Goals and meaning of financial statements
Objectives of the financial statements:
This article aims to explore the financial data of Hoa Phat Group Joint Stock Company by analyzing its fundamental financial statements within the context of a market economy It will identify the factors influencing the company's financial health and evaluate the current financial condition of Hoa Phat Group The analysis will highlight both the strengths and weaknesses present in the company's financial situation Ultimately, the article will propose solutions to enhance the financial capacity of Hoa Phat Group Joint Stock Company.
The meaning of financial statements:
Financial activities are closely linked to production and business operations, meaning that all business activities influence financial outcomes Conversely, a company's financial health can either propel or hinder its production and business processes Consequently, analyzing financial statements is crucial for both business owners and external stakeholders involved with the company's finances.
Internal financial analysis is crucial for enterprises, as it equips financial analysts with the necessary insights to effectively evaluate the company's financial health Corporate managers must prioritize various objectives, including job creation, enhancing product quality, reducing costs, and environmental protection, all of which hinge on the business's profitability and debt repayment capabilities To achieve financial balance, managers must gather comprehensive information to assess past financial performance, focusing on profitability, solvency, debt repayment, and financial risks Additionally, this data guides the financial management board in making informed investment and financing decisions, as well as analyzing dividend yields.
Investors prioritize payback, profitability, capital solvency, and risk management, making it essential for them to access information on financial conditions, operational status, business outcomes, and growth potential Additionally, effective management practices enhance safety and efficiency, further attracting investor interest.
For lenders and suppliers of goods to businesses:
Investors focus on a business's capacity to repay its debts by scrutinizing financial statements They particularly emphasize the liquidity of assets, assessing how quickly these can be converted into cash to evaluate the company's immediate solvency.
For state agencies such as tax and finance agencies and employees for enterprises:
The analysis of financial statements will show the financial situation of the business.
To ensure accurate tax rate calculations for businesses, the Finance Agency and governing bodies will implement more effective management strategies It's essential to recognize that not only business owners and investors but also workers share similar information needs, as this knowledge directly impacts their rights, responsibilities, and relationships with current and future customers.
Analyzing financial statements is crucial for managers in a market economy, as it provides essential insights that are interconnected and vital for informed decision-making.
Financial statement analysis is an essential tool for evaluating a business's economic value and identifying its financial strengths and weaknesses By uncovering both objective and subjective factors, it enables managers to make informed decisions aligned with their strategic goals Consequently, effective financial analysis empowers business leaders to enhance performance and achieve optimal efficiency.
Sources of information used for financial statement analysis
2.1 Sources of information from the balance sheet
A balance sheet is a comprehensive accounting document that illustrates the overall status of an enterprise's assets at a specific point in time, presenting the values of these assets and the sources from which they are derived in monetary terms.
The CSC table serves as a crucial document for assessing the overall business situation and results, evaluating capital utilization, and understanding the financial and economic outlook of the enterprise.
The "Assets" section provides an overview of an enterprise's capacity and asset utilization, representing the potential resources available for long-term management aimed at generating future benefits In contrast, the "Capital" section reveals the financial health of the business, highlighting its legal obligations related to registered capital with the State, as well as liabilities incurred through bank loans, debts to employees, shareholders, suppliers, and tax obligations.
The SSC is organized like a balance sheet, featuring accounting accounts and targets tailored to management needs It comprises two main components: the asset section, which indicates the value of assets, and the capital section, which shows the sources of asset formation These components can be displayed either side by side or in a top-and-bottom format Each section includes a total, and the totals of both parts are always equal, adhering to the accounting equation principle that states assets must equal liabilities and equity.
2.2 Sources of information from business results reports
The business results report provides a comprehensive overview of the company's performance, detailing outcomes from core business operations as well as financial activities and other related endeavors.
The report on business results has the following effect:
The analysis and evaluation of the plan's implementation involve estimating production costs, capital expenses, and revenue generated from goods consumption Additionally, it encompasses an assessment of the cost situation and income derived from other activities, along with the corresponding outcomes for each specific activity.
- Assess the development trend of the business, take measures to exploit the potential as well as limit overcoming future existences
The business results report offers a comprehensive overview of an enterprise's revenues, expenses, and profits or losses generated from both regular and non-core activities during a specific period It also details the allocation of corporate income tax costs and the net profit for the enterprise within that timeframe.
