CHAPTER IV : FINANCIAL FORECAST FOR 2004
1. Revenue forecast:
1.1. Rice market forecast for 2004:
According to the forecast of the US Department of Agriculture (USDA), the volume of global rice transactions in 2004 is estimated at 26.1 million tons, down 1.1 million tons compared to the estimate in 2003. The world rice output in the 2003/04 crop is forecast to reach 395.5 million tons, while the consumption is up to 413.2 million tons. At the same time, according to the forecast of the Ministry of Commerce, Vietnam's rice export this year will not be as favorable as in 2003 due to many fluctuations in the world:
Export: India exported about 4 million tons in 2003, but this year it is expected to decrease by 50%, the US is expected to decrease by 1 million tons, Thailand will increase by 750 thousand tons and will reach an export level of 8 million tons... This is the main fluctuation in supply that has a favorable impact on Vietnamese rice to keep the export price higher than the same period in 2003. In addition, Pakistan's export is at the same level as the same period at 1.7 million tons and Burma is stable at a low level of 500 thousand tons.
Import: From May 1, 2004, 10 Southeast European countries officially became members of the EU and at that time the import tax rate for rice of these countries was agreed to be 410 EUR/ton, much higher than before, so it is possible that Vietnam will not be able to maintain regular rice import markets such as Poland, Czech Republic, Slovakia, ... with an annual volume of about 80,000 - 100,000 tons. In addition, government-level contracts and government intervention are gradually decreasing in the Indonesian market. In addition, starting from 2004, the Philippine government will assign domestic enterprises to import rice and pay a tax rate of 50%. Thus, the Philippines will no longer have government-level rice purchase contracts but only purchase agreements between enterprises. Therefore, Vietnamese enterprises must be self-reliant and compete fiercely to be able to export to this market. In 2003, the Philippines alone consumed 17% of Vietnam's total rice, second only to Indonesia. These are not good signs for Vietnam's rice export situation in 2004.
Vietnam is forecast to stabilize at 4 million tons. The area planted with fragrant rice in 2004 will increase by 20-30% due to the impact of shifting and increasing high-quality rice, so the amount of common rice will decrease, while the inventory carried over from 2003 will be insignificant.
Thus, the demand for rice increases, while the supply is quite limited. This is the factor that pushes up the world rice price. The forecast for domestic rice price is about 1,700 - 1,900 VND/kg, corresponding to the export price of 185 - 195 USD/ton for 5% broken rice.
Based on the fluctuation of the rice market, the forecast revenue in 2004
In the commercial sector of An Giang Tourism Company, it may decrease by 0.50% compared to 2003.
1.2. Tourism forecast for 2004:
According to the General Department of Tourism's estimate, in 2004 we will welcome 2.7 - 2.8 million international visitors to Vietnam, an increase of 0.5 - 0.6 million visitors compared to 2003.
It is known that 2004 is the year of tourism with the theme "Heritage Journey" with many major tourism events to be held to promote the image of Vietnam tourism. The festival to receive the certificate of world natural heritage of Phong Nha - Ke Bang, followed by the event of the year of tourism of Dien Bien is an opportunity to attract tourists to Vietnam, the Central Heritage Road, Hue Festival 2004. In addition to the major events held, the promotion of Vietnam tourism image abroad this year will also be promoted in countries such as India, France, Japan, ... Along with the promotion, in 2004, the Vietnam tourism industry will participate in 11 major international tourism fairs and organize 15 Road Shows to introduce Vietnam tourism in key markets.
Besides, an important event that will increase the number of tourists to Vietnam this year is that Vietnam has exempted visas for Thailand, Singapore, Philippines, Indonesia, Malaysia and Japan.
Based on the above forecasts, revenue from the tourism sector of An Giang Tourism Company in 2004 could increase by about 34% compared to 2003.
Thus, from the above forecast results, combined with regression forecast, we see that the revenue of An Giang Tourism Company in 2004 can reach 392,615 million VND , which is an increase of 1.4% compared to 2003.
