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Financial report analysis of Phu Quy Thuan enterprise - 9


2.2.1.4.3 Operating ratio


Average collection period


Table 2.36: Average collection period calculation table


Unit: day




2012

2013

Accounts Receivable

1,857,972,601

2,178,529,870

Net revenue

6,336,422,279

5,599,666,051

Average collection period

105.56

140.06

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Financial report analysis of Phu Quy Thuan enterprise - 9

Source: 2013 business results report


The average collection period of enterprises tends to increase in 2013, both years have a very large average collection period. Specifically, in 2012 it took 105 days, in 2013 it took 140 days, this shows that the collection of receivables of enterprises is still weak, increasing credit risk, increasing the risk of capital loss.


Inventory turnover


Table 2.37: Inventory turnover spreadsheet


Unit: times




2012

2013

Net revenue

6,336,422,279

5,599,666,051

Inventory

73,054,182

79,242,554

Inventory Turnover

86.74

70.66

Source: 2013 business results report


The company's inventory turnover is quite high and tends to decrease in 2013, showing that the company's sales are very good and the efficiency of using borrowed capital is good. This


is a positive signal that businesses need to promote, however this turnover is on a downward trend, businesses need to review and increase this turnover in the coming years.


Fixed asset utilization efficiency


Table 2.38: Fixed asset utilization efficiency calculation table


Unit: times




2012

2013

Net revenue

6,336,422,279

5,599,666,051

Net fixed assets

261,099,356

165,165,906

Fixed asset utilization efficiency

24.27

33.90

Source: 2013 business results report


The fixed asset utilization efficiency of the enterprise is large and tends to increase, showing that the enterprise is using fixed assets quite well. However, according to the above analysis, the increase in fixed asset utilization efficiency is due to the enterprise increasing revenue in 2013, 2013 is the year the enterprise limited and cut costs without purchasing additional fixed assets.


Asset turnover


Table 2.39: Asset turnover spreadsheet


Unit: times




2012

2013

Net revenue

6,336,422,279

5,599,666,051

Total assets

2,304,369,425

2,516,007,838

Asset turnover

2.75

2.23

Source: 2013 balance sheet and 2013 income statement

2013


Asset turnover decreased in 2013, in 2012 each asset generated 2.75 dong of revenue for the business, in 2013 each asset generated 2.23 dong of revenue for the business, this shows that the business was not operating effectively in 2013, this is not a good development.

2.2.1.4.4 Profit margin


Return on Sales (ROS)


Table 2.40: ROS sales profit calculation table


Unit: %




2012

2013

Profit after tax

10,116,709

53,724,725

Net revenue

6,336,422,279

5,599,666,051

ROS

0.16

0.959

Source: 2013 business results report


In 2012, one dong of net revenue from sales and service provision will generate 0.16 dong of profit. In 2013, one dong of revenue will generate 0.959 dong of profit. We can see that in 2013, the business's operating efficiency improved significantly. However, in 2012 and 2013, the ROS index was relatively low, showing that the business's operating efficiency was not good and needed to be improved and promoted.


Return on assets (ROA)


Table 2.41: Return on assets ROA calculation table


Unit: %




2012

2013

Profit after tax

10,116,709

53,724,725

Total assets

2,304,369,425

2,516,007,838

ROA

0.44

2.14

Source: 2013 business results report


ROA from 2012 to 2013 has positive changes, showing that the business is operating more and more effectively. It can be seen that this increase is due to the increase in sales revenue in 2013, the inventory turnover in 2013 is also relatively high. The business needs to maintain and promote this index.


Return on equity (ROE)


Table 2.42: ROE return on equity calculation table


Unit: %




2012

2013

Profit after tax

10,116,709

53,724,725

Equity

912,798,148

838,522,873

ROE

1.11

6.41

Source: 2013 balance sheet and 2013 income statement

The company's equity profit increased significantly in 2013, which shows that in 2012, 100 dong of equity generated 1.11 dong of profit, in 2013, 100 dong of equity generated 6.41 dong of profit, both years had ROE index greater than 0, proving that the company was profitable. The company did quite well in 2013, as evidenced by the fact that in 2013, after-tax profit increased 4.3 times compared to 2012, an extremely impressive figure.


2.3 Assess financial situation through analysis:

Through analyzing the financial statements of Phu Quy Thuan enterprise, we can see the financial status as well as the business production and operation situation of the enterprise in 2012 and 2013 with the following characteristics:

2.3.1 Advantages:

About accounting work at the enterprise:


The company has a compact accounting system, along with a team of qualified employees, graduated in the right major and good coordination between accounting staff to ensure complete and accurate management.

