-Rice – main business: export business and export supply
with an output of 250,000 tons.
-Other industries (Honda cars, fertilizer: 20,000 tons, car repair services, mobile phone services): revenue increased by 15% compared to 2006.
- New business lines: exporting 1,320 tons of pangasius fillets, importing 20,000 tons of soybean residue to supply to aquatic feed processing factories and consuming 20,000 tons of animal feed.
*Solutions.
- Diversify rice processing products.
- Increase wholesale.
*Strategy, business orientation.
- Expand Honda services and Honda vehicle repair throughout the Mekong Delta.
- Expanding IT services at NIIT center: considering the direction of opening
Broadly train general subjects such as hardware assembly and office computer science.
- Shifting the rice export structure and gradually separating dependence from the government: reducing the export rate, using local raw materials to create consumer products to increase profit margins, limit risks and dominate the domestic market, while trading in cheap by-products to increase profits for the Company.
- Build a separate model for the trade and service industry.
Chapter 4
CAPITAL USE SITUATION AT ANGIMEX COMPANY
4.1. Capital usage situation in asset investment policy
4.1.1. Company's payment situation
Table 4.1: Current ratio and quick ratio
Unit: Million VND.
Target
Year 2004 | 2005 | 2006 | |
TSLD | 171,636 | 124,467 | 100,627 |
Short-term debt | 155,231 | 97,425 | 93,636 |
Current Ratio | 1.11 | 1.28 | 1.07 |
HTK | 84,370 | 54,105 | 69,755 |
Quick ratio | 0.56 | 0.72 | 0.33 |
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Chart 4.1: Payment ratio
1.40
1.20
1.00
0.80
0.60
0.40
0.20
-
1.11
1.28
1.07
0.72
0.56
0.33
2004 2005 2006
Current ratio Quick ratio
Year
Through the data in Table 4.1 above, it can be seen that the current payment ratio over the years is greater than 1, proving that the Company's payment ability is normal and acceptable. The payment ability in 2005 (1.28) is better than in 2004 (1.11). However, in 2006, although the current payment ratio (1.07) is still greater than 1, it tends to decrease. In addition, the Company's quick payment ability is assessed as
The company's liquidity ratio was good in 2004, 2005 and 2006 but also had a downward trend in 2006, foreshadowing future financial difficulties. The company needs to find out the cause and propose solutions. Through the balance sheet, in the current assets section, the two items HTK and KPT account for a very large proportion, showing that the company's short-term debt repayment is mainly due to KPT and HTK, which require time and cost to convert into cash. Therefore, to accurately assess the company's solvency, it is necessary to compare the solvency ratio with the cash conversion ability of these two items.
4.1.2. Efficiency in investing in current assets.
4.1.2.1.Receivables turnover.
Table 4.2: Number of KPT revolutions
Unit: Million VND
Target
2004 | 2005 | 2006 | |
Net revenue | 1,134,696 | 1,459,224 | 1,303,404 |
Accounts Receivable | 81,507 | 64,336 | 26,242 |
Number of KPT rotations | 13.92 | 22.68 | 49.67 |
Average collection period | 25.86 | 15.87 | 7.25 |
Chart 4.2: Number of KPT rotations
Number of KPT rotations
Ring
60
50
40
30
20
10
-
49.67
22.68
13.92
Year
2004 2005 2006
Through the analysis table 4.2 above, it can be seen that the number of KPT turnovers has nearly doubled over the years. In 2004, KPTs rotated 13.92 times, which means that the Company only collected debts every 25.86 days. Similarly, in 2005, the number of KPT turnovers was 22.68 times, corresponding to the debt collection time for each cycle of 15.87 days; in 2006, the number of KPT turnovers was 49.67 times, corresponding to the debt collection time for each cycle of 7.25 days. The number of KPT turnovers has increased over the years (corresponding to the average collection period decreasing), demonstrating that the Company's ability to recover capital is getting faster and faster during the payment process, and the efficiency of capital use is improving because the capital is being occupied less and less. Information
Through Appendix 1, it can be seen that the KPT has decreased sharply over the years. The reason is that in recent years, the rice import and export market has fluctuated a lot, affecting the Company's export market share. In 2004, the traditional Asian market encountered many difficulties, such as the important market of Indonesia closed, Nigeria and the Philippines reduced rice imports, forcing the Company to seek new customers to compensate, such as shifting to the African market (mainly large corporations). Therefore, to attract new customers, the Company loosened its credit policy, resulting in an increase in the number of customers, so the KPT in 2004 was very high. In the following years, when the market share was relatively stable, to limit the amount of capital occupied, the Company tightened its credit policy. On the other hand, the KPT decreased due to the impact of the Government's export restriction order, affecting the number of customers, reducing the KPT.