2. Forecasting business performance:
2.1. Changes in cost of goods sold, selling expenses and administrative expenses:
Cost of goods sold: It is known that in 2004 the company will put into operation 2 new warehouses built in convenient locations for both waterway and road and close to the rice supply source to purchase rice on the spot and directly from farmers, thus reducing most of the transportation costs and other costs incurred during the purchasing process. In addition, in 2004 the company will also reorganize its staff and reduce the number of redundant employees in the tourism sector.
Sales and administrative expenses: next year the company will continue to promote tourism, participate in tourism fairs and send employees to training courses on tourism, management, machine operation, product inspection, etc. to improve the company's operating efficiency.
Based on the above situation, we forecast the items of cost of goods sold, selling expenses, and administrative expenses as follows: calculate these items as a percentage of revenue and then perform regression to get the forecast results in 2004.
Table 38 : Summary table of cost of goods sold, operating expenses, and management expenses Unit: Million VND
Target
Year 2000 | Year 2001 | 2002 | 2003 | Forecast 2004 | |
Revenue | 262,865 | 300,813 | 271,058 | 387,311 | 392,615 |
Cost of goods sold | 239,361 | 261,464 | 221,387 | 350,034 | |
Cost of sales | 20,019 | 25,969 | 40,231 | 26,295 | |
Management costs | 4,269 | 5.531 | 7,046 | 7,149 |
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Table 39 : Forecast table of cost of goods sold, selling expenses, and administrative expenses
Target
Year 2000 | Year 2001 | 2002 | 2003 | Forecast 2004 | |
Increase annual revenue | - | 14.4% | -9.9% | 42.9% | 1.1% |
Percentage of revenue | |||||
Cost of goods sold | 91.1% | 86.9% | 81.7% | 90.4% | 86.0% |
Cost of sales | 7.6% | 8.6% | 14.8% | 6.8% | 10.4% |
Management costs | 1.6% | 1.8% | 2.6% | 1.8% | 2.3% |
Based on the forecast table, we have the following forecast figures for 2004:
Cost price: 86% * 392,615 = 337,767 million VND
Selling cost: 10.4% * 392,615 = 40,832 million VND
Management fee: 2.3% * 392,615 = 9,030 million VND
2.2. Forecast of financial and other activities:
Financial income in 2004 includes: interest income from deposits, interest income from exchange rate differences and income from leasing office space to Manulife Insurance Company. Therefore, this item will not fluctuate much and is forecasted based on the value regression method over 4 years to get the forecast result for 2004.
The financial operating expenses of the enterprise are interest expenses, estimated at 5,909 million VND in 2004.
The extraordinary income of the enterprise includes income from selling waste, scrap, and tourist insurance commissions. In addition, in 2004 the enterprise did not liquidate machinery, so extraordinary income will decrease compared to previous years. The way to forecast this item is similar to the forecast of financial income.
Table 40 : Forecast table of operating income, operating expenses and other income Unit: Million VND
Target
Year 2000 | Year 2001 | 2002 | 2003 | Forecast 2004 | |
Income from the Board of Directors | 1,997 | 2,318 | 1,261 | 4,708 | 4,340 |
Cost of HĐTC | 6.213 | 6,384 | 5.253 | 6,322 | 5.909 |
Other income | 4,354 | 4.014 | 4,340 | 1,363 | 1,356 |
2.3. Changes in corporate income tax:
According to Circular 128/2003/TT_BTC of the Ministry of Finance, starting from 2004, the corporate income tax rate of 28% will be applied to business enterprises.
