1. business and industrial

Topic:
Practical situation and proposed solutions for improving
the liquidity - in case of Ha Bac Food Joint Stock
Company
Bachelor of Business Administration Thesis
Student name (ID)
Tran Hoang Anh – BA00329
Bui Ngoc Tu – BA00195
Ha Trung Dung – BA00311
Nguyen Thu Ha – FB00291
Hoang Duc Anh – FB00130
Instructor
To Thi Thu Huong
Hanoi, 2014
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ACKNOWLEDGEMENT
We confirmed that we are the author of this thesis of Bachelor of Business which was done
under the mentorship of Mrs. To Thi Thu Huong. We would like to express thanks to our
supervisor were so enthusiasm during our work, as well as experts have contributed their
helpful comments on the thesis, they always supported us throughout the research process
with their patience and enthusiasm She always monitored and supported for us to help us
complete this thesis successfully. Besides that, we special thanks to all the lectures of the FPT
University, it's hardly a word that can describe the most beautiful time of the life’s student at
university. We are deeply grateful to all leaders and employees of Ha Bac food join-stock that
believed us and provided data and documentation, helped us have the opportunity to complete
this thesis . We have applied the knowledge learned in practical cases. Finally, we would like
to thank family and friends who always encouraged and supported us invaluably to complete
this thesis successfully
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EXECUTIVE SUMMARY
The objective of this thesis is to analyze the situation and solvency of the business firm Ha
Bac food shares in the period (2010-2013). There by offering solutions and solutions for
enterprises. Based on a literature review, we focus our efforts to investigate the solvency of
companies through: results of operations of Ha Bac in the period 2010-201, under the impact
of the operation economic and financial indicators related to the company's liquidity. The
study was conducted using descriptive literature review, research methodology and the
quantitative and qualitative. This thesis focuses on the following subjects: the accounts and
financial indicators related to the liquidity of the company, compared to the peers in the first
phase. Besides, through a number of different directions in the thesis, the team has focused on
how to improve the liquidity of the company.
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TABLE CONTENTS
Acknowledgement .................................................................................................................... 2
Executive summary .................................................................................................................. 3
Chapter I: INTRODUCTION ................................................................................................ 7
1.1 Introduction ................................................................................................................ 7
1.1.1 Background .................................................................................................................... 7
1.1.2. Practical problems....................................................................................................... 9
1.2 Research question and research objective ................................................................... 9
1.2.1 Research question ....................................................................................................... 10
1.2.2 Research objective ...................................................................................................... 10
1.3 Research scope ............................................................................................................................. 10
1.4 Methodology and data overview.............................................................................................. 11
1.5 Thesis outline ............................................................................................................ 11
1.6 Thesis conclustion ..................................................................................................... 11
Chapter II: LITERATURE REVIEW AND THEORETICAL MODELS ....................... 12
2.1 Defination .................................................................................................................. 12
2.2 Importance of liquidity to firm.................................................................................. 12
2.3 Liquid assets of the firm ............................................................................................ 13
2.3.1 Cash and cash equivalent ......................................................................................... 13
2.3.2 Short term investment ............................................................................................... 14
2.3.3 Net receivable .............................................................................................................. 15
2.3.4 Other current assets ................................................................................................... 15
2.3.5 Inventories .................................................................... Error! Bookmark not defined.15
2.4 Current obligation of the firm ................................................................................... 16
2.4.1 Account payable .......................................................................................................... 16
2.4.2 Employee payable ....................................................................................................... 17
2.4.3 Tax payable .................................................................................................................. 17
2.4.4 Short term loan payment .......................................................................................... 17
2.4.5 Interest expense ........................................................................................................... 17
2.5 Ratios measure liquidity of the firm .......................................................................... 18
2.5.1 Current ratio................................................................................................................ 18
2.5.2 Quick ratio ................................................................................................................... 18
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2.5.3 Days sales outstanding ............................................................................................... 19
2.5.4 Cash conversion cycle ................................................................................................ 19
2.5.5 Debt to equity ratio .................................................................................................... 20
2.5.6 Interest coverage ratio ............................................................................................... 20
2.6 Factors affect liquidity of the firm. ........................................................................ 20
2.6.1 The capacity of the firm ........................................................................................... 21
2.6.2 Sales policy ................................................................................................................... 21
2.6.3 Inventory level ............................................................................................................. 21
2.6.4 The relationship of the firm with suppliers .......................................................... 21
2.6.5 The liquid of stock market ....................................................................................... 22
2.7 The roles of other finacial institutions.................................................................... 22
2.8 Economic context ................................................................................................... 23
CHAPTER III – METHODOLOGY AND DATA ............................................................. 24
3.1 Introduction ...................................................................................................................... 24
3.2 Research philosophies ...................................................................................................... 24
3.3 Research approach .......................................................................................................... 25
3.4 Research methods ............................................................................................................ 27
3.5 Research strategies .......................................................................................................... 28
3.6 Time horizon .................................................................................................................... 28
3.7 Data collection technique & analysis procedure ........................................................... 28
3.8 Research ethics ................................................................................................................ 30
3.9 Research limitation .......................................................................................................... 30
3.10 Conclusion ...................................................................................................................... 31
CHAPTER IV: ANALYSIS AND FINDINGS .................................................................... 32
4.1 Analysis .............................................................................................................................. 32
4.1.1 Analysis of the cash flow statement .................................................................. 32
4.1.2 Ratio analysis...................................................................................................... 35
4.1.3 Analyzing current liabilities of the firm .......................................................... 49
4.1.4 Analyzing net receivable ................................................................................... 55
4.1.5 Analyzing liquid asset of the firm ..................................................................... 57
4.2 Problems and causes ......................................................................................................... 59
4.2.1 Problems ............................................................................................................. 59
4.2.2 Cause and factor ................................................................................................ 61
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4.3 Net working capital requirement of the company in 2014 ............................................ 63
4.4 Finding ............................................................................................................................... 65
CHAPTER V: CONCLUSION AND RECOMMENDATIONS ....................................... 67
5.1 Conclusion ........................................................................................................................ 67
5.2 Solution ............................................................................................................................. 68
5.2.1 Improved cash flow of the business through the accounts payable (AP) .... 68
5.2.2. Management effective account receivable (AR) ............................................ 69
5.2.3 Manage inventory efficiency. ........................................................................... 70
5.2.4 Applying the model of inventory management in a manner consistent. .................. 71
5.3 Limitations of the study ................................................................................................... 71
5.4 Further research .............................................................................................................. 72
References: ............................................................................................................................. 73
Appendix 1: Ha Bac Balance sheet ........................................................................................ 75
Appendix 2: Ha Bac Cash flow Statement............................................................................ 81
Appendix 3: Ha Bac’s financing ratio from 2010 to 2013 ................................................... 84
Appendix 4: Expenditure plans of the company in 2014 .................................................... 85
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Chapter I: INTRODUCTION
1.1 Topic definition
1.1.1 Background
1.1.1.1 Topic background
The financial situation of a business was clearly expressed through the situation of the
solvency. For any enterprise, solvency has always reflected financial situation of its.
Enterprises with high liquidity, the financial situation will be positive and vice versa.
Therefore, when assessing generalized financial situation, we cannot ignore business solvency
analysis. Solvency analysis is also useful for the owners. Solvency is less a sign of loss of
control or loss of capital investment as well as future threats affecting individual property
owners. For banks, analyze the solvency of companies to assess the recoverability of time,
late or no ability to recover principal and interest payments for their loans. So, solvency
analysis becomes urgent for every business. Following the analysis above, we decided to
choose the topic: The situation of the solvency and proposed solution to improve liquidity - in
case of Ha Bac Food Joint Stock Company for analyzing, interpreting and finding out the
situation in liquidity and proposed solution to improve liquidity of Ha Bac company
1.1.1.2 Company background
Name
Ha Bac food joint stock company.
Logo
Abbreviation
Ha Bac
Head Office
76A Ly Thai To, BacGiang City, BacGiang Province.
Phone
0240.3854.335
Fax 02403.857.305 / 855 847
Website
http://www.Ha Bac.com.vn/
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a) Business activities
- Collecting, preservation, processing, wholesale, retail, storage and circulation of food,
agricultural products and foodstuffs;
- Import and export of food and agricultural production and supply of materials and
specialized equipment for the production of food industry business
- Import and export of agricultural commodities, agricultural inputs, fertilizers and other
essential consumer goods
- Imports of corn, wheat, flour, beans and Vietnam consumer goods are not have the ability to
product enough;
- Farming, processing, exporting and importing fishery and related services;
- Production, import and export trading of all kinds of raw materials and finished products
cattle and poultry feed;
- Wood processing and wood, bamboo products manufacturing;
- Business, salt mining and processing of salt products;
b) History and development:
Ha Bac food joint stock company was formerly known as Ha Bac food company (State
Enterprises). In 2004, implementing the policy equalization of State enterprises, the Ministry
of Agriculture and Rural Development has issued Decision No. 4441 / QD / BNN-DOP dated
09/12/2004 transferred Ha Bac food company became Ha Bac food joint stock company.
With forms of state holds 51% controlling stake.
c) Some main productions
rice
product
s
aquacultur
e
feed
kinds of
corn
productions
kinds of
bean
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kinds of
Pepper
kinds of
sliced
manioc
kinds of
cafe
d) Main export and import market
Currently, the company has import and export to many countries around the world such as
Singapore, Indonesia, Malaysia, Philippines, Taiwan, Africa, Hong Kong, Australia, USA,
Japan, France, Switzerland, Argentina ..
