The product consists of three stages.
Analysis planning phase
During this stage, bank staff must identify analysis objectives and develop an analysis program .
Analysis phase
This is the stage of implementing and carrying out the work in the plan. During this stage, bank staff collect documents and process data; calculate, determine and predict; summarize results and draw conclusions . Based on financial reports, balance sheets, and cash flow statements.
Analysis Plan Completion Phase
The final stage is to prepare the analysis report and complete the analysis file.
Store disbursement records and credit records in the bank's administration department in accordance with regulations.
3.2.5 Content of corporate financial analysis of BIDV - Hoan Kiem branch
To better understand the financial analysis in lending activities at BIDV Hoan Kiem, the author would like to present the case of financial analysis of customers of Ba Dinh Pharmaceutical Technology Company Limited.
Address: No. 5 Nghi Tam, Yen Phu Ward, Tay Ho District, Hanoi. Charter capital: 30,000,000,000 VND
Owner's equity: 43,019,596,309 VND (as of December 31, 2017)
Credit approval level: Joint Stock Commercial Bank for Investment and Development of Vietnam.
The main activity of the enterprise since its establishment is the production and trading of food ingredients and additives. With more than 17 years of operation, the Company has continuously developed and affirmed its position in the market, becoming the leading supplier of food additives and ingredients in Vietnam.
The Company's products are rich, diverse and widely used in many manufacturing industries such as cakes, candies, jellies, soft drinks, ice cream, juices, etc.
fish sauce, soy sauce, instant noodles.
According to CIC information on August 1, 2018, the enterprise currently has a credit relationship at 03 credit institutions: BIDV Hoan Kiem, Joint Stock Commercial Bank for Foreign Trade - Chuong Duong Branch, and Military Commercial Joint Stock Bank - Transaction Office 1 Branch, with a total outstanding debt of 42,963 million VND. The customer is currently classified as a qualified debt group.
According to the instructions of the customer management officer, the customer provided a capital application file including audited financial statements for the period 2015-2017 (according to appendix 01,02..).
* Balance sheet analysis (Appendix 01)
Based on the financial reports provided by the customer and the information collected, the customer relations officer analyzes the following contents.
Regarding assets: The total assets of the enterprise have increased over the years, total assets in 2017 reached 122,953 million VND, an increase of 53 billion VND, equivalent to an increase of 77% compared to 2016. The reason is that at the end of the year, the company grasped the demand for production and consumption of goods during the holidays, at the same time, grasped the situation that the USD exchange rate would increase sharply at the beginning of 2018, so the company proactively increased the quantity of imported goods. Therefore, the inventory item at the end of 2017 increased by 45 billion VND to 68 billion VND, accounting for 55% of total assets. The structure of total assets also changed accordingly. Short-term assets reached 103,750 million VND, accounting for 84% of total assets, an increase compared to the proportion in 2016 (75%). The long-term asset item did not have many fluctuations in the period 2015 - 2017, the Company's long-term assets reached 19,202 million VND in 2017, an increase of 10% compared to 2016, but the proportion decreased to only 16% of total assets.
In general, during the period 2015 - 2017, the asset structure remained stable, consistent with the business operations of the enterprise.
Regarding capital: Along with the increasing fluctuation of total assets, total
Capital sources also changed accordingly. Total capital sources in 2017 reached 122,953 million VND, of which liabilities reached 79,933 million VND, accounting for 65% of total capital sources and equity sources reached 43,020 million VND, accounting for 35% of total capital sources. The capital source structure has changed from the direction of equity sources holding a higher proportion in the period of 2015 - 2016 (at 58 - 60% of total capital sources) down to only 35% of total capital sources in 2017. The reason is that at the end of 2017, the Company made the most of loans from credit institutions to stock up on inventory to serve the need to supply food during the Lunar New Year. This caused a clear change in the capital source structure at the end of 2017. The owner's equity item still maintains an annual growth rate of over 20%/year due to the company's accumulated retained earnings over the years. However, the sudden increase in short-term loans (doubled in 2017) has temporarily changed the capital structure of the enterprise.
On the balance between assets and capital:
The company's balance sheet shows:
The company's regular working capital in the past 3 years has always been positive and has tended to increase due to the increase in equity over the years. This shows that the company's use of capital is reasonable, there is no situation of using short-term capital for long-term investment.
