Subject Corporate Finance 1.Pdf

Table of contents

FACULTY OF CORPORATE FINANCEDEPARTMENT OF CORPORATE FINANCE

Full name: Le Duc Anh Student ID number: 20CL73403010131

Credit Class: CQ58/22.2CL_LT1Class: CQ58/22.03CL

Ordinal number: 05 Exam Room ID: 581 058 3214 Examination Date: 22/03/2022 Time: 9h15’

SUBJECT: CORPORATE FINANCE 1

Exam form: Case study Report

Exam time: 3 days

Year 2022

PART 1: THEORIES OF THE PROFITABILITY1.1 Definition, content of the profitability

1.1.1 Definition

1.1.2 Content of the profitability

1.2 Indicators of evaluating the profitability1.3 Fators affecting the profitability

PART 2: THE SITUATION OF THE PROFITABILITY AT THE AN PHU IRRADIATION JOINT STOCK COMPANY

2.1 Overview of the An Phu irradiation joint stock company

2.1.1 Introduction of the An Phu irradiation joint stock company

2.1.2 History begin and development of An Phu irradiation joint stock company 2.1.3 Recent development and recent performance

2.2 Situation of profitability at An Phu irradiation joint stock company

2.2.1 Revenue of An Phu irradiation joint stock company 2.2.2 Net income of An Phu irradiation joint stock company 2.2.3 Profitability ratios of An Phu irradiation joint stock company

2.3 Assessment of profitability at An Phu irradiation joint stock company

2.3.1 Results2.3.2 Limitation

PART 3: SUGGESTED SOLUTIONSCONCLUSION

REFERENCES APPENDICATES

The importance of the profitability

In today's economy, in order to survive and develop, most businesses must ensure efficient and profitable production and business activities That is, for businesses profit is extremely important It is both a goal, a driving force, and a condition for businesses to stand firm in the market Profit is considered as a basic economic indicator to assess whether an enterprise is productive or not Constantly increasing and improving profits is to ensure business efficiency, demonstrating the capacity and production management level of the production and business management staff in the enterprise The higher the profit, the stronger the financial strength of the business, creating favorable conditions for expanding production and business,

implementing technological innovation to improve the quality of products and services, and increasing competitiveness competition, producing many new products, this is considered as a step to create momentum to improve the profit of the business Therefore, profit is always a bigconcern of businesses, and financial investors.

Objective of research

The objective of the study is to re-evaluate profits at An Phu irradiation joint stock company After that, the company will base on the limitations to make suggestions and solutions, recommendations to improve the profit of An Phu irradiation joint stock companyin the coming time.

Scope of the study

- In terms of space: research on profitability at An Phu irradiation joint-stock company, which has a long history of operation and experience in the field of irradiation and sterilization of seafood, medical instruments, fruits,

- About time: the period from 2018-2020 Three years cannot fully and accurately reflect the actual operation of the An Phu irradiation joint-stock company, but it does show current results in the most recent time period and clearly demonstrates the company's effectiveness At the time of the study, the An Phu irradiation joint-stock company profitability.

Structure of the study

The report consists of 3 parts:Part 1: Theories of profitability

Part 2: The situation of profitability at the An Phu irradiation joint-stock companyPart 3: Suggest solutions

1.1 Definition, content of the profitability 1.1.1 Definition

Profitability is a situation in which an entity is generating a profit Profitability arises when the aggregate amount of revenue is greater than the aggregate amount of expenses in a reporting period.

1.1.2 Content of the profitability

Profitability is one of four building blocks for analyzing financial statements and company performance as a whole The other three are efficiency, solvency, and market prospects Investors, creditors, and managers use these key concepts to analyze how wella company is doing and the future potential it could have if operations were managed properly.

The two key aspects of profitability are revenues and expenses Revenues are the business income This is the amount of money earned from customers by selling products or providing services Generating income isn’t free, however Businesses must use their resources in order to produce these products and provide these services.Resources, like cash, are used to pay for expenses like employee payroll, rent, utilities, and other necessities in the production process Profitability looks at the relationship between the revenues and expenses to see how well a company is performing and the future potential growth a company might have.