1.1.2 Practical problems
In 2012 was a turbulent market of Vietnam's rice exports. The economic crisis worldwide has
a profound effect on the economy of Vietnam in general. On the other hand, India is a large
exported market rice in the world. Several years ago, due to stabilization of domestic food
market that India has stopped exporting rice. However, by 2012, the country suddenly
exported rice again, so that had greatly affects rice export market of Vietnam. For Ha Bac
food joint stock company, this activity had great
affects for the business situation of
company. Although the company reserved a large volume of rice with highly imported price,
but could not sell because of market’s volatility, or sold at prices lower than import prices.
This makes the inventory backlog is more, the company losses, short-term debt was so much,
the production and business
stagnated. Therefore, practical problem is around
actual
situation and how to raise Ha Bac food joint-stock’s liquidity.
1.2 Research question and research objectives
The regular liquidity analysis will help managers to clearly see the current status of payment
of business to anticipate risks to the business operations , which can be as a basis to make
appropriate plan for the future and at the same time proposing effective measures to stabilize
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the financial position . and to improve the financial situation of What are the problems with
the liquidity of Ha Bac food Joint Stock Company , we need to clarify :
1.2.1 Research questions
1. What are the problems with the liquidity of Ha Bac food Joint Stock Company?
2. What should they do to solve the problem and measures to improve the liquidity?
1.2.2 Research objectives
The thesis focused on:
- Analyze the liquidity of the business to clearly see the current situation of company's
liquidity
- On the basis that proposed solutions and recommendations to improve the financial
situation and help company operate more efficiently.
1.3 Research Scope
The business types of Ha Bac Food Joint Stock Company are manufacture and trade, with the
advantage of food processing, and food business. However this thesis are going to focus on
the analysis and evaluation of the financial situation of company, namely the liquidity of the
company through the financial statements of the company for a period of 4 years from early
2010 to late 2013. The company's data including report through 4 year 2010 to 2013,
statements of finance, and other reports involve liquidity of ha Bac company. This thesis
going to focus on the current situation of the company through the analysis of accounts
receivable and accounts payable, and the ratio of liquidity in long term and short term.
1.4 Methodology and data overview
There are nine layers of methodology and data, which are Research Philosophies, Research
Approach, Research Methods, Research Strategy, Data collection method, Data Analysis
Methods, Time horizon, Ethical consideration, and Research Limitations.
The methods used in the study included three main methods are research approach, data
collection methods, and data analysis methods. The financial statements data and the
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information obtained from direct interviews of employees in the accounting department to
identify trends, volatility of the data as well as the targets and thereby bring comments.
In this study, Inductive approach is identified firstly to manage cash flow in the case of Ha
Bacjoint stock company. The comparison between the business outcome of Ha Bac joint stock
company with the common standards in its industry, and those of other competitors will be
done in this approach to analyze and explain their financial activities and financial ratios
during the time from 2010 to 2013. After that, the problems will be pointed out and solved by
deductive method.
About data overview ,we will use primary data that is obtained directly from Ha Bac food
Joint Stock Company in the recent 3 years, 2010-2013.
1.5 Thesis outline
Chapter I – Introduction: Presentation of general information about topic, company
background, methodology and data overview, introducing the research questions, research
scope and research objectives.
Chapter II – Literature review: Definition and concept of liquidity, the ratio of the liquidity
Chapter III – Research methodology: involves type of approaches, choice of methodological,
techniques and adopted procedures, ethical and limitations of the research methods
Chapter IV – Analysis and findings: After analysis information and figures we recommend
some solution for the company Chapter V: Recommendations and conclusion: Summarize the
research and proposed some solutions.
1.6 Conclusion
To sum up , this chapter will present an overview of the background company and the
importance of the topic , it will clarify the research objectives , research scope and
methodology .With two research questions, the purpose of this report is to analyze the
liquidity of Ha Bac joint stock company to help company improve payment situation .
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CHAPTER II: LITERATURE REVIEW
2.1 Definition
Liquidity can be interpreted in many different ways. First, according to Robert Parrino, David
Kidwell, Thomas Bates (2009) liquidity refers to the ability of the property converted into
money (of course including securities) to cover its short-term debt and obligations. To do this,
business owners have the liquid assets, such as cash and cash equivalents (including, bluechip stocks and securities in the cash market example bonds government). The liquid assets to
ensure that can be bought and sold on the market quickly without affecting the price, this
mean that the price of the transaction was not too much difference compared to the original
price. Of course, investors prefer to invest in assets with high liquidity because they can easily
withdraw from the investment and regain their investments (together with all interest, or if the
losses, money lost is not significant). Second, according to John J. Wild, Ken W. Shaw,
Barbara Chiappetta (2008) liquidity only afford to pay its debts when due. And the third,
liquidity relates to ability to smooth operation of the market in terms of buying and selling
transactions. Either way, there understands liquidity has always been considered a lifesustaining blood vessels body business.
2.2 Importance of liquidity to firm
We already know that cash is important assets in business operations, but it would be lacking
if ignoring a more inclusive concept and equally important is that liquidity.
If the assets of the business cannot be converted into cash when needed (mean that nonliquidity), the enterprise does not have the ability to pay debts when due. Less liquid is not
necessarily synonymous with the long-term default if the property is likely to be sold.
However, a clear business activities of enterprises affected because of overdue debts may be
incurred due to interest and late payment penalties. Higher risk if the property is not
completely liquid, whereas now there is no money to pay the debt and of course will fall into
bankruptcy. Distance between insolvency and bankruptcy is just a matter of time, because
after the business was insolvent or the creditor may file a petition for the bankruptcy court to
declare bankruptcy to liquidate assets to pay creditors.
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Liquidity shows the flexibility and security of investment, market operation more dynamic
and the higher effective, the higher liquidity of the business.
Some examples may be mentioned related to liquidity. Company hedge fund manager - 1998
LTCM (Long-term Capital Management): Starting from the Russian government bond default
CP makes no liquidity; LTCM led to heavy losses for the company business uses a lot of nonliquid assets such as government bonds Russia. This is the reason why LTCM bankruptcy.
Then, The Asian financial crisis began in Thailand in 1997 and spread to other East Asian
countries. Only some countries the stock market dropped dramatically and no longer liquid.
The economy of the country fell into hard times for a long time before he could recover.
Another, subprime mortgage crisis in the fall of 2007 the United States has caused terrible
consequences for the liquidity of the banking and financial markets, the economy and stock
markets around the world. This is the crisis are still puzzling financial markets around the
world
The valuable lesson that people have been experiencing related to solving liquidity problems
still reinvigorated evidence warehouse importance of liquidity in the trading of any public
body, from small businesses to large banks and to the economy as massive as the United
States.
2.3 Liquid assets of the firm
Liquid assets are cash on hand or any tangible or intangible item that can be converted
quickly and easily into cash, typically within 20 days, without losing much of their value.
These assets are among the most basic types of financial resources used by consumers,
businesses, and investors. Cash and checking accounts are the two most obvious forms of
liquid assets.
Liquid assets include: Cash and cash equivalents, short term investment, net receivables,
inventory and other current assets.
2.3.1 Cash and cash equivalents.
“Cash and cash equivalents” is an item on the balance sheet that reports the value of a
company’s assets that are cash or can be converted into cash immediately. These are the most
liquid assets found in the asset of a company’s balance sheet. Cass is one of the most assets
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that easy to convert to cash, include stocks, money market, Treasury bonds, and short-term
government bonds
Cash is a medium of exchange, a store of value and a unit of account and a business have to
have cash in order to be able to pay its debts. Higher cash ratio shows that the business is
liquid. A business generate cash from the sale of products and services , sale of assets, loans
from banks and other creditors and from funds contributed by its owners. It uses the cash to
pay for its operating and capital expenditure, its debts and pay dividend to its owners.
Cash equivalent are distinguished determined from other investments through their short term
survival, whereas short-term investments are 12 months or less, they formed within 3 months,
and long-term investments are investments that mature in excess of 12 months. These highly
liquid financial instruments that are so near their maturity rates are known as cash equivalent.
2.3.2 Short term investment
Short-term investment are assets that are expected to expire or to be liquidated within the
course of 1-3 years. The purpose of this type of asset is to protect capital assets with low-risk
investments. However, with low risk, the return on short- term investments is very low.
Here are some of the most common types of thousands of different types of short-term
investments that many people use:
- Saving accounts: These accounts are kind that have the least profitable type of short-term
investment. Saving accounts are the most simple, liquid types of short-term investments, but
do not even keep up with inflation, so they should not be used to store money for long periods
of time.
- Certificates of Deposit (CDs): CDs are one of the most common types of short-term
investment. When you put your money into a CD, you agree not recovered within a specific
period of time, in exchange for a higher yield. CD lengths range from as little as three months
to as long as 5 years. CDs are federally insured, so they are one of the safest types of shortterm investments; Besides, they still provide a reasonable yield.
- Money market funds: These are typically liquid like savings accounts, but they offer a better
yield. The downside of most money market funds is that they are not federally insured, unlike
other types of short-term investment. This makes money market funds s higher- risk vehicle
for short- term savings.
- Treasury Bills and Bonds: Theses provide flexible short-term investment terms of 4 weeks
to 1 year. Treasury bills are designed for short-term savings and offer an extremely low yield.
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Bonds offer slightly more flexibility, but they may be less secure for short- term savings than
treasury bills.
2.3.3 Net receivable
Net receivable is a concept used in accounting to indicate payments due to a business. When a
business sells it product on credit, the customer is invoiced and then given a set time period (
often 30 days) to pay. This payment model carries an inherent risk that the customer may
default and the business will not be able to collect the money it is owed.
There are 4 steps to determine net accounts receivable
Step 1 : Assign a net account receivable balance according to its historical balance.
Step 2: Create a receivables aging schedule
Step 3: Calculate a weighted percentage of invoices paid
Step 4: Determine the net accounts receivable balance.
2.3.4 Other current assets
A firm’s assets that do not include cash, securities, receivables, inventory and prepaid assets,
and can be convertible into cash within one a firm’s balance sheet, and are a component of a
firm’s total assets.
2.3.5 Inventories
Inventories are assets held for sale during the production of the normal trading; or in the
production process, product enquiries; raw materials; tools and instruments for use in the
production process, sales, and service.
Inventories of the business may include: Goods purchased for sale (goods inventory, real
estate goods, goods in transit, goods sent for processing;
goods sent for outsourcing;
unfinished products (unfinished products and finished products but do not warehouse); raw
materials, tools, outgoing processing and bought on the road, costs of production, unfinished
business services; raw materials imported for production, processing and export of finished
goods stored warehouses of company.
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In addition, considering the liquidity of inventory, the inventory has relatively low liquidity
and small businesses often can liquidate inventories faster than large company. In fact, a
company have more inventories that will have current liquidity ratio is high, and we know the
inventory is difficult to convert assets into cash, especially in stagnant inventory, poor quality.
The companies that is professional in producing and exporting food, inventories are such as:
rice, bran, corn, food products.
2.4 Current obligation of the firm
Liabilities will identify current obligations of the business when they receive asset, take part
in commitments or generate some legal obligation.
Liabilities arising from transactions and other events in the past as a good buy without
payment, outstanding service, debt, commodity warranties, undertaking the obligation to
contract, pay employees, taxes payable and other accounts payable.
Based on economic textbooks, definition of books and other materials, researches, the
definition of kind of monetary flow which have some similar point and they are defined as
follows.
2.4.1 Account payable
Account payable is also known by other names as trade payable or payable. It is a short-term
obligation of an organizations to pay vendors for products, services or when the maturities are
overdue. ( David L Scott, 2003 ). If the account payable are not paid within the agreed
payment terms with supplies, payable to be considered is the default, which would make for
the party organization, business some penalties or an interest higher.
Account payable will be recorded, so that it can be written on general ledger. Following
business perspective, account payable divided into several main categories:
- Account payable for buyer: it is payable by the company for the provision of supplies of
goods or the rendering of services, the contractor installed… which under the contract has
been signed.
- Accrued expenses: the cost to operate for business in the period but amount of money is
not incurred. The main reason is it will ensure for the major costs will not affect anything to
the cost of production. For example, the salary accruals of workers, repair cost of fixed assets,
the cost of goods and warranty or other cost….
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- The internal payable: it is those amount arising in relations between the cost of coal
superiors, subordinates or other unit members…
- Other account payables
2.4.2 Employees payable
This account is used to reflect the situation payables and payments payable to employees of
enterprises about wages, salaries, bonuses , social insurances and other payable are belong to
workers.
Account payable has two categories:
- Payable for staffs: the money will be paid for employees of enterprise such as wages,
salary- bonuses, social insurance and other liabilities of the employee’s income.
- Payable for other workers : other workers aren’t staff will received amount of money from
business, which are wages, bonuses ( if any) and other term of the income of the labor.
2.4.3 Tax payable
Tax payable is also known as income taxes payable. Income tax payable is a term in
accounting that records income taxes due to local State and Federal governments. It means
that this account will be paid to the government each year. (Carter McBride, 2012 ).
In this category, it be divided into many different accounts such as value added tax payable,
excise taxes, tariffs, import, corporate income tax and other tax….
2.4.4 Short term loan payment
Short-term loans are loans which has a term within a production cycle, normal business or
within one fiscal year.
It includes bank loans, loans from organization and individual, outside the business which
was due to pay. Short- term loan will be recorded on a balance sheet as current liabilities. (
Farlex Financial dictionary , 2009 )
2.4.5 Interest expense
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Interest expense is the amount you must pay for using the loan, depending on using loans, it
has some kind of interest expense can be deducted from the income of the borrower ( Kent
Nimomiya), based on a signed contract, the borrowing costs ranged from 0 to 15% of
operating income. In the case, loans with interest, if it was due, that loan is not paid or not
fully paid, the borrowers must pay interest on the principal and overdue interest due follow
the base rate announced by the State bank for a term corresponding at the time repayment.
2.5 Ratios measure liquidity of the firm
According to Eugene F. and Joel F. 2009, the liquidity ratios are ratios that show relationship
of a firm’s cash and other current assets to its current liability. In other word, liquidity ratios
indicate the ability of a company to pay off its short-term debts when due.
2.5.1 Current ratio
The first main ratio measure liquidity of the firm is current ratio; this coefficient is the result
of division between current assets and current liabilities.
Current ratio =
“Current” means collectible or payable in one year. The components of current assets consist
of cash, marketable securities, account receivable, and inventories. Current liabilities include
account payable, accrued wages and taxes, and short-term notes payable to its bank (Eugene
F. and Joel F. 2009). This ratio show that how easily a firm can response with its obligation
within one year.
2.5.2 Quick or acid test ratio
The second liquidity ratio is quick ratio, sometime it called acid test ratio. This ratio measures
the firm’s liquidity more exactly than current ratio.
Quick ratio =
The reason why inventories is excluded from current assets, it is because inventories is the
least liquid of a firm’ current assets. It is very difficult to convert quickly inventories become
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cash in short-time. In addition, when a firm liquidates inventories, it might be lost amount of
value (Eugene F. and Joel F. 2009).
This coefficient measures how a firm can meet its obligation in short time with its most liquid
assets.
2.5.3 Days Sales Outstanding (DSO)
This ratio show the average length of time the firm must wait after making a sale before it
receives cash (Eugene F. and Joel F. 2009)
Days Sales Outstanding (DSO) =
=
The way to evaluate account receivable is using Days Sales Outstanding ratio. Sometime it
called the average collection period (ACP) when using receivable turnover to evaluate
receivable. However, the DSO ratio is easier to explain.
According to Investopedia US, 2014, DSO offence calculates quarterly or a year. If DSO is
high, it means that the company tanking too much time to collect payment and it tying up
capital in receivables.
2.5.4 Cash Conversion Cycle (CCC)
“Cash conversion cycle is the length of time funds are tied up in working capital or the length
of time between paying for working capital and collecting cash from the sale of the working
capital”, Eugene F. and Joel F. 2009.
The CCC is the mix of some activities ratios such as account receivable, account payable and
inventory turnover. All of them we could find in balance sheet. The CCC shows us how long
we could convert account receivable and inventory turnover in to cash (Investopedia US,
2014)
Cash Conversion Cycle are calculated by:
CCC = DIO + DSO - DPO
While:
- Days Inventory Outstanding (DIO) =
( Cost of sales per day =
)
- Days Sales Outstanding ( DSO) =
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(Net sale per day =
)
- Day Payable Outstanding (DPO) =
( Cost of sales per day =
)
2.5.5 Debt to equity ratio
Debt to equity ratio =
One of the last ratios we would like mention in this thesis is debt to equity ratio. This
coefficient is the result of total debt divide total equity. When debt to equity ratio is rising, it
means that the interest expense is rising. It could be affect a company’s credit rating. To sum
up, companies have the higher debt to equity ratio, they will be less liquid. They must spend
more available cash for purpose reducing the debt instead using for other purposes.
2.5.6 Interest coverage ratio.
This ratio measures the abilities a company can pay its interest on outstanding debt. The
interest coverage ratio calculated by dividing company’s earnings before interest and taxes
(EBIT) by the company’s interest expense with the same period.
Interest coverage ratio =
The lower interest coverage ratio leads to the company has to pay more for debt expense.
When this coefficient fall down 1.5 or lower, the abilities to meet the interest expense may be
have a problem. It would be worse when this ratio is less than 1, it mean that the company
doesn’t create revenues to satisfy interest expense.
2.6 Factors affect liquidity of the firm
Firm's liquidity refers to the ability of a firm to meet its need by converting its assets into
cash. Factors affecting a firm liquidity can be divided into two categories: internal and
external factors. Internal factors are factors originated from the firms itself such as its
capacity, sale policy, and inventory level, its relationship with financial institution. External
20
factors are factors from its business environment that lie beyond the control of the firm like
the liquidity of the stock market(in case the firm holds this type of asset), the role of other
financial institutions, economic context.
2.6.1 The capacity of the firm
Many firms do not have the ability to control cash flows of their business, cash flow
imbalance, and then inability to pay. Moreover, some businesses make a wrong forecast about
the market, the sale number and revenue, decide to buy a huge quantity of goods and services with
deffered payment, but the sale does not work, or orther causes make the goods accumulate,
leading to the liabilities are not paid.
