompetitive price of
imported sugar will increase demand for locally produced sugar, and domestic sugar
prices are projected to remain high.
In particular, Vietcombank Securities Company, Ltd. (VCBS) stated in the Sugar
Industry Report for the first quarter of 2023 that the overall volume of imported sugar for
the entire year 2022 has reduced by 12.6% year on year, with substitute import sources
primarily coming from Australia and Indonesia.
According to the Vietnam Sugarcane and Sugar Association (VSSA), Vietnam's
domestic need for sugar is between 2.1 and 2.3 million tons per year, with local sugar
production meeting only 33% of consumer demand. Because domestic demand cannot be
met due to poor production, Vietnam's sugar sector is significantly reliant on imported
sugar. This is both a challenge and an opportunity for domestic sugar producers to
increase output.
TTC AgriS (SBT) accomplished exceptional and remarkable accomplishments in the
year 2021-2022, despite the turbulent environment in the globe and Vietnam. SBT
supplies approximately one million tons of finished sugar to local and foreign markets,
maintaining its leadership position in the sugar sector with 46% of the domestic market
share.
TTC AgriS intends to extend the material area in Australia to 20,000 ha and to
implement digital farming technology through the FRM (Farmer Relationship
Management) platform through the sustainable agricultural development strategy for
2021-2025. The overarching goal is to increase the global material area to about 90,000
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hectares and ensure an adequate supply of products to meet domestic and international
market demands.
2.2. General Introduction
2.2.1. About the company
Thanh Thanh Cong - Bien Hoa Joint Stock Company is a multinational corporation
that was once a partnership between Group Bourbon, Union of Sugarcane II, and Tay
Ninh Union of Sugarcane. TTC AgriS aspires to maximize the entire value chain, which
is diversified and rich in potential to avoid negative consequences on the environment.
Besides, TTC AgriS has consistently accepted the "green" business approach as its core
value throughout its more than five decades of operation, viewing it as its own identity
towards a holistic value chain and establishing a sustainable competitive edge.
TTC AgriS is a prominent agricultural firm in the local market, accounting for
roughly half of the sugar sector in Vietnam. In particular, TTC AgriS operates in the
industrial business (B2B) and consumer business (B2C) sectors, with over 75 sugar
product lines serving a variety of local client channels as well as more than 29 export
countries.
The Company's shares are listed on the Ho Chi Minh City Stock Exchange under
License No. 27/QD-SGDCKHCM was issued by the Ho Chi Minh City Stock Exchange
on February 18, 2008.
2.2.2. Vision
TTC AgriS aspires to become Asia's leading sustainable and sourced agricultural
product supplier.
2.2.3. Mission
TTC Bien Hoa orients to create modern, sustainable agriculture and brings energy nutrition of natural origin, not genetically modified.
2.2.4. Core value
TTC AgriS's core values are "Efficiency – Creativity – Integrity – Ownership –
Pioneer".
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2.3. History of formation and development
TTC AgriS was founded on July 15, 1995. TTC AgriS aspires to be a sugar factory
with cutting-edge technology and sophisticated equipment, with the main product being
RE Refined Sugar which meets European standards.
In 2007, the enterprise was converted to a joint stock company.
In 2008, TTC AgriS listed 44,824,172 SBT shares on the Ho Chi Minh City Stock
Exchange (HOSE), representing 31.58% of total issued shares.
In 2012 TTC AgriS completed the Affinage Project - Raw Sugar Dissolving
Workshop.
In 2013, the enterprise changed its name to Thanh Thanh Cong Tay Ninh Sugar Joint
Stock Company and issued 6,574,200 ESOP shares.
In 2015, the enterprise combined with Gia Lai Thermal Power Joint Stock Company to
become the largest Sugarcane enterprise listed on Vietnam's stock exchange.
In 2016, TTC AgriS initially appeared in the VN30 Index basket and issued more than
9.1 million ESOP shares.
In 2017, the Company completed the merger with Bien Hoa Sugar Joint Stock
Company and changed its name to Thanh Thanh Cong - Bien Hoa Joint Stock Company.
TTC AgiS completed the Corporation concept by centrally managing all TTC Sugar
Business Units.
In 2018, TTC AgriS began improving corporate governance by international standards.
TTC AgriS was also the first Vietnamese company to export sugar to the United States
and has been named to HOSE's Top 20 Sustainable Development Index - VNSI.
In 2019, TTC AgriS collaborated with ED&F Man Company, DEG, and BIDV to
increase raw material sources and markets to Europe and Cambodia.
In 2020, the first time TTC AgriS’s Sugar Consumption Output achieved 1 million
tons.
In 2021, TTC AgriS successfully deployed the Oracle Cloud ERP system for all 22
SBT units in four countries: Vietnam, Singapore, Laos, and Cambodia.
In 2022, the TTC AgriS export market has grown to include more than 29 countries,
and sugar consumption remained above one million tons. Furthermore, TTC AgriS
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officially addressed the plan of bilateral agricultural development cooperation 4.0 with the
Government of Queensland, Australia. TTC AgriS has been the sole Sugarcane Enterprise
in the VNSI20 index basket for the past five years.
2.4. Share and shareholder information
BASIC INFORMATION
LISTED INFORMATION
SIC code
SBT
Listing date
25/02/2008
Industry code ICB
3577
Place of listing
HSX
Founded year
15/07/1995
Offer price (VND) 30.000
Charter capital (VND) 6.508 billion
Last release date
05/12/2022
Number of employees
Listing volume
673.188.563
2.635
Table 2. Shares information of TTC AgriS
TTC AgriS, a company under the industry code group ICB-3577, has been listed on the
HSX since December 25, 2008, with the SIC code of SBT. As of the last issuance date on
December 5, 2022, the total number of TTC shares listed on the stock exchange is
673,188,563 shares. TTC AgriS currently holds 33.73% of the shares of the group, of
which the company's leadership owns 30.53% of the shares, and the rest is owned by
domestic and foreign individuals, organizations, and shareholders outside holding
15.61%.
Organizational structure and management:
TTC Bien Hoa has an organizational structure according to the principles of modern
corporate governance as follows:
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Figure 2.1. Organizational structure of TTC Bien Hoa JSC
Administrative Council:
- Mrs. Huynh Bich Ngoc (Chairwoman)
- Mrs. Dang Huynh Uc My (Vice Chairwoman of the Board of Directors)
- Mr. Vo Tong Xuan (BOD Member)
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CHAPTER 03. BASIS – METHODS
3.1. Theoretical basis
3.1.1. The concept of financial analysis
Financial analysis is the systematic application of scientific methodologies to
evaluate a company's financial health. The primary purpose of financial analysis is to
examine an organization's viability and stability comprehensively by evaluating data and
identifying relevant trends, ratios, and indicators. It gives vital insights into the strengths
and weaknesses of a company's financial status, allowing stakeholders to analyze risks,
discover opportunities, and make strategic financial decisions. Financial analysts can
measure an entity's overall financial health by analyzing financial data to make informed
decisions and beneficial recommendations for improvement and growth.
3.1.2. Purpose of Financial Statement Analysis
The goal of financial statement analysis might vary greatly depending on the
intended audience. Different stakeholders have different goals and employ financial
statement analysis for different purposes:
- Investors: Investors examine financial statements to assess a company's financial
health, growth potential, and overall performance. The goal is to uncover appealing
investment opportunities, evaluate prospective risks and returns, and make informed
judgments.
- Lenders: Lenders use financial statement analysis to determine borrowers'
creditworthiness and repayment capabilities.
- Management: Management relies on financial statement analysis to evaluate
financial performance and operations to make strategic decisions. The goal is to
increase profitability while also optimizing resource allocation and ensuring
financial stability.
- Internal stakeholders: Financial analysis assists those participating in the business in
establishing solid employment positions and having confidence in devoting
themselves to production and business activities that are in line with their given
tasks.
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3.1.3. Scope of Financial Analysis
TTC AgriS has selected our team to conduct research and analysis of financial
statements for the period of 2019-2022. Our analysis will use the data from the company's
financial statements from 2019 to 2022 to ensure accuracy.
3.2. Methods of Financial Analysis
Our team used a variety of analytical methodologies to obtain exact and specific
conclusions when analyzing TTC AgriS's financial statements. Each method produces
various results and is used in different areas of analysis.
Our team's principal strategy entails comparing and synthesizing actual data gathered
from credible websites with the amounts indicated in financial statements. This method
helps us to derive useful insights and conclusions from the existing financial data.
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CHAPTER 04. FINANCIAL RATIOS
4.1. Liquidity
4.1.1. Overall ratio
The index reflects an enterprise's overall solvency during the reporting period. This
indicator reveals the number of times the company can cover its liabilities with the same
amount of cash as its total assets.
The firm can guarantee general liquidity if the indicator value "Overall ratio"
consistently > 1. Conversely, if this value is < 1, the enterprise cannot guarantee its ability
to pay its debts. The business becomes more insolvent the closer it goes near 1. If this
number > 2, the company's solvency is extremely accurately reflected, although capital
efficiency may not be high and financial leverage may be low. Businesses will struggle to
make a significant growth stride.
Formula: Overall ratio=
2019
Total
assets
Total assets
Liabilities
2020
2021
2022
16,743,296,335,713 17,955,718,783,912 20,470,899,249,259 27,730,368,032,587
Liabilities 10,924,103,440,168 10,313,417,423,502 12,232,594,239,837 18,061,488,986,946
Overall
ratio
1.53
1.74
1.67
Table 4.1. Overview of overall ratio analysis for the period 2019 – 2022
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Figure 4.1. The chart shows the overall ratio for the period 2019–2022
In general, the SBT company's overall ratio for the past four years is higher than 1,
indicating that the business has sufficient financial resources to fulfill its debts. This index
climbed from 1.53 to 1.74 between 2019 and 2020, but it then steadily fell in the years
that followed, reaching only 1.54 in 2022. This declining trend reflects a company's
financial situation, which may be in trouble. If this pattern continues, the business can be
hit with more late fines or expensive interest costs as a result of late payments.
We contrast SBT with rivals in order to obtain a more realistic picture. The overall
ratio is positive for all three companies. In this case, SLS's index has risen steadily over
the years, and most of them are larger than 2, demonstrating the company's excellent
ability to pay. Additionally, the LSS's index was also very high and even reached 3.19 in
2020. Like the other two businesses, LSS consistently guarantees its capacity to pay off
debt. However, a ratio that is too high, indicates that the company's financial resources are
not being utilized effectively or that the inventory is too huge, which prevents the
inventory from being sold to generate revenue during market swings. about sum up,
SBT's financial condition is efficient despite having the lowest overall ratio of the two
corporations. The business must, however, take action to reverse the index's current
downward trend.
