tiểu luận topic analyzing financial statements of vinhomes jsc in the period 2018 2022

GROUP EVALUATION FORM Member Task Evaluation Evaluation by group Nguy n Th ễ ịHương Nhu - Analyzing financial statements of Vinhomes: Calculate financial ratios; Give comments - Calculat

THE UNIVERSITY OF DA NANG UNIVERSITY OF ECONOMICS

*****************  *****************

REPORT Course: Corporate Finance

Topic:

ANALYZING FINANCIAL STATEMENTS OF

Lecturer: Ph.D Nguyen Quang Minh NhiImplementation group: Group 5 47K01.2–Group members:

Truong Thi Khanh Hoa Nguyen Thi Ly Na Nguyen Thi Huong Nhu Sam Ai Linh

Phan Nguyen Khoi Nguyen Nguyen Thi Diem Thao

Danang, November 2023

GROUP EVALUATION FORM

Member Task Evaluation Evaluation by group

- Calculate financial ratios of

competitors and compare with

Vinhomes

- Create Word file for the report

- Actively involved, enthusiastic

Calculate financial ratios;

Suggest reasons for the

changes of figures

- Answering question 2, 3 and 4

- Actively involved, enthusiastic

- Calculate financial ratios of

competitors and compare with

Calculate financial ratios

- Answering question 2, 3 and 4

- Actively involved, enthusiastic

brief description of the

company; Suggest reasons for

the changes of figures

- Answering question 2, 3 and 4

- Finish Word & PDF file for

TABLE OF CONTENTS

CHAPTER 2 FINANCIAL RATIOS & SUGGESTING THE REASONS FOR THE

CHAPTER 4 CONCLUSION ABOUT FINANCIAL PERFORMANCE OF THE

TABLE OF FIGURES

Figure 2-1: Liquid Ratio 3

Figure 2-2: Capital Structure Ratio 4

Figure 2-3: Turnover Ratio 6

Figure 2-4: Profitability Ratio 8

Figure 2-5: Market Value Ratio 10

Figure 3-1: Current Ratio 11

Figure 3-2: Quick Ratio 12

Figure 3-3: Total Debt Ratio 12

Figure 3-4: Debt to Equity Ratio 13

Figure 3-5: Equity Multiplier 13

Figure 3-6: Net Interest Cover 14

Figure 3-7: Debt to Gross Cash Flow 14

Figure 3-8: Inventory Turnover 15

Figure 3-9: Day's Sales in Inventory 15

Figure 3-10: Receivables Turnover 16

Figure 3-11: Day's Sales in Receivables 16

Figure 3-12: Fixed Asset Turnover 16

Figure 3-13: Total Assets Turnover 17

Figure 3-14: Profit Margin 17

Figure 3-15: ROA 18

Figure 3-16: ROI 18

Figure 3-17: ROE 18

Figure 3-18: EPS 19

Figure 3-19: Price to Earning Ratio 19

Figure 3-20: Market to Book Ratio 20

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ASSURANCE

We would like to assure you that the report is accomplished ourselves who declares

to take full responsibility for the contents of this document

We had checked the data in accordance with the current regulations The documents used in the article are of clear origin and we had mentioned in the references

THANK YOU First of all, our group would like to express our gratitude and respect to Ph.D Nguyen Quang Minh Nhi – lecturer in Corporate Finance

This group assignment is a great opportunity for students to consolidate our knowledge and develop the necessary skills described in the subject program In addition, this group assignment also helps us develop the ability to find, analyze a company's financial statements

There are many efforts, but in this report, it is impossible to avoid shortcomings and mistakes We hope that you would comment and help us improve the essay

We wish you always have good health and success in your work and in life!

We would like to thank you very much!