1.2 Indicators of evaluating the profitability

Profitability ratios: Profitability is the net result of a number of policies and decisions

The ratios are intended to measutr how efficiently the firm uses its assets and how efficiently the firm manages its operations.

- Profit Margin or Return on Sale (ROS): it is calculated by dividing net income by sales This show the profit per dollar of sales

- Return on Equity (ROE): Return on Equity (ROE) is a measure of net profit per dollar that owner ivest in It is the ratio net profit to equity, so ROE measures the rate of ruturn on owner’s investment:

Return on Equity = The Dupont Identity

The dupont equation shows how the profit margin, the total assets turnover raio, and the use of debt interact to determine the return on equity So, managers can use the DuPont system to analyze ways of improving the company’s performance

The profit margin times the total assets turnover is called the Basic DuPont Equation, and it gives the rate of return on assets (ROA)

ROA = Profit margin x Total assets turnover

= x

In an Extended Dupont Equation, the formula for ROE is:

ROE = = x ROE = = x

= Profit margin x Total assets turnover x Equity multiplier

1.3 Factors affecting the profitability

- Economic environment factors: economic environment is a set of factors that have far reaching effects on business activities of enterprises: inflation, economic growth rate, national income, fluctuations in supply and demand of goods and the level of competition in the market Favorable economic environment creates conditions forbusinesses to use their resources more effectively, on the contrary, they causedifficulties for businesses.

- Natual environment factors: These are the factors of climate, geographical location,topography They influence businesses to choose the location and sales method inaccordance with the requirements of buyers and to encourage consumers.

- Cultural environment factors: cultural factors affect business culture, forming the habitof buying and selling on credit The culture of credit trading of localities is different, so the management of receivables must have reasonable policies.

- Political law: Vietnam is a politically stable country in the world Political factors arefactors that directly affect the economy as well as the management of receivables Astable political environment and reasonable legal regulations will create a transparentand serious business environment, leading to better trading relations.

- The change in the state’s macroeconomic policies: it’s also significantly affects the

receivable management of corporate

PART 2: THE SITUATION OF THE PROFITABILITY AT THE AN PHU IRRADIATION JOINT STOCK COMPANY

2.1 Overview of the An Phu irradiation joint stock company 2.1.1 Introduction of the An Phu irradiation joint stock company

- Unit name: An Phu irradiation joint-stock company

- Address: 119A/2 Group 4, Ward 1B, An Phu Ward, Thuan An City, Province Binh Duong- Phone: 0274.3712292 – 0271.3713116

- Email: tai.pl@apic.com.vn- Website: http://www.apic.com.vn/- Establish: 20/01/2003

- Stock code: APC

- Charter capital at the beginning: 50 billion dong

- Business: The Company's main business lines include irradiation and sterilization of aquatic products, medical instruments and fruits; frozen storage services; food preservation services; Irradiation to preserve industrial products and other consumer products The irradiation marketshare of APC accounts for about 60% of the market.

2.1.2 History begin and development of An Phu irradiation joint stock company - An Phu Irradiation Joint Stock Company was established in 2003 under the first

business registration certificate number 3700480244 (new number) and 4603000059 (old number) issued by the Department of Planning and Investment of Binh Duong province on January 20, 2003 According to the investment incentive license number: 73/CN-UB issued by the People's Committee of Binh Duong province on June 30, 2003.

- The company has increased its charter capital 3 times from 50 billion dong when it wasfirst established to 12/2007 The charter capital of the company was 86.4 billion dong.

- APC has been approved by the Ho Chi Minh City Stock Exchange for listing since January 22, 2010 and officially traded on February 5, 2010.

- In April 2010, officially started construction of An Phu Binh Minh gunnery factory in Binh Minh Industrial Park, Vinh Long.

- June 2010 issued shares to increase charter capital from 86,400,000,000 VND to 114,480,000,000 VND to supplement capital to build An Phu Binh Minh Irradiation Factory.