2.6.2 Sale policy
The first internal factor is sale policy. The firms liquidity can be affected by whether the firm
allowing its customer to make payment in full or in installments. In the surface, it seems that
firms obtain cash faster in the first case, therefore have more liquidity, but by only allowing
full payment, customer choice is restricted, reducing the unit sold. The firms have to choose
the balanced sale policy for not being agreed on by installments without losing too much
customers.
2.6.3 Inventory level
Firm liquidity also depends on its inventory level. Inventory level determines the input and
output of the firms. With low inventory level, firm has to produce more, using its operating
capital, therefore, reduce its liquidity. The firm has to do this to avoid future shortage and then
low liquidity.
2.6.4 The relationship of the firm with suppliers
The relationship of the firm with suppliers is also an important factor affecting its liquidity.
This is somewhat similar to sale policy but, in this case, of the supplier. If the firm can
negotiate better payment deals with the suppliers, it will hold better liquidity position.
21
It can also be assumed that, increasing the size of the firm's asset alone would help increase
liquidity. If there is a capital raise, it will increase the size of their assets, allowing more
liquidity in the firm. For example, if firm issues shares, raising more cash. Therefore, it has
more liquidity at its disposal.
2.6.5 The liquid of stock market
Firm keeps short-term investments as stocks and bonds, the liquidity of the business will
depend on the state of the industry and affected from the economic context. For example, the
better of the economic, the increase of stocks price and bonds price for the firm, so the
liquidity of the firm also high and vice versa.
2.7 The role of other financial institutions
Moving to external factor, we look at the role of the other financial institution, firstly, if bank
gives the firm invoice discount, they will collect money faster. Another institution is the
broker when the firm trying to sell its asset. The faster the broker sell of the firm's asset, the
higher the liquidity is.
2.8 Economic context
Economic context is a big point in the external factor. Economic context determines how well
the stock market performs. If firms want to sell its asset in the forms of bonds and securities, a
well performing stock market would help to raise more cash and liquidity. Besides that, the
volatility of the economy makes businesses do not adapt in time, difficulties in business lead
to the loss of solvency. In terms of integration and international competition today, with
special attention to the fluctuations in foreign trade, such as changes in exchange rates-rich
gas, construction materials and raw materials.
The indicators of liquidity widely used to evaluate the financial viability of the company in
the world, but financial markets Vietnam and the negative impact of the macro economic
uncertainty tissue and the State's policy is different. So the deviation, lack of accurate research
results may affect the company.
22
2.9 Literature gaps
In this study of us, a lot of liquidity factors mentioned in the definition, theory, analysis and
analytical methods. After consultation with a lot of resources from books, newspapers,
magazines, and other dissertation we recognize the problem of liquidity of each business are
similarities although each business has unique different financing. Through this study we will
show more specifically and clearly thing that is much more than research articles, essays
highlight other to clarify the issue of public and private companies.
Liquidity is one of the methods widely used to evaluate the financial viability of the company
in the world. Factors that effected to the liquidity are not interested in companies in Vietnam.
Moreover, there is little research about accounts receivable, accounts payable, cash in the
23
CHAPTER III – METHODOLOGY AND DATA
3.1 Introduction
In this part, we will write about the methodology which we used during performing the
research. Methodology research include 6 layer mentioned in this research, first is
philosophy, the second is research approach, the thirst is methodological choice, then is
strategy, next is time horizon, and the last but not least is collecting data techniques. In
addition, in this research has some ethical and limitation that we mention at the end of this
chapter.
Based on Saunders’s Research onion
3.2 Research Philosophies
According to Crotty (1998) Research philosophy is the way everyone see the world. The
knowledge development and the knowledge nature which are derived from the relevant point
of view of research philosophy. Philosophy include Positivism, Realism, and Interpretivism .
However, each research should choose the method suitable for the characteristics and scope of
the study to have the best results. the most appropriate to apply in this study is realism
philosophy and Interpretivism philosophy. The philosophical realism is a philosophical
position that relate to scientific research (Crotty, 1998), The nature of realism is what we feel
is the truth: that the object has a the existence of the human mind. In reality philosophy
24
involve two types: direct realism and critical realism. In this report, we use the critical
realism. Critical realism argues that what we feel the feeling, the pictures of the objects in the
real world. Critical realism claims that there are two steps to experience the world. First, it's
ourselves things and feeling it conveys. Second, there is the mental processing that goes on
sometimes feeling after satisfying our senses (Bhaskar, 1989).an epistemology that advocates
that it is necessary for the research to understand the subjective meaning of social activities.
Interpretivism philosophy result that cannot be observed directly from that through this
experience, focusing on the problem and identify research problems. Because the application
of philosophical interpretation, the research we cover how to use the sample thoroughly
further investigation, from which we can accumulate views and system studied subjective. in
case of need change we can apply this method
3.3 Research approach
There are a numbers of necessary steps need to be taken in order to establish a connection
between assumptions, data collection and analysis methods. The process of processing those
information are called Research Approaches. There are two main methods to approach
called: inductive and Deductive approaches. The combination of the above methods are
called Abductive approaches. A good researcher needs to decide which method is the best for
the situation.
3.3.1 Inductive Approach
Inductive approach starts with the observations and theories are formulated towards the end of
the research and as a result of observations (Goddard and Melville, 2004). Inductive research
“involves the search for pattern from observation and the development of explanations –
theories – for those patterns through series of hypotheses” (Bernard, 2011, p.7). At the
beginning of the research process, there are no constraints applied to the researchers. They
does not have to lead at research toward one direction. Throughout the research
process, theories will start forming its own form. In other words, inductive approach are the
"bottom-up" way of doing research where observations are used
to build up the theory.
25
3.3.2 Deductive Approach
“A deductive approach is concerned with developing a hypothesis (or hypotheses) based on
existing theory, and then designing a research strategy to test the hypothesis” (Wilson, 2010,
p.7) In another word, deductive approach works on the theory then being tested by
experiments and observations to make sure the theory are correct. In the process of testing a
theory, it can be rejected if does not satisfy the outcome of the research. Deductive approach
can be called "top-down" approach to make it easier for reader.
3.3.3 Adductive Approach
Adductive approach are the combination of inductive and deductive approach. Researchers
start with a partial of observations, make the best prediction based on the research they have
26
on hand and using them to work toward the explanation to form a theory. This method
consumes less time than the other two approaches above since they do not have to wait for
one part to completely finish starting the next part of the process.
3.4 Research method
About method choices, in our study, we used a combination of both types and methods of
qualitative research and quantitative research.
First, the type of qualitative research: qualitative research include all research that uses data
do not show the ordinal value (Nkwi, P., Nyamongo, I., & Ryan, G. 2001) .The kind of
approach that seeks to describe and analyze the characteristics of groups from the perspective
of the researcher. The data in qualitative research will be disseminated in the form of letters
(eg, describe the nature and characteristics ...) some qualitative research is described in terms
of numbers (as described in the measurement values ....)
Through this type of study, we can detect important issues that previous researchers have yet
to cover before. Using this method will help us to grasp the extent of the information more
easily by methods such as interviews, observations, or recordings of meetings (Berg, Bruce L
- 2007).
Applying qualitative research methods for our study, we will interview one of the staff
management and directors of the company.
Second, quantitative research:
Quantitative research is analyze phenomena by assembling numerical data that are using
mathematical methods (Aliaga and Gunderson 2005) .This type of research is mainly related
to the numbers, generate data for analysis and use of statistical methods for data processing
and statistics.
There are two basic methods for quantitative studies, it was observed and investigated through
the questionnaire, the method of observation we found that staff will answer questions free of
intensity and sense uncomfortable with the question. people will ask or suspected so realistic
Shootout of the answer is not very high (Tho, 2011), the selection method through the table to
answer survey is the most logical way, it helps to approach the problem easier and more
realistic.
In this study, using quantitative research methods will be indispensable, it can help us with
multiple perspectives on the issues that we are seeking, and through the questions on survey
27
we will understand the key issues outstanding capital structure through which to ascertain the
cause, along with measures to help curb this problem.
By combining both methods this study, we will get a result deep and close to reality, then
analyze and choose to find out the appropriate information for the purpose of research.
3.5 Research strategy
The research strategy is a method that will help investigate the research problem (Saunders 2003). This strategy is an overall plan can clearly answer the questions on the issues to be
studied. Study the effectiveness of the best when it has clear goals and specific research
questions. Some research strategy includes the analysis of documents, interviews,
observations, experiments and surveys. To cater to the understanding of our problems, we will
use the analysis of specific documents such as financial statements, the income statement, the
website; the document has been earlier studies. Potency this survey will help us to collect the
information and qualitative data (Flick, 2009).
3.6 Time horizon
We use longitudinal studies for this research. Longitudinal studies collect data from the same
sample over long periods of time. The advantage of it is that researchers can find the
developments or changes in the characteristics of the target population. We analyze the
liquidity of Ha Bac Food Joint Stock in 4 years from 2010-2013.
3.7 Data collection technique & analysis procedure
3.7.1 Primary data
Primary data is very important in collecting data by researchers to solve current problems.
However, the information in this data does not appear in the past and it is not available from
the previous study. Primary data are believed to be the most specific data for research
projects.
Primary sources come from alot of source such as: video, audio or written sources. Therefore,
we use those data source because we it help us take an overview about the details for our
28
research. We will use the method of interview for collecting primary data. We list concise and
simple questions that there is a concern with matters of the company. The interview is a
conversation between two or more persons wherea conversation has an expert about this
research project. In particular, we will invite the Director-Mr. Truong Quang Nam and Chief
Accountant-Mr. Do Duc Sinh of Ha Bac Company to take an interview. Moreover, we must
record information from interviewees like a professional way possible because of data
analysis, we have to understand exactly the primary data collected by the method of interview
to find exactly the problem of Ha Bac company.
