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

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THE UNIVERSITY OF DA NANG UNIVERSITY OF ECONOMICS

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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

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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

- Calculate financial ratios of competitors and compare with Vinhomes

- Create Word file for the report

- Actively involved, enthusiastic in group’s work;

- Fully participate in all meetings;

- Care about the group work progress, helpful to the others- Finish work on time

100%

Nguy n Th ễ ịDiễm Th o ả

- Analyzing financial statements of Vinhomes: Calculate financial ratios; Give comments

- Calculate financial ratios of competitors

100%

Nguy n Th ễ ịLy Na

- Analyzing financial statements of Vinhomes: Calculate financial ratios; Suggest reasons for the changes of figures

- Answering question 2, 3 and 4

100%

S m Ái ầLinh

- Analyzing financial statements of Vinhomes & competitor: Calculate financial ratios; Give comments

- Calculate financial ratios of competitors and compare with Vinhomes

100%

Phan Nguyễn Khôi Nguyên

- Analyzing financial statements of Vinhomes: Calculate financial ratios - Answering question 2, 3 and 4

- Fully participation all meetings;

100%

Trương Thị Khánh Hòa

- Analyzing financial statements of Vinhomes: A brief description of the company; Suggest reasons forthe changes of figures - Answering question 2, 3 and 4- Finish Word & PDF file for

100%

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TABLE OF CONTENTS

CHAPTER 2 FINANCIAL RATIOS & SUGGESTING THE REASONS FOR THE

CHAPTER 4 CONCLUSION ABOUT FINANCIAL PERFORMANCE OF THE

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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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1 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

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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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

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1.4 Key competitor

Among the largest listed real estate enterprises on HOSE, Vinhomes (stock code: VHM) currently holds the position of the leading real estate enterprise in our country with a land fund of up to 16,800 hectares - the highest in the market, far superior to its industry peers by a significant margin and followed by Novaland (Novaland Investment Group Corporation) with a land fund of 10,600 hectares, considered one of Vinhomes' few competitors in Vietnam

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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4 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

2.1.2 Quick Ratio

It can be seen that Vinhome's quick ratio decreased gradually in the first 3 years, from 0.76 to 0.57 After that, the company's ratio increased again in 2020 but it decreased again in 2021 In general, Vinhome's quick ratio in all 5 years is less than 1, showing that the company hasn't enough financial resources, and liquid assets to pay short-term and lowly liquid liabilities The ratio of inventory in short-term assets is large and inventories between years fluctuate strongly, so the change of quick ratio is also similar The change in quick ratio is also similar to the current ratio by the impact of the other two factors, which are current assets and current liabilities Those are also the causes of Vinhome's quick ratio change

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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5 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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6 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

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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,

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8 Vinhome has seen a significant improvement, with the index falling below 200 days, indicating a recovery in customer debt management and collection capabilities

The increase in days of sales in receivables (from 176.48 to 562.83) indicates that receivables are taking longer to convert into cash, which can affect cash flow

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 decreasedto 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