INTRODUCTION This report will analyze the financial statements of Vinhomes company by briefly presenting Vinhomes company, calculating financial ratio, commenting on the ratio, comparing these ratios with a rival company, suggesting the reasons for the changes of the figures over the period, and briefly concluding the financial performance of the company

To ensure the logic and clarity of our report, below is the structure we have outlined: Chapter 1: Overview of Vinhomes company

Chapter 2: Financial Ratios & Suggesting the reasons for the changes of the figures Chapter 3: Comparison with competitor company - Novaland

Chapter 4: Conclusion about financial performance of the company

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CHAPTER 1 OVERVIEW OF VINHOMES COMPANY

1.1 History & Achievement

Vinhomes Joint Stock Company (Vinhomes JSC) was established in 2008 as a subsidiary of Vingroup Joint Stock Company and was spun off in 2018 Since 2011, it became a public company and began operating many large projects until today: Vinhomes Royal City, Vinhomes Riverside, Vinhomes Times City, Vinhomes Central Park, Vinhomes Golden River, Vinhomes Ocean Park, [1]

Since its establishment, Vinhomes has achieved many great achievements [2] : Many successful projects: Vinhomes Ocean Park received 2 Vietnam's records by Vietnam Record Association, was honored as "Best Complex Project in Vietnam"

at APPA; Vinhomes Smart City won the Best Township Development award at the Japan International Property Award ceremony, etc

Continuously honored by prestigious units in prestigious rankings, such as Top 50 Best Listed Companies 2023 ranked by Forbes Vietnam, Gold Award in the category

of Best Real Estate Company in Vietnam by Finance Asia voted, Top 20 most valuable Real Estate Companies in the world announced by Brand Finance, etc 1.2 Real Estate Development Industry

Vinhomes is the leading real estate development and management company in Vietnam The company specializes in the development, transfer and operation of complex residential real estate in the middle and high-end segments

1.3 Main sources of income

Income from sale of goods and rendering services: Sales of inventory properties Rendering general contractor, construction consultancy and ; supervision services; Rendering real estate management and related services; Leasing activities and rendering related services

Finance income: Sales of investment Deposits and lending; ; Co-operation contracts

Other income: From penalty, compensation, contract cancellation and others

CHAPTER 2 FINANCIAL RATIOS SUGGESTING THE &

REASONS FOR THE CHANGES OF THE FIGURES

It's important to note that changes in these financial figures result from a combination

of internal factors (company decisions and operations) and external factors (economic conditions, industry trends, etc.) Therefore, based on the Company’s Financial Statements,

we calculate most of all the financial ratios and we suggest some reasons for the changes

in these figures simultaneously

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A declining current ratio from 2018 to 2022 (1.27 to 1.05) might be due to increased short-term liabilities Vinhomes has tended to increase financial leverage (in terms of short-term debt) Liabilities increased but mainly increased short-term debt, focusing on prepaid customers This signal is positive for the business's future recorded revenue

Similar to the current ratio, the quick ratio also indicates liquidity A decrease (0.76

to 0.70) could be due to a reduction in highly liquid assets or an increase in short-term liabilities (as mentioned in Current Ratio) The increase of liquidity may be due to the increased trust and use of Vinhomes products by customers, especially the liquidity of utilities in the typical Vingroup ecosystem: Vinhomes Vinmec – – Vinschool – Vincom meets all the life needs of residents without having to go out of the urban area

2.2 Capital Structure Ratio

Figure 1-2: Capital Structure Ratio

2.2.1 Total Debt Ratio

There are many fluctuations in the overall debt ratio This ratio increased in 2019, decreased in 2020,2021 and increased in 2022 A low debt ratio means Vinhome has low

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financial leverage This also means that the company's financial risk is also low A debt ratio of less than 1 shows that Vinhome has more assets than debt They are still remaining solvent using their available assets However, this is not necessarily good In today's market economy, businesses can grow much stronger when they know how to use external resources, such as bank loans, and negotiate repayment terms with suppliers grant,…