- In October 2011, An Phu Binh Minh projector factory officially came into operation.- In October 2014, 572400 shares were issued under the employee selection program.- In May 2016, An Phu Binh Minh One Member Limited Liability Company was merged into a branch of Projection Joint Stock Company

2.1.3 Recent developments and recent performance

2.2.1 Revenue of An Phu irradiation joint stock company

Table 2.1: Revenue situation in 2018 and 2019 Unit: VND

Amount (VND)Proportion(%)

Amount (VND)Proportion(%)

Amount (VND)Proportion(%)Net

99.802% 143.323.583.498

99.935% (22.568.565.142)

Financial income

328.029.638 0.197% 90.913.702 0.063% (237.115.936) -72.28%

Other income

Total revenue

100% 143.416.702.765

100% (22.805.629.541)

(Sources: Financial statement in 2019 at An Phu irradiation joint stock company)- Total revenue of the Company includes:

+ Net revenue+ Financial income+ Other income

From Table 2.1, we see that the revenue in 2019 compared to 2018 decreased by VND 22,805,629,541 (equivalent to 13.72%).

• Below we will analyze the structure of the situation of 3 revenue sources as follows:

- The first is net revenue from selling goods and providing services, we see that this is the source that accounts for the largest proportion in the total revenue structure of the company (accounting for 99% of total revenue or more) In 2019, net revenue decreased from 2018 to VND 22,568,565,142 (equivalent to a decrease of 13.6%).- The second is that revenue from financial activities accounted for a relatively small proportion in the revenue structure of 0.197% in 2018 and 0.063% in 2019 Revenue from financial activities in 2019 decreased compared to 2018 by 237,115 ,936 VND (equivalent to a decrease of 72.28%)

- Finally, there is other income, according to Table 2.1, we see that this is the source of income that accounts for the smallest proportion of the company's revenue structure and remains stable at 0.001% in 2018 and 0.002% in 2019 This is the only source of income in all three sources of income with a growth in 2019 of VND 51,537 (equivalent to 2.39%).

- Through the above analysis, we can assess that the net revenue of An Phu irradiation joint stock company in 2019 compared to 2018 has a relatively large decline (down 13.6%) The company needs to research, evaluate resources, analyze market forecasts in the coming time to build a more effective sales and service provision plan.

For other revenues: In 2019, revenue from financial activities decreased quite significantly (down 72.28%) Other income increased but not significantly However,these revenues only account for a very small proportion in the revenue structure of the Company.

Table 2.2: Revenue situation in 2019 and 2020

Amount (VND)Proportion(%)

Amount (VND)Proportion(%)

Amount (VND)

Proportion(%)Net

143,323,583,493 99.935% 141,977,754,395

Financial income

90,913,702 0.063% 7,214,893,693 4.836% 7,123,979,991 7836%

Other income

Total revenue

+ The second is that revenue from financial activities accounted for a relatively small proportion in the revenue structure of 0.063% in 2019 and 4.836% in 2020 Revenue from financial activities in 2020 increased sharply compared to 2019 at 7,123,979,991 VND (corresponding to an increase of 7836%)

+ Finally, there is other income, according to Table 2.2, we see that this is the income source that accounts for the smallest proportion in the company's revenue structure and remains stable at 0.002% in 2019 and 0.004% in 2020 In 2020, other revenue increased by VND4,688,258 compared to 2019 (equivalent to 212.56%).

+ Through the analysis in the table above, we can see that net revenue from selling goods and providing services had a slight decrease (down by 0.94%).

Revenue from financial activities and other income both increased, in which revenue from financial activities increased strongly (up 7836%) and other income increased by 212.56%.

2.2.2 Net income of An Phu irradiation joint stock company

Table 2.3: Net income of An Phu irradiation joint stock company

Differentbetween2020/2019Sales 165,892,148,64

) (1,345,829,103)

Net sales 165,892,148,640

93,900,741,175 70,425,439,180 53,097,561,273

Net profit

after tax 74,399,725,541 55,970,793,838 45,575,065,385

From Table 2.3, we see that the company's profit targets in 2019 and 2020 tend to decrease, specifically as follows:

The first is Sales, in 2019 it decreased by 22,568,565,142 VND compared to 2018 specifically, it decreased to 143,323,583,498 VND In 2020, the figure tends to decrease less to VND 141,977,754,395.