2.3 Sources of information from the cash flow statement
Cash flow statements are essential elements of corporate financial reporting, offering valuable insights into changes in net assets and financial structure They enable users to evaluate a company's capacity to convert assets into cash, maintain solvency, and generate cash flows throughout its operations.
The cash flow report is essential for evaluating an enterprise's cash flow status, assessing the accuracy of previous cash flow predictions, and analyzing the connection between profitability and net cash flow It also forecasts the magnitude, duration, and speed of future cash flows, offering valuable insights for management decision-making.
* The main effect of the cash flow statement is:
- Provide information to assess the ability of the business to generate money, cash equivalents and needs in the use of funds
- Provide information to the subjects using the analysis report evaluating the time as well as the certainty of generating funds in the business
- Provide information on sources of money formed from business activities, financial investment activities to assess the impact of such activities on the financial situation of the business
- Provide information to assess the solvency and determine the money needs of the business in the next period of operation.
Methods in financial statement analysis
The comparison method is a widely utilized approach in both economic and financial analysis When employing this method, it is essential to consider specific key factors to ensure accurate results.
- At least two quantities must exist
- Quantities (indicators) must ensure comparison It is the unity of economic content, on the method of calculation, the agreement on time and units of measurement
Second, identify the original root comparison of comparative origin depending on the purpose of the analysis Concrete:
To assess the trend and development speed of the analysis target, we establish a baseline by referencing its value from previous periods, such as the previous year This mid-term target is then compared with earlier periods to identify patterns in financial phenomena By analyzing extensive historical data and selecting a representative year, we can effectively compare subsequent years against this baseline, utilizing the law of large numbers to account for fluctuations over time.
If it is cyclical, it means the law of volatility
When evaluating the achievement of established objectives and tasks, it is essential to compare the actual outcomes with the planned estimates and norms of the analytical targets This comparison not only assesses the fulfillment of the objectives but also evaluates the effectiveness of forecasting and financial planning.
To assess the position and ranking of enterprises, the initial comparison relies on the average financial indicators of the industry, the evaluation standards set by rating organizations, and the professional rankings or analytical metrics of competitors.
Third: The commonly used comparison technique is absolute numerical comparison, relative numerical comparison, vertical comparison, horizontal comparison
- Compare by absolute number to see the absolute numerical fluctuation of the analytical indicator (CTPT)
To evaluate the financial health and operational efficiency of enterprises, it is essential to analyze relative numbers and financial ratios rather than relying solely on the data presented in financial statements By comparing indicators such as solvency, profitability, and asset utilization efficiency, businesses can gain insights into their economic relationships Financial ratios provide valuable information by illustrating the connections between various items in financial statements, enabling a deeper understanding of performance trends, including rates of increase or decrease This comprehensive analysis is crucial for informed decision-making and strategic planning.
Vertical comparison, or vertical analysis technique, involves evaluating the relative size of each department in relation to the whole organization or comparing different parts of the whole This method helps assess the structural and proportional relationships among various components, providing insights into their interconnections and overall significance within the organization.
- Horizontal comparison (also known as horizontal analysis technique) is the comparison of each indicator over time or in different dimensions that have similarities
The exclusion method is utilized to assess the impact of each independent variable on the research target, assuming that other factors remain constant during the analysis This approach includes two variations: the continuous replacement method and the difference number method.
3.3 Application of Dupont financial model - ROA
The Dupont financial model is a valuable tool for examining the connections between various factors that influence financial indicators By analyzing these relationships, analysts can identify the key factors impacting their target metrics, allowing them to understand the underlying causes and address potential weaknesses effectively.
The Dupont financial model is a key tool for assessing financial performance, specifically focusing on return on total assets (ROA) and return on equity (ROE) By analyzing ROA, the model provides insights into how effectively a company utilizes its assets to generate profits.
To enhance the profitability of a company's co-assets, it is essential for corporate governance to explore and implement strategies focused on the ongoing improvement of revenue generation and asset utilization.
The Dupont model plays a crucial role in corporate governance by providing a thorough evaluation of business performance and objectively assessing the factors influencing it This comprehensive financial analysis enables companies to implement precise and effective measures to enhance their management practices, ultimately leading to improved operational efficiency in future business periods.
The balanced relationship method focuses on maintaining equilibrium between the quantities of two sides of business elements and processes This approach analyzes factor indicators in terms of their totals or differences, allowing for a comprehensive understanding of performance By comparing actual periods to planned periods and current periods to previous ones, the balanced contact method effectively assesses the influence of each factor over time, highlighting the differences between independent variables.
