PRINCIPLES OF CORPORATE FINANCE (FIN202) GROUP ASSIGNMENT thieu nien tien phong plastic joint stock company

BUSINESS ADMINISTRATION DEPARTMENT PRINCIPLES OF CORPORATE FINANCE (FIN202) GROUP ASSIGNMENT Thieu Nien Tien Phong Plastic Joint Stock Company Team members 1 Nguyễn Ngọc Minh Châu HS150227 2 Nguyễn Diệu Tú 150490 3 Nguyễn Thu Uyên 153194 4 Trần Hoài Anh 150639 5 Bùi Hồng Quân HS153133 Class IB1602 Team 6 Lecturer Hoàng Văn Tưởng Date Fall 2021 1 I Describe the company’s business operations 1 1 Current market strategy Currently, in the North alone, NTP is holding about 70 80% of the market sh.

-*** BUSINESS ADMINISTRATION DEPARTMENT PRINCIPLES OF CORPORATE FINANCE (FIN202) GROUP ASSIGNMENT Thieu Nien Tien Phong Plastic Joint Stock Company Team members: Nguyễn Ngọc Minh Châu - HS150227 Nguyễn Diệu Tú - 150490 Nguyễn Thu Uyên - 153194 Trần Hoài Anh - 150639 Bùi Hồng Quân - HS153133 Class: Lecturer: Date: IB1602 - Team Hoàng Văn Tưởng Fall 2021 I.Describe the company’s business operations 1.1 Current market strategy Currently, in the North alone, NTP is holding about 70-80% of the market share of pipes and fittings plastic parts On a national scale, NTP's products account for about 30% of total consumer demand Under the pressure of maintaining market share as well as revenue growth while ensuring benefits to shareholders, NTP's plans need to be very careful in execution NTP's Board of Directors has set a goal to compete with other competitors in domestic markets domestic and foreign, mainly by building and developing effective distribution channels,at the same time applying information technology in the management and control of the system distribution channels to optimize business efficiency, timely supply products to customers Regarding the value chain, NTP actively participates in closed value chain models from the "raw" stage materials – production – distribution” to ensure the brand reputation of the company and bring benefits best for customers and shareholders 1.2 Competitive advantage a) Production and distribution capacity • Production of plastic pipes and spare parts: Currently, the company owns 06 factories across the country with a total workshop area of nearly 450,000 m2 and nearly 1,900 employees, with a total annual output of about 112,000 tons of products Specifically: Northern Central Southward 04 factories with a total area of about 350,000 m2 01 factory with a total area of about 62,000 m2 01 factory with total area about 37,000 m2 Year output 80,000 tons of products 15,000 tons of products 17,000 tons of products Total employees 1,400 people 125 people 347 people Factory Besides, NTP also has a nationwide consumption network including 09 distribution centers, about 400 agents and 15,000 sales points nationwide • Real estate: With about 20ha of land in the old factory area at No An Da, Ngo Quyen District, City Hai Phong, NTP are implementing projects of commercial complexes, offices for rent and high-class apartments b) Partnerships c) Financial resources • Low cost of capital: With a background as an equitized state-owned enterprise, NTP is given relatively favorable incentives: capital sources with low interest rates and high credit lines with short-term interest rates on average only about 6% with short-term loans and 9% with long-term loans • Stable cash flow: The clearest proof for this point is the fact that NTP has been listed on HNX since 2006 Up to now, NTP has never offered shares to new investors or existing shareholders and only Currently increasing charter capital from profit after tax Another point worth noting is that NTP is still continuous pay regular dividends to shareholders d) Competitive advantage • Brand: owning a huge distribution network and a market share of 70-80% in the region Northern, Tien Phong Plastic Youth brand has become an affirmation of quality for plastic pipes and fittings • Research and development: NTP has always been a pioneer in investment, research and application using new products with top quality in the region ✓ In 2004: NTP was the first company to produce standard PP-R heat-resistant pipes DIN8077-2008-09 and DIN8078-2008-09 ✓ 2016: The company put into operation the DN2000 HDPE pipe production line and HDPE/PP pipes with layers of corrugated iron up to DN800 according to European technology with a total amount of 150 billion VND investment This is of lines that can produce HDPE pipes diameter as large as 2,000 mm is available in the world, NTP is the first enterprise from Vietnam and Asia to invest in this chain ✓ In 2017 – 2018: NTP continues to spend more than 100 billion VND to invest in machinery and equipment for PVC pipe production lines; HDPE and PP-R pipes; PVC pipe fittings production and PP-R; laboratory equipment and product quality control; chain investment MVPC pipes DN110 – DN355; PP-R pipe production line DN20 – DN63; cord production line for single-walled corrugated pipes for electrical cable conduit 500kg/h; production line double-walled corrugated pipe for drainage 1,000kg/h; equipped with 250T, 350T and injection molding machines 650T; grain dryer, PP-R spare parts packing machine; tube weld inspection ultrasonic machine HDPE;… II.Financial statement analysis Common-size analysis for Balance sheet and Income Statement a) Balance sheet Total assets: In general, NTP's total assets decreased gradually over the years Specifically, year 2019 compared to 2018, it decreased by 323,975,511,919 VND, corresponding to a decrease of 7.12% By 2020 compared to 2019 it will be reduced by 656,900,810,903 VND, equivalent to a decrease of 16.86% The reason that the company's total assets tend to decrease rapidly is due to the decrease in short-term assets In 2018 total assets are 54.61%, in 2019 total assets are 51.91% and in 2020 total assets are 