From the above forecast data, we have the following forecast business results report for 2004:
REPORT ON FORECAST OF BUSINESS PERFORMANCE IN 2004
Unit: Million VND
INDICATORS
CODE | 2004 | |
Total revenue | 01 | 392,615 |
Deductions (0.1% of Revenue) | 03 | 393 |
1. Net revenue ( 10 = 01-03 ) | 10 | 392,222 |
2. Cost of goods sold | 11 | 337,767 |
3. Gross profit (20=10-11) | 20 | 54,456 |
4. Selling expenses | 21 | 40,832 |
5. Management costs | 22 | 9,030 |
6. Net profit from operating activities (30=20-21-21) | 30 | 4,594 |
7. Income from working capital | 31 | 4,340 |
8. HĐTC costs | 32 | 5.909 |
In which: Interest expense | 33 | 5.909 |
9. Operating profit (40=31-32) | 40 | (1,569) |
10. Other income | 41 | 1,356 |
11. Other costs | 42 | - |
12. Other profits (50= 41-42) | 50 | 1,356 |
13. Total profit before tax (60=30+40+50) | 60 | 4,381 |
14. Corporate income tax (28% of pre-tax profit) | 70 | 1,227 |
15. Profit after tax | 80 | 3.154 |
3. Prepare forecast balance sheet:
3.1. Forecast items with percentage changes compared to revenue:
Items that vary as a percentage of revenue include: cash, short-term financial investments, receivables, construction in progress, payables and other liabilities.
Item | Year 2000 | Year 2001 | 2002 | 2003 | 2004 |
Revenue | 262,865 | 300,813 | 271,058 | 387,311 | 392,615 |
Money | 1,596 | 2,257 | 1,747 | 2,293 | |
Short term investment | - | - | - | 2,000 | |
Accounts Receivable | 46,278 | 25,354 | 79,887 | 77,810 | |
Construction cost | 4.127 | 4,597 | 4.112 | 4,720 | |
Accounts Payable | 11,386 | - | 42,722 | 58,391 | |
Other debt | 177 | 2,462 | 11,215 | 441 |
Table 41 : Summary table of items with percentage changes compared to revenue Unit: Million VND
Table 42 : Forecast table of items with percentage change compared to revenue
Item
Year 2000 | Year 2001 | 2002 | 2003 | Forecast | Forecasting method | |
Percentage of revenue | ||||||
Money | 0.6% | 0.8% | 0.6% | 0.6% | 0.6% | Regression |
Short term investment | 0.0% | 0.0% | 0.0% | 0.5% | 0.5% | Degree 2003 |
Accounts Receivable | 17.6% | 8.4% | 29.5% | 20.1% | 20.1% | Degree 2003 |
Construction cost | 1.6% | 1.5% | 1.5% | 1.2% | 1.2% | Degree 2003 |
Accounts Payable | 4.3% | 0.0% | 15.8% | 15.1% | 15.4% | Average of 2 years 2002 and 2003 |
Other debt | 0.1% | 0.8% | 4.1% | 0.1% | 2.1% | Regression |
Based on the above 2 tables, we have the following forecast values in 2004:
Money: 0.6% * 392,615 = 2,356 million VND
Short-term investment: 0.5% * 392,615 = 2,027 million VND
Receivables: 20.1% * 392,615 = 78,719 million VND Construction and installation costs: 1.2% * 392,615 = 4,751 million VND
Payables: 15.4% * 392,615 = 60,536 million VND Other liabilities: 2.1% * 392,615 = 8,245 million VND
3.2. Inventory forecast:
Inventory is forecasted by calculating inventory value as a percentage of cost of goods sold and regressing to obtain the ratio for 2004.