Content of financial statement analysis
4.1 General analysis of the financial situation of the enterprise
A comprehensive analysis of a company's financial situation involves evaluating its overall financial health to determine if it is positive or negative This assessment is conducted using key criteria that provide insights into the enterprise's financial performance and stability.
4.1.1 General assessment of the capital mobilization situation of enterprises
The fluctuation of total capital sources at the end of the year, compared to the beginning and previous years, serves as a key indicator of an enterprise's ability to organize and raise capital However, this fluctuation may not fully represent the financial health of the enterprise due to various influencing factors Therefore, a comprehensive analysis should also consider the capital structure and the reasons behind the changes in capital sources to provide accurate insights.
Analysts examined the growth trend of capital by comparing the original relative number (yi/y0; i=1,2, ,n), enabling them to assess the growth rate of total capital over time with a fixed root period.
Analysts utilize a continuous numerical comparison method, represented as (yi/y(i-1)), to determine the consistency of capital growth rates over different periods This approach allows them to effectively assess the capital mobilization situation within the enterprise by comparing actual outcomes against established benchmarks.
4.1.2 General assessment of the level of financial independence of enterprises
The financial autonomy of an enterprise signifies its capacity to independently make decisions regarding its financial and operational policies while maintaining control over these policies Analysts commonly assess the level of financial independence in businesses through various key indicators.
The funding coefficient is a key indicator of a business's financial self-assurance and independence, reflecting the proportion of equity in its total capital sources A higher funding coefficient signifies greater financial self-assurance and independence, while a lower value indicates diminished financial stability and reliance on external funding.
The long-term asset self-financing ratio, also known as the equity-to-long-term asset ratio, measures a company's ability to finance its long-term assets using its own equity This key financial indicator provides insights into the stability and financial health of a business by reflecting the proportion of long-term assets that are funded by shareholders' equity.
A higher long-term self-financing coefficient indicates a greater investment of equity in long-term assets, which enhances a business's financial stability However, this focus on long-term investments may lead to lower overall business efficiency, as less capital is allocated to short-term operations that drive profitability.
Fixed asset self-financing coefficient (Equity-to-fixed asset ratio): is a criterion that reflects the ability to meet the fixed asset division (already invested) with equity.
Fixed assets are long-term resources that represent a company's facilities and technologies, making them difficult to sell or liquidate Therefore, when a company faces the need to divest these assets, it must carefully evaluate the most viable options available.
4.2 Analysis of financial structure and the situation of ensuring capital sources for production and business activities
Financial structure analysis involves assessing the appropriateness of a company's capital structure in relation to its asset structure By examining capital funding policies, stakeholders can gain insights into the company's capital mobilization strategies and how they align with its overall business objectives.
Analyzing the financial structure is essential for corporate managers to assess the strengths and weaknesses of their current financial setup, enabling them to pursue an optimal financial structure Furthermore, this analysis allows business managers to identify potential financial risks, facilitating timely solutions to mitigate unnecessary risks and enhance overall financial stability.
Lenders evaluate a business's financial structure to determine credit risk before approving loans By examining the relationship between capital and assets, they can gauge a company's capacity to manage debts, especially in the event of bankruptcy Additionally, government officials analyze the financial health of enterprises to mitigate economic instability caused by inefficient businesses and excessive debt, which pose risks of default and bankruptcy.
- Analyze the relationship between assets and capital sources.
4.3 Analysis of debt shape and solvency
In a competitive market economy, the increasing complexity of financial relationships often leads to the appropriation of capital among enterprises Consequently, analyzing receivable and payable debts is crucial for identifying potential financial risks As most businesses operate independently in their financial activities and pursue expanded reproduction processes, understanding the structure of receivables becomes vital for developing effective recovery strategies.
At the same time, it is seen that the structure of payables introduce timely payment measures to improve the efficiency of capital use.
Enterprise receivables encompass various components, including customer receivables, upfront payments to sellers, and other receivables To analyze these receivables effectively, the vertical comparison method can be employed, where each specific receivable is divided by the total receivables to ascertain its proportion within the overall receivables.
To enhance the analysis of asset structure, it is beneficial to integrate both vertical and horizontal analysis This approach allows for a detailed examination of each receivable amount, akin to the format used in asset structure analysis tables.