43.10% Short-term assets and long-term assets Chart comparing short-term assets and long-term assets Through the comparison chart of short-term assets and long-term assets above, it can be seen that short-term assets and long-term assets have a change in the period 2018-2020 Specifically, in the period 2018-2020, short-term assets decreased and long-term assets increased + About short-term assets: * Period 2018-2019: 54.61% in 2018 and 51.91% in 2019 down 2.7% * Period 2019-2020: 51.91% in 2019 and 43.10% in 2020 down 8.81 + About long-term assets * Period 2018-2019: 45.39% in 2018 and 48.09% in 2019 up 2.7% * Period 2019-2020: 48.09% in 2019 and 56.90% in 2020 up 8.81% => Firms tend to invest more in long-term assets The fluctuations in the size of current assets and long-term assets are due to the impact of the following components: Cash and cash equivalents: In 2019 increased by 213,956,975,033 VND compared to 2018 respectively, an increase of 257.6 percent The reason for the rapid increase is that the company is saving costs for the purchase of input materials or the enterprise has recovered its debt The company's maintenance of a large amount of cash has the advantage of the company's solvency is always guaranteed, the company always has a high amount of liquid assets such as cash and cash equivalents to secure due debts However, storing a lot of cash also makes the company lose business opportunities when it always maintains a large amount of cash in the fund In 2020, a decrease of VND 84,852,237.244 compared to 2019 corresponding to a decrease of 28.6% The reason for the decrease is that the company spends on some of its activities Short-term accounts receivables: Short-term accounts receivables tend to decline over three years In 2018, short-term receivables were VND 1,549,583,689,783, accounting for a relatively high proportion of short-term assets However, in 2019 it decreased to 958,486,969,352 VND, down 591,096,720,431 VND compared to 2018 respectively, down 38.15% And in 2020 it will decrease to 813,391,481,075 VND, down 145,095,488,277 VND compared to 2019 respectively, down 15.14% The decrease in short-term receivables shows that the company is not misappropriating capital and they are tightening credit policy, enhancing debt collection Inventory Inventories are not stable The increase in 2019 was 78,289,174,862 VND higher than in 2018, equivalent to an increase of 7.86% An increase in inventory is a sign that the company is in a state of capital backlog At that time, the company needs to take measures to increase the speed of inventory turnover and reduce the amount of goods stored in the warehouse Such as improving product designs, diversifying products, bringing products abroad, etc However, in 2020 inventory has decreased compared to 2019 by VND 429,624,312,403 equivalent to a decrease of 40% This shows that the company's capital stagnation, reduced goods, good and favorable product consumption activities of the company Fixed assets The company's fixed assets fluctuate In 2019 decreased by 15,792,741,641 VND compared to 2018 respectively, a decrease of 1.02% and in 2020 increased by 263,198,816 VND compared to 2019 respectively, an increase of 0.02& In general, the company's fixed assets in the period 2018-2020 increased and decreased insignificantly The company still maintains stable fixed assets Long-term financial investment Long-term financial investments can be seen steadily increasing over three years Specifically, in 2019 an increase of VND 53,822,933,803, equivalent to an increase of 11.8%, and an increase of VND 17,358,831,905 in 2020 compared to 2019 respectively, an increase of 3.4% This shows that the company is actively making long-term financial investments that will bring long-term results for the company Funding situation: Liabilities Liabilities tend to decrease steadily over three years In turn, 2019 decreased by 638,889,202,261 VND compared to 2018 respectively, down 24.3% and in 2020 decreased by 678,770,094,288 VND compared to 2019 respectively, down 34.2% Liabilities decreased as short-term debt and long-term debt both decreased in three years Short-term debt in 2019 decreased by 533,263,299,950 VND compared to 2018 respectively, down 22.3% and in 2020 decreased by 583,436,466,406 VND compared to 2019 respectively, down 31.5% Long-term debt in 2019 decreased by 105,625,902,311 VND compared to 2018 respectively, down 44.68%, and in 2020 it decreased by 95,333,627,882 VND compared to 2019 respectively, down 72.89% Equity Equity tends to increase over three years In 2019, an increase of 314,913,690,342 VND compared to 2018 respectively, an increase of 13.98% and in 2020 an increase of VND 21,869,283,385 compared to 2019 respectively, an increase of 0.85% In addition, equity always accounts for a high proportion of total capital, especially in 2019 it is 56.40% and in 2020 it is 66.47% A high proportion of equity indicates that the company has a high degree of financial independence and financial autonomy The relationship between assets and capital Targets 2018 (times ) 2019 (times) 2020 (times) 2019/2018 2020/2019 Debt-to-asset ratio 0,54 0,44 0,34 -0,1 -18,52% -0,1 -22,73% Overall solvency ratio 1,86 2,29 2,98 0,43 23,12% 0,69 30,13% Asset to Equity Ratio 2,16 1,77 1,50 -0,39 -18,06% -2,27 -15,25% The three-year debt-to-assets ratio is low, the three-year expenses are all less than It shows that the company has used a lot of equity to purchase operating assets, making the company more financially autonomous and actively in business activities because it is heavily dependent on debt capital In 2019 compared to 2018 decreased by 0.1 with a reduction rate of 18.52% 2020 compared to 2019 decreased by 0.1 with a decrease rate of 22.73% The three-year general solvency ratio is both greater