3.7.2 Secondary data
Secondary data is data collected by others, which are used for other purposes, possibly for the
purpose of our research. Secondary data does not provide information for the current project,
however it provides some useful benefit for project
We try to collect and analyze many different types of secondary data to evaluate the issue
from all aspects. Then, we can offer a full range of answers to our research questions and to
find reasonable solutions for the problem of the company. In this research, we collect
secondary data from two main sources:
Internal sources: statements of finance, bookkeeping, marketing profile, etc.
External sources: books, the internet, research industry documents, etc.
From two sources, we compared with our issues and consider the impact of inside and outside
of the firm.
3.7.3 Sampling
The sapling method is the scientific produce of selecting those sampling units which would
provide the required estimates with associated margins of uncertainty, arising from examining
only a part and not the whole.
Using secondary data, we can take a list of companies in food industry, such as: Hanoifood
JSC, Son la food join-stock company, HaSonBinh food join-stock company.
Also, we decide to choose YenBai joint-stock forest agricultural and foodstuffs company
(CAP).We choose CAP because this company has some factor like our company and have a
few equivalent points.
29
3.7.4 Data analysis
For analyzing secondary data we use both quantitative and qualitative methods. We base on
statement of finance, such as: statements of income, balance sheets, statement of cash flow to
know how Ha Bacfood joint-stock company controls its liquidity. In addition, we analyze
cash and cash equivalents, short term investments and account receivables for evaluating
liquidity of company. Beside that, we review other company's solutions to compare and find
out the solution for Ha Bac food joint-stock company.
Qualitative methods is the method we choose to analyze this data because our primary data
collection by the method of interview. According to the interviews, we will use the answers
and opinions of the experts to give the solution of the problem without the secondary data.
Besides, we consider and estimate a company's liquidity and using some of the methods and
models for the companies
3.8 Research ethics
Research ethics involves the application of fundamental ethical principles to a variety of
topics related to research, including scientific research. There are many reasons to follow
ethical standards in research. Research is often related to a lot of cooperation and coordination
between many different organizations and promote ethical standards of values needed for
collaborative work such as trust, responsibility, respect mutual, equitable.
And researchers must be aware that they have the responsibility to ensure the rights and
interests of all those involved in research. They should not misuse any information and shall
be responsible for information security for the participants and keep their privacy safe. And
all the information from the interviews in the study must be reported honestly, do not falsify
research data.
3.9 Research limitation
Our study has certain limitations. Although collecting information from financial statements
published by the company and from the website but it's not quite complete the process makes
it difficult to analyze the data. In the course of our interviews mainly done via email, which
30
makes us limited time and number of questions as well as limits on the number of participants
in the study.
3.10 Conclusion
In this chapter we have identified the philosophies, research approach, data collection method,
methodological choice and data analysis. Realism philosophy and interpretivism philosophy
will be applied. We use adductive approach are the combination of inductive and deductive
approach. About method choices, we used a combination of both types and methods of
qualitative research and quantitative research.
31
CHAPTER IV: ANALYSIS AND FINDINGS
Table.. Asset and equity scale of Ha Bac food join stock company
year
2010
2011
2012
2013
Total asset
498,671,831,355 481,383,305,959 534,986,009,789
203,821,214,501
Current asset
487,109,322,111 469,799,062,914 515,253,250,448
184,672,577,839
Long term
asset
19,732,759,341
19,148,636,662
Total Equity
498,671,831,355 481,383,305,959 534,986,009,789
203,821,214,501
Liabilities
476,115,432,737 458,589,094,482 512,667,402,574
404,972,262,960
Equity
11,562,509,244
22,556,398,618
11,584,243,045
22,794,211,477
22,318,607,215
-201,151,048,459
The table above depicts the structure of assets and capital structure of Ha Bac company from
2010-2013. Easily found that short-term assets accounted for the majority in terms of total
assets. In addition, the liabilities are the majority of the total capital.
We will learn more about the financial situation of company through the analysis below.
4.1 Analysis
4.1.1. Analysis of the cash flow statement.
Analysis of the cash flow statement to explain cash fund on balance sheet are changed for
what reasons. Because cash flows from operating activities plus cash flow from investing
activities and cash flows from financing activities properly equal the difference cash fund in
first period compared with the ending on the balance sheet. Explain the operating cycle of a
business is at which stage. Businesses are interested in which investment policies and
sponsorship policy. The most important is to explain why the company make profit but still
lacked money.
32
4.1.1.1 Cash flow from operating activities
Table 4.1.1.1: Cash flow from operating activities of Ha Bac from 2010-2013
I. Cash flow from
operating activities
2010
1. Profit before tax
2011
2012
2013
2,858,165,850
(221,651,684,416)
(28,466,157,599)
885,688,680
884,122,678
892,170,102
5,946,499,189
(5,946,499,189)
2. Adjust the amounts
Depreciation
The existing provision
Gains or loses foreign
exchanges unrealized
3,317,222
Gains losses from
investment activities
(674,631,758)
(338,749,685)
(251,597,113)
Interest expense
90,319,073,672
72,983,268,572
31,206,010,542
93,388,296,444
(142,173,226,440)
(2,566,073,257)
(85,964,9 27, 578)
96,376,416,243
8,512,012,353
29,539,781,710
110,053,842,784
(197,215,693,874)
334,413,435,095
84,352,289,525
( 49,265,644,785)
(65,630,884,862)
(2,205,393,867)
(18,169,888,463)
prepaid expenses
2,969,350,000
115,017,059
138,792,259
Cash Interest paid
(90,319,073,672)
(74,197,418,752)
(4,183,196,834)
3. Profit from operations
before changes in working
capital.
Increase or decrease in
receivables
Increase or decrease in
inventories
Increase or decrease in
accounts payable
Increase or decrease in
Corporate income tax
already paid
(300,000,000)
(100,000,000)
Receipts from operating
activities
7,270,591,000
2,160,321,317
3,773,740,030
(7,370,234,427)
(63,075,000)
(82,050,000)
(160,531,233,148)
136,261,671,768
92,703,394,970
Other payments for
operating activities
Net inflows from
operating activities
(26,230,475,713)
Source: Ha Bac’s Finance Statement
As we can see in the table above, the account receivable was negative in 2010. It was nearly
equal 86 billion. In this year, Ha Bac held a lot of inventories, about 110 billion. And the
33
amount of money to pay was 49 billion. These are 3 main method directly effect to net
inflows from operating activities in 2010. In 2011, net cash flow from operating activities was
also negative; it means that cash inflow from operations was not sufficient to offset the cash
outflow from investing activities. In this year, the company has done well in taking back the
receivables. However it was not enough because there was high level of inventories. The net
inflows from operating activities increased in 2012 and fall down in 2013. In 2012 the
business of the company was favorable than last year. Especially increasing from inventory
was skyrocketed. It has contributed to the improvement amount of net cash flows from
operating activities. Inventory is also the main cause leading to the reduction of net cash flows
from operating activities of the company in 2013 when it was down sharply from 2012.
4.1.1.2 Cash flow from investing activities
Table 4.2.2 Cash flow from investing activities of Ha Bac from 2010-2013
II. Cash flows from
investing activities
2010
1. Payments to purchase,
construct fixed assets and
other long-term assets.
2011
2012
2013
(8,364,204,976) (2,709,999,999)
2. Receipts from disposal
or sale of fixed assets and
other long-term assets.
122,909,091
109,727,273
338,749,685
17,020,074
7. Receipts from interest,
dividends and profit
sharing
674,631,758
Net cash flow from
investing activities.
(7,671,573,218) (2,248,314,223) 297,928,007
Source: Ha Bac’s Finance Statement
It is very easy to see that the investing of Ha Bac for purchase, construct fixed assets and
other long-term assets were decrease from 2011 to 2012. And this activity didn’t maintain in
2013. Instead of payments to purchase, construct fixed assets and other long-term assets, Ha
Bac receipt amount of money from disposal or sale of fixed assets and other long-term assets
in 2012-2013. Beside receipted money from disposal and sale, Ha Bac receipted a little
money from interest, dividend and profit sharing. However it was not enough to made net
cash flow from investing activities
34
4.1.1.3 Cash flow from financing activities
Table 4.1.3 cash flow from financing activities of Ha Bac from 2010-2013
III. Cash flows
from financing
activities
2010
2011
2012
2013
1,228,885,493,612
1,989,257,218,374
1,898,350,437,523
34,624,750,000
(1,197,783,879,551)
(1,872,002,632,116)
(2,003,293,706,707)
(154,136,207,358)
(1,601,995,000)
(784,975,000)
115,652,591,258
(105,728,244,184)
3. Receipt from
short-term, and
long term loans
4. Repayment of
borrowings
6. Dividends and
interest paid to
the owner
Net cash flows
from financing
65,716,444,070
activities
(119,511,457,358)
Source: Ha Bac’s Finance Statement
Net cash flow from financial activities was decreasing through the years. The high level of
inventory in 4 years leads to the result that the company must increase the level of debt to
keep running. It showed that the company's solvency was fall down. The reason is business so
much debt, it makes the repayment is very hard. And the repayment amount is very large. For
example, in 2011, repayment of borrowings was only more than 1.8 billion. This number
increased sharply to more than 150 billion. The result was dividends and interest paid to the
owner was negative.
