Financial Statement Analysis On Vietnam Electrical Cable Corporation (Cadivi.pdf

LIQUIDITY ANALYSIS Liquidity ratio measures the ability of firm to repay the short-term loan without raising capital from outside so the ability of firm to pay short-term borrowings, sh

HANOI UNIVERSITY FACULTY OF MANAGEMENT AND TOURISM

Financial Statement Analysis on Vietnam Electrical Cable Corporation

(CADIVI)

Subject: Financial Statement Analysis

Teacher’s name: Mr Pham Van Hung

Tutorial: Tut

Student’s name:

Nguyen Minh Anh - 1804040010 Contribution: 100% Signature:

Le Thi Hoai Lam - 1804040057 Contribution: 100% Signature:

Pham Thi Khanh Linh - 1504040066 Contribution: 100% Signature:

Nguyen Thi Hang - 1704040030 Contribution: 100% Signature:

Hoang Thu Trang - 1804040111 Contribution: 100% Signature:

TABLE OF CONTENTS

Abstract iii

I COMPANY BACKGROUND 1

II INDUSTRY AND ECONOMIC ENVIRONMENTS ANALYSIS 1

1 Five Forces Analysis 1

2 Value Chain Analysis 3

III FINANCIAL ANALYSIS 4

1 Liquidity analysis 6

2 Solvency analysis 10

3 Profitability analysis 13

4 Cashflow analysis 16

V FORECASTING FINANCIAL STATEMENT 18

1 Forecasting income statement 18

2 Forecasting balance sheet 21

VI FIRM’S EQUITY VALUATION 33

1 Required rate of return 33

2 Dividend-based approach 34

3 Earning-based approach 34

VII CONCLUSION AND INVESTMENT DECISION 36

References 37

Abstract

The perception of investment opportunity can be shaped by harnessing all available data including into historical data In this report, the primary date pulled from the 4 consecutive years (2016- 2019) financial statements of the leading corporation in Wire and Electrical Industry – CADIVI will be evaluated in terms of economic environment, company’s SWOT and financial analysis The intrinsic value of the company will be calculated based on the result of our financial statement forecast for the company in the next 4 years As far as the economic and financial factors are concerned, some recommendations are brought out to support all the investors to measure profitability from the company’s investment

I COMPANY BACKGROUND

Established in 1975, throughout 40 years of development CADIVI has been focusing on the electrical wires and cables’ manufacturers for different aims With the business philosophy “good quality is the key factor to the development of CADIVI, the company takes pride in becoming the leading producer of cable manufacturers in Vietnam Owning a capacity of more than 60,000 MT

of copper, 40,000MT of aluminum, and 20,000 MT of PVC at the turnover growth of 25% annually (Chuiyan, 2020) As a State-owned enterprise before being equitized to be a joint stock company, CADIVI has 5 factories, 2 branches and a large group of over 200 agents to fill up the distribution system nationwide The company has also been listed on “50 best listed companies in Vietnam”, measured by taking the financial indicators and the size turnover by Forbes Vietnam Stepping its own feet outside of the border, CADIVI collaborates with some of the most influential companies

in Southeast Asia, such as Bodaiju, Coca Cola Bottling Plant Myanmar and Yangon Airport, etc With the motto “Transmitting Power to Everywhere”, CADIVI specializes in variety of products:

· Building wires and cables;

· Power cables;

· Bare overhead conductor (copper and aluminum);

· Magnetic wires;aerial bundled cables

· Medium voltage cables,

· LAN cables; automotive cables

· Service entrance cable, sector cable, duplex cable;

· Control cables, water-blocked cables;

· Flame retardant cables, fire resistant cables;

· PVC conduits and accessories

· Exported products…

In 2014, Company’s shares were listed on the Ho Chi Minh Stock Exchange (HOSE) with the stock code of CAV and currently has a market cap 4,018.51trillion VND (As at 18th December 2020)

II INDUSTRY AND ECONOMIC ENVIRONMENTS ANALYSIS

1 Porter Five Forces

a Rivalry among existing firms:

The Electrical Equipment Industry is highly competitive According to Yellowpagesvn, The intensive rivalry among corporations, such as Hoang Phat Petrocable Co, Daphaco Electric Cable, Themtrol (VSIP), Ngoc Lan Cable, Taihan Cable Vina and CADIVI, etc results in the decrease of customer loyalty and the profitability of the industry overall Even though the product's differentiation among competitors is not significant, each player strategically applies efficient approaches to expand their business based on their quality, affordability and diversification The core value remains to offer the customers reliability and satisfaction of service at affordable ranges From there, companies encore their sustainable competitiveness to stay active in this disputing industry Otherwise, collaborations between companies to increase the market size rather than just competing for a small market tends to be a new way of tackling the intensity

b Threats of new entrants:

Newcomers easily enter the cable and wire industry bringing innovations, new ways of doing things and put pressures on existing companies due to the low barriers of entry This requires corporations to build up effective safeguards to define their standards consistently New entrants attract customers who are willing to try new products by potential employees with the strategy of reducing prices and innovative technology Though they cannot be as dynamic as the existing players’ technological advancement which results from their previous activities in the industry to meet the market’s needs Generally, the increasing number of newcomers happens as a result of opportunities for innovation, low entry barriers and training availability (eduwitt, 2019)

c Power of suppliers:

The number of suppliers in this market is moderate which means the suppliers have low bargaining power due to the products similarity offered by companies within the segment Therefore, the buyers have plenty of options in the market so the suppliers should be expecting to switch choices and having few controls over the pricing of the products

d Power of Buyers

As a fact that buyers always demand the best offerings with affordable pricing, they are able to pressurize the profitability of the company In this industry, buyers have high bargaining power because of the big order size from large construction corporations and the threat of the substitution They can easily switch the buying decision without paying lots of money The buyers are able to purchase cables at substitutes with almost similar prices from competitors Firms can limit this

high power of bargaining by innovating new products which keep customers catching up with its attractive offerings (eduwitt, 2019)

e Threats of Substitutes

The power of substitution comes from technological advancements in producing more affordable and environmentally friendly products This green-based products trend creates opportunities for companies to be creative and innovative in making new goods and services to meet the requirements of its clients Understanding their core needs rather than what they are buying Adapting to the new concept of the market trends enhance the sustainable development strategies

of the company CADIVI has recently worked in some energy-efficient projects, such as Solar Farm in Ninh Thuan and My Son (CADIVI, 2020)

2 Value Chain Analysis

2.1 Company Analysis

a Creation

As the leading company in Vietnam in the electric cable manufacturing industry, with the motto

"Good electrical conductivity - Safe insulation - Saving electricity" In addition, CADIVI always focuses on product quality, design and price With the aim of "Bringing light to everywhere", CADIVI's products have accompanied the development of the electricity industry, participating in projects such as 500kV, 220kV, 110kV voltage lines; projects to renovate rural electricity networks, rural energy projects

To ensure that the production process of CADIVI electrical cables company is completely closed, tested strictly according to Vietnamese standards before reaching the hands of consumers Not only that, but the electric cable products manufactured by the cadivi electrical cable manufacturer are also certified by international organizations such as IEC, ASTM, JIS, AS, BS, DIN, U0L, issue certifications which demonstrate electric cable safety products for consumers

b Manufacturing:

From a small production scale in the early days of its establishment, CADIVI has gradually invested in equipment and machinery towards large production and diversified products At present, CADIVI's technological equipment level is on par with the region and some stages catch

up with developed countries such as the US and Western Europe with: The US's continuous copper casting and casting system according to SCR technology of South Wire, Upcast copper casting system (Finland); continuous aluminum rolling molding system; continuous annealing copper

tractors of Henrich Company (Germany), 61-thread knitting machine from Pourtier (France), layer coating machine from Nextrom (Finland), Troester medium-voltage underground cable sheathing machine (Germany)

3-c Distribution

CADIVI owns a distribution system with about 2,200 stores spread across the country, of which

200 are primary distributors and 2,000 stores are tier 2 distributors across the country At the same time, in 2015, CADIVI completed its plan to open three more distribution systems in Cambodia, Myanmar and Japan, thereby bringing the total number of existing overseas distributors to 13 The company has a large production capacity (annual production capacity is up to 60,000 tons of copper products, 40,000 tons of aluminum products, 20,000 tons of PVC resins); with 5 modern manufacturing factories in TP Ho Chi Minh City, Dong Nai, Da Nang and soon to be in Hanoi