than It proves that the company has excess solvency, strong financial position, has a positive impact on business activities In 2019 compared to 2018 increased by 0.43 with an increase rate of 23.12% 2020 compared to 2019 increased by 0.69 with an increase rate of 30.13% The three-year asset-to-equity ratio is close to 1, showing that the company's assets are invested mainly with equity In other words, the company is financially independent 2019 compared to 2018 decreased by 0.39 with a reduction rate of 18.06% 2020 compared to 2019 decreased by 2.27% with a reduction rate of 15.25% Ability to pay short-term debt Targets 2018 results (times) 2019 results (times) 2020 results (times) Ability to pay short-term debt 1,12 1,27 1,32 The company's short-term debt solvency for three consecutive years 2018 - 2020 is greater than 1, the company has excess capacity to pay for short-term debts That is, the financial situation of the company in years is very positive, it has a positive impact on the business activities of the company b) Income statement Revenue from sales of goods In general, the period 2018-2020 tends to be unstable In 2019 compared to 2018 increased by 254,069,099,506 VND, equivalent to an increase of 5.60% This shows that the sales and products of the company are very good and convenient The company has effective plans, policies and business plans from which to bring growth in sales revenue from providing sales and services during the above period However, 2020 compared to 2019 decreased by VND 142,503,633,540, equivalent to a decrease of 2.98% It shows that in the period of 2019-2020 the company is facing difficulties in sales and services The reason is that the Covid-19 epidemic caused the company to stall, it was difficult to supply goods and services to the market, and the demand and use of products during this period was limited Net sales There was a fluctuation in net sales over the three years In 2019 compared to 2018 increased by 154,227,935,920 VND, corresponding to an increase of 3.41% In 2020 compared to 2019 it decreased by VND 187,762,390,827, equivalent to a decrease of 4.02% In the period of 2018-2020, net revenue is not stable In the period of 2018-2019, the increase shows that the company is profitable, operating effectively and bringing profits to the company The decrease in the period of 2019-2020 shows that the company is facing difficulties in operation and needs solutions to improve the situation and stabilize the company Cost of goods sold Cost of goods sold over the years has not been stable In 2019 compared to 2018 it increased by 136,684,801,182 VND, corresponding to an increase of 4.29%, showing that the cost of raw materials and workers directly used to create goods chemical increase In 2020 compared to 2019 it decreased by 227,437,030,546 VND, equivalent to a decrease of 6.84%, due to the decrease in the price of plastic input materials Financial activities income Financial activities income tends to increase steadily in the period 2018-2020 Specifically, the increase in 2019 compared to 2018 is VND 1,727,001,858, an increase of 11.47%, an increase of VND 4,526,068,099 in 2020 compared to 2019 is VND 4,526,068,099, an increase of 26.97% This shows that the company is focusing on financial activities and the company's financial investment activities in this period are good, favorable, and highly effective with investment policies and plans thoroughly effective Selling expenses & General and Administrative expense Selling expenses of the company tended to decrease steadily over the past three years, while general and administrative expenses fluctuated Specifically in terms of selling expenses, the decrease in 2019 compared to 2018 was VND 73,371,641,445, equivalent to a decrease of 10% The decrease in 2020 compared to 2019 is VND 77,634,520,465, equivalent to a decrease of 11.77% This shows that the reduction in selling expenses will save some money for the company, but this reduction in selling costs also affects the company's sales activities such as limiting service provision such as limited service delivery Product introduction, advertising, etc For business administration expenses, in 2019 the decrease compared to 2018 was 12,113,103,214 VND, equivalent to 8.18% decrease The increase in 2020 compared to 2019 is 79,809,874,219 VND, equivalent to an increase of 58.71% The reason is that the company has expanded a number of new factories in Tien Phong in the South and a new factory in Binh Duong Gross profit In general, the company's gross profit in this period tended to increase steadily Specifically, in 2019 the increase compared to 2018 is 17,543,134,738 VND, equivalent to an increase of 1.32% The increase in 2020 compared to 2019 is 39,674,639,719 VND, equivalent to an increase of 2.94% The reason for the strong increase in gross profit is that the increase in net sales is larger than the increase in cost of goods sold Other income Other income in this period generally tends to increase and decrease unstable The increase in 2019 compared to 2018 is 3,504,323,366 VND, equivalent to an increase of 62.05% The decrease in 2020 compared to 2019 is 5,019,798,026 VND, equivalent to a decrease of 54.85% This shows the instability in profits and other income of the company during the period when it increased very quickly but when it decreased very quickly Profit before tax Profit before tax tends to increase steadily over the years The increase in 2019 compared to 2018 is 91,341,114,234 VND, equivalent to an increase of 24.05% The increase in 2020 compared to 2019 is 52,232,242,143 VND, equivalent to an increase of 11.09% This shows that the company's profit is still increasing steadily over the years and this is really a good sign for the company's business Net income After deducting incurred