Company name and address
- Company name: Hoa Phat Group Joint Stock Company
- English name: Hoa Phat Group
- Head office: Pho Lien A Industrial Park, Giai Pham Commune, Yen My District, Hung Yen Province
- Official website: http://www.hoaphat.com
- Charter capital: VND 44,729,227,060,000 (extracted on September 9, 2021)
Main business lines
- Trading in iron and steel.
- Production of construction machinery and equipment
- Production of office furniture, family, school, business
- Synchronous investment and construction of infrastructure, engineering of industrial parks and urban areas
History of formation and development
- 1992: Establishment of Hoa Phat Parts Equipment Co., Ltd.; The first company was branded Hoa Phat.
- 1995: Establishment of Hoa Phat Furniture Joint Stock Company.
- 1996: Establishment of Hoa Phat Steel Pipe Co., Ltd.
- 2000: Establishment of Hoa Phat Steel Joint Stock Company, now Hoa Phat Steel One Member Co., Ltd.
- 2001: Establishment of Hoa Phat Refrigeration Co., Ltd.
- 2001: Establishment of Hoa Phat Urban Construction and Development Joint Stock Company
- 2004: Establishment of Hoa Phat Trading Co., Ltd.
- January 2007: Restructuring according to the Group model, with the parent company being Hoa Phat Group JOINT STOCK COMPANY and its member companies.
- June 2007: Establishment of Hoa Phat Mineral Joint Stock Company.
- August 2007: Establishment of Hoa Phat Steel Joint Stock Company, deploying the iron and steel production complex in Kinh Mon, Hai Duong.
- 15/11/2007: Listed HPG shares on the Vietnamese stock market.
- June 2009: Acquisition of An Thong Mineral Investment Joint Stock Company.
- June 2009: Acquisition of Hoa Phat Energy Joint Stock Company.
- December 2009: Hoa Phat Iron and Steel KLH completes phase 1 investment.
- July 2010: Golden Gain Vietnam JOINT STOCK COMPANY becomes a member company.
- January 2011: Structure of the parent company's operating model with the separation of the steel production and business segment.
- January 2012: Implementation of phase 2 of the iron and steel production complex in Kinh Mon, Hai Duong.
- August 2012: Hoa Phat Group celebrates 20 years of establishment and development.
- February 25, 2015: Increase the charter capital to VND 4,886 billion.
- April 26, 2017: Increase the charter capital to VND 12,642,554,170,000.
- July 10, 2018: Increase the charter capital to VND 21,239,071,660,000.
- July 4, 2019: Increase the charter capital to VND 27,610,741,150,000.
- September 1, 2020: Increase the charter capital to VND 33,132,826,590,000.
- June 30, 2021: Increase the charter capital to VND 44,729,227,060,000.
Extracts from Finance.Vietstock.vn
Organization chart
Figure 1: Hoa Phat Group organization diagram
Shareholder structure
Figure 2: Hoa Phat Group's shareholder structure
Board of Directors
Time Full name and name Duty Year of birth
Chairman of the Board of Directors
Vice Chairman of the Board of Directors
Vice Chairman of the Board of Directors
Vice Chairman of the Board of Directors
Chief Accountant /Chief Financial Officer
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Assessing the efficiency of hoa Phat's fixed capital use in 2019 and 2020
Table 1: Efficiency of using fixed capital of Hoa Phat Group
7 Original price of fixed assets 67.405.566 127.104.107 59.698.541 88,57%
8 The amount of depreciation and accounting of fixed assets (23,373,512) (30,292,956) (6,919,444) 29,60%
1.2 Commenting and evaluating the effectiveness of using fixed capital
In which: Average fixed capital = fixed capital avg đầu ky fixed capital avg cuoi ky +
In 2020, Hoa Phat Company achieved a 20.39% increase in fixed capital efficiency compared to 2019, resulting in an additional revenue of VND 0.21 for each unit of fixed capital This improvement indicates that each fixed capital coin in 2020 generated more revenue than in the previous year.
- Fixed capital content: Reflected to get 1 dong of revenue, it is necessary to invest
VND 0.98 of fixed capital in 2019 By 2020, the fixed capital content will decrease by 16.94% corresponding to VND 0.17.
In 2019, each unit of fixed capital generated a profit of 0.122 VND, which rose to 0.185 VND in 2020, reflecting a significant increase of 51.57% or an additional 0.06 VND in profit This upward trend in profit margins indicates an improvement in the quality and efficiency of fixed capital investments.