2.2 SWOT

- CADIVI’s brand is present in the market and

has built a leading brand position in the electric

cable industry for over 43 years With the

advantage of brand name, high-quality

products and a network of level 1 agents in

more than 200 stores nationwide CADIVI

easily becomes one of the top choices of power

projects Besides products are always

appreciated, one of the pride of CADIVI is a

team of staff with professional skills, high

altitude and practical experience, acutely

absorbing advanced science and technology

achievements Currently, CADIVI has more

than 50% of the company's employees are

technical workers, the rest, besides middle and

senior managers, are staff members of

experienced functional departments It is this

- Extensive integration has created conditions for CADIVI’s brand to be known in the world but also puts the company under great pressure

of competition Integration means that Vietnam's economic developments will be increasingly sensitive to global fluctuations One of the biggest impacts is that the general situation of the domestic and foreign markets has made the prices of materials and raw materials mainly for production fluctuate, fluctuating

- It can be seen that CADIVI is one of the few enterprises that can export to markets requiring high quality and technical standards such as China, Japan, Korea, America For products

of each market, they have to go through a separate quality management system for

workforce that has contributed to the growth of

the company over the years

- The company's products are not only

consumed domestically but also exported to

the US and Japanese markets Currently, this

export activity is being maintained relatively

stable, helping the company's production and

business activities rapidly developing

- Over 40 years of development, CADIVI now

has 3 modern manufacturing factories, 2

member companies and a network of 200 level

1 agents all over the country Along with a

diversified product portfolio from civil wiring

products, bare conductors, data transmission

cables, control cables, fireproof cables, to

products for export On the way of national

construction and modernization, CADIVI

electric cable manufacturing company is an

important factor providing construction

equipment to make the national grid system a

modern safe, and bring a happy life to citizens

- With the advantage of being a leading

enterprise in the industry, CADIVI has also

established a large supplier network in both

domestic and foreign markets, thereby

ensuring the stability of supply and price

inspection, and when they meet the standards and meet the requirements of the import market, the company can sell them on the market However, if there are changes in technical standards of consumer markets, it will lead to disturbance in production and increase the company's costs In addition to product quality criteria, the company's export activities are also influenced by import and export tax policies in host countries

- CADIVI is entering the central and Northern region markets, so there will be many changes

in design, packaging At the same time, CADIVI will also expand to penetrate into developed countries such as the US, Japan, Australia Export activities of the company when entering these markets will face tariff and non-tariff barriers The most difficult non-tariff barrier is the technical barrier (TBT) CADIVI’s products, in addition to having superior quality and price than competitors in host countries, must also meet such certifications as UL certification (US market), SAA certification (Australian market), certified JIS, PSE (Japanese market)

III FINANCIAL ANALYSIS

1 LIQUIDITY ANALYSIS

Liquidity ratio measures the ability of firm to repay the short-term loan without raising capital from outside so the ability of firm to pay short-term borrowings, short- term debts and current

position for long- term liability is called short-term liquidity Short – term liquidity issues can emerge from untimed inflows or cashflows or high degree of leverage In this report, we analyze ratios affecting the liquidity in short-term liquidity: current ratio, quick ratio, operating cash

flow to current liabilities ratio, working capital turnover ratio

Current assets 1,463,797,900,112 1,671,922,573,152 1,913,663,656,341 Current liabilities 1,241,992,799,760 1,534,500,141,913 1,663,499,757,762

The current ratio compares the book value of current assets with current liabilities The ratio is over 1:1 is considered to be acceptable and the ratio is under 1:1 needs consideration because its may indicate a shortage of fund

In more detail in figure 3.2, we can see that ratio from 2017 to 2019 were over 1.0, indicating that the company’s current assets is sufficient to repay short-term debt obligations In 2017 and 2018, the inventories were accounted for 43% of current assets and it increased to 52% in 2019 The inventories took time to be converted into cash so the company should increase sale and receive cash from customers All the ratios suggest that the company has not done well in paying short-term debts to creditors, it might be raised funds from outsides and needs to be extend the time to pay debts

In sum, the current ratios show that the ability of paying debt of company is not effectively