The second is Net sales, the data in 2019 decreased by 22,568,565,142 VND compared to 2018 specifically, it decreased to 143,323,583,498 VND In 2020, the figure tends to decrease less to VND 141,977,754,395.

The third is the cost of goods sold, the data in 2019 compared to 2018 increased by 116,070,226 VND, specifically increased to 46,263,947,501 VND For 2020, cost of goods sold increased significantly to 12,687,543,150 VND to 58,951,490,651 VND.The fourth is pre-tax accounting profit, in 2019 this figure had a significant decrease of VND 23,475,301,995 to VND 70,425,439,180 And in 2020, pre-tax accounting profit continued to decrease by 17,327,877,907 VND compared to 2019 to 53,097,561,273 VND.

Finally, net profit after tax, the figure in 2019 decreased from 18,428,931,703 VND to 55,970,793,838 VND In 2020, the figure continues to decrease to 45,575,065,385 VND,which is a decrease of 10,395,728,453 VND compared to 2019.

2.2.3 Profitability ratios of An Phu irradiation joint stock company

Table 2.4: Profitability ratios of An Phu irradiation joint stock company

93,900,741,175 70,425,439,180 53,097,561,273

after tax 74,399,725,541 55,970,793,838 45,575,065,385

Equity 598,385,483,48

4 598,385,483,494 640,042,593,311

10 41,657,109,817

Numberof days 1inventor

yturnover

- The ROS, ROA, and ROE criteria are the main indicators related to the assessment of profitability in the course of business operations of the enterprise They play an important role in reflecting the company's business performance In general, through data table 2.3, we can see that the indicators in 2029 have a downward trend compared to 2018 and by 2020 there are a few indicators that have increased compared to 2019 Specifically:

- Profit-to-sales ratio (ROS) in 2018 for every 100 VND of revenue, 44.85 VND of profit will be generated In 2019, this ratio decreased by 5.8%, which means that when the company makes 100 VND of revenue, the company earns 39.05 VND of profit In 2020, this ratio will decrease further by 6.95% compared to 2019, ie, when making 100 VND of revenue, the company will get 32.1 VND of profit The numbers tend to decrease quite a lot and affect the profit of the business The company needs to try to boost revenue and reduce costs further to improve profitability.

- Profit after tax ratio on total assets (or on average working capital) ROA: This ratio changed from 20.04% in 2018 to 5.47% in 2019, so in terms of decrease in ROA is 14.57% So, when implementing 100 dong of capital used in 2019, it generated 5.47 dong of profit after tax In 2020, this ratio will decrease by 0.97% to 4.5% compared to 2019, that is, when implementing 100 VND of capital used in 2020, it will generate 4.5 VND of profit after tax Thus, we can see that the company has exploited and used assets inefficiently The company needs to save costs, save capital to increase the ratio ofprofit after tax to total assets to achieve the highest efficiency.

- Return on equity (ROE): If in 2018, for every 100 VND of equity, 21.88 VND in profitafter tax, in 2019, that ratio will decrease by 12.53 % down to 6.88%, that is, for every 100 VND of equity, there will be 9.35 VND of profit after tax And in 2020, this ratio will decrease by 1.63% compared to 2019, which means that for every 100 dong of equity, there will be 7.12 dong of profit after tax Like the above two ratios, the profit after tax/equity ratio is also reduced This shows that the company is not using equity effectively.

- In addition, there are indicators related to the performance coefficient of operation Specifically:

+ Total capital turnover: Total capital turnover in 2019 compared to 2018 decreased by 0.28 rounds and in 2020 compared with 2019 decreased by 0.07 rounds Through Table 2.3, in 2018, 2019 and 2020 reflect that each dong of the company's assets generates 0.49, 0.21 and 0.14 dong of net revenue, respectively.

+ Inventory turnover: The inventory turnover in 2019 compared to 2018 decreased by 273,031 rounds Inventory turnover ratio in 2018 reflects 1 dong of inventory turned over 788,935 times In 2019, reflecting 1 dong of inventory capital rotated 515,904 times In 2019, the number of days per inventory turnover decreased by 0.28 days