expenses and paying taxes to the state in full, the company's final business results in the three years of 2018, 2019 and 2020 achieved positive and stable growth Specifically, in 2019 the increase compared to 2018 is VND 77,508,948,948, equivalent to an increase of 23.38% The increase in 2020 compared to 2019 is 38,163,029,980 VND, equivalent to an increase of 9.33% It can be seen that the company has been profitable over the years with quite stable profit growth and this is a good sign and shows that the company's business results in the period 2018-2020 are very effective c, General comments Through the above analysis, we can see that in the period of 2018-2020 the economy faced many difficulties, but the company's production and business results were still very positive The company's business results show that the company's ability to expand production and business, make use of good resources, and policy guidelines and wise leadership have brought about a successful financial year of the company The results of revenue and profit show that the company's growth rate is good, meets the expectations of the leadership and needs to continue to try harder in the future And through that, when comparing the company with companies in the same industry such as Binh Minh Plastic Company or some other companies in the industry, in general, Tien Phong Plastic Company has indicators as well as financial business situation stable, efficiency is evaluated better than other companies in the same industry 2.Ratios analysis a) Liquidity Ratios ● Current ratio Current asset 2018 2019 2020 2,663,120,671,142 2,363,188,726,746 1,678,805,704,398 Current liabilities 2,387,372,889,586 1,854,109,589,636 1,270,673,123,230 Current ratio 1.11 1.27 1,32 2018 2019 2020 BMP 5.04 4.2 4.03 DNP 1.29 1.08 1.22 TPC 1.4 1.44 1.3 AAA 1.24 1.54 1.19 Current ratio business 2018-2020 From the table above, we see that the current ratio of Tien Phong company in consecutive years from 2018 to 2020 is greater than one Enterprises always ensure the ability to pay short-term debts and due debts The company's current solvency has slightly increased over the years 2018-2020 because the decreasing rate of short-term liabilities tends to be higher than current assets The current ratio in 2018 reached 1.11 times; in 2019 reached 1.27 times; 2020 will reach 1.32 times This shows that the enterprise is able to pay its debts and increasingly ensures its ability to pay its short-term debts with short-term assets such as cash, inventory, and receivables The financial situation of the enterprise is stable and can be assessed as gradually improving ● Quick Ratio 2018 2019 2020 Current asset 2,663,120,671,142 2,363,188,726,746 1,678,805,704,398 Inventory 995,457,074,011 1,073,746,248,873 644,121,936,470 Current liabilities 2,387,372,889,586 1,854,109,589,636 1,270,673,123,230 Quick ratio 0.698 0.695 0.814 2018 2019 2020 BMP 3.46 2.93 3.28 DNP 1.08 0.84 0.99 TPC 0.79 0.79 0.81 AAA 0.98 1.16 0.94 Quick Ratio business 2018-2020 10 other organizations in the same industry NTP firm is in second position, bringing in 3,796 dong in profit after taxes for each share The profit of AAA's firm is 1,367 dong, TPC's profit is 1,417 dong, and DNP's profit is 232 dong ● Price-Earnings Ratio 2018 2019 2020 Price per share 40,500 32,300 36,000 Earnings per share 3,714 4,166 3,796 Price-earnings ratio (P/E) 10.9 7.75 9.48 2018 2019 2020 BMP 10.07 8.75 9.81 DNP 68.98 83.68 136.13 TPC 7.55 9.61 10.35 AAA 10.97 4.72 10.53 NTP has a P/E ratio that is comparable to the industry average for the period 2018-2020 In 2018, if investors want a dong of income, they will have to invest 10.9 dong In 2019, the price is lower than in 2018, but investors must spend 7.75 VND; in 2020, the price will rise again, but not to the same level as in 2018, and investors must spend 9.48 VND DNP's P/E ratio in 2020 is the highest when compared to other firms in the same sector Investors in BMP Company only have to pay 9.81 dong to earn a dong of income, however investors in NTP must spend 9.48 dong to invest As a result, NTP must continue to enhance its business processes in order to increase earnings and, as a result, become more appealing to investors ● Market-to-book ratio - BVPS Giá trị sổ sách cổ phần = Vốn chủ sử hữu – Tài sản vơ hình Tổng khối lượng cổ phiếu lưu hành - Market value of equity per share = Price per share Book value of equity per share 2018 2019 2020 24,833 25,346 21,331 21 Market value of equity per share 40,500 32,300 36,000 Market-to-book ratio (P/B) 1.63 1.27 1.69 Market-to-book ratio 2018-2020 2018 2019 2020 BMP 1.75 1.5 2.07 DNP 0.81 0.86 0.71 TPC 0.69 0.64 0.66 AAA 0.84 0.67 0.79 The Market to Book Ratio (also called the Price to Book Ratio), is a financial valuation metric used to evaluate a company’s current market value relative to its book value In other words, the ratio is used to compare a business’s net assets that are available in relation to the sales price of its stock Looking at the chart above, we can see that the Tien Phong enterprise's book exchange rate has been more than over the last three years (2018 to 2020) If the index is less than one, it means that a corporation may be bought for less than its property worth This figure shows how much equity investors pay per dollar of net assets The company's price-to-book ratio in 2018 was 1.63, indicating that its market capitalization was 1.63 times that of its assets' net book value This ratio fell to 1.27 times in 2019, indicating that the company's stock is undervalued in comparison to 2018 In 2020, the price-to-book ratio will be substantially higher than in 2019 and somewhat higher than in 2019 The fact that the company's stock is inexpensive, its market capitalization is bigger, and it is performing better than in 2018 demonstrates that the company's stock is undervalued When we compare Tien Phong's price-to-book ratio to that of other firms in the same industry, we discover that NTP's index is second only to BMP's, and far higher than DNP, AAA, and TPC's III Dupont ratios - ROA = Net income / Total assets ROA= Net profit margin X Total asset turnover Net profit margin = Net income/Net sales = EBIT/ Net sales x EBT/EBIT x Net income/ EBT ROE = Net income / Total equity ROE = ROA x Equity multiplier ROE = Net profit margin x Total asset turnover x Equity multiplier ROE = Net income/Net sales x Net sales/Total assets x Total assets/Total equity Year 2018 2019 2020 22 Firm Firm Firm ROS 0.073 0.0859 0.0997 ROE 0.1528 0.1697 0.1734 ROA 0.07 0.088 0.1059 Equity multiplier 2.16 1.77 1.5 Net profit margin 0.07 0.09 0.1 Asset turnover 0.99 1.01 1.06 Comparing some profitability indicators of NTP with some enterprises in the same industry in 2020 BMP DNP TPC AAA ROS 0.1115 0.0082 0.0251 0.0381 ROA 0.178 0.0015 0.0319 0.0317 ROE 0.2115 0.0055 0.0645 0.0721 To better analyze the return on assets, we use the Dupont model: ROA = ROS x Asset Turnover According to the Dupont model, asset profitability is the combined result of Return on Sales (ROS) with asset turnover Analyzing the impact of factors on ROA in 2020 we have: Năm 2019: ROA = 0.0859 x 1.01 = 0.086759 Năm 2020: ROA = 0.0997 x 1.06 = 0.105682 We see that ROA in 2020 increased by 21.81% compared to 2019 due to the influence of two factors: + As the rate of return on sales increases, the return on assets increases: ROA1 = (0.0997 - 0.0859) x 1.01 = 0.013938 23 + As the turnover of total assets increases, the return on assets increases: ROA2 = (1.06 - 1.01) x 0.0997 = 0.004985 Total influence of two factors: ROA = ROA1 + ROA2 = 0.018923 Thus, the return on assets in 2020 of the Company increased to 0.018 mainly due to the increase in total asset turnover compared to 2019 at 4.95% It proves that in 2020 the company is also gradually controlling costs, taking advantage of the capacity of assets But this change is not large, the company needs to make more efforts to keep up with the development of enterprises in the same industry and improve the efficiency of asset use Below, the author summarizes the ROA analysis according to the Dupont model to be able to see more clearly the effects of each asset and cost component on ROA in 2020: 24 25 Through the Dupont model, we consider each indicator affecting the Company's ROE in 2020 as follows: ROE = ROS x Asset turnover x financial leverage + Return on revenue (ROS) increased from 0.0859 in 2019 to 0.0997 in 2020 With the same 100 dong of net revenue, 2014's profit after tax was higher than 2013's 0.0138 dong corresponds to an increase of 16.06 %, contributing to an increase in ROE + Asset turnover increased from 1.01 rounds in 2019 to 1.06 rounds in 2020, with an increase rate of 4.95%, reflecting the company's efficient use of assets, contributing to an increase in ROE + Financial leverage decreased, in 2020 compared to 2019 it decreased by 0.3 times, corresponding to a reduction rate of 16.66% because total assets and equity increased Thus, the return on equity in 2020 compared to 2019 increased by 0.23% due to the influence of the following three factors: + As the return on sales (ROS) increases, ROE increases: ROE1 = (0.0997 - 0.0859) x 1.01 x 1.8 = 2.5% + Due to an increase in total asset turnover, ROE increases: ROE2 = 0.0997 x (1.06 - 1.01) x 1.8 = 0.8973% + Due to increased financial leverage, ROE also increases: ROE3 = 0.0997 x 1.06 x (1.5 - 1.77) = -2.85% Total difference: ROE = ROE1 + ROE2 + ROE3 = 2.5% + 0.8973% - 2.85% =0.54% Through the above analysis, ROE increases mainly due to total asset turnover, increasing total asset turnover ratio makes ROE increase by 2.5%, then the increase in return on revenue makes ROE increase by 0.8973%, and finally an increase in equity multiplier causes ROE to decrease by 2.85% From this result, it can be seen that the company has shown signs that production and business activities are recovering and are at a high level Compared with other companies in the same industry in 2020, the Company's ROE is at the highest level of only about 17%, while BMF Company has the highest ROE of 21.15% Company DNP is 0.55%, TPC Company is also 6.45% and AAA Company is 7.21% These three companies have much lower ROE than NTP company However, the company needs to further improve asset utilization efficiency, control costs and further improve equity utilization efficiency, thereby creating attraction for investors and lenders Below, the author summarizes the assessment of ROE volatility in order to better clarify the influence of assets, expenses and equity factors on the return on equity in 2020 according to the Dupont model: 26 27 IV Statement of Cash flows 2020 2019 2018 I Operating Activities Profit after tax 2020/2019 2019/2018 (+/-) % (+/-) % 523,418,677,069 471,186,434,926 379,845,320,692 52,232,242,143 11,08% 91,341,114,234 24,05% Adjustments for accounts Depreciation and amortization 147,795,673,087 149,825,693,007 133,917,695,978 -2,030,019,920 -1,35% 15,907,997,029 11,9% Provision 77,552,270,807 -8,818,137,228 1,483,243,073 86,370,408,035 -979,5% -10,301,380,301 -694,5% Gains (losses) on exchange rate differences from revaluation of accounts derived from foreign currencies -123,355,044 58,951,944 - -182,306,988 -309,25% - - Gains (losses) on investing activities -37,117,384,658 -29,957,455,448 -32,541,302,220 -7,159,929,210 23,9% 2,583,846,772 -7,94% Interest expenses 66,756,127,721 114,690,167,705 107,149,414,700 -47,934,039,984 -41,8% 7,540,753,005 7,04% Operating profit before changes in working capital 778,282,088,982 697,615,654,906 589,854,372,223 80,666,434,076 11,56% 107,761,282,683 18,3% Increase (decrease) in receivables 71,769,544,252 602,508,747,511 -260,161,161,404 -530,739,203,259 -88,1% 862,669,908,915 -331,6% 10 Increase (decrease) in inventories 430,955,342,998 -70,101,037,634 -143,868,765,932 501,056,380,632 -714,76% 73,767,728,298 -51,3% 11 Increase (decrease) in payables -150,734,219,419 51,049,069,293 -31,569,391,873 -201,783,288,712 -395.3% 82,618,461,166 -261,7% 12 Increase (decrease) in prepaid expenses 533,570,702 7,996,307,976 -5,422,480,861 -7,462,737,274 -93,33% 13,418,788,837 247,46% 14 Interest paid - 69,499,119,336 -114,571,266,552 -106,266,622,542 45,072,147,216 -39,34% -8,304,644,010 7,81% 28 15 Paid enterprise income tax - 81,117,191,574 -28,203,387,482 -66,240,919,220 -52,913,804,092 187,6% 38,037,531,738 -57,4% 17 Other payments on operating activities - 55,768,965,698 -19,994,932,931 -28,628,198,176 -35,774,032,767 178,9% 8,633,265,245 -30.15% 20 Net cash flows from operating activities 924,420,970,907 1,126,299,155,087 -52,303,167,785 -201,878,184,180 -17,9% 1,178,602,322,872 2253.4% II Cash flow from Investing Activities - ICF 21 Expenditures on purchase and construction of fixed assets and long-term assets - 118,033,023,743 - 169,760,204,641 - 294,650,204,815 51,727,180,898 -30,5% 124,890,000,174 -42,4% 22 Proceeds from disposal or transfer of fixed assets and other long-term assets 1,001,232,372 323,832,727 - 677,399,645 209,2% - - 23 Deposit money into a deposit account with a term of more than months - - 10,000,000,000 - 24 Withdrawal of term deposits with a term of more than months 10,000,000,000 - - 25 Expenditures on equity investments in other entities - -33,120,000,000 -1,128,120,000 -31,991,880,000 2835.85 % 27 Proceeds from interests, dividends and distributed profits 18,861,188,959 16,711,816,988 13,503,923,132 2,149,371,971 12,9% 3,207,893,856 23,75% 30 Net cash flows from investing activities - 88,170,602,411 - 195,844,554,926 -282,274,401,683 107,673,952,515 -54,98% 86,429,846,757 -30,62% III Cash flows from financial activities 33 Proceeds from borrowings 3,175,614,314,278 3,788,555,884,880 3,967,099,907,748 -612,941,570,602 -16.2% -178,544,022,868 -4.5% 34 Repayment of principal -3,723,839,876,428 -4,415,747,204,799 -3,540,104,213,837 691,907,328,371 -15.67% -875,642,990,962 24.7% 36 Dividend payment -373,021,980,500 -89,240,302,000 133,860,453,000 -283,781,678,500 318% -223,100,755,000 -166.7% 29 40 Net cash flows from financial activities -921,247,542,650 -716,431,621,919 293,135,240,911 -204,815,920,731 28.6% -1,009,566,862,830 -344.4% 50 Net cash flow during year -84,997,174,154 214,022,978,242 -41,442,328,557 -299,020,152,396 -139.7% 255,465,306,799 -616.4% 60 Cash and cash equivalents at beginning of year 297,022,694,727 83,065,719,694 124,508,048,251 213,956,975,033 257.6% -41,442,328,557 -33.3% 61 Effect of exchange rate changes on foreign currency conversion 144,936,910 -66,003,209 - 210,940,119 -319,6% 70 Cash and cash equivalents at end year 212,170,457,483 297,022,694,727 83,065,719,694 -84,852,237,244 -28,6% 213,956,975,033 257,6% According to Vietnamese Accounting Standards: The statement of cash flows is an integral part of the statement of cash flows, it provides information to help users evaluate changes in net assets, financial structure, etc principal, the convertibility of assets into cash, liquidity and the ability of the enterprise to generate cash flows during its operations The statement of cash flows increases the ability to objectively assess the business performance of the enterprise and the comparability between businesses because it eliminates the effects of using other accounting methods each other for the same transaction and phenomenon So, from analyzing NTP's Cash Flow statement for the three years 2020, 2019, 2018 we can see the trend and proportion of cash flows as follows: 1, Cash flows from operating activities During three years of net cash flow from operating activities of NTP with many fluctuations, 2020 and 2019 are both positive, showing business activities that create an increase in cash for the business and the ability to pay business activities business is good However, in 2018, net cash flow from operating activities was negative, showing that the cash capital size of the enterprise is decreasing, affecting the safety of the enterprise's treasury, as well as the financial security of the enterprise industry in general Comparing 2020 with 2019, net cash flow tends to decrease to -201,878,184,180 VND equivalent to 17.9% because the company has to suffer a large loss from the exchange rate difference from the assessment cash items denominated in foreign currencies, sharply reduced receivables from 602,508,747,511 in 2019 to 71,769,544,252 in 2020, which means a decrease of 88.1% Next, in 2019 with 2018 there was a big change, in 2018 the net cash flow from operating activities was negative This shows that in 2018, enterprises had difficulties in consuming products, goods and services, in the collection of sales and service provision However, this situation has been improved and thrived by the company in 2019 with net cash flow from operating activities 30 +1,126,299,155,087, marking year of an effective business This big change shows that NTP's pre-tax profit in 2019 was 24.05% higher than 2018, sharply increasing receivables from -260,161,161,404 VND to 602,508,747,511VND, equivalent to 331.6% Besides, in 2018 there was no profit from the exchange rate difference, but in 2019, NTP earned a profit of 58,951,944 VND In addition, the net cash flow from operating activities in 2020 is higher than the profit after tax of 401,002,293,838 VND (924,420,970,907 - 523,418,677,069) 2019 is also larger than 655,112,720,161 VND (1,126,299,155,087-471,186,434,926) This shows that the business is profitable, thriving and generating a lot of revenue, especially