The fixed asset wear factor indicates the level of wear and tear on fixed assets at the time of assessment compared to the initial investment In 2019, this factor was 0.35, suggesting that the fixed assets of enterprises were relatively new and modern However, by 2020, the coefficient decreased to 0.24, highlighting a significant increase in the wear and tear of Hoa Phat's fixed assets over the course of one year.
Assessing the efficiency of hoa Phat's working capital use in 2019, 2020
2.1 Efficiency of using working capital in 2019, 2020
Table 2: Efficiency of using working capital of Hoa Phat Group
2 Vốn lưu động bình quân 27.872.831 43.592.097 15.719.266 56,40%
4 Vòng quay vốn lưu động = (1)/(2) 2,28 2,07 - 0,21 -9,36%
5 Kỳ luấn chuyển vốn lưu động = 360/(4) 157,63 173,91 16,29 10,33%
6 Hàm lượng vốn lưu động 0,44 0,48 0,040 9,09%
7 Hiệu suất sử dụng vốn lưu động = (1)/(2) 2,28 2,07 - 0,22 -9,48%
8 Tỷ suất lợi nhuận vốn lưu động (%) = (3)/(2) 27,19% 30,98% 0,04 13,94%
2.2 Commenting and evaluating the effectiveness of using working capital
VL D bq k ì VL D bq cuối kỳ
In which: Average Working capital = đầu +
- Working capital rotation: Reflecting the company performing 2.28 rotations in
By 2020, Hoa Phat's working capital rotations decreased to 2.07, reflecting a 9.48% decline, or a reduction of 0.22 rotations This indicates that the company is facing challenges related to inventory management, necessitating a strategic shift in its business approach.
The working capital rotation measures the time required to turn working capital into revenue, with a lower ratio indicating better efficiency In 2020, this rotation period increased to 174.14 days, up from 157.63 days in 2019, reflecting a slowdown in working capital management This trend suggests that businesses faced challenges in optimizing their working capital in 2020 compared to the previous year.
- Working capital content: In 2019, to generate 1 vnd of revenue needs 0.44 VND working capital In 2020 to generate 1 dong of revenue, it is necessary to 0.48 VND Working capital.
In 2020, Hoa Phat experienced a 9.48% decline in working capital efficiency compared to 2019, resulting in a decrease of VND 0.22 This indicates that each unit of working capital in 2020 generated less revenue than in the previous year The COVID-19 pandemic significantly impacted the effectiveness of working capital utilization for businesses.
- Working capital profit margin: From the above calculation data, we see that in
2020, the company's VLD is more effective than 2019 as shown by the increase in the profit margin of VLD In 2019, this rate is 27.19% compared to 30.98% in
2020 This means that in 2019, for every 100 VND spent, 27.19 Profit after taxes will be collected Meanwhile, in 2020, for every 100 VND spent, 30.98 Profit after taxes will be collected.
Figures from [ CITATION Newspaper191 \l 1033 ], CITATION Newspaper201 \l 1033 ]
Capital structure and capital formation sources in 2020
Capital sources are financial relationships through which businesses can exploit or raise a certain amount of money to invest assets.
Figure 3: Capital structure of Hoa Phat from 2015-2020
In 2020, the Group's financial structure demonstrated stability, with equity rising by 24% from VND 47,787 billion to VND 59,220 billion, driven by profit streams for the year Despite an increase in the liabilities-to-equity ratio above level 1, the bank loan debt-to-equity ratio remained manageable at 0.91 times.
Figure 4: Hoa Phat's debt coefficient from 2018-2020
The current net bank loan-to-equity ratio is 0.54 times, reflecting a low average for financial leverage Despite achieving the highest bank loan milestone to date, the increase remains within safe limits, enhancing the Group's resilience for the future Additionally, net cash flow from business activities has risen by 17% compared to the same period last year, signaling an improvement in Hoa Phat's financial health.
Source: [ CITATION Gro20 \l 1033 ] Figure 5: Hoa Phat's solvency coefficient from 2018-2020
As of the end of 2020, the company's solvency ratio stands at 1.09, demonstrating an improved ability to meet short-term liabilities compared to 2019 Additionally, the ability to pay has increased, with a ratio of 0.54, reflecting a stronger financial position The consistent payout ratio above 1 further indicates the Group's robust capacity to handle short-term obligations effectively.