Table 43 : Inventory forecast table Unit: Million VND
Target
Year 2000 | Year 2001 | 2002 | 2003 | Forecast | |
Inventory | 6,353 | 6.605 | 11,073 | 10,890 | |
Cost of goods sold | 239,361 | 261,464 | 221,387 | 350,034 | 337,767 |
Percentage of cost price | 2.7% | 2.5% | 5.0% | 3.1% | 4.3% |
Thus, the value of inventory in 2004 is: 4.3% * 337,767 = 14,490 million VND
3.3. Changes in other current assets:
Other current assets have a relatively small value, so they are forecasted by taking the average value of 2002 and 2003 as the value for the next year. Thus, other current assets in 2004 will be: (1,042 + 870) = 956 million VND
3.4. Changes in fixed assets:
In 2004, the construction enterprise completed and put into use Dinh Thanh warehouse and Tay Phu warehouse, An Hai Son hotel, equipped equipment, machinery, vehicles for An Hai Son hotel, Dong Xuyen and purchased additional machinery for the processing factory with
Total estimated value is about 11,000 million VND, depreciation value in the year is about 2,000 million VND
Thus, the net fixed asset value in 2004 is calculated as follows:
Table 44 : Net fixed assets forecast table for 2004
Unit: Million VND
Target
STT | Amount | |
Net fixed assets value in 2003 | 1 | 54,985 |
Buy new, build new | 2 | 11,000 |
Depreciation in 2004 | 3 | 2,000 |
Net fixed assets in 2004 (4=1+2-3) | 4 | 63,985 |
3.5. Changes in long-term prepaid expenses:
In 2004, long-term prepaid expenses did not increase and the enterprise continued to allocate 274 million VND of long-term prepaid expenses into period expenses, so the remaining long-term prepaid expenses in 2004 will be: 405 - 274 = 131 million VND.
3.6. Changes in salaries and other payables:
This item is forecasted by regressing the value over 4 years from 2000 - 2003 to forecast the value in 2004, the forecast result is: 2,583 million VND.
3.7. Changes in funds:
If a business makes a profit, it will set aside funds at the following rates:
Development investment fund: provision level is 42% of after-tax profit.
Financial reserve fund: provision level is 8% of profit after tax.
Unemployment benefit fund: the provision is 5% of after-tax profit. Estimated expenditure for the year will be about 35 million VND.
From the above information we have the following forecast results:
Table 45 : Fund forecast table: Unit: Million VND
Target
Provision level | 2003 | Increase in the year | Decrease during the year | Predictive value | |
(1) | (2) | (3) | (4)=(2)*Profit after tax in 2004 | (5) | (6)=(3)+(4)-(5) |
Profit after tax in 2004 | 3.154 | ||||
Development investment fund | 42% | 1,514 | 1,325 | - | 2,839 |
Financial reserve fund | 8% | 448 | 252 | - | 700 |
Unemployment benefit fund | 5% | 104 | 158 | 35 | 227 |
Bonus and welfare fund: is also deducted from after-tax profit, but the deduction level is not based on a percentage of after-tax profit but is calculated as follows:
Bonus fund allocation = Actual average salary * 2 * Number of employees.
It is known that the estimated number of employees in 2004 is 378 people. To forecast, we use the planned salary level in 2004 of 1,300,000 VND. During the year, the company plans to spend about 144 million VND on bonuses.
Thus, the 2004 bonus and welfare fund will be calculated as follows:
Table 46 : Forecast table of bonus and welfare funds
Unit: Million VND
Target
STT | Amount | |
Bonus and welfare fund 2003 | 1 | 1,601 |
Average salary plan for 2004 | 2 | 1.3 |
Number of employees in 2004 | 3 | 378 |
Increase in year (4)=(2)*2*(3) | 4 | 983 |
Decrease during the year | 5 | 144 |
Bonus and welfare fund in 2003 (6)=(1)+(4)-(5) | 6 | 2,439 |
3.8. Changes in business capital:
The business capital in 2004 is forecasted to be equal to the business capital in 2003 of VND 26,576 million plus the remaining after-tax profit in 2004 after fund provision of VND 437 million, so the forecast value in 2004 will be VND 27,013 million.
In addition, it is known that in 2004 the company will not increase long-term financial investments, long-term loans and capital for basic construction investment.
3.9. Changes in short-term borrowings:
Short-term borrowings will be forecasted by balancing total assets and total capital in 2004, the difference will be the capital shortage that the enterprise must mobilize from outside.
From the above analysis, we have the following forecast balance sheet for 2004: