group assignment analyze the 2020 2021 and 2022 financial statements of pnj

while also stimulating the experience of various product lines within the PNJbrand ecosystem.o In 2022, PNJ achieve lots of rewards:Top 50 Best Listed Companies in 2022.Top 50 Efficient

GROUP ASSIGNMENT

Analyze the 2020, 2021 and 2022 Financial Statements of PNJ

Subject: Principles of Accounting Code: ACC101

III Financial Ratio of PNJ from 2020 to 2022……… ………8

1 Calculation of financial ratios………8

2 Analysis of the performance through 3 years (2020-2022) ……… …….9

2.1 Liquidity and Efficiency ratio……… ……….…10

2.2 Solvency ratio……….…… 20

2.3 Profitability ratio……….25

IV Recommendations……… 29

V References……….………30

- Established in 1988, Phu Nhuan Jewelry Joint Stock Company (PNJ) has become a leading player in the Vietnamese jewellery industry The company’s logo, which draws inspiration from the precious diamond symbol, represents its commitment to longevity and visibility With a strong focus on trading, manufacturing gold, silver jewellery, precious stones, fashion accessories, souvenirs, watches, and even real estate, PNJ has diversified its offerings to cater to a wide range of customers.

- PNJ’s impressive growth can be seen through its expansion timeline In 1994, PNJ opened its first store in Hanoi, followed by a branch in Da Nang in 1998 By 1999, PNJ has successfully established its presence in the central market of Da Nang as well as the western market of Can Tho In 2010, PNJ was ranked 16th by Plimsoll in the top 500 largest jewellery companies in the world Until 2018, PNJ has charter capital of up to 1,081,020 billion.

- PNJ’s slogan, “Belief and Style”, reflects the company’s commitment to delivering quality products that align with customers’ personal style preferences The company’s operation process comprises various aspects, with a professional design team continually creating beautiful and unique jewellery models that capture the essence of elegance and charm PNJ’s nationwide network of retail stores offers a pleasant and convenient shopping experience for customers, complete with after-sales assurance and consulting service to ensure customer satisfaction.

- Moreover, PNJ has embraced the digital era by establishing an e-commerce platform, allowing customers to shop online and enjoy a convenient shopping experience from the comfort of their own homes This online marketplace complements the physical stores, providing customers with more choices and flexibility.

- Recognizing the importance of its workforce, PNJ invests heavily in employee training and development The company conducts intensive training programs on conduct knowledge and sales skills, empowering its employees to provide exceptional service and advice to customers By fostering a culture of continuous learning and growth, PNJ ensures that its employees are equipped with the knowledge and skills necessary to outperform in the challenging competitive landscape.

- SWOT matrix is the business strategy of PNJ This strategy has proven to be highly effective in helping the company analyze internal strengths and weaknesses, as well as external opportunities and threats By leveraging this analysis, PNJ can develop appropriate strategies and business plans that capitalize on its strengths and address

its weaknesses, thereby maximizing its potential and maintaining its position as a keyplayer in the jewellery industry.

1 Strengths:

● Trading strategy:

- In 2022, PNJ is determined to improve the implementation of sustainabledevelopment in line with ESG development For PNJ, ESG is a complete andcomprehensive corporate governance framework.

- So far, PNJ has primarily assessed the data information framework, which isconsidered the key aspect of the business based on the GRI and CSI standards ofVBCSD This process involves identifying risks and bridging the gap between thecurrent state and the desired level, ultimately integrating these issues into theenterprise risk management framework.

- The company has a wide network of retail agents across the country, with 346 retailstores, mainly located in cities directly under the Central Government In addition tothe domestic market, the PNJ brand is also present in 13 countries on 4 continents.This number plays a positive role in boosting PNJ's revenue growth.

● Achieved many achievements:

- With over 25 years of dedicated efforts to excel, gain customer trust, and foster term customer relationships, PNJ is well-positioned to surpass its domesticcompetitors, gain a competitive edge, outperform emerging companies, andgradually expand into international markets

long PNJ has been recognized through awards and achievements such as:

o In 2020, PNJ became the Best Jewelery Company in Asia-Pacific and wasvalued at $93.1 million by Forbes Vietnam, an 18% increase compared to the2019 evaluation period In addition, PNJ's timely and effective actions in theF5-Refresh process were highly evaluated and honored by Talentnet for itsoutstanding HR policies in responding to Covid Moreover, the new brandSTYLE By PNJ was launched this year.

o In 2021, PNJ continued its journey to become a professional retailer andinitiated a multi-brand distribution strategy with the collaboration of Pandora.The integration of international brands throughout the system helps PNJ tapinto more potential customers who prefer high-end international products,

while also stimulating the experience of various product lines within the PNJbrand ecosystem.

o In 2022, PNJ achieve lots of rewards:Top 50 Best Listed Companies in 2022.Top 50 Efficient Business Companies.Prominent Enterprises in Ho Chi Minh City.Kotler Awards 2022.

Top 10 Outstanding Customer Experience Brands 2022.

Leading Top 10 Companies in the Trade and Service Sector Among100 Sustainable Development Enterprises 2022 …

● Active social activity:

- According to market research report released by VNExpress in 2014, PNJ is perceived by customers as a brand that prioritizes quality and reliability, offering products served by courteous and professional staff Since its establishment in 1988,PNJ has been building a reputable organization, comprising responsible individuals who are committed to fostering mutually beneficial relationships with customers.

- PNJ actively engages in community collaboration through its PNJ Charity Fund In 201, PNJ spent 4.5 billion VND on charity budget alone, extending numerous scholarships to underprivileged but deserving students, and providing countless gifts to residents in remote and impoverished areas (VietNamNet, 2015) (PNJ, Mái ấm của những tấm lòng, 2015) These impactful initiatives have significantly contributed to PNJ's positive public image and enhanced customers' perceptions of the company.

2 Weaknesses:

● PNJ is not as favourable in the North as it is in the South:

The gold bar business segment of PNJ is unimpressive due to its low gross profitmargin (0.17%) and contributes only 0.2% to the company's total revenue.Additionally, PNJ faces less beneficial conditions in the Northern region compared tothe Southern region Bao Tin Minh Chau (BTMC) is still holding the number oneposition in the Northern market, particularly HaNoi This is partly because BTMCestablished its presence long before PNJ came Besides, according to researchers,people in HaNoi are more traditional and enjoy jewelry of nostalgic style as well asthe aversion to change

● All raw materials are mainly imported:

All raw materials are mostly imported This is attributed to the peculiarity of thejewelry manufacturing industry that requires high quality raw materials and VietNam'sskill level has not yet reached that level However, the excessive import may causePNJ's contracts to be heavily affected by external factors such as political tensions,exchange rate fluctuations, inflation.

● Price Sensitivity:

The jewelry market is highly price-sensitive, with consumers often comparing pricesand seeking competitive alternatives The gold bar business does not generatesignificant profitability for PNJ due to its low profit margin (selling 1 tael of gold for55.25 million Vietnamese dong only yields a profit of 450,000 dong, resulting in aprofit margin of 0.03%) This price sensitivity may impact their profitability and marketshare, especially during periods of economic uncertainty.

3 Opportunities:

E-commerce Expansion:

The rapid growth of e-commerce provides an avenur for PNJ to expand its online

presence and tap into the increasing trend of online jewelry shopping By investing inuser-friendly and secure e-commerce platforms, enhancing their digital marketingefforts, and providing an integrated online shopping experience, PNJ can reach awider customer base, including customers outside VietNam.

High Jewelry Consumption Trends:

According to the latest report form World Gold Council (WGC), global demand forgold jewelry has recovered from the decline caused by Covid-19 pandemic since2020 In 2021, the demand for gold jewelry in Vietnam increased by 11% Moreover,global gold consumption in the fourth quarter of 2021 reached 1,147 tons, nearly a50% increase compared to the same period in the previous year This trend isoccurring as individual investors are seeking safe investment channels to protecttheir assets among increasing inflation and economic instability caused by the Covid-19 pandemic.

Product Innovation:

Continual product innovation is essential to stay competitive in the jewelry industry.PNJ can invest in research and development to introduce new designs, incorporateunique materials, and stay on top of changing fashion trends By offering innovativeand distinctive products, PNJ can differentiate itself from competitors and attract abroader customer base.