Table 3: Capital statistics of Hoa Phat in 2019 and 2020
Phải trả người bán ngắn hạn 7.507.198 10.915.752 3.408.554 45,4%
Người mua trả tiền trước ngắn hạn 408.691 1.257.272 848.581 207,6%
Thuế và các khoản phải nộp NN 478.426 548.579 70.153 14,7%
Phải trả người lao động 247.936 313.099 65.163 26,3%
Chi phí phải trả ngắn hạn 429.777 640.129 210.352 48,9%
Doanh thu chưa thực hiện ngắn hạn 27.406 34.564 7.158 26,1%
Phải trả ngắn hạn khác 237.391 328.061 90.670 38,2%
Dự phòng phải trả ngắn hạn 3.111 5.846 2.735 87,9%
Quỹ khen thưởng, phúc lợi 806.604 1.133.445 326.841 40,5%
Phải trả người bán dài hạn 6.652.492 2.637.987 -4.014.505 -60,3%
Chi phí phải trả dài hạn 427.328 223.664 -203.664 -47,7%
3.2 Sources of capital formation in 2020
According to the source of capital formed
Divided by source of formation, hoa Phat Group's capital in 2020 includes equity and liabilities In it:
- In 2020, the equity source (which is the capital spent by the business owner in the form of capital contribution, equity ) reached VND 59,219,786,306,111 on
December 31, 2020, an increase of 23.9% compared to December 31, 2019.
- Hoa Phat's liabilities in 2020 reached VND 72,291,648,082,726 , an increase of VND18,302,254,126,521 or 33.9% compared to December 31, 2019.
Over time mobilized and used
Divided by the time of mobilization and use, hoa Phat Group's capital in 2020 includes temporary capital and regular capital In it:
- In 2020, Hoa Phat's temporary capital (short-term capital, meeting temporary capital needs) reached VND 51,975,217,447,498, an increase of 92.6% compared to the temporary capital in 2019.
- Regular capital sources (long-term capital sources of a stable nature, used in production and business activities) of enterprises decreased compared to December
Divided by the scope of mobilization, hoa Phat Group's capital in 2020 includes internal and external capital sources In it:
- In 2020, the internal capital (which is the capital mobilized from production and
As of December 31, 2019, Hoa Phat has achieved a 37.2% increase in internal capital, highlighting its strong self-financing capability This growth not only reduces capital costs but also enables the company to maintain business control and alleviate pressure related to timely debt repayments.
- Hoa Phat's external capital (which is a source of capital mobilized from other activities) in 2020 reached million VND 70,845,102, while, on December 31,
2019, this capital only reached million VND 52,934,852 Thus, after 1 year, the internal capital of the enterprise has grown by 33.8%.
Specifically, hoa Phat's capital formation sources in 2020 are shown in the following table:
Table 4: Sources of capital of Hoa Phat in 2020
Vốn chủ sở hữu Nợ phải trả NV tạm thời NV thường xuyên NV bên trong NV bên ngoài
2 Người mua trả tiền trước x x x
3 Thuế và các khoản phải nộp NN x x x
4 Phải trả người lao động x x x
5 Chi phí phải trả ngắn hạn x x x
6 Phải trả ngắn hạn khác x x x
7 Vay và nợ thuê tài chính ngắn hạn x x x
8 Dự phòng phải trả ngắn hạn x x x
9 Quỹ khen thưởng phúc lợi x x x
10 Vay và nợ thuê tài chính dài hạn x x x
12 Quỹ đầu tư phát triển x x x
Theo phạm vi huy động
Nguồn hình thành nên nguồn vốn Các nguồn vốn Theo nguồn vốn hình thành Theo thời gian huy động và sử dụng
Capital financing plans for the company
From Hoa Phat's capital statistics report (2019 - 2020), we see an increase in the cost of using equity over two years, specifically in 2020 increased
23.9% compared to 2019 In which equity increased by 20%, proving the effective use of equity capital, creating a relative profit for the business.
In addition, we also see that the capital mobilization from TDNH is being used by businesses and it has brought some positive results In 2019 it was VND
22,248,179,488,083 and IN 2020 it was VND 22,587,781,095,478 (up 1.53%).
Thus, it can be seen that raising capital from bank credit and issuing shares can be considered as the most suitable method for Hoa Phat Group today.