Company
2019
2020
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Overall
SBT
1.53
1.74
1.67
1.54
ratio
SLS
1.63
2.03
2.23
2.23
LSS
2.86
3.19
2.61
2.77
Table 4.1. Analysis of the overall ratios of the 3 companies period 2019-2022
Figure 4.2. Chart showing the overall ratios of the 3 companies from 2019 to 2022
4.1.2. Current Ratio
This index gives the most accurate indication of how well assets that are anticipated
to be converted into cash will cover the claims of short-term creditors. It is the most
frequently employed indicator of short-term solvency. The likelihood of insolvency rises
as the ratio gets closer to 0, indicating that the company will be less able to fulfill its
obligations. This ratio must be regularly monitored in order to spot potential financial
hazards and take immediate action.
A high current ratio can indicate that the business has a significant amount of capital
locked up in non-productive assets like extra cash or marketable securities or maybe a lot
of inventory that could go out of date before it can be sold. So, a high current ratio might
not be desirable to shareholders.
Formula: Current ratio = Current assets/Current liabilities
LIQUIDITY
RATIOS
2019
2020
2021
2022
Current assets 9.794.108.835.254 10.030.796.116.425 12.577.330.513.959 18.026.635.002.596
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Short-term
liabilities
8.966.033.051.411 8.807.443.159.566 8.571.563.364.667 15.294.959.798.595
Current ratio
1,09
1,14
1,47
1,18
Table 4.2. Analysis of the Current ratio of TTC - Bien Hoa JSC from 2019 to 2022
Figure 4.3. Chart showing the Current ratio of TTC Bien Hoa JSC from 2019 to 2022
SBT is considered to be prepared to pay its debts when they are due if its current
ratios were all larger than 1. The index continuously rose until it peaked in 2021 at 1.47;
the following year, it slightly declined to 1.18.
Current
ratio
Company name
2019
2020
2021
2022
SBT
1,09
1,14
1,47
1,18
SLS
1,07
1,21
1,30
1,37
LSS
1,20
1,05
0,99
1,17
Table 3.4. Analysis of the Current ratio of the 3 companies period 2019 to 2022
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Figure 4.4. Chart showing the Current ratio of the 3 companies from 2019 to 2022
The three companies' current liquidity ratios did not differ all that much. The most
significant improvement is seen in the SLS’s index, which has been rising over time. The
company appears to have enough cash on hand and short-term assets to pay off its debts
and other commitments on time. In terms of firm LSS, its index typically dropped to less
than 1 in 2021 after the first three years. This demonstrates that the business is in a
downturn, but the index bounced back the next year. Overall, all three businesses have a
strong to excellent current ratio, demonstrating that they have enough cash on hand to pay
their short-term obligations.
4.1.3. Quick Ratio (QR)
The quick ratio measures a company's ability to meet its short-term obligations
using the assets that are most liquid and acts as an indicator of its short-term liquidity
position. Inventories are frequently the least liquid of a company's current assets. As a
result, it is critical to evaluate the company's ability to settle short-term loans irrespective
of inventory sales.
A ratio greater than 1 indicates that a company has enough liquid assets to cover its
liabilities straight away. A quick ratio of less than 1, on the other hand, shows that the
company is unlikely to repay its short-term loans without having to liquidate some of its
larger assets.
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Formula: Quick ratio = (Current assets − Inventories)/ Current liabilities
LIQUIDIT
2019
2020
2021
2022
Y RATIOS
Current
9.794.108.835.254 10.030.796.116.425 12.577.330.513.959 18.026.635.002.596
assets
Inventories 2.781.398.584.531 2.529.346.657.059 3.158.779.109.857 4.625.727.670.410
Short-term
8.966.033.051.411 8.807.443.159.566 8.571.563.364.667 15.294.959.798.595
liabilities
Quick ratio
0,78
0,85
1,10
0,88
Table 4.4. Analysis table of Quick ratio of TTC - Bien Hoa JSC from 2019 to 2022
Figure 4.5. Chart showing the Quick ratio of TTC Bien Hoa JSC from 2019 to 2022
SBT's quick ratio declined dramatically compared to the previous two indices when
inventory was subtracted from assets. Except for 2021, this indication has typically
decreased by less than 1 year over year. Due to its comparatively low quick ratio, SBT
may be experiencing financial difficulties and may neeaboutto sell off goods in order to
generate cash flow. However, the fact that the index has never been lower than 0.5 and
that it tends to rise over time, however, shows that the company has taken attempts to
improve this indicator.
Quick ratio
Company name
2019
2020
2021
2022
SBT
0,78
0,85
1,10
0,88
SLS
0,34
0,69
0,73
0,55
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LSS
0,53
0,64
0,43
0,41
Table 4.5. Analysis of the Quick ratio of the 3 companies period 2019 to 2022
Figure 4.6. Chart showing the Quick ratio of the 3 companies from 2019 to 2022
When compared to the other 2 competitors, the SBT's index is far superior. The
SLS's index also exhibited hints of growth, but it was still relatively low. The LSS's
index, meanwhile, gradually dropped throughout the years until it was completely below
0.5 in the years 2021–2022. Future difficulties for the organization will be numerous if
this condition does not change. The aforementioned data shows that SBT outperforms the
other two businesses in terms of asset and debt management.
4.1.4. Instant Ratio
It specifically establishes the ratio of a company's total cash and cash equivalents to
its current liabilities. The statistic evaluates the company's ability to pay down its shortterm debt using cash or resources that can be swiftly converted to cash, such as easily
traded securities. This information can be used by creditors to decide the amount of
money, if any, they are ready to loan a business.
If this ratio is equal to one or above, it means that the company has enough cash on
hand to pay down all short-term obligations simultaneously. However, to fully and
promptly satisfy short-term liabilities, very few organizations actually have enough cash
and cash equivalents on hand. Because having a significant cash balance indicates either
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poor cash flow efficiency or that the company is building up a sizable reserve of money to
support future objectives.
Formula: Cash ratio = (Cash + Cash equivalents)/ Current liabilities
LIQUIDITY
2019
2020
2021
2022
RATIOS
Cash and
cash
1.004.775.238.727 999.620.661.512 1.823.297.113.682 2.563.428.628.818
equivalents
Short-term
8.966.033.051.411 8.807.443.159.566 8.571.563.364.667 15.294.959.798.595
liabilities
Instant ratio
0,11
0,11
0,21
0,17
Table 4.6. Analysis table of Instant ratio of TTC - Bien Hoa JSC from 2019 to 2022
Figure 4.7. Chart showing the Instant ratio of TTC Bien Hoa JSC from 2019 to 2022
SBT's instant ratio from 2018 to 2021 showed a fluctuating trend with both gains
and decreases, and it was consistently under 0.5. As a result, the corporation is unable to
guarantee the quick repayment of all short-term loans. However. This is not a major issue.
High levels of cash and cash equivalents held by a company also indicate the company's
ineffective use of this liquid asset. Therefore, it is difficult to draw any conclusions about
how the company will develop in the future or whether SBT would be vulnerable to
failure and bankruptcy.
Company
name
2019
2020
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Instant
ratio
SBT
0,11
0,11
0,21
0,17
SLS
0,006
0,012
0,010
0,012
LSS
0,035
0,054
0,038
0,056
Table 4.7. Analysis of the Instant ratio of the 3 companies period 2019 to 2022
Figure 4.8. Chart showing the Instant ratio of the 3 companies from 2019 to 2022
The other two companies' respective indexes are significantly lower, barely rising
over 0.1. The cash ratio is rarely larger than or equal to 1, as very few organizations
actually have enough cash and cash equivalents to meet all short-term liabilities.
However, if this coefficient is too low, it's possible that the 2 businesses SLS and LSS
may struggle to make loan payments. SBT generally outperforms the other 2 businesses in
this ratio, demonstrating the company's efforts to improve it.
4.2. Assets Management Ratios
4.2.1. Inventory Turnover
This ratio is a financial ratio that demonstrates how frequently a company turns over
its stock in relation to its cost of goods sold (COGS) over the course of a specific time
period. The number of days in the period - typically a fiscal year - can then be divided by
the inventory turnover ratio to determine the average number of days it takes for a
company to sell its inventory.
A low ratio may suggest slow sales or overstocking, which is sometimes referred to
as surplus inventory. It could be a result of poor marketing or a flaw in a retail chain's
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merchandising strategy. A high ratio, on the other hand, suggests strong sales.
Alternatively, there may not be enough stock. When it comes to problems, ensuring that a
company has enough stock to support strong sales is better than having decreased
inventory when business is slow.
Formula: Inventory turnover ratio = Sales/Inventories
Ratio/Year
Inventory turnover
2019
2020
2021
2022
2,96
4,31
4,47
4,11
Table 4.8. Analysis table of Inventory turnover of TTC - Bien Hoa JSC from 2019 to 2022
Figure 4.9. Chart showing the Inventory turnover of TTC Bien Hoa JSC from 2019 to 2022
With the exception of 2022, which saw a little decline, the data shows that Inventory
turnover climbed steadily over the years starting in 2019 and reached 4.47 in 2021. This
demonstrates how well the business is managing its inventory. However, as each distinct
industry will demand this index differently, it is vital to compare it to businesses in the
same industry in order to judge how well this index performs. As a result, we make
comparisons with SLS and LSS.
Inventory
turnover
Company
name
SBT
2019
2020
2021
2022
2,96
4,31
4,47
4,11
SLS
1,74
2,78
2,69
1,80
LSS
2,44
4,10
4,50
3,21
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Table 4.9. Analysis of the Inventory turnover of the 3 companies period 2019 to 2022
Figure 4.10. Chart showing the Inventory turnover of the 3 companies from 2019 to 2022
SBT has the highest turnover of the three corporations, according to the statistics in
the graphic. In a similar vein, LSS also had an increase in this index throughout time, but
it abruptly declined in 2022 from 4.5 to 3.21. The ineffective inventory management of
SLS is demonstrated by this organization's Inventory Turnover, which is not excessively
high and has been declining over time. Thus, based on the trend of competitors in the
same industry, we can say that SBT's inventory turnover is relatively high and the
company needs to make plans to ensure this stability.