4.1.2 Ratio analysis
4.1.2.1 Horizontal analysis.
In this part, we analysis some financial ratio relate to liquidity of Ha Bac through 4 year
(2010-2013).
a)
Current ratio
Table 4.2.1.1 Ha Bac and CAP’s Day inventory outstanding (2010-2013)
Ha Bac
2010
2011
2012
2013
1.02
1.01
0.46
0.15
35
Figure 4.2.1.1: Ha Bac and CAP’s Day inventory outstanding (2010-2013)
Habacfood
1.2
1
0.8
0.6
Habacfood
0.4
0.2
0
2010
2011
2012
2013
Compared to 2010, the current ratio of Ha Bac in 2011 decreased slightly from 1.024 to
1,008. Although short-term assets of the company increased but the growth rate of short-term
debt was faster. In 2012, the rate was drop significantly 0.457, the main reason was the
reduction of short-term assets. Specifically, it was the Considerable decline in inventories,
despite the rise of the money. By 2013, this ratio continue dropped to 0152 by the fall of
short asset in which short-term assets in this year only equal 1/4 compared to 2012 and equal
1/11 compared with 2011
b)
Quick ratio
Base on formula of quick ratio, we calculated the result of acid-test ratio and they are showed
in the table below.
Table 4.3.2 Ha Bac’s quick ratio (2010-2013)
Ha Bac
2010
2011
2012
2013
0.5
0.15
0.24
0.12
Source: Ha Bac’s Finance Statement
Figure 4.3.2 Ha Bac’s quick ratio (2010-2013)
36
Habacfood
0.6
0.5
0.4
0.3
Habacfood
0.2
0.1
0
2010
2011
2012
2013
Source: Ha Bac’s Finance Statement
In 2010 quick ratio of Ha Bac was 0.5 and it gone down to 0.15 in 2011 by the substantial
decline of cash and accounts receivable. In 2012, this ratio had increased moderately by the
remarkable increase in cash, but accounts receivable was almost unchanged. Especially in
2013, this ratio of Ha Bac had dropped to 0.11. The continued decline of cash and receivables
is the main cause
c)
Day inventory outstanding.
Table4.3.3 Ha Bac’s Day inventory outstanding (2010-2013)
Ha Bac
2010
2011
2012
58.66
64.62
55.44
2013
62.27
Source: Ha Bac’s Finance Statement
37
Figure 4.3.3 Ha Bac’s Day inventory outstanding (2010-2013)
Habacfood
66
64
62
60
58
Habacfood
56
54
52
50
2010
2011
2012
2013
Source: Ha Bac’s Finance Statement
DIO of Ha Bac did not change too much over the years, the number of days fluctuates from an
average of 55 days to 65 days and there was a slight upward trend. Although it in 2012 it
decrease slightly by the significant decline of inventory. However in 2013 the number of days
gone up to 62 days.
d)
Day sales outstanding
Table 4.3.4… Ha Bac ’s Day sales outstanding (2010-2013)
Ha Bac
2010
2011
2012
2013
17.81
15.26
8.31
26.51
Source: Ha Bac’s Finance Statement
Figure 4.3.4 Ha Bac ’s Day sales outstanding (2010-2013)
Habacfood
30
25
20
15
Habacfood
10
5
0
2010
2011
2012
38
2013
Source: Ha Bac’s Finance Statement
DSO decreased stability from 2010 to 2012 from 17.81 days to 8:31, by the decline of
receivables. Especially in 2012, the ratio fell sharply by the corresponding considerable
decrease in account receivable. However in 2013, the number of days increased to 26.51 days,
equal 1.5 times in 2010 and more than three times in 2012, the main cause is the significant
reduction of sales , sales decreased much faster than the speed reduction of receivables .
e)
Day payable outstanding
Table 4.3.5… Ha Bac’s Day payable outstanding (2010-2013)
2010
Ha Bac
2011
1.00
2012
1.02
2013
0.74
3.12
Source: Ha Bac’s Finance Statement
Figure 4.3.5… Ha Bac’s Day payable outstanding (2010-2013)
Habacfood
3.5
3
2.5
2
Habacfood
1.5
1
0.5
0
2010
2011
2012
2013
Source: Ha Bac’s Finance Statement
DPO is almost the same from 2010 to 201 is 1 days. in 2012 , DPO decreased minimally by
the decrease of cost of goods sold from beginning of 2012. Specifically in 2013 , this index
increase more than three time compare with 2011 and 2010 is average 3 days. Main reason is
remarkable downturn of cost of goods sold.
39
f)
Cash conversion cycle
Table… Ha Bac ‘s cash conversion cycle (2010-2013)
Ha Bac
2010
2011
2012
2013
75.48
78.68
63.01
85.66
Source: Ha Bac’s Finance Statement
Figure 4.3.6… Ha Bac ‘s cash conversion cycle (2010-2013)
Habacfood
100
80
60
Habacfood
40
20
0
2010
2011
2012
2013
Source: Ha Bac’s Finance Statement
Because of Ha Bac 's DPI is insignificant , Ha Bac CCC depends on DIO and DSO . As we
have analyzed DIO and DSO of Ha Bac tend to increase over the years from 2010 to 2011 and
so it have corresponding increase in the CCC . in 2012 DSO and DIO decrease significantly ,
so CCC also reduced . However CCC in 2013 increased by the significant growth of the DSO
g)
Interest coverage ratio
Table4.3.7 Ha Bac’ Interest coverage ratio (2010-2013)
Ha Bac
2010
2011
2012
2013
1.10
0.98
(2.06)
0.14
Source: Ha Bac’s Finance Statement
40
Figure 4.3.7 Ha Bac’ Interest coverage ratio (2010-2013)
Habacfood
1.5
1
0.5
0
-0.5
2010
2011
2012
2013
Habacfood
-1
-1.5
-2
-2.5
Source: Ha Bac’s Finance Statement
Interest coverage ratio of the Ha Bac decrease considerably in 2010 from 1.1 to 0.9 in 2011
and this ratio is negative in 2012 because EBIT is negative. In 2013, This ratio has increased
slight by the fall of interest.
h)
Debt to asset
Table 4.3.8 Ha Bac ‘s debt to assets (2010-2013)
Ha Bac
2010
2011
2012
2013
0.95
0.96
1.99
4.71
Source: Ha Bac’s Finance Statement
Figure 4.3.8 Ha Bac ‘s debt to assets (2010-2013)
Habacfood
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Habacfood
2010
2011
2012
2013
Source: Ha Bac’s Finance Statement
41
This ratio in 2010 is 0.95 , this ratio increased slightly in 2011 to 0.96 by the the rise short
and long term debt. In 2012, Despite the short-term debt has decreased, the ratio increased to
1.9, because equity is negative. In 2013 this ratio increased to 4.7 because the company
continued has negative profit.
4.1.2.2 Cross-section analysis
In this part, we perform some comparisons between Ha Bac Food Join Stock Company (Ha
Bac) and Mechanical YenBai Joint Stock Forest Agricultural Products and Foodstuff
Company (CAP). A company processing and trading of forest products; Processing,
outsourcing, business of agricultural products; Export and import of spare parts, supplies,
equipment, general goods.
The reasons why we choose CAP was a company to compare with Ha Bac. It is because; this
company has the same business activities and the same industry. Both of companies have total
assets over 100 billion VND in 2009-2012. In addition, we can easily have the financial ratios
in the internet, because CAP has issued securities.
i)
Current ratio
As we mention on the chapter II, we knew the formula to calculate current ratio is:
Base on this formula, we calculated current ratio throw 4 year from 2010 to 2013. And base
on website www.finance.vietstock.vn/ one of the most famous websites and high accuracy.
This websites uses statistical data, indicators and charts are calculated automatically based on
the financial statements, schedules and events daily trading price. We collected the current
ratio of CAP; it is showed in the table below.
Table 4.4.1 Ha Bac and CAP current ratio (2010-2013)
2010
2011
2012
2013
Ha Bac
1.02
1.01
0.46
0.15
CAP
0.81
1.11
1.09
1.20
Source: http://www.cophieu68.vn/
The chart below shows Ha Bac’s current ratio compare to CAP. This chart provides us an
overview Ha Bac’s ability to repay current liabilities.
42
Figure 4.4.1… Ha Bac and CAP current ratio (2010-2013)
1.4
1.2
1
0.8
Habacfood
0.6
CAP
0.4
0.2
0
2010
2011
2012
2013
Source: http://www.cophieu68.vn/
Except in 2010 and 2011, we can see easily the Ha Bac’s current ratio was lower much than
CAP. Especially in 2012 and 2013, it was much lower than CAP’s current ratio. This ratio is
called ideal when it equal 1. We see that CAP always had current ratios close to 1 since 2010
to 2013
Current ratio is higher when current asset is higher than current liabilities. The reason why Ha
Bac’s current ratio is too low (only 0.46 and 0.15 in 2012 to 2013), it is because the current
liabilities are too high in 2012 and 2013.
j)
Quick ratio
As we mentioned in the chapter II, quick ratio is a coefficient quite like current ratio. But on
the numerator, inventories are excluded from current assets.
