HANOI UNIVERSITY FACULTY OF MANAGEMENT AND TOURISM FINANCIAL STATEMENT ANALYSIS Cuu Long Pharmaceutical Joint Stock Company DCL Tutor’s name: Mr... In this report, we applied all techni
VND)CashFlow Indirect Year 2016 Year 2017 Year 2018 Year 2019
| CASH FLOWS FROM OPERATING ACTIVITIES
Depreciation of fixed assets and properties investment 20.056.402 36,857,547 41,083,608 39.617.442
Foreign exchange (gain)/loss from revaluation of monetary 87,612 10,982,188 -300,385 Loss/(profit) from investment activities -12,862,230 -27,535,757 -53,957,248 -135,236,248
|3- Operating profit before changes in working capital 138,860,211 118,672,238 60,626,143 58,194,261
Increase/(decrease) in payables (other than interest -5.675.057 -33,013,781 -16,619,200 42,786,502 (Increase)/decrease in prepaid expenses -2,282 236 1,424,752 -5,495,782 2,632,648
Other payments for operating activities -995,124 -1,734,518 -2,262,065 -1,755,615 NET CASH FLOWS FROM OPERATING ACTIVITIES 47,353,802 49,812,763 63,279,915 75,575,059
As can be seen, the profit before tax of DCL fluctuated significantly The company faced to the decreasing continuously from 2016 to 2018, especially, in the year 2018, the number dropped from more than VND 113 billion to only more than VND 20 billion However, in the year 2019, the profit bumped up to more than VND 104 billion, nearly touched the peak of four-year period
In 2017, the company did acquisition of Euvipharm However, at the point of acquisition, Euvipharm could not provide any profits to DCL, DCL had to ask for permission for 8 products of Euvipharm from the Ministry of Health to continue working That resulted to the significantly decreasing in profit in 2018 Comparing to the increasing of receivables in 2016 and 2019, the company witnessed the decreasing in 2017 and 2018 Along with the receivables, the inventories of the company significantly changed during the period, the inventories item of 2018 was more than VND 40 billion higher than 2017 Based on event that the company had Euvipharm and Benovas, the prepaid expense of company increased double to more than VND 34 billion in 2018 Generally, the year 2018 witnessed significantly decreasing cash flow from the operating activities, then also witnessed the increasing in 2019 That point proved that the firm could get better chance to increase its cash in order to server for liquidity However, the firm still has to control the cash flow in order to have stable cash flow to avoid liquidity risk
CashFlow Indirect Year 2016 Year 2017 Year 2018 Year 2019
CASH FLOWS FROM INVESTING ACTIVITIES 1 Payment for fixed assets, constructions and other long- -13,678,114 -153,511,472 -102,685,813 -10,515 491]
2 Receipts from disposal of fixed assets and other long- 40,017,324 37,727 219,705|
3 Loans, purchases of other entities’ debt instruments -416,000,000 -309,900,000 -1,050,490,000 -839,255,000/
4 Receipts from loan repayments, sale of other entities’ 400,000,000 280,000,000 664,400,000 640,490 000/
5 Payments for investment in other entities -139,040,757
6 Collections on investment in other entities 3,825,000 170,150 612|
7 Dividends, interest and profit received 12,215,480 11,251,865 21,338,131 57,365 610{
NET CASH FLOWS FROM INVESTING ACTIVITIES -17,462,635 -271,183,041 463,574,955 18,455,436|
Coming to the investing cash flow, the firm had paid huge amount of money for investing activities In 2017, the company brought VND 1000 billion to invest in Benovas- cancer medicine and the third factory that produces empty capsule, which resulted in high liabilities
Moreover, the event of holding Euvipharm at the time that the company did not work well made the purchases of other entities’ debt instruments increased three times compares to 2017 (bumped up from VND 309 billion to VND 1,050 billion) This was the main reason caused high and negative investing cash flow in 2018 Investing huge amount of money in 2017 and 2018 brought high returns back to the company in 2018 and 2019 The number of loan repayments went up to nearly three times compared to the year 2017, which was more than VND 664 billion in 2018 and only decreased slightly in 2019 Overall, the net investing cash flow of DCL witnessed a positive number in 2019 after the significantly decreasing in 2017 and 2018 This proves that the investing activities improved, and the company had earned returns from investment activities
Therefore, they had source of cash to cover the loss
CashFlow Indirect Year 2016 Year 2017 Year 2018 Year 2019
Ill CASH FLOWS FROM FINANCING ACTIVITIES |
1 Receipts from equity issue and owner's capital 50,000,000 31,465,441 |
4 Dividends paid, profits distributed to owners -28,399,823 |
NET CASH FLOWS FROM FINANCING ACTIVITIES -32,028,702 230,182,165 529,538,043 102,133,654]
Net cash flows during the period -2,137,535 8,811,887 2,683,173 8,103,159]
Cash and cash equivalents at beginning of the period 13,248,703 11,111,168 19,919,971 22,603,807 |