4 Threats:

Intense Competition with Industry Peers:

The jewelry industry is divided into different segments, including low-end, mid-range, and high-end With numerous established and emerging brands saturating the market, competition is fierce among names like PNJ, Doji, SJC, Bảo Tín Minh Châu, Phú Quý, as well as smaller brands like Shimmer and FloralPunk Jewelry stores are rapidly emerging, indicating a highly competitive landscape.

Fluctuations in Domestic and Global Gold Prices:

The widening price difference between the exclusive SJC brand gold and the global market poses risks for buyers Additionally, the increased demand for gold jewelry is met with frequent shortages of materials by jewelry manufacturers and retailers due to import-export restrictions.

Changing Consumer Preferences:

Consumer preferences and fashion trends in the jewelry industry can change rapidly PNJ must closely monitor these shifts and adapt their product offerings accordingly Failing to respond to changing preferences may result in declining sales and loss of market share By conducting market research, staying up-to-date with fashion trends,and engaging with customers, PNJ can align its products with evolving consumer demands.

1 Calculation of financial ratios:

FINANCIAL RATIOS OF PNJ FROM 2020 TO 2022

PNJ JEWELRY JOINT STOCK COMPANY

Cash 879,548,130,711 355,454,838,957 422,234,781,061Account receivable (Beginning

a year) 111,969,758,488 98,997,286,429 129,688,313,476Account receivable

(Ending a year) 300,880,402,245 111,969,758,488 98,997,286,429Average account receivable 206,425,080,367 105,483,522,459 114,342,799,953Inventory (Begining a year) 8,754,741,712,359 6,545,905,987,056 7,030,420,371,216Inventory (Ending a year) 10,506,054,932,284 8,754,741,712,359 6,545,905,987,056Average inventory 9,630,398,322,322 7,650,323,849,708 6,788,163,179,136Current assets 11,966,357,761,798 9,292,192,238,421 7,143,929,036,497Noncurrent asset 1,370,766,887,448 1,326,824,308,701 1,339,217,061,954Total assets

(Beginning a year) 10,619,016,657,122 8,483,146,098,451 8,602,964,421,816Total assets (Ending a year) 13,337,124,649,246 10,619,016,657,122 8,483,146,098,451Total average assets 11,978,070,653,184 9,551,081,377,787 8,543,055,260,134

Current liabilities

(Beginning a year) 4,563,002,409,508 3,231,907,356,443 4,017,860,824,469Current liabilities

(Ending a year) 4,883,064,421,396 4,563,002,409,508 3,231,907,356,443Average current liabilities 4,723,033,415,452 3,897,454,882,976 3,624,884,090,456Noncurrent liabilities

(Beginning a year) 43,380,157,361 9,376,877,000 7,837,786,000Noncurrent liabilities

(Ending a year) 9,965,573,000 43,380,157,361 9,376,877,000Average noncurrent liabilities 26,672,865,181 26,378,517,181 8,607,331,500Total debt/liabilities 4,749,706,280,633 4,606,382,566,869 3,241,284,233,443

EQUITY Net sales 33,876,454,559,153 19,547,058,364,834 17,510,788,650,999Cost of goods sold 27,949,348,024,381 15,948,760,134,458 14,076,055,770,112Gross profit 5,927,106,534,772 3,598,298,230,376 3,434,732,880,887Operating expense

(Selling expenses & General and administration

3,502,205,641,060 2,189,474,256,422 1,926,428,448,052

Net income (EBITDA) 2,424,900,893,712 1,408,823,973,954 1,508,304,432,835Total Equity 8,444,094,654,850 6,012,633,980,253 5,241,861,865,008Interest expenses 94,421,152,974 104,380,274,160 154,416,694,276Tax expenses 540,486,830,932 269,158,555,562 282,174,591,374EBIT (Earnings before interest

and taxes) 3,059,808,877,618 1,782,362,803,676 1,944,895,718,485

LIQUIDITY AND EFFICIENCY

Profit margin ratio 0.072 0.072 0.086

Return on assets (ROA) 0.20 0.15 0.18

2 Performance through 3 years (2020-2022):

2.1 Liquidity and Efficiency Ratio:

1 Current Ratio:a Formula:

- In the year 2020-2022, PNJ's current ratio is increasing (2.21 > 2.45) by 10.86% showing that the current asset of PNJ is growing faster than current liabilities while SJC’s current ratio is decreasing (11.4 > 8.2) by 28.08%, showing that the current liability of SJC is growing faster than current assets The current ratio assesses a company’s ability to pay its short-term so the increase in PNJ is great and the decrease in SJC is considered healthy and indicative of strong short-term financial health.