4.1 Capital mobilization by bank credit
- It is possible to mobilize large amounts of capital in the short or long term, meeting the capital needs of the enterprise for different objectives;
- Bank interest rate is considered a type of expense, so when using bank loans, enterprises are entitled to a partial reduction in corporate income tax;
- The cost of using bank credit is the cheapest of all methods of raising capital;
- Low level of risk: by the time of payment, the enterprise fails to pay the debt will be issued additionally by the bank.
- The enterprise must have a report on the specific capital use plan for the bank to appraise and need assets to secure such loan;
- Enterprises must comply with regulations set by banks in the use of loans;
- Subject to the supervision of the bank on the use of capital for the right purposes stated in the contract, pay the principal and interest on the committed term ;
- Enterprises reduce the initiative in borrowing and using loans because they depend on the bank's assessment and regulations set out by credit institutions.
Complex and time-consuming procedures can cause businesses to lose business opportunities due to the lack of capital in a timely manner.
4.2 Mobilize capital from stock issuance
- The enterprise is underwritten by the bank and has a securities company that supports the public offering of shares;
Enhancing capital borrowing capabilities allows businesses to scale up and boost their competitiveness in production and operations by accessing new financial and technological resources.
In a scenario where a business is not profitable, the enterprise is not obligated to repay the principal or distribute dividends, as dividends are derived from after-tax profits.
- The cost of guarantee and issuance that the enterprise must pay to banks and securities companies is relatively large;
- Cumbersome, time-consuming loan procedures;
- The issuance of shares is likely to reduce the current owner's control over the business;
- The issuance of additional shares often reduces the share price of the business.
Ros, ROA, ROE targets in 2019 and 2020 of Hoa Phat
5.1 ROS, ROA and ROE targets in 2019 and 2020.
1) Tổng tài sản bình quân 89.999.518 116.643.732 26.644.214 29,60%
Tỷ suất lợi nhuận trên tổng tài sản ROA = (4)/(1)*100% 8,42% 11,58% 3,16% 37,51%
Tỷ suất lợi nhuận trên doanh thu ROS = (4)/(3)*100% 11,90% 14,99% 3,08% 25,89%
Tỷ suất lợi nhuận trên vốn CSH ROE = (4)/(2)*100% 17,14% 25,24% 8,10% 47,25%
In which: T ổng tài s ản bình quân= Tài sản đầu kỳ + Tài sản cuối kỳ
Average CSH = V ốn CSH đầu kỳ Vốn CSH cuối kỳ +
5.2 Commenting and evaluating ROS, ROA, ROE targets
- In 2020, ros, ROA and ROE profitability indicators all increased higher than in
2019 due to increased after-tax profitability Concrete:
POSITIVE ROS proves that the company operates effectively and the business is profitable ROS increased by 25.97% year-on-year indicating the profitability of increased revenue.
Roa's 37.53% increase indicates that using assets to profit a company is more efficient than the previous year.
ROE's increase of 47.26% in 2020 proves that Hoa Phat uses capital more effectively than in 2019 ROE >15% indicates that the company has sufficient financial capacity.
Over the past two years, the asset turnover ratio has remained around 0.7, indicating effective asset management Additionally, the rise in the return on sales (ROS) ratio suggests that the return on assets (ROA) will also experience an increase, reflecting the business's successful cost management during this period.
The company's return on equity (ROE) target surpasses its return on assets (ROA) target, demonstrating effective utilization of financial leverage By employing borrowed capital, the business has successfully enhanced its profit margins.
Thus, in general, despite the impact of covid-19 epidemic, Hoa Phat's business situation is still relatively stable and achieves high performance.
In a detailed analysis of Hoa Phat Group Joint Stock Company's financial statements for 2019 and 2020, key assessments were made regarding the company's strengths and weaknesses, as well as the effectiveness of its production and business operations This analysis highlights the importance of evaluating a business's financial situation, which is crucial for developing appropriate strategies, investment directions, and growth plans to maximize operational efficiency.
In today's integrated economy, businesses, including Hoa Phat Group Joint Stock Company, must proactively enhance their performance and develop their capabilities while improving employee welfare Over the past two years, the company has actively engaged in expanding its production and business activities despite facing challenges from the prolonged epidemic However, the ongoing crisis has hindered overall business efficiency and capital utilization As we adapt to the "new normal," it is essential for the entire company to unite and for the Board of Directors to exercise discernment in making strategic decisions for optimal outcomes.