At the same time, Phu Quy Thuan is a small enterprise, so the cash flow in and out is also small. In addition, the enterprise does not invest in securities and does not pay dividends, so the accounting work is also easier. 100% of accounting staff work on computers, so data retrieval, calculation, processing, and reporting are done more accurately and save time.

About the financial situation of the enterprise:


Assets:


Total assets of the enterprise in 2013 increased compared to 2012, mainly due to the increase of short-term assets by 307,571,863 VND compared to 2012, this is a good sign that the enterprise's current payment ability is met. Inventory also improved, down 7.8% compared to 2012, this shows that the enterprise has done a good job of selling its products.

Capital sources:


Currently, the capital structure of the enterprise needs attention and improvement.

than.


Business results:


In 2013, the company had quite impressive business results, after-tax profit increased by 431% compared to 2012, the company needs to maintain and promote.

Quick payment ability structure:


Although the current ratio in 2013 decreased compared to 2012, it still has a value greater than 1, ensuring the company's debt payment obligation when due. We can imagine that the business's operating cycle is relatively stable. At the same time, the company's ability to quickly pay debts when due is also considered quite good.

Financial structure:


The interest coverage ratio increased slightly from 2012 to 2013, and increased by 0.4%, showing that the company's ability to pay interest to its creditors is greater because the company has used borrowed capital effectively.


Activity ratio:


The company's inventory turnover is quite high, showing that the company has done a good job in its sales, and at the same time, the efficiency of using fixed assets has also improved in 2013, showing that the company is exploiting the value of fixed assets at the unit well.


Profit margin:


The company's sales profit, asset profit, and equity profit increased sharply in 2013, showing that the company is using its assets quite effectively and that its production and business situation is changing positively.

2.3.2 Disadvantages:


Customer receivables increased sharply (up 17.3% compared to 2012), accounting for a very high proportion of short-term receivables. Leaving such a large amount of customer receivables behind shows the weakness in debt collection of the company.


Enterprises, reducing the financial autonomy of enterprises, along with the average collection period of enterprises tended to increase in 2013, both years had a very large average collection period. Specifically, in 2012 it took 105 days, in 2013 it took 140 days, this shows that the collection of receivables of enterprises is still weak, increasing credit risk, increasing the risk of capital loss.

Payables increased quite high from 2012 to 2013 (20.5%) and accounted for a very high proportion in the capital structure (66.7% in 2013). This increase is a negative signal, putting great pressure on businesses to pay debts and negatively affecting the business operations of the business. This led to the ratio of quick cash payment ability tending to decrease in 2013, and both years had very low values. It is unsafe for businesses to maintain a small amount of cash and a decreasing trend as above.

Owner's equity decreased from 2012 to 2013, specifically in 2012 owner's equity was 912,798,148 VND, in 2013: 838,522,873 VND, owner's equity accounted for 100% of total owner's equity, this decrease is a bad sign for businesses in controlling their own capital.


Chapter III: Solutions and recommendations


3.1 Business development orientation:

The immediate and long-term task is to increase the search, sign contracts, and ensure the correct production schedule according to orders. In addition, it is necessary to restructure capital for enterprises, link, and concentrate resources on key orders; focus on and concentrate on moderate orders, suitable for the financial capacity and ability of the enterprise.

During the process of operation and development, businesses must strive to expand the market, seek new cooperative businesses, and create high prestige with customers in order to find new customers.

To promote strengths, overcome weaknesses and combine with opportunities to build a proper business strategy, businesses need to focus on marketing.

3.2 Solution:


As analyzed above about the financial situation of Phu Quy Thuan enterprise, it has helped us to visualize the positive and negative aspects that the enterprise is still facing. For the positive aspects, the enterprise needs to promote, and for the negative aspects, it is necessary to find out the causes and then propose timely, specific and positive solutions to solve the problem, not to let the situation get worse. However, besides that, there are also objective reasons such as state policies, changing consumer views of customers... that the enterprise needs to flexibly grasp and change. But the main problem that needs to be done now is to overcome the difficulties that still exist within the enterprise itself, thereby helping the enterprise develop and stand firmer. From a partial understanding of the business situation of the enterprise, in addition to the knowledge learned, I would like to propose some solutions to help the enterprise solve the difficulties in financial management through analyzing the financial statements of the enterprise in 2013.

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