2.2.2 Debt to Equity Ratio

In general, the debt-equity ratio is greater than 1, except for 2021, which means Vinhome's assets are financed mainly by debt In 2021, Vinhome assets are financed mainly

by equity This means that Vinhome is more likely to have difficulty repaying debt or go bankrupt when bank interest rates increase

2.2.3 Equity Multiplier

The equity multiplier of Vinhome increased between 2018-2020 but it decreased in

2021, after that, it increased in 2022 In general, this figure increases and it reached the highest level at 3.05 in 2019 The equity multiplier over the years, except for 2021, is still greater than 2, which means that the company's assets are financed less by equity The change shows that the financial autonomy of enterprises in 2022 is much higher than in 2018 It can be seen that enterprises are trying not to promote the use of leverage finance

2.2.4 Net Interest Cover

Net interest cover is highest in 2021 and lowest in 2020 Net interest cover over the years is greater than 2, which means Vinhome’s ability to pay loan interest is high

2.2.5 Debt to Gross Cash Flow

This ratio over the years is pretty low, except for 2018 but this number is still within

an acceptable range This means that Vinhome is profitable enough to repay debt without facing great pressure Lower debt levels relative to net cash circulation can also increase the ability to invest, pay dividends, or devote resources to other business activities From

2018 to 2021, there is a significant increase in the company's ability to cover its interest expenses (from 9.00 to 18.14), which could be due to higher profits or reduced interest

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costs From 2021 to 2022, the ratio sharply decreased by half, this may be because Vinhomes issued more bonds to restructure debt, causing interest costs to increase The significant decrease in debt to gross cash flow (from 2.03 to 0.91) indicates that the company is becoming less leveraged (in terms of long-term debt) over the period This might be a result of debt reduction or an increase in cash flows This may be because Vinhomes has reduced the need for other forms of external financing in many ways such as: managing projects, meeting working capital needs and financing other investments rely

on many sources of capital, including: internal resources, external funding through financial institutions, commercial banks, offerings on the capital market and especially pre-sales proceeds

2.3 Turnover Ratio

Figure 1-3: Turnover Ratio

2.3.1 Inventory Turnover

The inventory turnover ratio of Vinhome in the past 5 years has always fluctuated In

2018, the inventory turnover ratio was 0.78 but in 2019 it suddenly dropped sharply to 0.4

In 2020, the inventory turnover ratio increased to 1.06 and it’s at the highest level of 1.28 and in 2022 it decreased to 0.49 In 2019, there was a sudden decrease due to problems ininventory management that prevented inventory from being sold outside, the total inventory increased from 36.858.429 to 60.306.616 In 2020 and 2021, the increase is a result of improved inventory management and accelerated sales In 2022, the decrease is similar to the year 2019 A decrease in inventory turnover might be because in this period, Vinhomes had implemented many real estate projects, which leads to an increase in inventory Vinhomes’s inventory is mainly in real estate for sale under construction (including land use fees, site clearance costs, construction and development costs)

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2.3.2 Day’s Sales in Inventory

The longest and fastest average time it took Vinhome to convert inventory into sales was 910.66 days in 2019 and 286.86 days in 2021 High Days' sales in inventory will lead

to high storage costs and the risk of outdated inventory, and conversely, low Days' sales in inventory means that Vinhome has effective inventory management and the ability to sell quickly

The increase in days of sales in inventory (from 344.28 to 741.18) indicates that inventory is taking longer to sell This may be due to changing market conditions or inefficient inventory management

2.3.3 Receivables Turnover

Between 2018 and 2022, Vinhome's receivables turnover index experienced notable fluctuations 2019 was an outstanding year with a sudden increase in the index to 3.35, increasing the impression of the company's ability to manage debt and collect customer debt during that period However, in 2020, with a sharp decrease to 1.09 This could be a sign of challenges in debt management, possibly due to the impact of factors such as the pandemic causing difficulties for customers in making payments In the years that followed, the receivables turnover ratio saw a recovery, especially in 2021 and 2022, when the index reached 2.07 and 2.25, respectively This could be a positive sign, but further monitoring is needed to ensure that growth is sustainable