Table 4.4.2 Ha Bac and CAP quick ratio (2010-2013)
2010
2011
2012
2013
Ha Bac
0.50
0.15
0.24
0.12
CAP
0.26
0.43
0.73
0.53
Source: http://www.cophieu68.vn/
43
Figure 4.4.2… Ha Bac and CAP quick ratio (2010-2013)
0.8
0.7
0.6
0.5
0.4
Habacfood
0.3
CAP
0.2
0.1
0
2010
2011
2012
2013
Source: http://www.cophieu68.vn/
We can see in the chart a big problem of 2 companies in the same industry. Almost quick ratio
of these companies is less than one. This was not good. However, Ha Bac’s quick ratio is less
much than the remaining company. A big different between Ha Bac’s current ratio and quick
ratio showed us that current asset of Ha Bac company depend too much on inventories. While
CAP fallen into the different situation. CAP’s quick ratio was equal the haft of current ratio.
However, CAP’s quick ratio is increase and positive changes in 2012-2013 with 0.73 and 0.53
k)
Day inventory outstanding.
Table 4.4.3 Ha Bac and CAP’s Day inventory outstanding (2010-2013)
2010
2011
2012
2013
Ha Bac
58.66
64.62
55.44
62.27
CAP
51.01
46.89
37.05
40.61
Source: www.finance.vietstock.vn/
44
Figure 4.4.3 Ha Bac and CAP Day inventory outstanding (2010-2013)
70.00
60.00
50.00
40.00
Habacfood
30.00
CAP
20.00
10.00
2010
2011
2012
2013
Source: www.finance.vietstock.vn/
Compared with the CAP's DIO , Ha Bac's DIO is much higher . Meanwhile CAP's DIO tends to
decrease over the years, Ha Bac's DIO continues to increase. This indicators of Ha Bac is longer
than the CAP's DIO approximately 1.5 times each year
l)
Day sales outstanding
Table 4.4.4 Ha Bac and CAP Day Sales outstanding (2010-2013)
Ha Bac
CAP
2010
2011
2012
2013
17.81
15.26
8.31
26.51
8.97
7.28
7.68
8.86
Source: www.finance.vietstock.vn/
Figure 4.4.4 Ha Bac and CAP Day sales outstanding (2010-2013)
30
25
20
Habacfood
15
CAP
10
5
0
2010
2011
2012
2013
Source: www.finance.vietstock.vn/
45
Ha Bac's DSO was much higher than the CAP's DSO over the year 2010 and 2011
(approximately 2 times). Although in 2012, this ratio decline and it is approximately
equivalent to CAP by the fall of sale , but in 2013 this ratio increased 3 times compared with
CAP's DSO
m)
Day payable outstanding
Table 4.4.5 Ha Bac and CAP Day payable outstanding (2010-2013)
2010
2011
2012
2013
Ha Bac
1.00
1.02
0.74
3.12
CAP
8.59
10.61
13.95
14.74
Source: www.finance.vietstock.vn/
Figure 4.4.5 Ha Bac and CAP Day payable outstanding (2010-2013)
16
14
12
10
Ha Bac
8
CAP
6
4
2
0
2010
2011
2012
2013
Source: www.finance.vietstock.vn/
From the table , We can clearly see that the CAP's DPO is a lot longer than Ha Bac's DPO .
while the ratio of CAP tends to increase, Ha Bac's DPO continues to decline. Although in
2013, Ha Bac DPO has increased significantly, but it is still much shorter than CAP
n)
Cash conversion cycle
46
Table 4.4.6 Ha Bac and CAP Cash conversion cycle (2010-2013)
2010
2011
2012
2013
Ha Bac
75.48
78.68
63.01
85.66
CAP
51.39
43.56
30.78
34.73
Source: www.finance.vietstock.vn/
Figure 4.4.6 Ha Bac and CAP Cash conversion cycle (2010-2013)
90
80
70
60
50
Habacfood
40
CAP
30
20
10
0
2010
2011
2012
Source: www.finance.vietstock.vn/
compared with CAP, in contrast to Ha Bac, CAP index decreases over the year , Through
calculation, this ratio of Ha Bac is longer approximately 2 times than the CAP from 2010 to
2012. especially in the 2013's CCC of Ha Bac equal 2.8 times compare with CAP CCC
o)
Interest coverage ratio
Table 4.4.7 Ha Bac and CAP’ Interest coverage ratio (2010-2013)
2010
2011
2012
2013
Ha Bac
1.10
0.98
(2.06)
0.14
CAP
4.24
8.23
9.95
9.47
Source: www.finance.vietstock.vn/
47
Figure 4.4.7 Ha Bac and CAP’s Interest coverage ratio (2010-2013)
12
10
8
6
Habacfood
4
CAP
2
0
-2
2010
2011
2012
2013
-4
Source: www.finance.vietstock.vn/
While Interest coverage ratio CAP doubled since 2010 and increased the following year. In
2010, the ratio of Ha Bac equal 1/4 times compare with CAP. In 2011, this ratio of CAP is
greater than Ha Bac 9 times and 67 times in 2013
p)
Debt to asset
Table 4.4.7 Ha Bac and CAP’ Interest coverage ratio (2010-2013)
2010
0.95
0.71
Ha Bac
CAP
2011
0.96
0.54
2012
2013
1.99
4.71
0.59
0.46
Source: www.finance.vietstock.vn/
Table 4.4.8 Ha Bac and CAP’ debt to asset ratio (2010-2013)
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Habacfood
CAP
2010
2011
2012
2013
Source: www.finance.vietstock.vn/
48
the ratio of debt to total assets of Ha Bac is much higher than the CAP. 2010, the ratio of Ha Bac was greater than CAP 1.3 times of CAP. But in
2013, this ratio of Ha Bac was higher than CAP 10 times, while in this year debt of CAP was reduced to less than 50 % compared to total assets.
Over the years, the ratio of the CAP continue to decrease and this may self-funded by equity debt, while the debt increased CAP in 2011. in 2012
the company has reduced the debt, but not much. in 2012 and 2013, the company took the loan to offset losses from profit , Ha Bac cannot selffunded debt by equity
4.1.3 Analysis current liability of the firm
Table 4.1.3: Structure of liability in each year 2010-2013
Target
2010
2011
2012
2013
V
%
V
%
V
%
V
%
458,543,203,994
100
512,667,402,574
100
404,972,262,960
100
291,482,440,085
100
458,458,203,994
99.98
511,113,752,846
99.69
403,430,340,505
99.62
289,910,972,176
99.46
351,638,969,667
76.7
468,893,555,925
91.74
363,950,286,741
90.21
244,438,829,383
84.32
Account payable
7,042,478,653
1.54
3,680,354,325
0.72
3,329,443,234
0.83
1,593,714,858
0.55
Deferred revenue
87,100,765,125
18.99
23,813,402,000
4.66
14,240,000,000
3.53
_
_
9,895,280,830
2.16
11,524,250,739
2.25
18,998,766,818
4.71
13,590,239,052
4,69
LIABILITY
Current liability
Loans and shortterm debt
Tax and other
payables to the
State budget
49
Accrued expenses
Short-term
payable
Bonus and welfare
fund
Long-term debt
115,226,321
0.03
2,753,646,396
0.54
1,367,546,380
0.34
27,752,117,584
9.57
2,655,272,656
0.58
378,894,719
0.07
1,323,994,973
0.33
2,397,818,940
0.83
10,210,742
0.00223
69,648,742
0.01
220,302,359
0.05
138,252,359
0.04
1,553,649,728
0.31
1,541,922,455
0.38
1,571,467,909
0.54
85,000,000
0.02
50
Chart 4.3.1: Structure of liability in 4 years from 2010 to 2013
Through the table 4.4.1 and graphs of structure of liabilities from 2010 to 2013, we found that
short-term debt accounted for a large proportion of the company’ s liabilities, over 99% in 4
years 2010 to 2013, it shows that the company raises capital mainly from short-term sources.
This also shows that the authorized capital and liquidity of the company is low, the company
is unlikely to pay accounts.
51
Chart 4.3.2: Structure of liabilities in each year 2010, 2011, 2012, 2013
The company's current liabilities includes bank loans, trade creditors, customers payable by
the customer prior to implementation of the contract amount, payable state and another
payable short term.
Through Table 4.4.2 shows the structure of current liabilities of the company is quite
specially, loans and short-term debt are high, accounting for a large proportion, and generally
having tends to increase in 4 years. In 2010, accounting for 76.7% of total current liability. By
2011 increased nearly 20%, accounting for 91.74% of total current liability, it was the highest
level in 4 years. This may be in 2011, the company reserved a large inventory, so amount of
cash decreased and cannot “capital turnover”, the company borrowed money and have enough
money to pay loans. In 2012, this rate is still very high (90.21%). Although in 2013, loans and
short-term debt decreased over the previous year, but it was still high proportion of current
liability (84.32%). loans and short-term debt at high proportion affected seriously to the
liquidity of the company The company have no money to pay debt.
52
Then are the accrued expenses (electricity, water,). In 2010, this expenditure was at a
moderate figure (115,226,321 VND), but in2011, it increased more than 2 billion VND
(2,753,646,396 VND) and 2013, reached a giant figure compared with 2010 was
27,752,117,584 VND. The expenditures incurred so fast
that made negative affect to the
capital and the total assets of the company.
The short-term payable; bonus and welfare fund increased slightly from 2010-2013. However,
trade creditors, differed revenue reduced significantly over the previous 4 year.