The credit period that the Company gives to its customers is usually within one month. The Company does not have a discount policy to attract customers to pay their debts earlier than the term in the signed contract, but on the contrary, if customers pay their debts to the Company later than the prescribed term, they will have to pay an additional penalty with an interest rate higher than the bank's interest rate, usually from 1.3% - 1.5% for violating the payment term. However, with the number of KPTs increasing rapidly, it will reduce the Company's competitiveness. The Company is applying a policy of reducing credit sales to customers to reduce the amount of capital occupied, but due to the too strict credit sales policy, the number of customers has decreased, indirectly reducing revenue.
Through appendix 1 (2), it can be seen that KPT is always smaller than short-term debt, proving that the Company uses other people's capital more than other people use its own capital. This helps the Company avoid losses, especially in the condition of rapid currency depreciation.
4.1.2.2.Inventory turnover
Table 4.3: Number of HTK rotations.
Unit: Million VND
Target
2004 | 2005 | 2006 | |
Net revenue | 1,134,696 | 1,459,224 | 1,303,404 |
Inventory | 74,370 | 54,105 | 69,755 |
Number of HTK rotations | 13.45 | 26.97 | 18.69 |
Number of days of HTK | 26.77 | 13.35 | 19.26 |
(2) See details in Appendix 1 in the appendix below.
Chart 4.3: Number of HTK rotations
Ring
30
26.97
25
20
18.69
15
13.45
10
5
0
Year
2004 2005 2006
Number of HTK rotations
The Company's inventory turnover ratio in 2004 was 13.45 with 26.77 days in inventory per cycle, increased to 26.97 with 13.35 days in inventory per cycle in 2005, then decreased to 18.69 with 19.26 days in inventory per cycle in 2006.
The increase in inventory turnover in 2005 was due to the increase in turnover speed while the decrease in inventory speed, which reduced the time of goods in stock by nearly 14 days, thereby reducing the number of days of turnover of the Company's working capital. This was because at the beginning of 2005, the Company had resolved the amount of inventory transferred from 2004 at high prices. At the same time, in the Winter-Spring crop of 2005, the Company implemented a phase-oriented inventory management policy, combining inventory - sales - purchase - production and delivery, which resulted in a small amount of inventory. Although in July 2005, the Government restricted exports, causing inventory to be stagnant, the Company was able to balance its inventory reasonably and sign contracts at high prices. In the third quarter, the company received contracts for 52,750 tons of rice and in the fourth quarter for 9,700 tons of rice, so business activities were maintained continuously. This contributed to reducing the amount of inventory at the end of 2005.
In 2006, although the inventory turnover decreased to 18.69, the number of days of inventory increased by about 6 days compared to 2005. The reason was that the Company decided not to release the inventory with low-priced contracts during the price war in late March and early April 2006. On the other hand, the impact of the Government's export suspension order in the last 6 months of the year caused the inventory to stagnate. However, this is not a cause for concern because this inventory will be resolved for the Government's export contracts in 2007.
Relating the payment ratio with the number of KPT turnovers and the number of HTK turnovers shows that the Company still ensures good payment ability. Because the two KPT and HTK have a fairly fast turnover, they are completely capable of converting into cash quickly when the debt maturity date arrives. It is reasonable for the Company to maintain such a payment ability ratio.
The overall payment ratio is not lower than 1, so the Company still ensures the ability to pay debts. The payment ratio is not too high, if it is too high, it will reduce efficiency because the Company has invested too much in inventory as well as in KPT with a rather slow repayment time. Because the Company operates seasonally, it must have many
High inventory and KPT are inevitable in import-export companies, so the Company can only balance them at a reasonable level, bringing the best efficiency to the business.
4.1.2.3. Efficiency of using current assets.
Table 4.4: Efficiency of using working capital.
Unit: Million VND
Target
2004 | 2005 | 2006 | |
Net revenue | 1,134,696 | 1,459,224 | 1,303,404 |
TSLD & DTNH | 171,636 | 124,467 | 100,627 |
Efficiency of using working capital | 6.61 | 11.72 | 12.95 |
Chart 4.4: Efficiency of using working capital
Copper
14
12
10
8
6
4
2
-
11.72
12.95
6.61
Year
2004 2005 2006
Efficiency of using working capital
The index in Table 4.4 shows that in 2004, the Company's working capital turned 6.61 times, in 2005 it was 11.71 times and in 2006 it was 12.95 times. The number of working capital turnover increased over the years, proving that the working capital turnover speed is getting faster. That is important, it shows that with less capital, the Company has created more results, thereby showing that the Company's capital productivity is getting bigger and the relative saving ability of capital is also better. Combining horizontal and vertical analysis shows that the proportion of working capital and current assets has decreased over the years, mainly due to the sharp decrease in the proportion of fixed assets and inventories, these are two items that account for a high proportion of the Company's working capital and current assets, followed by a slight decrease in the proportion of other short-term assets.