Exchange difference due to re-valuation of ending balances -3,084 663 -1 644|
Cash and cash equivalents at end of the period 11,111,168 19,919,971 22,603,807 14,499,005|
For the financing cash flow, the company witness the increased dramatically from 206 to 2017, which was from VND -32 billion to VND 230 billion The number kept increasing until 2019,
21 the number hit the lowest point ( VND -102 billion), which was even lower than the starting point of the period Looking at the detail, the inflow was from the borrowings, which means the company has higher debt, especially in 2018, the company borrowed more than VND 1,189 billion In this year, the company issued convertible bond caused the debt increased significantly
Rather than that, along with high debts, the ocmpany also paid out more than VND 789 billion in 2018 and the number declined to VND 621 billion in 2019 As concluded, the company increased its debts but als tried to control its pay out in order to balance the liquidity risk
4.4, Overall assessment Relying on the event of holding Euvipharm and issuing convertible bond, the company proved that they could control well over 2017 and 2018 Until 2019, the business slightly went down by outflow cash flow was higher than inflow cash flow This happened because the company had strategies to repay the debt and restructure the company by deciding not to hold Euvipharm
Based on the analyzing above, we draw a conclude that the company is in its growth period
Restructuring with new strategies can bring more advantages for the company the develop
VI Forecast company’s financial statements
1 Balance sheet forecast Besides, for the part of balance sheet, in the cash and cash equivalents item, day sales held in cash is predicted to be 9 in the following years because those of the years ago fluctuate from 9.6 to 8.9
The next item is short-term financial investments, which is expected to increase with the growth rate of 2% because DCL’s production of empty capsule
Next, in term of short-term receivables, day receivable held will be approximately from 123 to 130 because it increases each year, specifically rises to 124 in 2019 and we use this item to adjust balance sheet
Continuously, day inventories held in inventories part is predicted to be 160 days because those of the previous year increase but until 2020, it will fall due to the larger amount of selling goods after the effects of vaccine for Covid-19
Subsequently, according to the slight increase during the period from 2018 to 2019, short-term prepayment will increase 6% per year in the following years
The amount of tax is just a small number, only used to adjust balance sheet
Moreover, fixed assets is divided into tangible fixed assets, which is forecasted to increase 3% each year because of the company’s equipment investment to product empty capsule along with the increase of 0.7% in intangible fixed assets per year from 2020 to 2023 due to the shortage of activities in trading or merging
Subsequently, the volume of long-term assets in process is excluded for cash because it is small number In addition, the item of goodwill is rejected due to the lack of trading or merging information of DCL from 2018 up to now
Next, the size of other long-term assets is guessed to decline slightly in 2020 before rising during the following 3 years with 2%
Furthermore, in term of short-term liabilities, days payable held will be 36 days in the next years because it is in the range from 30 t0 33 between 2017 and 2019
Follow-up to that, taxes and other payables to state authorities in the first 3 quarters of 2020 reduces so it will decrease in 2020 and increase 5% per year from 2021 to 2023
Next, payable to employees is predicted to increase 3% from 2020 to 2023
Besides, short-term accrued expenses will fall slightly with 1% in rate based on the data collected
More to the point, according to the strong investment in empty capsule production as well as pharmaceutical industry in general in 2021, short-term borrowings and financial leases will raise with the rate of 6% in the following 4 years after shooting up from 2016 to 2018 and inching up in 2019
The following item is other long-term liabilities, which is only used for adjustments
Based on the collected information, the volume of convertible bond falls from the first quarter to the third quarter, so it is predicted to decline a little in 2020 However, according to the future investment plan, there will be a rise with the rate of 5.1% from 2021 to 2023
After that, accumulated retained earnings at the end of the previous period gets a prediction of increasing each year in the level of 3% because it increases strongly through the previous years
At last, minority’s interest will raise 1% during the following period from 2020 to 2023 based on the increase of 1% in the third quarter of 2020