4.2.2 Receivables turnover and Days' sales in receivables
The receivables turnover ratio measures the efficiency with which a company may
collect on its receivables or the credit it extends to customers.
A high ratio may indicate that a company's debt collection efforts are effective and
that its customers are dependable and timely with their payments. A low ratio may be
caused by inadequate credit policies, ineffective collection tactics, or untrustworthy or
creditworthy customers.
Formula: Receivables turnover = Sales/ Accounts receivable
Day’s sale in receivables is a measurement that shows how long it usually takes a
company to get paid for a transaction. This index is typically computed on an annual,
quarterly, or monthly schedule.
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A high Day’s sale in receivables suggests that a company is probably experiencing
payment delays, which could result in a cash flow problem. A low ratio indicates quick
payment to the company. That money can be prudently invested back into the business.
Typically, a DSO of under 45 days is thought to be low.
Formula: Day’s sale in receivables = 365 days / Receivables turnover
Ratio/Year
Accounts receivable turnover
2019
2020
2021
2022
5,90
9,46
12,10
9,89
Days' sales in receivables
61,91
38,56
30,16
36,90
Table 4.10. Analysis table of Accounts receivable turnover and Days' sales in receivables of TTC
- Bien Hoa JSC from 2019 to 2022
Figure 4.11. Chart showing the Accounts receivable turnover of TTC Bien Hoa JSC from 2019
to 2022
SBT's Receivables turnover climbed steadily from 2019 to 2021, almost doubling
from 5.9 to 12.1 in that time. But in 2021–2022, this index fell to a minimal 9.89, which is
insignificant. shown encouraging indicators in recent years when it comes to business
debt collection efforts.
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Figure 4.12. Chart showing the Days' sales in receivables of TTC Bien Hoa JSC from 2019 to
2022
This demonstrates the importance of the fact that SBT's Days' Sales in Receivables
also fell sharply, almost doubling in the years 2019 through 2021 from 62 to 30 days, only
increasing by 6 days in 2022. It is clear that the company's credit policy, deferred
payment policy, and debt recovery from clients are all reasonably effective. The better the
collection policy is, generally speaking, the greater the receivables turnover ratio and the
shorter the average collection duration. To draw meaningful conclusions, we must
contrast these indicators with those of other companies in the same industry.
Accounts
receivable
turnover
Company
name
SBT
2019
2020
2021
2022
5,90
9,46
12,10
9,89
SLS
7,72
9,39
4,67
5,96
LSS
12,48
14,34
13,82
12,50
Table 4.11. Analysis of the Accounts receivable turnover of the 3 companies period 2019 to 2022
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Figure 4.13. Chart showing the Accounts receivable turnover of the 3 companies from 2019 to
2022
Competing businesses' receivables turnover ratios fluctuated during the course of the
years from 2017 to 2021. The SLS index rose between 2019 and 2020 before dropping
precipitously to 5.96 in 2022. In contrast, even if it varied regularly, LSS's index
nevertheless appeared to be in good condition, higher than the rival two businesses.
Days' sales in
receivables
Company
name
SBT
2019
2020
2021
2022
61,91
38,56
30,16
36,90
SLS
47,31
38,85
78,16
61,29
LSS
29,24
25,46
26,41
29,19
Table 4.12. Analysis of the Days' sales in receivables of the 3 companies period 2019 to 2022
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Figure 4.14. Chart showing the Days' sales in receivables of the 3 companies from 2019 to 2022
Similarly, LSS Days' sales in receivables are excellent when they consistently go
below 30 days. Generally, the Days' Sales in Receivables tend to decline with time and
Receivables Turnover of SBT enterprises are good. This demonstrates that SBT does not
have many challenges when using the company's capital, enforcing its policies, and
collecting debts.
4.2.3 Fixed asset turnover
The fixed asset turnover ratio (FAT) is frequently used by analysts to assess the
efficiency of operations. By comparing net sales (found on the income statement) to fixed
assets (found on the balance sheet), this efficiency ratio evaluates a company's ability to
produce net sales from its fixed-asset expenditures, notably property, plant, and
equipment (PP&E).
A higher ratio indicates that the company's leadership is using its fixed assets more
effectively. A high FAT ratio does not reveal anything about a company's ability to
generate steady earnings or cash flows.
Formula: Fixed asset turnover = Sales/ non-current asset
Ratio/Year
Fixed asset turnover
2019
2020
2021
2022
2,40
3,02
3,68
4,34
Table 4.13. Analysis table of Fixed asset turnover of TTC - Bien Hoa JSC from 2019 to 2022
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Figure 4.15. Chart showing the Fixed asset turnover of TTC Bien Hoa JSC from 2019 to 2022
According to the data table, SBT's fixed asset turnover climbed steadily over time,
rising from 2.4 in 2019 to over double that amount in 2022. This encouraging pattern
demonstrates that the business is making optimal use of its fixed assets and increasing the
revenue it derives from them.
Fixed asset
turnover
Company
name
SBT
2019
2020
2021
2022
2,40
3,02
3,68
4,34
SLS
1,54
1,71
1,27
1,49
LSS
1,45
1,45
1,52
1,73
Table 4.14. Analysis of the Fixed asset turnover of the 3 companies period 2019 to 2022
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Figure 4.16. Chart showing the Fixed asset turnover of the 3 companies from 2019 to 2022
We contrast SBT with competing businesses to conduct a more detailed analysis.
The fixed asset turnover indicator for SLS was continually changing and typically had a
very low value. Although LSS also had an upward trend from 2019 to 2022, the values
were still less than 2. In summary, SBT has consistently outperformed its rivals in terms
of fixed asset turnover. In comparison to its rivals in the market, this is a positive
indication of the company's efficient management of fixed assets.
4.2.4. Total asset turnover (TAT)
The asset turnover ratio compares a company's sales or revenues to the value of its
assets. The asset turnover ratio may be employed to determine how well a company uses
its assets to generate revenue.
The more effectively a corporation uses its assets to generate revenue, the greater its
asset turnover ratio. On the other side, a company that has a low asset turnover ratio is not
successfully using its assets to generate sales.
Formula: Total asset turnover = Sales/ Total average assets
Ratio/Year
Total asset turnover
2019
2020
2021
2022
0,70
0,79
0,81
0,81
Table 4.15. Analysis table of Total asset turnover of TTC - Bien Hoa JSC from 2019 to 2022
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Figure 4.17. Chart showing the Total asset turnover of TTC Bien Hoa JSC from 2019 to 2022
SBT's total asset turnover increased marginally between 2019 and 2022, reaching
0.81 in 2022. The total asset turnover ratio is going down, which indicates that PPH is
doing better at using its assets to make money. A dollar of assets now generates more
money than it did in the past because of increased efficiency.
Total asset
turnover
Company
name
SBT
2019
2020
2021
2022
0,70
0,79
0,81
0,81
SLS
0,66
0,88
0,70
0,69
LSS
0,68
0,75
0,79
0,81
Table 4.16. Analysis of the Total asset turnover of the 3 companies period 2019 to 2022
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Figure 4.18. Chart showing the Total asset turnover of the 3 companies from 2019 to 2022
This index did not significantly differ from rivals in the same industry. SBT,
however, continues to show its capacity for efficient operation when there are programs
and initiatives in place to raise this score over time. In contrast to SLS, this company's
index has been dropping recently, which indicates that its asset management is having
issues.
4.3. Debt Management Ratios
4.3.1. Debt-to-Total Asset Ratio (D/A)
D/A is a financial indicator that measures the extent to which a company has used
debt to finance its assets.
Formula: D/A = Debt/ Total assets
Year
2019
2020
2021
2022
Debt 10.924.103.440.168 10.313.417.423.502 12.232.594.239.837 18.061.488.986.946
Total 16.743.296.335.713 17.955.718.783.912 20.470.899.249.259 27.730.368.032.587
asset
s
D/A
0,6524
0,5744
0,5976
0,6513
Table 4.18. Analysis table of debt to total assets ratio of Thanh Thanh Cong - Bien Hoa JSC from
2019 to 2022
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Figure 4.19. Chart showing the Debt-to-Total assets ratio of TTC Bien Hoa JSC from 2019 to
2022
The debt-to-total assets ratio of Thanh Thanh Cong - Bien Hoa JSC is presented in
the table from 2019 to 2022. The ratio showed volatility over this time frame. In 2019,
Thanh Thanh Cong - Bien Hoa JSC's debt-to-total assets ratio was 0.6524, implying that
65% of its total assets were financed by debt. Then, the ratio fell to 0.5744 in 2020,
indicating that 57% of its total assets were financed by debt. In 2021, the ratio increased
further to 0.5976. In 2022, the ratio continuously rose to 0.6513 indicating that 65% of
Thanh Thanh Cong - Bien Hoa JSC's total assets were funded by debt. Compare to 2019
the 2022’s ratio fell to 0.0011. However, this is a cause for concern, suggesting that the
company could face challenges in repaying its debt if it does not generate sufficient
revenue.
Ratio
Debt to
Total assets
Company
2019
2020
2021
2022
SBT
0,6524
0,5744
0,5976
0,6513
SLS
0,6128
0,4935
0,4494
0,4490
LSS
0,3499
0,3139
0,3831
0,3608
Table 4.19. Debt-to-Equity ratio analysis of three companies from 2019 to 2022
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Figure 4.20. Chart showing the Debt-to-Total assets ratio of the 3 companies from 2019 to 2022
The table shows the Debt-to-Asset Ratios of three companies from 2019 to 2022.
During this period, TTC Bien Hoa's Debt-to-Asset Ratio was consistently higher than that
of the other two companies. This could be an unfavorable indicator as it suggests that
TTC Bien Hoa may encounter challenges and face the risk of insolvency or bankruptcy.
However, from 2021 to 2022, the Debt-to-Asset Ratios of Son La Sugar JSC and Lam
Son Sugar JSC gradually declined, indicating that both companies exhibit strong financial
autonomy and have been successful in capitalizing on opportunities to generate profits for
their shareholders by leveraging their partners' capital.
4.3.2. Debt-to-equity ratio (D/E)
D/E ratio is a financial metric that displays the proportion of equity and debt that is
utilized to fund a company's assets.