in 2019 But in 2018, profit after tax was 379,845,320,692, while net cash flow from operating activities is very low (52,303,167,785), showing that the revenue quality of the business may not be high (because it does not generate money for business activities but only profits on the books) Originally, in 2018, NTP had a negative net cash flow, because there was a risk of appropriating capital of Minh Hai import-export-trading company - a familiar partner of Tien Phong Plastic Company (NTP), this has made a significant impact on NTP's receivables Besides, according to Vietstock.vn, in 2018, NTP had to pay high raw material prices, which directly affected the cash flow and profits of the business Cash flows from investing activities Through the three years of 2018, 2019 and 2020 the net cash flow from investment activities has a negative price, showing the expanding investment scale of the enterprise, the production capacity, the business capacity of the enterprise is tending to develop and have a business investment in the future Because businesses have to spend money to buy and build more fixed assets or increase capital investment outside In 2020, cash flow from investing activities (II) has improved significantly from (195.8) billion to (88.2) billion This represents money spent on procurement, construction of fixed assets and other long-term assets, NTP company spent a large amount of money on this purchase, especially in 2018, the company spent 294,650,204,815 means that there is a large investment for the business, in the following years the company still spends a large amount of money mainly on this purchase and investment Cash flow into the business is the income from deposit interest, dividends and distributed profits 2020 is 18,861,188,959 the most in years from 2018, it is 12.9% higher than 2019 and 23.75% in 2018 From here, we can see that over years, cash inflows are not much different, kept at stability level Tien Phong Plastic Joint Stock Company is considered one of the largest plastic companies in the country, with large production capacity and distribution channels covering from North to South According to NTP's 2020 annual report: ● In 2017 - 2018, Tien Phong Plastic continued to invest more than VND 100 billion for HDPE and PP-R pipe production lines; PVC pipe; production of PVC and PP-R pipes and fittings; PP-R pipe production line DN20 - DN63; ultrasonic weld inspection machine for HDPE pipes; equipped with injection molding machines of 250 tons, 350 tons and 650 tons; testing equipment and product quality control, investing in M-PVC pipe production line DN110 - DN355; PE/PP double-layer corrugated pipe production line 1000kg/h; grain dryer, PP-R spare parts packing machine; 500kg/h single layer HDPE spiral pipe production line, etc 31 ● In 2019, not only that, but the enterprise has also developed a product line of uPVC drainage pipes and fittings according to international standards ISO 3633 to have a total solution for civil drainage systems In addition, products used for water supply systems were also introduced to consumers such as 2-layer PE/PP corrugated pipes ● In 2020, Tien Phong Plastic pioneered in researching new solutions for vertical shaft drainage of high-rise buildings and launched twisted core uPVC pipes on Sekisui corporation's technology line with many outstanding features compared to other products conventional uPVC products In addition, the Company has also successfully produced PE Walls to meet the needs of constructing reservoirs to store fresh water in drought and mangrove areas, serving aquaculture From here, we can see that Tien Phong Youth Plastic Joint Stock Company is always pioneering and developing and that shows the cash flow spent on purchasing and building large, fixed assets This helps the company's products become more diversified and meet the needs of the current Vietnamese market Cash flows from financial activities Through the years of 2018, 2019 and 2020 there is a decreasing net cash flow of financial activities, in 2020 and 2019 there is a negative cash flow and positive value in 2018 First, we comment on the item "Proceeds from borrowings", this entry is made based on the total amount of money received in the period from borrowings from financial institutions, credit institutions and other entities during the reporting period From 2018 to 2019, enterprises reduced the amount of borrowed money from 3,967,099,907,748 to 3,788,555,884,880, equivalent to a decrease of 4.5% Continuing to 2020, this loan level further decreased to 3,175,614,314,278, equivalent to 16.2%, a sharp decrease compared to the period of 2018-2019 This is a good sign, because borrowing money from the company is significantly reduced Second, the item " Repayment of principal" is made based on the total amount paid back to the loan principal of the NTP company From 2018 to 2019, the loan principal payment decreased by 24.7% and also decreased by 15.67% in the period 2019-2020 Finally, in the item “dividend payments”, this entry is established based on the total amount of dividends and profits paid to the owners of the business, i.e., from profits earned from operating activities business and NTP's payable expenses to the amount left to pay dividends, it represents the financial health and profitability of the business We can see, from 2018 to 2020, the cash flow of the item “dividend payments” gradually decreases from a positive value in 2018 of 133,860,453,000 to a negative value of 2019 and 2020 From the above two items, it is reasonable because the net cash flow of financial activities gradually decreased over years, especially from 2019 to 2020 it decreased significantly from (716,431,621,919) to (921,247,542,650), equivalent to a decrease of 28.6% From the above, it is concluded