Net profit in 2009 was only about 16%, directly affecting the efficiency of total asset usage and total asset profitability ratio. Thus, with 1 dong of assets participating in the business process, Dalattourist only earned 1,189 dong in revenue.
1,627
1,564
1,189
year
In 2010 and 2011, Dalattourist's total asset utilization efficiency and total asset profitability ratio were similar (in 2011, total asset utilization efficiency and total asset profitability ratio were slightly higher than in 2011, but not significantly). In 2011 and 2010, with 1 dong of assets, Dalattourist earned 1,627 dong and 1,564 dong in revenue, respectively.
Total Asset Utilization Efficiency
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2011 2010
2009
Figure 2.9. Total Asset Usage Efficiency of Dalattourist
Author calculated based on company's financial statements
• Efficiency and short-term asset profitability:
The efficiency of using short-term assets in 2009-2011 of Dalattourist has been decreasing as follows: 6,188 times, 4,897 times and 3,860 times, similarly, the short-term asset profitability coefficient has also tended to decrease gradually and times.
6,188
4,987
3.86
year
respectively: 1.073 times, 0.886 times and 0.814 times; Thus, on average, for every 1 dong of short-term assets, Dalattourist's business only brings in nearly 4 dong of revenue. The main reason is that Dalattourist has too high a level of cash and cash equivalents; specifically: 2009-2011, the ratio of Cash and equivalents/Short-term assets was respectively: 82.47%; 96.15% and 95.5%.
7
6
5
4
3
2
1
0
2011 2010 2009
Short-term asset utilization efficiency
Figure 2.10. Efficiency of using Dalattourist's short-term assets
Source: Author's calculation based on company's financial statements
• Long-term asset utilization and profitability ratio:
In contrast to short-term assets, the efficiency of using long-term assets in 2009-2011 tended to increase gradually over the years, reaching 1.472 times; 2.298 times and 2.811 times respectively, higher than the efficiency of using long-term assets of Dalat Tourism Services Joint Stock Company by 3.2 times and the long-term asset profitability coefficient also increased gradually over the years and reached 0.593 times; 0.415 times and 0.255 times respectively, higher than the long-term asset profitability coefficient of Dalat Tourism Services Joint Stock Company by 9.7 times; proving that Dalattourist has effectively used long-term assets.
Long-term asset utilization
3
2.5
2
1.5
1
0.5
0
2011 2010 2009
2,811
2,298
1,472
year
Figure 2.11 Efficiency of using Dalattourist's long-term assets
Source : Author's calculation based on the company's financial statements
Thus, on average in the 3 years 2009-2011, Dalattourist's asset utilization efficiency and overall asset profitability ratio were higher than those of Dalat Tourism Services Joint Stock Company, proving that Dalattourist used its business assets more effectively.
However, in reality, in the process of determining the total assets for the equitization of Dalat Tourism Services Joint Stock Company (in 2004), the State re-evaluated the asset value, and at the same time included the value of location advantages and brand value in the value of equitized assets, so the total assets of Dalat Tourism Services Joint Stock Company were much larger than Dalattourist. This raised the issue of having to recalculate the indicators of the company's asset usage efficiency on a different asset basis.
2.2.2.3 Financial leverage ratio
a) Debt ratio
Table 2.11. Debt ratio of Dalattourist
Target
2011 | 2010 | 2009 | BQ Dalattourist | B DVDL Dalat | |
Liabilities/Total Capital | 0.29 | 0.48 | 0.65 | 0.45 | 0.34 |
Credit Debt/Total Capital | 0.03 | 0.19 | 0.45 | 0.20 | 0.15 |
Long-term debt/Equity | 0.10 | 0.49 | 1.38 | 0.45 | 0.28 |
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Note:
Source: Author's own calculation based on company financial statements
And financial statements of Da Lat Tourism Service Joint Stock Company (survey unit)
Total capital
Debt ratio = Liabilities
Equity
Total capital
Credit Debt Ratio = Credit Debt Long-Term Debt Ratio = Long-Term Debt
Due to the nature of the tourism industry, the proportion of capital appropriated from customers and suppliers is not much, on average the proportion of capital appropriated by Dalattourist is within <1% of total capital, so the debt appropriated by Dalattourist often accounts for a small proportion compared to capital. However, the average debt ratios of Dalattourist are all higher than the average debt ratio of Dalat Tourism Services Joint Stock Company (survey unit).
Figure 2.12. Debt ratio of Dalattourist
Source: Author's calculation based on company's financial statements
In 2009, Dalattourist's liabilities accounted for about 65% of its capital, of which 68.5% were loans and long-term debts for investment in fixed assets and joint investments with two companies, IMS Empress Hotel and Saigon - Dalat Joint Venture Company; 17.6% were reward and welfare funds; 7.7% were tax debts to the State; and 3.9% were long-term payables to customers (this was a long-term deposit of domestic travel companies for the Travel Center - a unit under Dalattourist). Therefore, the ratio of liabilities/Total capital in 2009 (1.38 times) of Dalattourist was higher than in 2010 and 2011.
In 2010, the ratio of liabilities/total capital of Dalattourist decreased compared to 2009, because Dalattourist paid off some of its long-term credit loans. By the end of the year, Dalattourist's long-term debt balance decreased by about 59.6% (decreased by 13.16 billion VND), while equity increased by 68.93% (increased by 7.85 billion VND), pushing the long-term debt/equity ratio from 1.38 times to 0.49 times.
In 2011, Dalattourist continued to reduce its debt-intensive structure, so the proportion of debt to total capital continued to decrease compared to the previous year, because capital
Owner's equity increased by 96.6%; Meanwhile, long-term debt at the end of the year continued to decrease sharply to only 19.3% compared to 2010. Therefore, the long-term debt/equity ratio decreased from 0.49 times to 0.10 times.
b) Long-term solvency
Table 2.12. Long-term solvency ratio of Dalattourist
Target
2011 | 2010 | 2009 | BQ of Dalattourist | B of DVDL Dalat | |
Interest Coverage Ratio | 47.15 | 30.79 | 11.14 | 23.72 | 4.38 |
TSDH self-funding rate | 1.33 | 0.81 | 0.48 | 0.88 | 0.93 |
Source: Author's own calculation based on company financial statements
Note:
EBIT | |
Interest Coverage Ratio | = |
Interest payable | |
Equity | |
Long-term asset self-financing ratio | = |
Long-term assets |
Interest Coverage Ratio
On average, in the period 2009-2011, Dalattourist's interest coverage ratio was 23.72 times, showing that operating profit (EBIT) was more than enough to cover all interest payments; this ratio was about 5.4 times higher than the average of Dalat Tourism Services Joint Stock Company (4.38 times), the reason being that Dalattourist borrowed from the bank with a lower amount, so it had to pay less interest, while Dalattourist's average EBIT was about 3.6 times higher than that of Dalat Tourism Services Joint Stock Company.
In 2009, Dalattourist's interest coverage ratio was 11.14 times, the lowest in the entire 2009-2011 period; the reason was that at the beginning of the year Dalattourist continued to borrow 32,977 billion VND (long-term debt transferred from 2008), although by the end of 2009 it had repaid 10,725 billion VND of principal debt, but with the 32,977 billion VND of debt transferred from the end of 2008, Dalattourist had to pay over 1.3 billion VND.
interest. Meanwhile, revenue and operating profit (EBIT) increased more slowly than interest. Therefore, the ability to pay interest in 2009 was the lowest.
In 2010, the ability to pay interest was higher than in 2009 because the credit loans were mainly transferred from 2009 (22,252 billion VND) and from the beginning of the year Dalattourist had a debt repayment plan. During the year Dalattourist paid off 13,161 billion VND, so the interest expense only had to be paid 0,626 billion VND, a decrease of 53% compared to 2009. Meanwhile, revenue increased by over 19%, and operating profit (EBIT) increased by over 37%, contributing to improving the interest coverage ratio to 30.79 times.
In 2011, Dalattourist continued to pay off long-term debt of 7,336 billion VND, pushing the long-term debt balance down to 1,755 billion VND. At the same time, the growth rate of revenue and operating profit (EBIT) continued to be maintained and increased somewhat compared to 2010, so the interest coverage ratio continued to increase by 16.33 times compared to 2010 (in 2011 it reached 47.12 times). This is a very encouraging signal for Dalattourist.
Long-term asset self-financing ratio
The average long-term asset financing ratio of Dalattourist is 0.88 times, lower than the long-term financing ratio of Dalat Tourism Service Company (0.93 times). The investment in fixed assets is less, so the average long-term asset ratio of Dalattourist is only over 62%, lower than that of Dalat Tourism Joint Stock Company (about 77%), besides, the reduction in debt and capital appropriation helps Dalattourist's equity ratio reach about 55%. Thus, about 90% of Dalattourist's long-term assets are financed by equity, only the remaining 10% is financed by long-term debt.
In 2009, although long-term debt was paid down by nearly 11 billion VND, Dalattourist continued to use long-term debt to finance fixed assets and increase current assets, while equity decreased by about 1.5 billion VND compared to 2008, so the self-financing ratio this year only reached 0.48 times.
In 2010, because Dalattourist had a plan to pay off some of its debt from the beginning of the year, interest expenses on loans decreased. At the same time, revenue in 2010 increased by 19%, but the cost of capital increased more slowly and reached about 10.76%, which contributed to helping the company operate more profitably than in 2009. Therefore, the undistributed profit reached nearly 8 billion VND, thereby increasing equity to nearly 8 billion VND to finance long-term assets (over 1 billion VND) and increasing cash balances (nearly 6 billion VND); therefore, the self-financing ratio was significantly improved to 0.81 times but was still low.
In 2011, Dalattourist continued to pay off long-term loans of about 7 billion VND, but short-term debt increased by more than 3 billion VND (mainly appropriated debt including: Bonus and welfare fund: 2.698 billion VND and salary payable to employees: 0.470 billion VND) and fixed assets decreased by about 6 billion VND; At the same time, other long-term receivables increased by over 12 billion (the amount the company paid back to shareholders who contributed capital to invest in the slide and cable slide system at Datanla waterfall tourist area - In fact, this is the amount the company paid back to shareholders and must be accounted for as a decrease in capital; however, the company accounted for it as a long-term revenue and accounted for an increase in equity. The independent auditor inspected the company's 2011 settlement, but still did not process this adjustment . Short-term assets increased by over 14 billion VND, so the equity increased by over 24 billion VND, so the self-financing ratio in 2011 increased rapidly and reached 1.38 times, the highest level in the period 2009-2011. This proves that Dalattourist's business is increasingly effective, and in the long term, the company has the ability to pay its debts.
2.2.2.4 Profitability (DuPont Chain Analysis)
Any business when conducting production and business aims for economic efficiency. They all have a common goal of maximizing the value of their assets.