Table 3.11: Analysis of solvency of APSC Securities Company
Target
Unit | 2011 | Year 2010 | Year 2009 | |
1. Fast payment ability | time | 2.99 | 3.17 | 2.22 |
2. Current payment capacity | time | 2.99 | 3.17 | 2.22 |
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Source: Finance - Accounting Department of APSC Securities Company
The survey shows that Thu Do Securities (CSC), An Binh Securities (ABS), Dong A Bank Securities (DAS), Da Nang Securities (DNSC), EuroCapital Securities (ECC) also conduct solvency analysis but there are differences from the above securities companies in the number of indicators used. The most different is that VSM Securities (VSM) only uses one indicator, which is current solvency, when analyzing solvency. Some other securities companies such as CSC Securities, DAS Securities, ECC Securities use three indicators to reflect current payment, quick payment, and cash payment; An Binh Securities (ABS) uses three indicators on solvency: Total assets/Total liabilities, Total short-term assets/Total short-term liabilities, Total cash and short-term financial investments/Total assets; DNSC Securities uses three indicators, which are current solvency, short-term debt payment ability, and quick payment ability. In addition, CSC Securities also clearly states the calculation formula for each indicator, accordingly, current payment = Current assets/Current liabilities, quick payment = (Current assets - Inventory)/Current liabilities, cash payment = Cash and cash equivalents/Current liabilities. The indicators are calculated only for the reporting year, while the indicators of ABS Securities and DAS Securities are calculated at the beginning of the year (January 1, 2011) and the end of the year (December 31, 2011), while the indicators of DNSC Securities are calculated for the reporting year and the previous year, ECC Securities and VSM Securities only calculate for one reporting year. CSC Securities, DAS Securities, and ECC Securities are the three securities companies among all the surveyed securities companies that calculate the cash payment indicator when analyzing solvency. In addition, CSC Securities is the only securities company that uses the unit of calculation as % for the indicators analyzing solvency.
Table 3.12: Analysis of solvency of CSC Securities Company
Target
2011 | |
1.Current Payment (Current Assets/Current Liabilities) | 1.59% |
2. Quick Payment (TSNH - Inventory)/ Short-term Debt | 1.59% |
3. Payment in cash (Cash and cash equivalents/ Short-term debt) | 1.52% |
Source: Finance - Accounting Department of CSC Securities Company
3.2.2.3. Analysis of operating capacity and profitability
93.33% of the surveyed securities companies analyzed profitability by using the profitability ratio. There were 02 securities companies (accounting for 6.67%), ACB Securities Company (ACBS) and Ho Chi Minh City Securities Company (HSC), which did not analyze this content. About 10% of the surveyed securities companies analyzed operating performance through the turnover ratio. Securities companies calculated the values of the indicators by year or by quarter but did not compare them over the years.
The actual survey shows that the analysis of performance and profitability of securities companies has some characteristics such as: (1) there is no uniformity in the names of analytical indicators among securities companies (for example, some securities companies call it profit margin, some securities companies call it profit ratio, some securities companies call it profit/total assets ratio), (2) there is no uniformity in the data used to calculate analytical indicators (for example, with the same ROA indicator, some securities companies use pre-tax profit to calculate, some securities companies use post-tax profit), (3) there is no uniformity in the way of presenting analytical indicators among securities companies (for example, some securities companies present the calculation formula for each profitability analysis indicator, some securities companies do not do this), (4) there is a difference in the time of analytical indicator data among securities companies (some securities companies only calculate for the reporting year, some securities companies calculate for two years: the reporting year and the previous year, some securities companies calculate for (3 consecutive years), (5) the data of the analysis indicators are only listed over time without comparison, (6) there is no consistency in the analysis method (some securities companies analyze major changes and the causes leading to changes in profitability, some securities companies only list the indicators without any comments or analysis). The following presentation will clearly illustrate the
Characteristics of performance analysis and profitability of securities companies. Vietnam Bank for Agriculture and Rural Development Securities Company (AGRISECO)
analyze profitability through profit margin. AGRISECO Securities Company does not analyze operating performance. Some profitability analysis indicators that this Securities Company uses are pre-tax profit margin/total assets, after-tax profit margin/net revenue, after-tax profit margin/owner's equity. These indicators are calculated by the company in %, data is calculated for the reporting year and the previous year.
Table 3.13: Analysis of profitability of AGRISECO Securities Company
Target
Unit calculate | Year 2010 | Year 2009 | |
1. Pre-tax profit margin/Total assets | % | 1.85 | 1.69 |
2. Profit margin after tax/Net revenue | % | 11.71 | 29.09 |
3. Profit after tax/Equity | % | 8.27 | 11.43 |
Source: Finance - Accounting Department of AGRISECO Securities Company
Securities companies such as: Asia-Europe Securities (AAS), An Binh Securities (ABS), Beta Securities (BSI), Da Nang Securities (DNSC), EuroCapital Securities (ECC), MB Securities (MBS),
Vietnam Prosperity Bank Securities Company (VPBS), VSM Securities Company (VSM), Tri Viet Securities Company (TVSC*), Alpha Securities Company (APSC), Au Viet Securities Company (AVS), Saigon Hanoi Securities Company (SHS), Bao Viet Securities Company (BVSC), Saigon Securities Company (SSI), FPT Securities Company (FPTS)
uses the same profitability analysis indicators, and is similar to AGRESECO Securities Company (the only difference is that it is profit after tax/total assets instead of profit before tax). These securities companies analyze profitability through three indicators: profit after tax/total assets (Securities companies denote it as ROA), profit after tax/net revenue (Securities companies denote it as ROS), profit after tax/owner's equity (Securities companies denote it as ROE), BSI Securities Company uses an additional indicator reflecting profitability, which is profit after tax/charter capital. An Binh Securities Company (ABS) does not use the word "ratio" but calls it "coefficient" (Profit after tax/Net revenue, Profit after tax/Total assets, Profit after tax/Owner's equity) but the unit of calculation is still %. DNSC Securities Company uses profit after tax/total assets, profit after tax/owner's equity) but the unit of calculation is still %.
pre-tax profit to calculate profitability indicators: pre-tax profit/revenue, pre-tax profit/total assets, pre-tax profit/equity. The indicators are calculated for the reporting year and the previous year, except for An Binh Securities Company (ABS) and MBS Securities Company at the beginning of the year (January 1, 2011) and the end of the year (December 31, 2011), while ECC Securities Company, VSM Securities Company (VSM) and VPBS Securities Company only calculate for the reporting year. APSC Securities Company calculates for all 3 consecutive years (2009-2011). TVSC Securities Company only lists the names of indicators and units of calculation for profit margin but does not calculate data for 2011. Thu Do Securities Company (CSC) and Dong A Bank Securities Company (DAS) also analyze profit margin but only use two indicators. Thu Do Securities Company (CSC) uses the ratio of profit after tax/net revenue and the ratio of profit after tax/owner's equity, the ratios are calculated for the reporting year 2011. DAS Securities Company uses the ratio of profit on revenue and profit on capital, the ratios are calculated for the reporting year 2011.
Table 3.14: Analysis of profitability of SHS Securities Company
Target
Unit calculate | Year 2010 | Year 2011 | |
1. Return on Assets (ROA) | % | 2.94 | N/A |
2. Return on Sales (ROS) | % | 12.29 | N/A |
3. Return on Equity (ROE) | % | 5.14 | N/A |
Source: Finance - Accounting Department of SHS Securities Company Not only calculating the analysis indicators, SHS Securities Company also analyzed the major changes compared to the forecast and the reasons leading to the change in profitability: The profitability indicators in 2011 decreased sharply mainly because the company lost 381 billion VND in 2011, while in 2010 the company made a profit (41 billion VND). The reason was that the stock market in 2011 mainly followed a strong downward trend, the company's self-trading portfolio from 2010 was too large. The company's management was also not good, there were many bad debts left, so the provision for bad debts and provision for securities investment depreciation accounted for
significant proportion of the Company's losses in 2011.
Table 3.15: Analysis of profitability of APSC Securities Company
Target
Unit | Year 2011 | Year 2010 | Year 2009 | |
1. Profit after tax/Total assets | % | (8.8) | 0.72 | 1.03 |
2. Profit margin after tax/Net revenue | % | (80.6) | 3.24 | 6.36 |
3. Profit after tax/Equity | % | (12.45) | 1.01 | 1.76 |
Source: Finance - Accounting Department of APSC Securities Company
Hai Phong Securities Company (HASECO) also analyzed profitability by using four profit ratios, including three similar to SHS Securities Company and AVS Securities Company, and one more ratio of profit from business activities/Net revenue. HASECO Securities Company does not call the ratio a ratio but only calls it profit after tax/Net revenue. The ratio is calculated for the reporting year and the previous year.
However, in its financial report, ACB Securities Company (ACBS) does not use the same indicators as the above securities companies when analyzing profitability, but uses the indicators of revenue, pre-tax profit, and after-tax profit. The indicators are calculated for the reporting year and the previous year, using the unit of VND billion, using the comparison method to calculate the increase/decrease rate over the two years. At the same time, ACBS Securities Company has made comments on the data in the analysis table.
Table 3.16: Financial status report of ACBS Securities Company
Target
Unit of measure | 2010 | 2009 | Rate of increase/decrease | |
1. Revenue | Billion VND | 503 | 523 | -3.8% |
2. Profit before tax | Billion VND | 25 | 346 | -92.77% |
3. Profit after tax | Billion VND | 23 | 318 | -92.77% |
Source: Finance - Accounting Department of ACBS Securities Company
In addition to presenting the index data, ACBS Securities Company has a general analysis of its business results in the financial situation report as follows: The stock market in 2010 can be said to be a difficult year for securities companies. However, with strong financial potential and strategy
With flexible business operations, ACBS still maintains positive business results. According to audited data, revenue from securities trading activities in 2010 reached 503 billion VND, of which: revenue from brokerage activities accounted for 19%, revenue from investment and capital contribution activities accounted for 63%.
Similar to ACBS Securities, Ho Chi Minh City Securities (HSC), Thien Viet Securities (TVSC), VIT Securities (VITS) also do not analyze profitability through profitability ratios like most other securities companies. HSC Securities only calculates some income-related indicators such as return on average equity (this company denotes ROAE), return on average assets (this company denotes ROAA), earnings per basic share, earnings per adjusted share. These indicators are presented by HSC Securities in a table called ''Outstanding financial indicators''. The data of the indicators are calculated and presented for 09 consecutive years, from 2003 to 2011. However, HSC Securities does not provide comparative figures between years, so it does not reflect the trend and growth rhythm of them over the past 09 years.
Table 3.17: Income analysis of HSC Securities Company
Target
2003 | Year … | Year 2009 | Year 2010 | 2011 | |
1. Return on Average Equity (%) (ROAE) | 4.0 | … | 19.5 | 11.7 | 10.7 |
2. Return on average assets (%) ( ROAA) | 4.0 | … | 15.6 | 7.9 | 7.5 |
3. Basic earnings per share (VND) | 430 | … | 7,056 | 3,044 | 2,920 |
4. Adjusted earnings per share (VND) | 30 | … | 3,863 | 2,499 | 2,920 |
Source: Finance - Accounting Department of HSC Securities Company
Some securities companies analyze both profitability and operational capacity such as VNDIRRECT Securities (VNDS), An Phat Securities (APSI), Cho Lon Securities.
(CLS). VNDS Securities Company analyzes operational capacity through revenue/total assets indicators. Profitability indicators such as profit after tax/revenue ratio, profit after tax/equity ratio, profit after tax/total assets ratio, profit from business activities/net revenue ratio. Securities Company
VNDS calls profitability indicators coefficients but the unit of calculation is %.
APSI Securities Company uses a number of indicators to analyze operational capacity such as: Working capital turnover (this securities company gives the formula of net revenue/Average working capital), total asset turnover (this securities company gives the formula of net revenue/Average total assets). Regarding profitability analysis, the analysis indicators are identical to those of VNDS. The indicators are called coefficients but the unit of calculation is % and is only calculated for the reporting year.
CLS Securities also uses the same indicators as APSI Securities and VNDS Securities when analyzing profitability, however, this Securities Company calls them profit ratios. For example, the sales profit ratio (this Securities Company denotes ROS), the asset profit ratio (this Securities Company denotes ROA), the equity profit ratio (this Securities Company denotes ROE). These indicators have the unit of %, calculated for the reporting year and the previous year. At the same time, CLS Securities Company also calculates the operating ratio through the fixed asset utilization efficiency ratio and the asset turnover ratio, without showing the unit of the indicator, the data is calculated for the reporting year and the previous year.
Table 3.18: Analysis of operating capacity and profitability of CLS Securities Company
Target
Unit calculate | Year 2010 | Year 2009 | |
Profitability ratio | |||
1. Return on Sales (ROS) | % | (27.10) | 65.89 |
2. Return on assets (ROA) | % | (3.36) | 11.14 |
3. Return on equity (ROE) | % | (7.48) | 24.85 |
Operating ratio | |||
1. Fixed asset utilization efficiency ratio | 3.83 | 6.72 | |
2. Asset turnover ratio | 0.12 | 0.17 |
Source: Finance - Accounting Department of CLS Securities Company
3.2.2.4. Analysis of available capital ratio
According to the survey results, 100% of securities companies conduct capital adequacy ratio analysis. Capital adequacy ratio report reflects the financial safety level of securities companies. Board
The General Director is responsible for preparing the Capital Adequacy Ratio Report and ensuring that this Report reflects fairly and truthfully the financial situation of the Securities Company. In order to prepare the Capital Adequacy Ratio Report, the Board of Directors is required to: (1) Select and consistently apply accounting policies; (2) Have a full understanding of the internal control system, accounting system as well as a reasonable understanding of the financial situation and business performance of the Company at all times; (3) Make judgments and estimates in a reasonable and prudent manner. All Capital Adequacy Ratio Reports must be reviewed by an independent auditing organization to ensure that this Report reflects fairly and truthfully in all material respects, in accordance with Vietnamese Accounting Standards, the current Accounting Regime applicable to Securities Companies and relevant legal regulations on finance and accounting. The audit organization's review report must be published together with the Capital Adequacy Ratio Report.
According to current regulations, securities companies report their capital adequacy ratio according to the regular reporting regime or the irregular reporting regime. Every month, securities companies must report to the State Securities Commission on their capital adequacy ratio according to the prescribed form. In unusual cases, securities companies report their capital adequacy ratio weekly or daily. The capital adequacy ratio report is prepared based on the securities companies' data, and there are specific explanations for each indicator in the report. The capital adequacy ratio report is prepared similarly for 100% of the surveyed securities companies.
When analyzing available capital, 100% of securities companies calculate and show six indicators: total market risk value, total payment risk value, total operational risk value, total risk value, available capital and available capital safety ratio.
Kim Long Securities Company (KLS) analyzes the available capital ratio by calculating the indicators of risk, available capital and available capital safety ratio. However, at June 30, 2012, the Company did not show the payment risk value.