Time
Regular working capital | |
December 31, 2015 | 19,497 million VND |
December 31, 2016 | 22,708 million VND |
December 31, 2017 | 23,817 million VND |
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Source: BIDV Hoan Kiem credit management department
Analyze the structure and quality of asset items: Cash and cash equivalents. Analyze cash and cash equivalents to
Assess whether the amount of cash the enterprise maintains at the end of the period is appropriate to the scale of the enterprise's operations and the enterprise's ability to make immediate payments. Is the enterprise's end-of-period cash mainly in cash or mainly in bank deposits? (For enterprises whose revenues and expenditures are mainly in cash, especially non-state enterprises, this is an issue that needs attention). Based on the year-end deposit balance at banks as well as the turnover of money transfers through banks and the number of banks with which the enterprise has deposit relationships, it is possible to assess the level of the enterprise's relationship with its bank and the implementation of the enterprise's commitments to its bank.
This item is maintained at a high level by the end of each year, which is also the time when the business focuses on collecting payments from customers. At the end of 2016, cash and cash equivalents reached 4,526 million VND, accounting for 7% of total assets. By the end of 2017, the cash item reached 5,254 million VND, accounting for 4% of total assets. Although the cash item increased in value (increased by 728 million VND, equivalent to an increase of 16%), the proportion decreased due to large fluctuations in other items in the total asset structure.
Accounts receivable:
INDICATORS
2015 | 2016 | 2017 | |
Accounts Receivable | 18,979 | 24,782 | 27,169 |
1. Accounts receivable from customers | 15,828 | 16,494 | 23,079 |
2. Prepayment to the seller | 3,106 | 8,237 | 3,910 |
3. Other receivables | 46 | 51 | 180 |
Source: BIDV Hoan Kiem credit management department
In 2016, receivables reached 16,494 million VND, accounting for 24% of total assets. By 2017, receivables increased by 40%, reaching 23,079 million VND.
VND, accounting for 19% of total assets. Receivables tended to increase in 2017 because the Company allowed the Ho Chi Minh City branch to apply deferred debt to customers. This is a favorable condition for the Company to develop its operations in the Southern market. The value of large receivables is specifically as follows:
Unit: Million VND
STT
Client | Debt beginning of period | Play debt | Play born with | Outstanding debt end of period | |
1 | Thai Premium Beverage Joint Stock Company Lan | - | 462 | 28 | 434 |
2 | Long Hai Company Limited | 539 | 34,434 | 34,645 | 329 |
3 | Number One Ha Nam Company Limited | 286 | 3,048 | 3,027 | 307 |
4 | Import Export Production Trading Company Limited Bao Hung Confectionery | 146 | 1,682 | 1,248 | 581 |
5 | Food Processing Company Limited Virtue | 4,222 | 9,590 | 9,731 | 4,081 |
6 | Production and trading joint stock company Dai Long Import Export | - | 1,086 | 700 | 386 |
7 | Masan Consumer Goods Joint Stock Company | 580 | 3,832 | 3,528 | 884 |
8 | Asia Food Technology Joint Stock Company | 1,119 | 8,374 | 8,608 | 884 |
9 | Thuan Phat Vietnam Joint Stock Company | - | 1,626 | 1,277 | 349 |
10 | Hung Viet Trading - Production Company Limited | 82 | 1,108 | 864 | 326 |
11 | La Cusina Food Company Limited | - | 340 | - | 340 |
12 | Dang Thu Trang | 102 | 1,450 | 1,207 | 345 |
13 | URC Vietnam Company Limited | - | 8,734 | 4,004 | 4,730 |
Total | 7,075 | 75,767 | 68,867 | 13,975 | |
Source: BIDV Hoan Kiem credit management department
These are all reputable customers who have cooperated with the company for many years. The company's sales policy allows partners to pay in installments within 30 days after receiving complete payment documents. This is an opportunity for the company to increase revenue, while creating opportunities to cooperate with new customers, especially in Ho Chi Minh City and the southern provinces. The remaining receivables worth VND 9,104 billion, accounting for about 39% of the total value of receivables, concentrated in small retail customers, with a value of less than VND 200 million. In 2017, the company did not incur any outstanding receivables from 2016, the company's customers all incurred regular debts and made payments on time. The value of debt with each customer is also maintained at a reasonable level by the company, ensuring the company's cash flow.
Inventory: As of December 31, 2017, the company's inventory reached VND 68,017 million, accounting for 55% of total assets. Inventory in 2017 increased more than 2 times compared to 2016, and the proportion of inventory also increased from 32% in 2016 to 55% in 2017. The company's inventory is diverse in all types of products. Inventory is carefully preserved, ensuring food hygiene and safety. At the end of 2017, the demand for consumer food during the holidays increased, and the Company predicted that the USD exchange rate would increase sharply in early 2018, so the Company proactively took advantage of loans from credit institutions to increase the quantity of imported goods to meet consumer demand while avoiding risks when the exchange rate fluctuated sharply. Therefore, the value of inventory at the end of 2017 increased sharply compared to the same period in 2016. The company imported a large quantity of raw materials for the production of confectionery and holiday foods such as: flavoring agents, jelly agents, sweeteners, flavorings, etc. The total value of imported goods in 2017 reached 247 billion VND, of which the value of imported goods reached 181 billion VND (accounting for 73% of the total value of purchased goods). Details of some inventory items with large values are as follows:
STT
Client | Beginning balance | Debt generation | Arising has | Final balance period | |
1 | Preservatives | 795 | 15,257 | 12,825 | 3,227 |
2 | Flavor enhancer | 2,326 | 27,624 | 26,907 | 3,044 |
3 | Thickener | 5,674 | 57,130 | 41,224 | 21,580 |
4 | Jelly Powder Group | 2,411 | 18,828 | 13,693 | 7,546 |
5 | Sweetener | 3,743 | 59,995 | 44,818 | 18,920 |
6 | Flavors | 2,486 | 19,617 | 16,381 | 5,721 |
Total | 17,434 | 198,452 | 155,849 | 60,038 | |
Source: BIDV Hoan Kiem credit management department
The Company's inventory is rotated regularly because these are all substances serving the food processing industry, so the storage time is short. The quality of the inventory is guaranteed, the company did not have any goods in inventory for a long time in 2017.
Fixed assets: Analyze fixed assets in detail by object, origin, condition when first put into use, year put into use, time used, capital formation source, % of depreciation, depreciation rate included in annual expenses, remaining value and current asset status... When evaluating fixed assets, it is necessary to know whether the accounting value is consistent with the remaining exploitable value of that asset. Compare the value on the accounting books with the market value to see if the provision is reasonable or not. At the same time, it is necessary to find out whether these assets have been secured for loans at which credit institutions to draw appropriate conclusions.
Fixed assets: As a business mainly trading in additives, the fixed assets of the business account for a lower proportion in the total assets structure. The company's fixed assets in 2017 reached 17,605 million VND, an increase of 1% compared to 2016. However, due to the sudden increase in goods
inventory, so the proportion of fixed assets decreased to only 14% of total assets. The most valuable fixed assets are 02 real estates at 05 Nghi Tam, Hanoi and 32/5 Bau Cat, Ho Chi Minh City. These are 02 Company offices with a value of more than 10 billion VND, accounting for 60% of the value of fixed assets. In addition, the Company's fixed assets include machinery and equipment for technical inspection, production and some cars for transportation. All fixed assets of the Company are invested with equity. In 2017, the Company invested in some additional machinery for office work and research rooms such as photocopiers, mixers, grinders, ... with a value of about 300 million VND. In addition, the company has invested in 2 more means of transport: 1 Thaco 2.3-ton truck and 1 Honda Civic car to serve the transportation of goods and travel needs of the company's leaders.
Analysis of business results report (Appendix 02).
Regarding total revenue: In the period from 2015 to 2017, the company has increased fluctuations over the years. From 141,385 million VND in 2015, it decreased by 7% to 131,830 million VND in 2016 and increased sharply in 2017 to 210,301 billion VND, corresponding to a growth rate of 60%. By grasping the increasing market demand at each specific time, while strengthening the development of customers in the Southern region, the company has exceeded 42% of the business plan set out in 2017 (148 billion VND).
The Company's capital structure has changed, specifically as follows:
STT
2016 | Proportion | 2017 | Proportion | Growth | (%) TT | |
Company Revenue (Customers in Hanoi and other provinces) North) | 118,647 | 90% | 155,623 | 74% | 36,976 | 31% |
Branch Revenue (Customers) in Ho Chi Minh City and Southern provinces) | 13,183 | 10% | 54,678 | 26% | 41,495 | 315% |
Total | 131,830 | 100% | 210,301 | 100% | 78,471 | 60% |
Source: BIDV Hoan Kiem credit management department