Formula: D/E = Debt/ Equity
Year
2019
2020
2021
2022
Debt
10.924.103.440.168 10.313.417.423.502
12.232.594.239.83
7
18.061.488.986.946
Equit
y
5.819.192.895.545
7.642.301360.410
8.238.305.009.422
9.668.879.045.641
D/E
1.8773
1.3495
1.4848
1.8680
Table 4.20. Analysis of SBT's Debt-to-Equity ratio from 2019 to 2022
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Figure 4.21. Chart showing SBT's Debt-to-Equity ratio from 2019 to 2022
Thanh Thanh Cong - Bien Hoa JSC's debt-to-equity (D/E) ratio showed volatility in
the period of 2019 - 2022, which indicates that the majority of the company's assets are
financed through debt. In 2020, there was a sharp decrease in the D/E ratio from 1.8773 to
1.3495, indicating that the company exhibits strong financial autonomy. But after 2020,
there was a sharp increase from 1.3495 to 1.8680. Overall, there was a light decrease of
about 0.0093. Nevertheless, maintaining such a high level of debt can cause concern for
the company.
Ratio
Debt
to
Equity
Company
2019
2020
2021
2022
SBT
1.8773
1.3495
1.4848
1.8680
SLS
1.5824
0.9743
0.8163
0.8150
LSS
0.5381
0.4576
0.6210
0.5644
Table 4.21. Debt-to-Equity ratio analysis of 3 companies from 2019 to 2022
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Figure 4.22. The chart shows the Debt-to-Equity ratio of 3 companies from 2019 to 2022
The debt-to-equity ratio analysis was conducted on three companies during the
period of 2019 - 2022. Upon reviewing the data table, it can be observed that TTC Bien
Hoa JSC consistently had a higher debt-to-equity ratio than its competitors during the
period of 2019 - 2022. The ratios show that the company may be experiencing financial
difficulties and struggling to pay off its debts. Furthermore, it is noteworthy that the debtto-equity ratios of TTC Bien Hoa over this period and Son La Sugar in 2019 are greater
than 1, except for Son La Sugar after 2019 and Lam Son Sugar over this period. This
indicates that the majority of TTC Bien Hoa assets were primarily funded by debt rather
than equity capital.
4.3.3. Long-term debt to equity (LTD/E)
LTD/E ratio is a financial metric that indicates the amount of long-term debt in
relation to the equity that is being utilized in a company's production and business
activities.
Formula: LTD/E = Long-term debt/ Equity
Year
2019
2020
2021
Long-term
liabilities
1.958.070.388.75
7
1.505.974.263.936 3.661.030.875.170 2.766.529.188.351
Equity
5.819.192.895.54
5
7.642.301360.410 8.238.305.009.422 9.668.879.045.641
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LTD/E
0.3365
0.1971
0.4444
0.2861
Table 4.22. Analysis of long-term debt-to-equity ratio of SBT from 2019 to 2022
Figure 4.23. Graph showing the ratio of long-term debt to equity of SBT from 2019 to 2022
Thanh Thanh Cong - Bien Hoa JSC's long-term debt-to-equity (LTD/E) ratio
showed volatility in the period of 2019 - 2022. In 2019, the ratio was 0.3365, indicating
that for every dollar of owner's equity, the company had 0.3365 dollars of long-term debt,
which implies that TTC Bien Hoa had a considerable amount of operating capital
compared to its debt. The situation was better in 2020 when the long-term debt-to-equity
ratio fell from 0.3365 to 0.1971. In 2021, the ratio increased to 0.4444. After that, there
was a decrease in 2022 from 0.4444 to 0.2861. The resulting LTD/E ratio is considered a
"healthy" parameter of a company, usually a LTD/E value below 0.5 is considered good.
In conclusion, there is not a big problem with the ratios within this period.
Ratio
Long-term
debt to equity
Company
2019
2020
2021
2022
SBT
0.3365
0.1971
0.4444
0.2861
SLS
0.4081
0.3120
0.1559
0.0659
LSS
0.0399
0.0588
0.0504
0.0460
Table 4.173. Analysis of long-term debt to equity ratio of 3 companies from 2019 to 2022
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Figure 4.24. Graph showing long-term debt to equity ratio of 3 companies from 2019 to
2022
The table provides an analysis of the long-term debt-to-equity ratio of three
companies over the period of 2018-2021. As shown, TTC Bien Hoa had the highest longterm debt-to-equity ratio compared to its two competitors (except 2019). The long-term
debt-to-equity ratios of the three companies are less than 1, indicating that the three
companies are financially independent.
4.3.4. Interest Coverage Ratio (ICR)
ICR is a financial metric that shows a company's ability to make interest payments
and generate enough profits to pay off its debts during its operations. It is an essential
indicator of a company's financial stability and ability to manage its debt obligations. The
ICR measures the number of times a company's earnings can cover its interest expenses.
Formula: ICR = EBIT/Interest expenses
2019
2020
2021
Net profit
before tax
421.783.945.893
512.359.717.149
5.086.223.164.450 5.086.223.164.450
Interest
expenses
705.491.023.191
685.620.883.846
691.890.712.661
Earnings
1.127.274.969.084 1.197.980.600.995 5.778.113.877.111 5.900.127.348.381
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before interest
and taxes
(EBIT)
Interest
coverage ratio
(ICR)
1.5979
1.7473
8.3512
7.2492
Table 4.24. Analysis of SBT's interest coverage ratio (ICR) from 2019 to 2022
Figure 4.25. Chart showing SBT's interest coverage ratio (ICR) from 2019 to 2022
By reviewing the table, we observe that TTC Bien Hoa had the lowest interest
coverage ratio (ICR) of 1.5979 in 2019 and the highest ratio is 8.3512 in 2021. Although
the company's ICR did not increase significantly from 2019 to 2020, it sharply rose in
2021 and 2022. Indicating that the company is gradually recovering and possesses good
financial capacity to pay off its interest in the future.
Ratio
Interest coverage
ratio
Company
2019
2020
2021
2022
SBT
1.5979
1.7473
8.3512
7.2492
SLS
2.3270
3.7174
6.1302
7.2666
LSS
1.1881
1.9663
2.7869
3.4456
Table 4.25. Data on interest coverage ratio of 3 companies from 2019 to 2022
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Figure 4.26. The graph shows the interest coverage ratio of 3 companies from 2019 to 2022
Upon reviewing the data Table, we observe that TTC Bien Hoa and Son La Sugar
had higher interest coverage ratio (ICR) than Lam Son Sugar. In general, the three
companies steadily increasing, indicating that the companies are gradually recovering and
possess good financial capacity to pay off their interest in the future.
4.4. Profitability
4.4.1. Return on Sales (ROS)
The Return on Sales (ROS) is an important metric used to evaluate a company’s
performance. It offers valuable information regarding the level of profit generated in
relation to each dollar of revenue earned.
Formula: ROS=
Operating
Profit
Net Sales
Revenue
Return on
Sales (ROS)
Opening profit
×100 %
Net sales revenue
2019
2020
2021
2022
259.292.667.062
362.919.816.632
650.368.455.065
873.458.753.885
10.856.612.400.144 12.888.682.601.777 14.924.867.625.715 18.318.941.759.936
2,39%
2,82%
4,36%
4,77%
Table 4.26. Analysis of SBT’s Return on Sales (ROS) for the period 2019 – 2022
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Figure 4.27. The chart shows the return on sales (ROS) TTC - Bien Hoa JSC 2019 – 2022
After reviewing the data table, we can see that Thanh Thanh Cong - Bien Hoa
experienced fluctuations in its profitability ratio, known as the return on sales (ROS). The
lowest ROS value was recorded at 2.39% in 2019, while it reached its highest point at
4.77% in 2022. The ROS of the company exhibited increased volatility year after year.
Notably, Thanh Thanh Cong - Bien Hoa's ROS experienced a modest increase of 2.38%
from 2019 to 2022, indicating that the company is generating higher profits relative to its
revenue.
Ration
RETURN ON
SALES (ROS)
Company name
2019
2020
2021
2022
SBT
2,39%
2,82%
4,36%
4,77%
SLS
7,21%
11,38%
20,45%
21,59%
LSS
0,08%
1,12%
1,24%
2,19%
Table 4.27. Analysis of Return on Sales (ROS) of Companies 2019–2022
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Figure 4.28. The chart shows the return on sales (ROS) of 3 companies 2019–2022
In the analysis of the Return on Sales (ROS) for three companies between 2019 and
2022, it is evident that the ROS index fluctuates but generally shows an increasing trend,
albeit not consistently across the years. Thanh Thanh Cong - Bien Hoa Joint Stock
Company exhibits a lower profit margin on sales compared to Son La Sugar but higher
than Lam Son Sugar Joint Stock Company.
Specifically, Thanh Thanh Cong - Bien Hoa's ROS increased by 0.43% from 2019
to 2020, by 1.54% from 2020 to 2021, and by 0.41% from 2021 to 2022. Son La Sugar's
ROS experienced a more significant increase, rising by 4.17% from 2019 to 2020, by
9.07% from 2020 to 2021, and by 1.14% from 2021 to 2022. As for Lam Son Sugar JSC,
its ROS increased by 1.04% from 2019 to 2020, by 0.12% from 2020 to 2021, and by
0.95% from 2021 to 2022.
Overall, the ROS values indicate varying levels of profitability and efficiency in
generating profits from sales for each company over the analyzed period.
4.4.2. Basic Earning Power (BEP)
The Basic Earning Power (BEP) ratio is a fundamental measure of profitability that
evaluates how effectively a company generates profits from its assets, excluding taxes and
debt service. It offers valuable insights into the inherent earning capacity of a company
and serves as a reliable indicator of its financial robustness.
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Formula: BEP=
EBIT
×100 %
Total assets
2019
2020
2021
2022
1.127.274.969.084
1.197.980.600.995
1.475.490.662.695
1.859.476.584.312
Earnings before
interest and
taxes (EBIT)
Total assets
Basic Earning
Power (BEP)
16.743.296.335.713
6,73%
17.955.718.783.91
2
6,67%
20.470.899.249.259 27.730.368.032.587
7,21%
6,71%
Table 4.28. Analysis of Basic Earning Power (BEP) TTC - Bien Hoa JSC 2019–2022
Figure 4.29. Basic Earning Power (BEP) chart Thanh Thanh Cong - Bien Hoa JSC 2019 – 2022
Based on the analysis of the data table, it is evident that Thanh Thanh Cong - Bien
Hoa's profitability has shown an inconsistent trend over the four-year period, with both
upward and downward fluctuations. In 2019, the company had a BEP ratio of 6.73%,
indicating that it generated earnings equivalent to 6.73% of its total assets. However, in
2020, the BEP ratio slightly declined to 6.67%, suggesting a slight decrease in the
company's ability to generate earnings relative to its asset base.
On a positive note, in 2021, the BEP ratio improved significantly to 7.21%,
indicating enhanced profitability and operating efficiency as the company generated
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higher earnings compared to its assets. Nevertheless, in 2022, the BEP ratio decreased
again to 6.71%, although still higher than the BEP ratios in 2019 and 2020.
Overall, Thanh Thanh Cong - Bien Hoa's performance in terms of profitability
remains relatively positive, demonstrating the ability to earn a profit on its assets.
However, when compared to Son La Sugar, it is evident that Thanh Thanh Cong - Bien
Hoa's BEP ratio in 2022 was significantly lower. This discrepancy poses a potential risk
to the company's future financial performance.
It is important to note that additional analysis, including examination of other
financial ratios and consideration of industry and market factors, would provide a more
comprehensive evaluation of Thanh Thanh Cong - Bien Hoa's overall financial health and
potential risks.
Ratio
BASIC
EARNING
POWER (BEP)
Company name
2019
2020
2021
2022
SBT
6,73%
6,67%
7,21%
6,71%
SLS
8,52%
14,47%
16,41%
15,77%
LSS
2,30%
2,33%
1,74%
2,75%
Table 4.29. Basic Earning Power (BEP) comparison table of 3 companies 2019–2022
Figure 4.30. Basic Earning Power chart (BEP) of 3 companies 2019 – 2022
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This analysis examines the Basic Earning Power (BEP) ratios of three companies
from 2019 to 2022. The data indicates that Son La Sugar JSC demonstrated the highest
profitability among the three companies. Notably, all three companies experienced
irregular fluctuations in their BEP ratios, with both increases and decreases observed.
However, during the period of 2021-2022, Thanh Thanh Cong - Bien Hoa and Son La
Sugar exhibited a decreasing trend, while Lam Son Sugar showed an upward trend. This
suggests that Thanh Thanh Cong - Bien Hoa's financial position is potentially at
significant risk of deterioration.
4.4.3. Return on total assets (ROA)
The Return on Total Assets (ROA) is a financial ratio that offers valuable insights
into how well a company utilizes and manages its assets. It allows stakeholders to assess
the company’s efficiency in generating earnings from its asset base, making it a crucial
metric for evaluating the company’s overall financial performance.
¿
Formula: ROA=Net income available ¿ common stockholders Total assets ×100 %
Net income
available to
common
2019
2020
2021
2022
259.292.667.062
362.919.816.632
650.368.455.065
873.458.753.885
stockholders
Total assets
16.743.296.335.713 17.955.718.783.912 20.470.899.249.259 27.730.368.032.587
Return on
total assets
1,55%
2,02%
3,18%
3,15%
(ROA)
Table 4.30. Return on assets (ROA) data table of TTC - Bien Hoa JSC (period 2019–2022).
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Figure 4.31. Return on assets (ROA) chart of Thanh Thanh Cong - Bien Hoa JSC in the period of
2019 – 2022
After examining the financial data, it is clear that Thanh Thanh Cong - Bien Hoa has
experienced an upward trend in its Return on Total Assets (ROA), although there was a
slight decrease from 3.18% in 2021 to 3.15% in 2022. This positive trend suggests that
the company has been utilizing its assets more efficiently over the years. Specifically, the
ROA ratio has increased by approximately 1.6% from 2019 to 2022, indicating a
significant improvement in the company's ability to generate profit from its assets. The
ROA ratio holds substantial implications for the company's financial sustainability in the
future.
Ratio
RETUR
N ON
Company name
SBT
SLS
ASSETS
(ROA)
LSS
2019
2020
2021
2022
1,55%
2,02%
3,18%
3,15%
4,86%
10,58%
13,73%
13,60%
0,06%
0,86%
0,91%
1,75%
Table 4.31. Comparison table Return on assets (ROA) of 3 companies 2019–2022
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Figure 4.32. Return on assets (ROA) chart of 3 companies in the period of 2019 – 2022
An examination of the Return on Total Assets (ROA) ratios for three companies
over the past four years reveals that Son La Sugar Joint Stock Company consistently
achieves the highest ROA compared to Thanh Thanh Cong - Bien Hoa JSC and Lam Son
Sugar JSC. Son La Sugar Joint Stock Company's ROA ranges from 4.86% to 13.6%,
while Thanh Thanh Cong - Bien Hoa JSC's ROA ranges from 1.55% to 3.15%, and Lam
Son Sugar JSC's ROA ranges from 0.06% to 1.75%. It is notable that Lam Son Sugar
Joint Stock Company has experienced a growth trend in its ROA ratio. In contrast, both
Thanh Thanh Cong - Bien Hoa and Son La Sugar JSC exhibit fluctuating trends, with
both increases and decreases observed over the years. However, during the period of
2021-2022, both companies experienced a slight decline in their ROA ratios. This trend
raises concerns as it suggests a projected decrease in profitability per dollar of assets for
these two companies in the future.
4.4.4. Return on equity (ROE)
The Return on Equity (ROE) is a widely employed financial ratio that assesses the
efficiency with which a company utilizes its equity to generate income and returns for its
common stock shareholders. It quantifies the income earned per dollar of equity invested
in the company's operations and business. This ratio is commonly referred to as the rate of
return on equity investment.
¿
Formula: ROE=Net income available ¿ common stockholders Common equity ×100 %
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2019
2020
2021
2022
259.292.667.062
362.919.816.632
650.368.455.065
873.458.753.885
5.819.192.895.545
7.642.301.360.410
8.238.305.009.422
9.668.879.045.641
4,46%
4,75%
7,89%
9,03%
Net income
available to
common
stockholders
Common
Equity
Return on
equity
(ROE)
Table 4.32. Data table Return on equity (ROE) TTC - Bien Hoa JSC 2019–2022
Figure 4.33. Chart showing Return on Equity (ROE) TTC - Bien Hoa JSC 2019 – 2022
The company's Return on Equity (ROE) has displayed fluctuations over the past
four years, rising from 4.46% in 2019 to 9.03% in 2022. This signifies an increasing
ability to generate income per dollar of invested capital over time. A growing ROE
suggests an improvement in the company's efficiency in utilizing its capital. The upward
trend in ROE raises concerns for the company's future, as it indicates a continued increase
in the return on invested capital.
Ratio
Company name
2019
2020
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Return
on
SBT
SLS
Equity
(ROE)
LSS
4,46%
4,75%
7,89%
9,03%
12,55%
20,89%
24,94%
24,69%
0,09%
1,25%
1,47%
2,73%
Table 4.33. Comparison table Return on Equity (ROE) of 3 companies 2019–2022
Figure 4.34. Chart showing Return on Equity (ROE) of 3 companies 2019 – 2022
According to the provided data table, Son La Sugar Joint Stock Company exhibits
the highest return on equity compared to Thanh Thanh Cong - Bien Hoa JSC and Lam
Son Sugar JSC. However, there is a slight decline in Son La Sugar's ROE during the
period of 2021-2022. Specifically, Son La Sugar's return on equity ranges from 12.55% to
24.69% over the past four years, Thanh Thanh Cong - Bien Hoa's ranges from 4.46% to
9.03%, and Lam Son Sugar's ranges from 0.09% to 2.73%. Overall, all three companies
have witnessed a gradual increase in their return on equity over the past four years. This
indicates that each company has been successful in generating profits per dollar of equity
invested.
4.5. The evaluation ratios from the market perspective
Year
2019
2020
2021
2022
P/E
36,15
23,95
19,46
11,60
P/S
0,86
0,67
0,85
0,55
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P/B
1,64
1,17
1,60
1,16
Table 4.34. SBT’s P/E, P/S, and P/B analysis data table from 2019 to 2022
Figure 4.35. The chart shows the evaluation ratios from the market perspective of SBT from 2019
to 2022
4.5.1. P/E analysis
The price-to-earnings (P/E) ratio is a metric used to gauge the market's assessment
of a company's earnings potential. It measures how much investors are willing to pay for
each unit of earnings that a stock produces. Essentially, the P/E ratio is the ratio of the
current market price of the stock to the earnings per share (EPS) of that stock. A higher
P/E ratio indicates that the market expects the company to have higher earnings growth
potential, while a lower P/E ratio indicates that the market is not as optimistic about the
company's future earnings potential.
Formula: P/E = Market value per share/EPS
Year
2019
2020
2021
2022
Market value per share
17,850
15,200
21,000
16,150
EPS
494
635
1,079
1,392
P/E
36,15
23,95
19,46
11,60
Table 4.35. P/E analysis of TTC Bien Hoa JSC from 2019 to 2022
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Upon reviewing the financial data, it is evident that TTC Bien Hoa's P/E ratio has
been on a downward trend, decreasing from 36,15 in 2019 to 11,60 in 2022. This was due
to a period of strong and continuous EPS increase of SBT stock.
4.5.2. P/B analysis
The P/B ratio is a financial metric that compares a company's stock price to its book
value, indicating how much the stock price exceeds the business's book value. A higher
P/B ratio typically reflects higher growth expectations for the company, while a lower P/B
ratio indicates lower growth expectations.
Formula: P/B = Market value per share/ Book value per share
Year
2019
2020
2021
Total assets
16.743.296.335.71
3
17.955.718.783.912 20.470.899.249.259 27.730.368.032.587
Value of
intangible
assets
114.143.403.482
226.740.803.653
Debt
10.924.103.440.16
8
10.313.417.423.502 12.232.594.239.837 18.061.488.986.946
Shares
outstanding
525.142.839
571.829.119
602.657.704
627.606.623
Book value
per share
10.863
12.667
12.760
13.902
Market
value per
share
17.850
15.200
21.000
16.150
P/B
1.64
1.17
1.60
1.16
330.334.295.978
2022
943.581.681.740
Table 4.36. P/B analysis of TTC Bien Hoa JSC from 2019 to 2022
Based on the financial data from 2019 to 2022, the P/B ratio of the company shows
slight fluctuations over the past four years. In 2020, the company’s P/B fell by 0.47,
implying that a negative perception of the company's business situation by the market.
After that, the increase of 0.43 in the index in 2021 compared to 2020 reflects a more
optimistic view of the company's business situation by the market, with investors willing
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to spend a higher amount to invest in TTC Bien Hoa's stocks. However, at the end of the
period, the index is downward to 1.16.