However, to increase capital turnover, the basic measure is not to reduce capital, because such a reduction in capital will reduce business scale and capacity.
competitiveness of the Company. Therefore, we need to consider and compare the capital growth rate with the revenue growth rate to have a more objective view.
Table 4.5: Comparison of growth (decrease) rate of revenue with employees and number of turnovers
TSLD.
Target
2004 – 2005 | 2005 – 2006 | |
DT increase (decrease) rate | 28.60% | -10.68% |
Capital growth rate (decrease) | -14.98% | -1.72% |
Rate of increase (decrease) of TSLD rotation | 77.34% | 10.48% |
If we compare the capital growth rate with the revenue growth rate over the years, we can see that the capital source has decreased steadily over the years (in 2005 it decreased by 14.98% compared to 2004, in 2006 it decreased by 1.72% compared to 2005) while the revenue in 2005 increased by 28.60% compared to 2004, the revenue in 2006 decreased by 10.68% compared to 2005. Thus, in the period 2004 - 2005, although the capital source decreased, the sales revenue and service provision still increased, the working capital turnover increased, proving that the Company has really used the working capital effectively, used capital economically and effectively, shortened the working capital time in each stage of the circulation process. This is a good achievement in the management and use of working capital as well as working capital in the Company.
In the period of 2005 - 2006, although the turnover rate of working assets increased, the revenue from sales and service provision decreased by 10.68%, which was larger than the decrease rate of capital (1.72%), showing that the turnover rate of working assets decreased due to the narrowing of business scale and reduced competitiveness. However, the decrease in revenue was also due to the impact of the Government's temporary export suspension order, which limited the Company's business plan at a very favorable time: high selling prices, strong market demand, and the Company had inventory to meet export needs. Therefore, it is not possible to assess this as a shortcoming in the Company's management and use of working assets.
Thus, the scale of the Company's production and business activities has decreased, but that is due to the reduction of the level of outstanding bank assets by accelerating the recovery of KPT, reducing inventory to reduce costs. This is a positive sign of the change in working capital and investment capital over the years, contributing to limiting capital stagnation, reducing the amount of capital occupied by other units, saving capital to serve production and business.
4.1.3 Efficiency in fixed asset investment and long-term investment .
4.1.3.1.Fixed asset usage efficiency.
Table 4.6: Fixed asset utilization efficiency.
Unit: Million VND
Target
2004 | 2005 | 2006 | |
Net revenue | 1,134,696 | 1,459,224 | 1,303,404 |
Original price of fixed assets | 64,542 | 77,534 | 82,986 |
Fixed asset utilization efficiency | 17.58 | 18.82 | 15.71 |
Chart 4.5: Fixed asset utilization efficiency
Copper
20
19
18
17
16
15
14
18.82
17.58
15.71
Year
2004 2005 2006
Fixed asset utilization efficiency
Through the above index in Table 4.6, it can be seen that in 2004, every VND of fixed assets invested would bring VND 17.58 in revenue, corresponding to VND 18.82 in revenue in 2005 and VND 15.71 in revenue in 2006. This index increased in 2005, showing that in this year the Company effectively used fixed assets, making good use of all types of fixed assets to increase business efficiency. The Company invested more than VND 11 billion in repairing, upgrading warehouses, innovating technology, purchasing machinery in polishing lines, electronic scales, continuing to equip conveyor belts and rice containers... making the operation of machinery and equipment achieve high productivity. Then this index decreased in 2006, at this time the fixed asset utilization efficiency only reached 15.71, down 16.52% compared to 2005 and down 10.64% compared to 2004. In this year, the Company invested more in fixed assets such as opening new Head Honda (Honda Angimex III Store and Honda Thoai Son Store). Fixed assets increased in 2006, in addition to the Company's investment in additional fixed assets, due to the sale of a production workshop in Can Tho. Increasing fixed assets by selling fixed assets is not good because those fixed assets do not operate effectively. This is the main reason for the sharp decrease in fixed asset utilization efficiency in 2006. This shows that although the Company increased its investment in additional fixed assets, it only achieved high efficiency in 2004 and was highest in 2005, after which the fixed asset utilization efficiency decreased.