A decrease in receivables turnover (from 2.07 to 0.65) suggests that the company is taking longer to collect payments from customers, potentially due to changes in credit terms

or the creditworthiness of customers

2.3.4 Day’s Sales in Receivables

From 2018 to 2022, Vinhome's Days' Sales in Receivables (DSR) index experienced notable fluctuations In 2019, the index suddenly decreased from 297.36 days in 2018 to 108.91 days, showing that the company has the ability to collect customer debt effectively and quickly However, in 2020 this index increased significantly to 335.60 days, possibly due to difficulties in debt collection due to the impact of the pandemic In 2021 and 2022,

2.3.5 Fixed Asset Turnover

In 2018, fixed asset turnover's ratio of Vinhome reached 1.87, the highest level in the past 5 years Through that index, we can see that in 2018, Vinhome had effectively used investments in fixed assets to generate sales In the next 4 years, Vinhome's ratio decreased

to 0.38 from 2018 to 2022 This ratio lower shows that Vinhome is not currently using up all its assets their own to the maximum

The declining fixed asset turnover (from 1.87 to 0.38) may suggest an underutilization

of fixed assets, which can result from reduced production or operational issues Even though the Vinhomes’ revenue still increased over the years, the non-current assets of the firm decreased more significantly, which led to a gradual decrease in fixed asset turnover The increase in non-current assets may come from the increase in investing in real estate projects or acquisition activities,

2.3.6 Total Asset Turnover

In 2018, the index was 0.44, showing that the company was effectively using its entire assets to generate sales From 2019, the index began to decline sharply, falling below 0.4

in the following years This reduces efficiency in using assets to generate profits

A decrease in total assets turnover (from 0.44 to 0.17) may be affected by the total asset increase more considerably than sales in the period, indicating less efficient asset utilization

2.4 Profitability Turnover

Figure 1-4: Profitability Ratio

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2.4.1 Profit Margin

During 5 years, the profit margin index changed continuously, increasing and decreasing each year This index increased by 0.58 in 2019, decreased by 0.39 in 2020, then increased by 0.57 in 2021, and finally decreased by 0.47 in 2022 The unusual decline in net profit margin over the years shows that Vinamilk is operating less efficiently and reflects the company's "financial health" and declining profitability

Although it fluctuates, the company maintains a healthy profit margin throughout the period The decrease in 2022 might be due to various factors, including changes in costs, pricing, or market conditions

2.4.2 Return on Assets

Overall, Vinhome's ROA can still be considered a high rate and earn more money on less investment However, during this period, Vinhome's ROA tended to unusual increase and decrease The total assets of Vinhome used for investment increased significantly over the years, and the profit after tax also increased, only decreased in 2022, which shows that the increase in profit after tax over the years suggests that Vinhome has been successful in converting its investments into profitable ventures However, the decrease in profit after tax in 2022 warrants closer scrutiny Enterprises need to adjust their business plans to improve efficiency and ensure the sustainability of their profitability

ROA shows how efficiently assets generate profits However, ROA fluctuated from

2018 to 2022 which may derive from the change of net income over the year, especially from 2021 to 2022, net income sharply decreased which contributed to the decline in ROA from 20.9 in 2021 to 8.06 in 2022, shows that the company's ability to turn a profit in relation to its asset base has significantly decreased This could be impacted by a number

of things, like rising costs, falling income, or other financial difficulties

2.4.3 Return on Investment (ROI)

In the first 3 years, Vinhomes’ ROI tends to decrease sharply (from 18.47 to 15.56)

In the following two years, this ratio fluctuated continuously, increasing to 21.92 in 2021 and again decreasing to 10.05 in 2022 In general, the ROI rate of Vinamilk is relatively