4.5.3. P/S analysis
The P/S ratio is a valuation metric that compares a company's stock price to its
revenue per share, indicating how much investors are willing to pay for each dollar of the
company's revenue.
Formula: P/S = Market value per share/ Sales per share
Sales per share = Net revenue/ Shares outstanding
Year
2019
Net
10.856.612.400.14
4
revenue
Shares
2020
2021
2022
12.888.682.601.777 14.924.867.625.715 18.318.941.759.936
525.142.839
571.829.119
602.657.704
627.606.623
20673,63695
22017,07669
24083,27131
29188,57305
17.850
15.200
21.000
16.150
0.86
0.67
0.85
0.55
outstanding
Sales per
share
Market
value per
share
P/S
Table 4.37. P/S analysis of TTC Bien Hoa JSC from 2019 to 2022
Based on the financial data from 2019 to 2022, the P/S ratio of the company shows
slight fluctuations over the past four years. The ratio was the lowest in 2022, with an
index of 0.55, and the highest in 2019, with an index of 0.86. While there was a slight
fluctuation of 0.19 in the 2019-2020 period, indicating that investors were not willing to
pay a high price for each dong of revenue generated by the business. After that, the index
increased by 0.18 in 2021, implying that TTC Bien Hoa JSC has managed to earn
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investors' trust in the 2020-2021 period. However, there was the lowest index 0.55 in
2022.
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CHAPTER 05. BANKRUPTCY ANALYSIS
5.1. Model Z-Score
Edward Altman, a professor at New York University, developed and published the
Z-Score model in the late 1960s. His idea of developing this model began during the
Great Depression when the default rate of enterprises increased sharply. This model is
considered the original model applied by many researchers in many different continents
and countries to forecast credit risk and asset risk. In fact, Altman's Z-Score formula has
actually given investors understanding of a company's overall financial health.
Altman (2000) investigates the factors that influence the likelihood of failure in
small and medium-sized businesses in the United States. Working Capital/Total Assets
ratio, Retained Earnings/Total Assets ratio, Earnings Before Interest and Tax/Total Assets
ratio, Market Value of Equity/Total Liabilities ratio, Total Sales/Total Assets ratio are the
five separate variables (financial ratios) that are the best predictors of the possibility of
corporate default, according to the research results. The criteria employed in the
calculation method are easily gathered on the enterprise's financial accounts and widely
spread to the public.
The formula of the Z model is expressed by the following equation, where Z is
considered as the composite index:
Z = 1,2A + 1,4B + 3,3C + 0,64D + 0,999E
Explain the five financial ratios in Z-Score:
A. Working Capital/Total Assets:
The gap between a company's current assets and current liabilities is its working
capital. A company's short-term financial health is determined by the value of its
working capital.
Working capital = Current assets – Short-term liabilities
B. Retained Earnings/Total Assets:
The retained earnings/total assets ratio indicates how much profit or loss a firm
keeps. New companies often have a low ratio of retained earnings to total assets
because there has not been much time to accumulate retained earnings. Therefore,
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the probability that these companies are often classified as bankrupt is higher than
that of more established companies.
C. Earnings Before Interest and Taxes (EBIT)/Total Assets:
EBIT is an indicator of the profitability of an organization that relates to the
profitability of its operations only, excluding taxes and debt. The EBIT/Total Assets
ratio measures the ability of a business to produce enough revenue to maintain
profitability while also financing continuing operations and debt obligations.
D. Market Value of Equity/Total Liabilities:
Market value, or market capitalization, is the equity value of a company. This
value is calculated by multiplying the number of shares outstanding by the current
share price.
The market equity/total liabilities ratio measures how much of a decline in the
value of a company's assets before liabilities exceed assets and result in the company
becoming insolvent. This high ratio can be interpreted as high confidence of
investors in the financial strength of the company.
E. Total Sales/Total Assets:
The ratio of total sales to total assets shows how effectively management is using
assets to generate revenue compared to competitors. This high ratio means that
management only needs to require a small investment to be able to generate revenue,
increasing the overall profit of the company.
Conversely, if this ratio is low or tends to decrease over time, it means that
management needs to use more resources to be able to generate enough revenue,
resulting in a decrease in the company's profits.
Usually, the lower the Z-score, the higher the probability that the business is about
to go bankrupt. Therefore, the way to classify and evaluate enterprises based on calculated
data of investors can be determined as follows:
 If a Z-score below 1.8 indicates (Z < 1.8), then the company is in distress zone,
facing financial difficulties and high probability of bankruptcy.
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 If a Z-score between 1.8 and 2.99 (1.8 < Z < 2.99), the company is in the gray
zone, no short-term problem. However, the company still needs to consider its
financial situation carefully because of the possibility of bankruptcy.
 If a Z-score is greater than 2.99 (Z > 2.99), the company is in a safe zone,
financially healthy and unlikely to file for bankruptcy.
Analyzing the Z-score Model of Thanh Thanh Cong Company:
Ratio
Z = 1,2A + 1,4B + 3,3C + 0,64D + 0,999E
2019
2020
2021
2022
A
0,04945715391
0,06813166165
0,1956810544
0,0985084367
B
0,01603184065
0,02028651741
0,03151014699
0,03154101695
C
0,06732694366
0,06671861012
0,07207747177
0,06705560424
D
0,858084119
0,8627597302
1,063887569
0,5611855683
E
0,6484154722
0,7178037681
0,729077284
0,660609399
Index Z
1,500912969
1,599582723
1,926023378
1,402758595
Table 5.1. Z-score Model Analysis Table of TTC – Bien Hoa JSC in 2019-2022
Through the Z-score results table of Thanh Thanh Cong Company from 2019 to
2022, it can be seen that the company's scores over the years were very low, especially in
2022 when the lowest score is 1,402, down 27.17 % compared with the last year. This is a
worrying point when the company's score for 4 consecutive years has been in the danger
zone, with high bankruptcy risk.
However, in 2021, the Company has a better signal when the score in the gray area
is 1,926, this is the highest value in this period, increasing by about 20.41% compared to
the previous year. Although this is a positive sign for the company, it still needs to be
considered when the risk of bankruptcy is still high. This makes Thanh Thanh Cong more
cautious in his financial and business matters.
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Taking a closer look at the Z-score model, we can see that the 4 indices A, B, C, E
are all related to assets when total assets are all denominators of the above 4 indices.
Therefore, minimizing unnecessary assets is necessary to optimize the financial problems
of Thanh Thanh Cong. The company needs to identify assets that do not contribute to
value creation in terms of revenue and liquidate them gradually. This helps to increase the
company's working capital. Thanh Thanh Cong may also sell assets that are recognized as
liabilities. This not only reduces interest expense but also reduces total debt, leading to an
increase in D. In addition, the company can also increase retained earnings by reducing
the cost of dividends to shareholders to improve index B without negatively affecting
index D.
On the other hand, in 2019 and 2020, the financial health of enterprises has
decreased alarmingly after Vietnam had COVID-19 outbreaks and prolonged social
distancing. In this situation, Thanh Thanh Cong's business activities were seriously
reduced. Overall, from analyzing the results of the Z-score model, the company has had a
gradual recovery after 2 years of decline in 2019 and 2020, but the company is still in an
alarming state and needs to continue developing for the future business.
5.2. The balanced scorecard
The Balanced Scorecard is a system used to track and manage corporate strategies. It
is a combination of many indicators and values, considered as the driving force, as well as
the result of the company's goals. By analyzing the Balanced Scorecard, managers can
make plans based on key metrics and track them. In addition, the Balanced Scorecard
helps companies measure the success of their strategies; whether the business is moving
in the right direction, and whether the company can achieve the goals set out earlier.
For Thanh Thanh Cong Company, the financial goal for the period 2019-2022
focuses on the growth of the company's revenue and pre-tax profit. The planned financial
targets of Thanh Thanh Cong are presented in the following table:
Financial
indicators
Total planned
2019
2020
2021
2022
11,545,100,000,000 10,922,000,000,000 14,358,000,000,000 16,962,000,000,000
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revenue
Earning before
tax plan
680,000,000,000
430,000,000,000
662,000,000,000
752,000,000,000
Earning before
tax / Total
revenue
5.89%
3.94%
4.61%
4.43%
-5.40%
31.46%
18.14%
Revenue
growth rate
Table 5.2. Table of planned financial targets of Thanh Thanh Cong Company (2019-2022)
Performance of SBT's financial goals (2019 – 2022)
SBT has been actively implementing financial goals throughout the period of 2019 –
2022, the results of SBT's efforts in achieving these goals are summarized in the table
below:
Financial
indicators
2019
2020
2021
2022
Total
realized
revenue
10,856,612,400,144 12,888,682,601,777 14,924,867,625,715 18,318,941,759,936
Earning
before tax
(EBT)
421,783,945,893
512,359,717,149
783,599,950,034
1,045,572,400,381
3.89%
3.98%
5.25%
5.71%
18.72%
15.80%
22.74%
Earning
before tax /
Total
revenue
Revenue
growth rate
Table 5.3. Actual financial targets of Thanh Thanh Cong Company (2019-2022)
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Percentage achieved against target
Financial indicators
2019
2020
2021
2022
Total revenue
94.04%
118.01%
103.95%
108.00%
Earning before tax
62.03%
119.15%
118.37%
139.04%
Earning before tax / Total revenue
65.96%
100.97%
113.87%
128.74%
-346.80%
50.22%
125.39%
Revenue growth rate
Table 5.4. The percentage of achieving the target compared to the plan of TTC Bien Hoa (2019 2022)
Based on the above table, it can be seen that Thanh Thanh Cong Company was
unable to achieve the planned target of total revenue in 2019, the result was only about
94% of the plan. But it is worth noting that from 2020 onwards, the Company has
exceeded the set total revenue target, which is at least 3.95% higher than the plan in 2021.
In terms of profit before tax, in 2019, the Company still could not exceed the set
target, reaching only 62.03% of the plan. But from 2020 onwards, Thanh Thanh Cong has
prospered when it is able to exceed the target. With the lowest target of 118.37% in 2021
and the highest at 139.04% in 2022.
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Figure 5.1. The chart shows the actual and target revenue performance of Thanh Thanh Cong
Company (2019 – 2022)
Figure 10.2. The chart shows the actual and target profit before tax of Thanh Thanh Cong
Company (2019 - 2022)
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Figure 5.3. The chart shows the actual and target profit-to-revenue ratio of Thanh Thanh Cong
Company (2019 - 2022)
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CHAPTER 06. RISK ANALYSIS
6.1. Analysis of relevant ratios
6.1.1. Debt-to-equity ratio analysis
2019
2020
2021
2022
Account
payable
10,924,103,440,168
10,313,417,423,502
12,232,594,239,837
18,061,488,986,946
Owner’s
Equity
5,819,192,895,545
7,642,301,360,410
8,238,305,009,422
9,668,879,045,641
Debt-toequity
1.88
1.35
1.48
1.87
Table 6.1. Analysis of Thanh Thanh Cong’s Debt-to-Equity ratio from 2019 to 2022
The debt-to-equity (D/E) ratio indicates a company's level of financial leverage by
comparing debt to equity. Thanh Thanh Cong's D/E ratio decreased from 2019 to 2020
but tends to gradually increase again until 2022. This shows that the company's risk
increases in case of financial difficulties. Although the highest D/E ratios are only 1.88
and 1.87, which are not very high compared to other companies, Thanh Thanh Cong
should still be cautious when financial risks are worrisome.
6.1.2. Debt-to-asset ratio analysis
2019
2020
2021
2022
Total
asset
16,743,296,335,713
17,955,718,783,912 20,470,899,249,259
27,730,368,032,587
Account
payable
10,924,103,440,168
10,313,417,423,502 12,232,594,239,837
18,061,488,986,946
Debt-toasset
0.65
0.57
0.60
0.65
Table 6.2. Analysis of Thanh Thanh Cong’s Debt-to-Asset ratio from 2019 to 2022
The debt-to-assets (D/A) ratio is a reflection of a company's debt to total assets.
Thanh Thanh Cong Company's D/A ratio fluctuates at 0.65 in the period of 2019 - 2022.
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This shows that the company is not too dependent on loan capital. However, with a ratio
above 0.5, the company should still consider it because it shows that Thanh Thanh Cong
may face financial difficulties when the loans are in trouble, or when the debt has to be
paid back if the revenue is not generated enough. It is important to monitor this trend
carefully, as large amounts of borrowed capital can also cause financial difficulties.
2019
2020
2021
2022
Accounting
profit before
tax
42,783,945,893
512,359,717,149
783,599,950,034
1,045,572,400,381
Interest
expenses
705,491,023,191
685,620,883,846
691,890,712,661
813,904,183,931
1,127,274,969,084
1,197,980,600,995
1,475,490,662,695
1,859,476,584,312
1.60
1.75
2.13
2.28
Earnings
Before
Interest and
Taxes (EBIT)
Interest
coverage
(ICR)
6.1.3. Interest coverage analysis
Table 6.3. Analysis of Thanh Thanh Cong’s Interest coverage (IC) ratio from 2019 to 2022
The Interest Coverage (IC) ratio assesses a business's ability to cover its interest
charges using pre-tax income and interest payments. This ratio of Thanh Thanh Cong
shows significant growth from 1.60 to 2.28 in the period of 2019 – 2022. This proves the
ability to cover high-interest expenses in the future and ensures lower interest rates on
corporate loans. However, despite this positive upward trend of IC, the D/A and D/E
ratios still indicate the company's financial instability. Moreover, this high IC ratio cannot
guarantee the company's ability to avoid bad debt in the future. Therefore, although the IC
rate is positive, Thanh Thanh Cong still should not be subjective but needs to ensure
sustainable development.
6.1.4. Net profit margin analysis
2019
2020
2021
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Net Income
873,458,753,885
362,919,816,632
650,368,455,065
873,458,753,885
Revenues from
sale of goods
and rendering
of services
18,367,176,407,725
12,923,457,051,438
14,940,490,283,184
18,367,176,407,725
4.76%
2.81%
4.35%
4.76%
Net profit
margin
Table 6.4. Analysis of Thanh Thanh Cong’s Net profit margin from 2019 to 2022
Thanh Thanh Cong's growth rate can be measured by the Sales growth index, which
shows the percentage of sales in a given period of time. In the period of 2019 - 2022, the
company's sales growth rate is relatively low, all below 5%. This shows that the
company's situation is still not stable, it can be said to be in a serious condition.
Therefore, the Company needs to have a more reasonable investment and business
development strategy in the future to be able to improve its growth rate in the future.
6.2. Financial leverage analysis
6.2.1. Degree of Operating Leverage (DOL)
The Degree of Operating Leverage (DOL) is a financial ratio used to assess the
influence of fixed and variable expenses on the operations of a firm. It contributes to a
better understanding of how variations in sales affect earnings before interest and taxes. It
can be said that DOL measures the percentage change in earnings before interest and
taxes for each percentage change in sales.
2018
2019
2020
2021
2022
Accounting
profit
before tax
421,783,945,893
421,783,945,893
512,359,717,149
783,599,950,034
1,045,572,400,381
Interest
expenses
714,074,144,851
705,491,023,191
685,620,883,846
691,890,712,661
813,904,183,931
Net
revenues
from sale
of goods
and
rendering
10,284,695,599,709
10,856,612,400,144
12,888,682,601,777
14,924,867,625,715
18,318,941,759,936
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of service
EBIT
1,135,858,090,744
1,127,274,969,084
1,197,980,600,995
1,475,490,662,695
1,859,476,584,312
%∆EBIT
-0.76%
6.27%
23.16%
26.02%
%∆S
5.56%
18.72%
15.80%
22.74%
DOL
-0.1359
0.3351
1.4663
1.1444
Table 6.5. Table of Degree of Operating Leverage of Thanh Thanh Cong from 2019 to 2022
Based on the above table of results, it can be seen that the company's DOL has
increased significantly from -0.1359 in 2019 to 0.3351 in 2020, the level of operating
leverage of the company has increased significantly during this period. In 2020, the
company is more likely to be profitable due to increased output and revenue, which has a
significant impact on pre-tax profit. And in the following years, specifically in the period
2020 - 2022, the level of leverage has a stronger growth. This can be explained by the
increase in output and revenue compared to the previous year. Additionally, this increased
DOL may reflect the company's gradual recovery from the COVID-19 pandemic between
late 2021 and early 2022.
6.2.2. Degree of Financial Leverage (DFL)
The Degree of Financial Leverage (DFL) is a financial ratio that measures the
impact of a business's financial policy by looking at a combination of liabilities and
equity. The DFL represents the ratio of earnings before interest and taxes (EBIT) to
earnings before taxes (EBT), as well as the percentage change in net profit or earnings per
share (EPS) per percent change. EBIT also refers to the amount of interest a business can
generate before paying any interest or taxes on the money the company has borrowed.
2018
2019
2020
2021
2022
EBI
T
1,135,858,090,744
1,127,274,969,084
1,197,980,600,995
1,475,490,662,695
1,859,476,584,312
EBT
421,783,945,893
421,783,945,893
512,359,717,149
783,599,950,034
1,045,572,400,381
2.6726
2.3382
1.8830
1.7784
DFL
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Table 6.6. Degree of Financial Leverage of TTC Bien Hoa JSC from 2019 to 2022
Based on Thanh Thanh Cong's analysis above, it can be seen that the percentage
change in EBIT led to a gradual decrease in net income from 2.6726 in 2019 to 1.7784 in
2022. This implies that the company is currently using less debt capital to reduce financial
risk in the event of insolvency. Also showing the company's efforts in solving financial
difficulties, is a positive sign of the company's ability to grow.
6.2.3. Degree of Total Leverage (DTL)
The Degree of Total Leverage (DTL) measures the impact of operating and financial
leverage on corporate profitability. While operating leverage affects profits based on
changes in sales, financial leverage magnifies equity by changing the amount of debt and
equity financing. The combination of both operating and financial leverage is known as
compound leverage.
2019
2020
2021
2022
DOL
-0.1359
0.3351
1.4663
1.1444
DFL
2.6726
2.3382
1.883
1.7784
DTL
-0.3632
0.7835
2.7610
2.0352
Table 6.7. Degree of Total Leverage of TTC Bien Hoa JSC from 2019 to 2022
A company may decide to invest in fixed assets (affect F) and finance that
investment with borrowed capital (change I) which will determine the volatility of
revenue (S) affects the return (NI/EPS) of the owner.
The Degree of Total Leverage (DTL) can reflect how a company's decisions to
invest in fixed assets and finance them with debt affect fluctuations in revenue and return
on equity. Thanh Thanh Cong's DTL by years is -0.36 in 2019, 0.78 in 2020, 2.76 in 2021
and 2.04 in 2022. DTL's trend is influenced by DOL and DFL, as it is a combination of
both. The gradual increase in DTL shows that the company's cost risks are increasing and
the stability of the business is decreasing. This means that the company needs to ensure
future financial stability.
In conclusion, based on the analysis of key financial ratios such as D/A, D/E,
Interest Coverage, Net Profit Margin, and Financial Leverage, it can be seen that Thanh
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Thanh Cong Company is facing many financial difficulties. Under the impact of the
COVID-19 pandemic, many complicated fluctuations have been created in the general
economic situation. Although there has been some improvement, the company needs to
do more to address the remaining challenges.
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CHAPTER 07. GROWTH ANALYSIS
The Dupont Model is a performance evaluation method utilized to analyze corporate
profitability by integrating elements from both the income statement and balance sheet.
This model serves as a valuable tool not only for assessing a company's profitability but
also for evaluating its growth potential. By examining the various components that
contribute to a company's return on equity (ROE) and return on assets (ROA), investors
and financial experts can gain a deeper understanding of the factors influencing the
company's growth. A high rate of return indicates that the company has effectively
utilized both its equity and assets to generate favorable returns. By enhancing
profitability, a company can boost its revenue and profits, and the Dupont model assists in
identifying the key factors necessary to achieve this growth objective. The formulas for
calculating ROE and ROA are as follows:
Return on equity (ROE)
ROE=Net income available ¿ common stockholder
Net income Sales Assets
¿
=
×
×
Commonequity
Sales
Assets Equity
¿ Profit margin ×Total assets turnover × Equity multiplier
Return on assets (ROA)
ROA=Net income available ¿ common stockholders
Net income Sales
¿
=
×
Total assets
Sales
Assets
¿ Profit margin ×Total assets turnover
Ratio
Net profit
Net
Revenue
Total assets
Owners'
equity
ROE
Return On
Sales (ROS)
Year
2019
2020
2021
2022
259.292.667.062
362.919.816.632
650.368.455.065
873.458.753.885
10.856.612.400.144
12.888.682.601.777
14.924.867.625.715
18.318.941.759.936
16.743.296.335.713
17.955.718.783.912
20.470.899.249.259
27.730.368.032.587
5.819.192.895.545
7.642.301.360.410
8.238.305.009.422
9.668.879.045.641
4,46%
4,75%
7,89%
9,03%
2,39%
2,82%
4,36%
4,77%
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Total asset
turnover
Financial
leverage
ROA
0,65
0,72
0,73
0,66
2,88
2,35
2,48
2,87
1,55%
2,02%
3,18%
3,15%
Table 7. Dupont Model Analysis Table of TTC AgriS in 2019–2022
Figure 7. Graph showing ROE and ROA in Dupont model analysis
The presented table and graph offer valuable information regarding the company's
Dupont model, allowing for meaningful analysis and understanding.