- In general, SJC's current ratio is better than PNJ, because SJC's current ratio is 3 times larger than PNJ's current ratio which means that SJC in the short-term will not have to encounter financial difficulty, otherwise PNJ in the future may have to strugglewith some financial difficulties.

2 Acid-test ratio (Quick Ratio):a Formula:

- During the period of 2020-2022, the quick ratio of PNJ is 0.19 and 0.3 respectively,an increase of 61.62%, tends to increase because the ratio of current assets (1.67) >the ratio of current liabilities (1.51) but the quick ratio is less than 1 (<1) that showsthe company may have difficulty paying off its current liabilities with its readilyavailable liquid assets It indicates potential liquidity issues.

- The same time with SJC, the quick ratio is 2.47 and 1.89 respectively, a decrease of23.26%, tends to decrease because the ratio of current liabilities (1.5) > the ratio ofcurrent assets (1.08) but the quick ratio is more than 1 (>1) indicates that thecompany has enough liquid assets to cover its current liabilities without relying oninventory This suggests good short-term liquidity.

- In conclusion, the increasing of PNJ is still below ideal threshold of 1 so it shouldimprove liquidity position over time The increasing indicates that the company isgradually strengthening its ability to meet short-term obligations using its liquidassets About SJC, in spite of still maintaining a ratio above the ideal threshold, it stillneeds to concern to the company's quick ratio is decreasing This indicates that thecompany's ability to meet short-term obligations using its liquid assets mayweakening over time.

3 Account receivable turnover:

management and ability to maintain a healthy cash flow (converting credit sales intocash quickly).

- In 2020-2021, SJC's receivable turnover ratio is 291.36, 233.83 and 400.99

respectively, showing that debts are recovered very efficiency because thecompany's accounts receivable turnover ratios are exceptionally high, indicating anextremely rapid collection of receivables These ratios suggest that the company hashighly efficient credit management and strong ability to maintain a healthy cash flow.

- In conclusion, PNJ's receivable turnover ratio is increasing by 7.16% and SJC'sreceivable turnover ratio is increasing by 37.63% Additional, SJC has a significantlybetter debt collection ability than PNJ, with a ratio that is 2.4 times higher So, PNJshould focus on improving credit management and collection efforts, while SJCshould maintain effective credit practices and streamline collection processes.Monitoring these ratios and taking appropriate actions will help both companiesoptimize their debt collection abilities.

4 Inventory turnover:a Formula:

- PNJ's inventory turnover increased stably from 2020 to 2022 in spite of the impact ofthe Covid-19 pandemic, but the ratio is relatively low, slightly above the industryaverage A lower inventory turnover ratio suggests slower sales or excess inventorylevels It may indicate challenges in selling products because the biggest challenge in2020 we must mention is COVID-19 pandemic PNJ may need to assess itsinventory management strategies, adjust production levels, and refine its sales andmarketing approaches to optimize its inventory turnover and address thesechallenges.

- Compared to PNJ, SJC’s inventory turnover is 8 times higher than PNJ’s and SJC’sinventory turnover decreased from 2020 to 2022 especially in 2021 the ratio issignificantly drop because of the COGS go down so the ratio of 3 years are relativelyhigh and it is not stable, indicating that the company is selling its inventory at a rapidpace This indicates that inventory management and sales processes are still in goodperformance during the pandemic.

- In general, due to the impact of the Covid-19 epidemic, the inventory turnover forboth PNJ and SJC tended to be unpredictable and unstable, but it still increased in2020 Although SJC reduced its inventory turnover to adapt and respond to thepandemic, it still needs to maintain a sufficient accumulation level to promptly supplyproducts when the pandemic passes.