that the company shows that its solvency is not stable even though the dividend payment over the past years has decreased sharply, so the company needs to have measures to use money wisely study, avoid waste and shortage of capital, contribute to improving the efficiency of capital use, enhance debt recovery and attract more capital flows from investors, shareholders and credit institutions 32 Conclusion: For the company, in the statement of cash flows, the most important focus is on cash flows from operating activities, as it represents the actual cash generation of the business (cash inflows and outflows are mainly related to business) Although the proportion of net cash flow from investment activities is not the main item of the enterprise, the enterprise must aim at the goals expressed through payments with banks and economic units Enterprises must always maximize the use of capital but still have to ensure liquidity V Conclusion In recent years, the developing economy has not been really stable, with many potential risk factors such as epidemics, slow handling of bad debts, leading to many cases of businesses having to stop operating The fact that raw materials are difficult to buy due to foreign imports has affected the production and business activities of NTP Company Therefore, despite achieving encouraging results, the Company has made efforts to improve its financial situation main but still not avoid the existence 1.Debt situation and solvency Receivables management: In 2019 and 2020, the Company recovered collect some bad receivables, reverse the provision to reduce the receivables from customers Accounts payable management: The turnover of payables to sellers shows positive signs and is at a reasonable level, while taking advantage of the appropriated capital but still ensuring to pay debts at a reasonable time The Company's solvency is getting better: The short-term ratio and the quick ratio are average and safe compared to other companies in the same industry, showing that the Company still has conditions to pay its debts in the short term 2.About business performance The efficiency of using assets is having positive changes.Total asset turnover and inventory turnover increased over the past three years, showing positive signs in sales, sales promotion and assets being used more efficiently Return on equity performance The ownership is gradually increasing, showing a positive sign for investors who have been, are and will invest in the Company 3.The company needs to focus on the core issues Focusing on core activities: For sustainable development, the Company needs to develop its core activities in the mineral sector because it has certain advantages in terms of partners, inputs, outputs and directions strategy 33 Profit maximization: The ultimate goal of the Company is to generate profits, focus on developing business activities at each stage, each stage and the whole process, focusing on achieving profits in depth, that is to collect both the root and the top Risk management: Without good management of risks that occur in the business process, it will not be possible to have the desired profit, so it is necessary to have a strict management policy to minimize losses, risks when implementing policies such as risk management of contract signing, risk of bad debts, Expanding business activities: First, expanding the business within the core activities of the Company, after having sustainable development, good governance, and maximizing profits, the Company continues to consider new development directions and add their core values Business expansion is also to avoid the risk of developing a particular industry due to policy issues VI Reference Tien Phong Plastic Joint Stock Company (2018, 2019, 2020); Consolidated financial statements Tien Phong Plastic Joint Stock Company (2018, 2019, 2020); Annual Report Binh Minh Plastic Joint Stock Company (2018, 2019, 2020); Consolidated financial statements Dai Hung Plastic Joint Stock Company (2018, 2019, 2020); Consolidated financial statements An Phat Plastic Joint Stock Company (2018, 2019, 2020); Consolidated financial statements Dongnai Plastic Joint Stock Company (2018, 2019, 2020); Consolidated financial statements Huy Bình, Nhựa Tiền Phong: Rủi ro từ nhà phân phối than hữu… , 05/09/2020 Link: https://viettimes.vn/nhua-tien-phong-rui-ro-tu-nha-phan-phoi-than-huu-post137935.html Thu Lê, Nhựa Tiền Phong Vững bước tiên phong, 18/05/2020 Link: https://tinnhanhchungkhoan.vn/nhua-tien-phong-vung-buoc-tien-phong-post240060.html? fbclid=IwAR3oZMFbZsO8TrUMxBy0ZwFQpi5OM2PuhkSYsU3VPlhnpTkVNjuJQr2CVTc Thu Le, Chủ tịch Nhựa Tiền Phong Đặng Quốc Dũng: “ Tương lai không nằm đường kéo dài khứ”, 19/05/2020 Link: https://baodautu.vn/chu-tich-nhua-tien-phong-dang-quoc-dung-tuong-lai-khong-nam-tren-duong-keo-dai-cua-qua-khud122316.html?fbclid=IwAR1qd5xYh24B1FXT3vMMxtk69JRpbUIal_GLNB3hRfYHWmT1E3MDKm7Me7A 10 Hương Dịu, Nhựa Tiền Phong-Mở rộng sản xuất bối cảnh khó khăn, 31/03/2020 Link: https://haiquanonline.com.vn/nhua-tien-phong-mo-rong-san-xuat-trong-boi-canh-kho-khan-101989-101989.html 11 Website: https://finance.vietstock.vn/ https://www.stockbiz.vn/Industries.aspx?Code=2000&view=0 34 35 ... risk of developing a particular industry due to policy issues VI Reference Tien Phong Plastic Joint Stock Company (2018, 2019, 2020); Consolidated financial statements Tien Phong Plastic Joint Stock. .. Plastic Joint Stock Company (2018, 2019, 2020); Annual Report Binh Minh Plastic Joint Stock Company (2018, 2019, 2020); Consolidated financial statements Dai Hung Plastic Joint Stock Company (2018,... from cost of goods sold, 0.29 dong versus dong of gross profit from cost of goods sold in 2019, and 0.31 VND versus gross profit from cost of goods sold in 2020 The company' s Gross Profit Margin