In 2019, TTC - Bien Hoa had the lowest levels of ROA and ROE, reaching 1.55% and
4.46% respectively. Additionally, the average total asset turnover of only 0.65 indicates
that the company's utilization of its assets is not efficient. The company's financial
leverage was low at 2.88, and the net profit margin was also low at 2.39%, suggesting that
the company generates relatively low profits from its sales.
In 2020, the company experienced an increase in both its ROA and ROE to 2.02% and
4.75% respectively. While there was an improvement in the total asset turnover, it
remained low at 0.72. Additionally, the company's financial leverage decreased to an
average of 2.35. On a positive note, the net profit margin showed an upward trend,
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reaching 2.82%. This improvement suggests an enhancement in the company's business
performance.
In 2021, the company's financial performance showed a notable increase in the net
profit margin, reaching 4.36%. The company’s total asset turnover is 0.73, indicating
slightly more efficient utilization of assets compared to the index in 2020 (0.72).
Nonetheless, the company's ROA continued to trend upward, reaching 3.18%. The
financial leverage also increased to 2.48, suggesting a gradual increase in the use of
borrowed capital. Moreover, the company maintained a high ROE of 7.89%, indicating a
favorable return on investment for shareholders.
In 2022, the ROE of the company still increased to 9.03%. While the company's ROA
faced a slight downward to 3.15%. Additionally, there was a decrease in the total asset
turnover, which remained at a low level of 0.66. Besides, the company's financial
leverage increased to 2.87. On a positive note, the net profit margin continued to improve,
rising to 4.77% compared to the previous year. These findings highlight the importance
for the company to prioritize enhancing asset management and reducing financial
leverage in order to ensure stability and sustainable growth in the future.
Besides the positive improvement index over the past four years. To improve the
company's business performance and stabilize growth, the following recommendations
were made:
The company's Total Asset Turnover increased considerably from 0.65% in 2019 to
0.73% in 2021 and then declined to 0,66% in 2022, indicating inefficient use of assets.
Compared to 2019, this index was higher but just a slight increase. The result shows that
for each dong of assets, there will be 0,66 dong of corresponding revenue. Therefore, the
company should explore ways to improve asset liquidity, as an increase in total asset
turnover will enable each dong invested in assets to generate more revenue and contribute
to steady growth.
Over the last 4 years, the company's Financial Leverage Ratio decreased slightly from
2,88 in 2019 to 2,47 in 2021 and then increased to 2,87 in 2022. This indicates that the
company has been relying more on debt financing to support its business growth.
However, this also means that the company's business risks have increased.
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Although the company's ROA rose significantly from 2019 to 2021, it dropped slightly
to 3.15% in 2022. This suggests that the company has been struggling with asset
efficiency so SBT must be careful at this point. To improve ROA, the company needs to
enhance asset efficiency and cost management to boost ROS.
In conclusion, to achieve consistent growth and better performance, a company must
conduct a comprehensive review of its financial aspects and identify ways to improve
asset liquidity, lower financial leverage, and enhance financial management efficiency, as
well as other metrics, and adapt them to increase agility, improve equity performance, and
promote digital innovation. These measures will help the company achieve its future
growth targets.
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CHAPTER 08. FORECASTING & FIRM EVALUATION
Our assessment of Thanh Thanh Cong - Bien hoa company is based on its intrinsic
value. The intrinsic value of the company will be determined using the Discounted Cash
Flow (DCF) method, which has five steps. In addition, the team also created a short-term
10-year estimate to get an idea of the company's future status as well as utilize these
calculations to evaluate the company.
Step 1: Determine the company's free cash flow:
The team used the data from the cash flow statement of the company to calculate
Thanh Thanh Cong - Bien Hoa company's free cash flow. The precise formula states that
total capital expenditures must be subtracted from net cash flow from operating
operations in order to compute FCF. The team used the cash for purchasing fixed assets to
represent the total capital expenditures because capital expenditures are sums of money
that a business invests to purchase or upgrade fixed, physical, or non-consumable assets.
Formula: Free cash flow (FCF) = Operating cash flow - Total capital expenditure
2018
2019
2020
2021
2022
Operating
1.085.397.464.105 1.435.467.652.955 98.336.034.285
94.624.273.591 1.174.693.258.695
Cash Flow
Total
-479.534.685.000 -1.303.763.127.960 -302.947.407.068 -347.932.042.951 -142.288.857.489
Capital
Expenditure
1.564.932.149.105 2.739.230.780.915 401.283.441.353 442.556.316.542 1.316.982.116.184
FCF
Table 8.1. FCF data sheet of Thanh Thanh Cong - Bien Hoa JSC in the period of 2019-2022
Step 2: Project the future development index of Thanh Thanh Cong - Bien Hoa
company:
As previously said, the team will predict the company's growth index for the following
few years. The group looks to the following sources of data to be able to anticipate
development at a realistic rate:
- Long-term growth in sugar industry is anticipated because when compared to 2020–
2021, sugar production increased by 7.5% and sugar cane production by more than
11.6%.
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- The growth rate of Thanh Thanh Cong - Bien hoa company's equity and free cash
flow over the last five years. Even though the growth index was negative in 2018–
2019, this index increased and attained a positive index in the following periods and
reached an average of 12,98%. This suggests promising potential for the company's
future business activities.
2018
2019
2020
2021
2022
Average
-4,56%
31,33%
7,80%
17,36%
12,98%
Capita
6.097.359.934.316 5.819.192.895.545 7.642.301.360.410 8.238.305.009.422 9.668.879.045.641
l
%∆
Capita
l
Table 8.2. Equity ratio of Thanh Thanh Cong - Bien Hoa JSC in the period of 2019-2022
- Taking into account the variables, such as the economy's state, pandemics, natural
disasters,... that could potentially have an impact on the company's future cash flow.
Summarizing the aforementioned three elements, it can be said that while Thanh Thanh
Cong - Bien Hoa company's condition overall appears promising, there are still hazards,
as shown by the earlier-mentioned signs. The group has therefore chosen to suggest the
company development index evaluation at 8% for the following ten years.
Step 3: Calculate The Terminal Value:
The terminal value is the sum of money we wish to get if we sell the business at a
specific time (in this case, after keeping it for 10 years). The average Market
Capitalization/FCF ratio for a previous time period suggests the final number. The group
has determined a suitable multiple for FCF, which is 13,61 times, assuming the company
is sold in the tenth year based on historical data. As a result, we may anticipate that the
company will be sold for a price that is 13,61 times its FCF for that particular year.
Market capitalization / FCF
2018
2019
2020
2021
2021
Average
6,66
3,42
21,66
28,60
7,70
13,61
Table 8.3. Market capitalization/FCF of TTC - Bien Hoa JSC for the period 2019-2022
Step 4: Discount all future cash flows:
It is necessary to discount all free cash flows to the base year (2022) in order to
determine how much that future money contributes to the intrinsic value of the company
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today. Although the cash flow that will appear in the future will add value to the business,
it does not represent the business's present value.
It requires a discount rate in order to discount these sums. If we don't purchase Thanh
Thanh Cong - Bien Hoa company right away, this value will demonstrate that we can
invest instead and produce a future rate of return equal to this discount rate. The group
uses the following variables to determine the discount rate: Although the company's
financial status is somewhat unstable, it has shown encouraging indicators and indicates
that it will continue to grow in the future. The yield on 10-year government bonds is
5.3%, market interest rates (measured as the 10-year growth rate of the VN-Index) are
about 8%, and the current tax rate is 10%. The group decides on a relative discount rate of
11% as a result. The present value of currencies in 10 years is calculated as:
PV = FV/(1+11%)n
Step 5: Add up all of the present values of future FCF (terminal values included):
The intrinsic worth of the Thanh Thanh Cong - Bien Hoa company is obtained by
adding all the current values of the money. The evaluated final intrinsic value of the
company should be added to the company's cash holdings (2.563 billion VND) because
the company's current cash holdings can also build value through investments and directly
contribute to the company's intrinsic value.
Year
FCF
PV
1
1.316.982.116.184
1.186.470.374.941
2
1.422.340.685.479
1.154.403.608.050
3
1.536.127.940.317
1.123.203.510.535
4
1.659.018.175.542
1.092.846.658.899
5
1.791.739.629.586
1.063.310.262.713
6
1.935.078.799.953
1.034.572.147.504
7
2.089.885.103.949
1.006.610.738.112
8
2.257.075.912.265
979.405.042.488
9
2.437.641.985.246
952.934.635.934
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10
2.632.653.344.066
927.179.645.774
Terminal Value x FCF 10 years 35.824.012.453.070
12.616.661.153.395
Present Value of Money in the future
23.137.597.778.345
Intrinsic Value
25.701.026.407.163
Intrinsic Value / Shares
40.951
Table 8.4. Intrinsic value & Intrinsic value/ shares of TTC - Bien Hoa JSC
Final intrinsic value (based on market capitalization): about 25.701 billion VND, or
40.951 VND for the stock of Thanh Thanh Cong - Bien hoa company.
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REFERENCE
Gabriel Hawawini, Claude Viallet, (2019) Finance for Executives: Managing for Value
Creation, 6th Edition
Eugene F. Brigham,(2018), Financial Management, Theory and Practice. Đại học Florida,
Cengage Learning Asia Pte Ltd
VCCorp.vn. (n.d.). Kênh Thông tin kinh TẾ - Tài Chính việt nam. Kênh thông tin kinh tế
- tài chính Việt Nam. https://cafef.vn/
Investopedia. (n.d.). Investopedia. https://www.investopedia.com/
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