1.2.Quick Ratio

Quick ration is an indicator of company’s short-term liquidity position and measures the ability to meet the short-term obligations with most liquid assets (Investopedia.com) Because it indicates the ability of company to use the nearest assets (that how fast the assets can be converted into cash)

to pay its current liabilities, it is also called acid test ratio

Quick ratio = (𝐶𝑎𝑠ℎ 𝑎𝑛𝑑 𝑐𝑎𝑠ℎ 𝑒𝑞𝑢𝑖𝑣𝑒𝑙𝑒𝑛𝑡+𝑀𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑒𝑠+𝑆ℎ𝑜𝑟𝑡−𝑡𝑒𝑟𝑚 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑙𝑒)

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑡𝑖𝑒𝑠It’s more conservative than the ratio because it excludes the inventories and current assets which are difficult to be converted into cash This ratio covers only the assets can be converted into cash easily

Normal quick ratio is usually 1, it shows that the business has fully assets to be instantly liquidated

to cover the current liabilities Company has quick ratio less than 1, indicating this company is unable to pay fully its current liabilities in short-term In contrast, if the ratio is higher than 1, the

Cash and cash equivelent 102,459,663,879 158,864,523,862 115,873,664,674 Short-term investment 139,524,375,000 126,000,000,000

Short-term receivable 600,523,750,779 678,397,429,767 774,486,658,580 Current liabilities 1,241,992,799,760 1,534,500,141,913 1,663,499,757,762

Table 3.4

Moreover, short-term receivable is less liquidity than cash but it was accounted for larger percentage compared with others that leads to problem of liquidity in short-term of CADIVI

1.3.Operating cash flow to current liabilities ratio

The operating cash flow to current liabilities ratio is a measurement of how well current

liabilities are covered by the cash flow generated by company’s operations (investpedia.com) With the ratio is greater than 1, it shows that the company generated more cash in a period than what it needs to pay off the current liabilities

1.4 Working capital turnover ratio

● Account receivables turnover ratios measure how many time businesses can turn its

account receivable into cash during a period (investpedia.com) It also means that how many times business can collect is average account receivable during year

𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑙𝑒𝑆𝑎𝑙𝑒

Because of receivables turnover ratio show the company’s ability to collect its receivables, higher ratio makes it favorable and companies are collecting their receivables more frequently through the year

2017 2018 2019 Account receivables turnover 9.02 10.69 11.51 Days of sales outstanding (DSO) 40.44 34.15 31.71

Table 3.6

From table 3.6, there was an upward trend in Account receivables turnover ratio of CADIVI, from 9.02% to 11.51% over three years The reason is DSO decreased from 40 days in 2017 to 31 days

in 2019 From this result, we can see that this company can collect cash from customers efficiently

in short time So, this increases ability of the company to pay bills and other obligations The more sales to be collected, the less liquidity risk CADIVI can have

● Inventories turnover ratio

Inventory turnover is a ratio showing how many times a company has sold and replaced inventory during a given period (investpedia.com) In other words, it measures how many times company sold its total average inventory amount over the year

● Account payable turnover ratio

Account payable turnover ratio evaluates how fast a company pays off its creditors (suppliers) In other words, the ratio shows how many times in a given period (typically 1 year), the company can pay its average account payable

𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑝𝑎𝑦𝑎𝑏𝑙𝑒𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒

Table 3.8

Following the table 4.8, it shows that CADIVI gradually paid its bill infrequently lately because

of the days AP outstanding was accounted in 26 days in 2019 and there was a stable trend over three years The reason why the number of days inventories on hands were very high, indicating that the sale of CADIVI is not efficiently

2 SOLVENCY RISK ANALYSIS

Long-term solvency risk is essential for examining the firm’s ability to make interest and principal payments on long – term debt and similar obligations In fact, an insolvent company is unable to pay its debts and will be forced into bankruptcy There are three measures used to examine the long-term solvency risk: Debt ratios, Interest coverage ratio and Operating cash flow to total

liabilities ratio These measurements below are applied for CAV Company as an example:

Liabilities to Assets ratio 0.6379937391 0.5282803 0.5537423506 0.5556469052

Liabilities to Shareholders'

Long Term Debt to Long

Term Capital Ratio 0.1208483924 0.07872154247 0.08446789459 0.1297010561

Long Term Debt to

Shareholders’ Equity Ratio 0.1374602416 0.08544815287 0.09226098581 0.1490304648 Interest coverage ratio (net

income basis) 11.62394007 12.67607737 9.504719794 9.910913657

Interest coverage ratio (CF

long-to equity The number was 1.76 in 2016 then went down long-to only 1.24 and 1.25 in 2018 and 2019 respectively This happened due to a large issuance of shares to raise capital The liabilities to equity ratio of the company was kept quite low, reflecting a healthy capital structure, but the low level of debt illustrated that management was unwilling to take risks

With regards to long-term debt to total assets ratio, there was a substantial decline from 2016 to

2017, before rising again to 0.129 in 2019 Even though the trend was gradually changed, it is noticeable that a greater portion of the company’s assets is funded by equity (the proportion of equity is greater than the proportion of debt)

The debt-to-capital ratio can be determined by taking the total asset and dividing it by the total capital, thus it is used to indicate the firm’s financial leverage The higher the ratio, the riskier the company because the amount of debt load is large However, there was a significant drop by 5.2%% in 2017 (from 13.7% to 18.5%) indicating a low level of debts and CAV’s high ability to meet these financial obligations The ratio increased slightly by 0.7% in the following year but was considered low and safe This result can be explained by a dramatic decline in debt which went

along with a significant capital increase compared to 2016 Overall, CAV Company seems to be

in a good position when it can limit the riskiness of debt and it is expected that the ratio will keep

on diminishing margin or remain the same in the following year

2.2 Interest coverage ratio

Interest coverage ratio (net income

Interest coverage ratio (CF basis) 6.347208662 6.914679962 10.42588233 0.9828927117

Table 3.10: Interest Coverage

The interest coverage ratio can be used to evaluate a company's financial condition Interest coverage ratio equals EBIT over interest expense Therefore, it indicates the number of times a company’s income or cash flows can cover interest charges It can be seen clearly from the table that the interest coverage ratio in 2019 had a significant decrease compared to the previous year The proportion rose from 11.62 to 12.67 in 2017, then decreased substantially to only 9.91 at the end of the period This result can be explained by a dramatic growth in net income from 2016 to

2019, which is a positive signal because the company has the ability to make payments as they

mature

2.3 Operating cash flow to total liabilities ratio

Operating cash flow to current liabilities ratio 0.0235 0.0626 -0.0112

Operating cash flow to total liabilities ratio 0.0213 0.0563 -0.0098

Table 3.11: Operating cash flows to total liabilities ratio

The Operating Cash to Debt Ratio measures the percentage of a company’s total debt that is covered by its operating cash flow for a given accounting period For operating cash flows to total liabilities, the benchmark of this ratio for a healthy firm is 0.2 to be considered as a healthy company Looking at the table, during the period from 2017 to 2019, this ratio in the case of CAV Company was 0.02 in 2017 and 0.05 in 2018, especially there was a negative number of -0.0098, which was not financially healthy This bad signal of the company was due to the negative operating cash flow of the firm Therefore, in this year, CAV showed bad performance and was highly exposed to solvency risk

3 PROFITABILITY RISK ANALYSIS

Investors in a firm are keenly interested in profitability in determining how effective managers use the capital they have invested in the firm to achieve returns on that investment One of the most regularly used profitability measures is earnings per share (EPS) Moreover, Analysts and investors also use EPS to assess firms In this case of CAV corporation, we will conduct return on assets (ROA), which calculates the performance of a company is using assets to produce profits independently of the funding of the asset, and Return on Common Equity (ROCE), which measures the return to common shareholders after subtracting not only operating expenses but also the costs of servicing debt and deferred securities

3.1 Return on asset (ROA)

The rate of ROA evaluates the performance of the company in the use of assets to raise earnings

on the basis of the financing of those assets

Table 3.12: Return on asset (ROA)

Overall, CAV’s ROA rose significantly, with major variations between 2016 and 2019, from 0.115% to 0.155% respectively Specifically, for the period 2016-2018, CAV Company experienced slight fluctuations, which rose marginally by 0.118% in 2017 and eventually decreased to 0.116% in 2018 After that, there was a rather substantial increase in 2019 to 0.155% According to data from the electricity cable industry in Vietnam, the ROA of CAV is quite high

In order to obtain the reasons for the change in the ROA ratio, it is necessary to examine the components of the ROA profit margin and asset turnover

Firstly, we use common-sized to show profit margin for ROA:

Interesting expense/ Revenue -0.00534 -0.00526 -0.00643 -0.00758

Selling expense/ Revenue -0.01532 -0.01288 -0.01993 -0.02162

Administration expense/

Revenue

-0.02252 -0.0209 -0.01747 -0.01652

Other expense/ Revenue -0.00572 -0.0004 -0.00089 -0.00064

Table 3.13: Operating expense and other

Based on Income Statement, in the period 2017-2019, The profit margin of ROA has insignificant fluctuations, from 0.05% in 2017 to 0.06% in 2019 This figure proved that The profit margin for ROA rose slightly in 2019 due to an increase of (-0.9)% in COGS/Net Sales and a decline (0.02)%

in Selling expenses/Net Sales Besides, the percentage of administration expense over net sale was

a modest increase, from (-0.02252)% in 2016 to (-0.01652)% in 2019 These figures have just been shown to be the reason for the modest increase in profit margin for ROA

The next component of ROA is asset turnover from 2017-2019, which tends to increase slowly from 2.44 in 2017 to 2.56 in 2019 The initial ratio that needs to be considered is the account receivables turnover, which has boosted quite considerably from 9.02 in 2017 to 11.51 in 2019 The outstanding account receivable turnover amounted to 40 days 2017, 34 days in 2018 and 32

days in 2019 have been clearly illustrated Using the above data, we can see that CAV is collecting accounts receivable more quickly Another ratio is inventory turnover This rate tends to decrease gradually, especially in 2018, with a rather steep decline to (9.29) Moreover, Account payable turnover also reduces, with the number of days payable fractionally increasing over time The most remarkable point is that there was a dramatic rise to 30 days during 2018

of leverage on the capital structure

For profit margin for ROCE, there was a small rise from 0.055% in 2017 to 0.064% in 2019 In

the meanwhile, Capital structure leverage tends to gradually decrease, especially in 2018 rather

quickly with 2.35 in 2017 to 2.18 The main reason for this trend is that the Corporation suffered

a large debt in 3 years recently

Payments for additions

to fixed assets -265,232,686,601 -154,013,633,793 -195,712,299,441 -260,511,645,170 Proceeds from disposals

of fixed assets 2,381,906,080 0 21,332,771,966 1,618,409,675 Placements of term

Table 3.16: Cash flow from investing activities

Returning the balance sheet, it indicates fluctuation in both total liabilities and common

shareholders' equity In terms of total liabilities, the highest figure was reached in 2019 due to the

remarkable increase in short-term borrowing Regarding common shareholders' equity, The

highest number is due to the issue of shares in 2019 and receiving of contributed capital These

were easily achieved that CAV used its short-term debts and loans to invest by buying fixed assets

and another long-term asset with the aim of boosting production and rebuilding the company As

a consequence, it also helped to reduce outstanding borrowing and interest expenditure, which

contributed to a small drop in the capital structure leverage in 2019

4 CASH FLOW ANALYSIS

Defined as information obtained from the Income Statement for the preparation of the Cash Flow,

we use 2 major methods to analyze the CAV cash flows are FCFF and FCFE

Operating Cash Flows 84,900,499,589 111,324,282,813 347,753,930,261 -71,711,594,760Add/Less Decrease/ Interest

paid (net of tax) -25,771,130,268 -28,609,888,762 -43,194,240,714 -67,406,592,993

Cash required for liquidity -115,547,441,389 32,246,990,770 56,404,567,231 -43,101,555,110Add

Investing Cash Flow -206,364,184,042 -355,295,375,921 -274,754,569,653 85,876,711,973

FCFF -262,782,256,110 -240,333,991,100 86,209,687,125 -96,343,030,890

Add

Financing Cash Flows 5,916,243,064 276,218,083,878 -16,594,793,377 -57,266,672,323

Cash flow from operating activities represents the cash inflow or outflow that the company

generates from their operations Obviously, net income has risen dramatically during four years,

from roughly 217 billion to about 628 billion VND.Two reasons for the increase in net profit may

be explained by the rise in financial income and the decline in financial expenses In addition,

account receivable and inventories have fluctuated a lot throughout the four-year period But still,

net cash flow from operating activities increases every year, especially in 2017, the proportion was

almost four times higher than 85 billion in 2016 In 2019, though, it experienced a negative portion

(net loss) of (-71,711,594,760) This can be described that the market for electricity has developed

as the government considers the electric system is the key economic sector in Vietnam, bringing a

lot of earnings for CAV

4.1 FCFF