Table 4.3.2: Situation of liability in 4 years (2010-2013)
Compare with 2010(%)
Target
LIABILITY
Current
liability
2010
2011
2012
2013
2011/2010
2012/2010
2013/2010
458,543,203,994
512,667,402,574
404,972,262,960
291,482,440,085
111.8
88.32
63.57
458,458,203,994
511,113,752,846
403,430,340,505
289,910,972,176
111.49
87.99
63.24
351,638,969,667
468,893,555,925
363,950,286,741
244,438,829,383
133.35
7,042,478,653
3,680,354,325
3,329,443,234
1,593,714,858
52.26
47.27
22.63
87,100,765,125
23,823,402,000
14,240,000,000
_
27.35
16.35
_
9,895,280,830
11,524,250,739
18,998,766,818
13,590,239,052
116.46
191.99
137.34
115,226,321
2,753,646,396
1,367,546,380
27,752,117,584
2389.77
1186.8
24084.88
2,655,272,656
378,894,719
1,323,994,973
2,397,818,940
14.27
49.86
90.3
10,210,742
69,648,742
220,302,359
138,252,359
682.11
2157.6
1353.99
Loans and
short-term
103.5
69.51
debt
Trade
creditors
Differed
revenue
Tax and other
payables to
State budget
Accrued
expenses
Short-term
payable
Bonus and
welfare fund
53
Growth of liabilities from 2010 to 2013
120%
100%
80%
60%
Growth of liabilities from 2010 to
2013
40%
20%
0%
2010
2011
2012
2013
Figure 4.3.2: Growth of liabilities from 2010 to 2013
According to the Table 4.4.2 and chart 4.4.2, we can see clearly the growth rate of liabilities
for 3 years from 2011 to 2013 compared with 2010. We can see that, the liabilities increased
slightly in 2011 compared with 2010. This was happened in 2011 that the reason is the
company's short-term debt increased to VND 52,655,548,852 (including loans and short-term
debt, accrued expenses are highest increase). However, in 2012 and 2013, the liabilities of the
company are reduced, and in 2013 also fell sharply to VND 167,060,763,909.
In general, current liability of the company from 2010 to 2013 decrease. In particular, loans
and short-term debt, what are loans and mortgage banks in spite of accounting for a high proportion
of liabilities, but still decreased nearly half in 2013.
Trade creditors are funds misappropriation of whom provides goods or services, these amounts fell
sharply several times in late 2013 (almost 5 times more than in 2010).
Differed revenue helps companies increase capital business .However, this amounts declined
sharply in three years from 2010 to 2012 and it was zero in 2013, this suggests that the
problem in the contracting and reputable company. In addition, the decrease in differed
revenues also make the capital of the company is affected, cash flow reduced and increases
the risk in management capital and liquidity of the company.
Then are the accrued expenses (electricity, water,). In 2010, this expenditure was at a
moderate figure (115,226,321 VND), but in 2011, it increased more than 2 billion VND
54
(2,753,646,396 VND) (greater than 2389.77% in2010) and 2013, reached a giant figure
compared with 2010 was 27,752,117,584 VND (higher than 24084.88% 2010). The
expenditures incurred so fast made negative affect to the capital and the total assets of the
company. They made the company with small amounts of cash, but spending too much
money to pay debt.
Fees and charges payable to the State but not yet paid or delay also are considered short-term
funds. However, the share of capital in total liabilities and capital of the company is not high,
because this is the amount of the obligation to state, companies also have the responsibility to
pay sufficiently and on time, even before the transactions. Furthermore, although there is
capital that have no cost but if utilize it, the reputation of the company will be reduced,
increased reliance on state management agencies, so 4 years but have increased in face value,
but growth has been decreasing, indicating the company wishes to make his reputation in the
eyes of the State agency, confirm that the company enterprise efficiency and clear finance.
The other accrued expenses increased from 2010- 2013 as well as an increased cost of shortterm debt of the company.
4.1.4 Analysis net receivables
Table 4.6.1: Structure of receivables in each year 2010-2013
2010
V
2011
%
2012
V
%
V
2013
%
V
%
ASSETS
481,332,912,745
100
534,986,009,789
100
203,821,214,501
100
61,865,234,027
100
Net
receivable
135,600,786,908
28.17
36,600,927,457
6.84
37,451,490,549
18.37
7,556,965,974
12.22
Receivables
from
customers
47,321,437,454
34.90
31,839,882,834
86.99
33,451,759,384
89.32
3,190,524,100
42.22
Advanced
payments
to suppliers
88,136,443,659
65.00
4,582,383,000
12.52
3,896,227,342
10.40
3,733,853,818
49.41
Other
receivable
142,905,795
0.11
178,661,623
0.49
103,503,823
0.23
632,588,056
8.37
55
Chart 4.4.3: Structure of receivables in each year 2010, 2011, 2012, 2013
According to the table, we can see that short-term receivables accounted for the low
proportion of the total assets of the company. In 2010, the short-term receivables accounted
for 28.17% of total assets, but in 2013, it dropped to 12.22% of the total assets of the
company. This proves that the company had the capital that other company was owned
decreased, efficient of using capital of the company was better, the assets of short-term
receivables decreased gradually from 2010 to 2013. And most of the items were dropped,
except the other receivables increased highly in 2013. This suggests that the ability to recover
of debt and outstanding capital of the company has changed quite well.
Receivables from customers had tend to increase from 2010 to 2011 (increased 2 times) and
rised slightly in 2012. Especially in 2011 and 2012, the proportion of receivable from
customers very high in total accounts receivable (86.99% in 2011 and 89.32 in 2012). By
56
2013, this proportion has decreased significantly, down to 42.22% of the total net receivables.
However, this is still not low level. This proves in these years, the amount of which was
occupied by customers of the company is very high, the Company usually sold on credit.
Situation of payment receivables was difficult.
Advanced payments to suppliers decreased in four years from 2010 to 2013.Specially they
decreased sharply from 2010 to 2012 (down to 54.60% of the total net receivable. However,
by 2013, the proportion of advanced payments to suppliers accounted the highest of net
receivables (49.41%),lead to the growth rate of advanced payments of suppliers were faster
than the speed of receivables from customers.
The other receivables increased slightly from 2010 to 2012, but in 2013, they increased
rapidly, from 0.23% in 2010 to 8.37%% of total net receivables. However, this provision is
accounted for the lowest proportion of net receivables of 4 years.
4.1.5 Analysis Liquid assets of the firm
In order to see the liquidity of the business, in the financial statements, we often arrange
short-term assets in order of decreasing liquidity. However, in this thesis, to clarify the
liquidity of the company, we want to arrange short-term assets in order: the liquidity assets
from low to high with their values.
Table 4.4.1 Liquid asset of the firm
2010
2011
2012
2013
Inventory
241,526,073,878
438,741,767,752 88,381,833,468 9,976,043,132
Net
135,600,786,908
36,600,927,457
37,451,490,549 7,556,965,974
Cash and Cash
Equivalents
69,596,833,939
17,044,633,351
45,329,719,709 18,801,585,328
Other current
assets
23,070,304,589
22,865,921,888
13,509,534,113 7,998,965,745
Short-term
investment
_
_
_
receivables
57
_
According to Table 4.3.1, we can see, inventories accounted a very large proportion (usually
the highest) in the total current assets of the company, even much more than the cash value in
3 years ,from 2010 to 2012. In 2011, the inventory almost increased nearly double compared
with 2010, and reached the highest level within 4 years from 2010 to 2013, accounting for
85.15% of the total value of current assets and 82% of the total assets of the company. This
shows that the company has entered a very large amount of cargo this year. With
characteristics of manufacturing enterprises and export bran, rice, food products, the keeping
as archives a large amount of inventory, account for a high proportion of the total value of
short-term assets, create a major concern for the company. If inventory to be survived too
long, it will negatively affect for business processes ,the company wastes money for reserves,
liquidation or improved old products and damaged liquidation. Therefore, the liquidity of
inventories is very low. From this it follows that the liquidity of the company in recent years
is not high because of reserve a large amount of inventory compared to the value of current
assets. By 2012, the value of inventory has decreased a lot (more than 350 billion VND),
which is a good sign that the company had a good solution on their inventory. However,
inventories are still accounted for the highest proportion in this year (accounting for 43.36%
of the total assets of the company). By 2013, at the first time, the inventories continue to
decline in four years from 2010 to 2013, inventory’s values is half lower than the cash. This
continues to be a good sign showing the liquidity of the company is increasingly growing.
Cash and cash equivalents of the company for 3 years from 2010 to 2012 had less value than
the total value of current assets. In 2010, the company's cash is 69,596,833,939 VND,
accounting for 14.46% of the total assets (481,332,912,745 VND). Even in 2011, they also
had the lowest value, and was just 17,044,633,351 VND of 534,986,009,789VND total assets
(equivalent 3.19%).Because the inventory backlog in this year, so cash was not relative , the
proportion of cash was too small, made dangerous problem to the operations and liquidity of
the company .By 2013, this asset increase rapidly it was at the head of the total value of
current assets. However, if it compared with other years, the cash in 2013 were reduced (
more than half compared to 2012 and more than one third compared to 2010). As we know,
cash asset is highest liquidity. Since this as proved in recent years the liquidity of the
company is not high and stable.
The net receivables are capital that company’s partners (can be customer or supplier) occupy,
so in principle the size of receivables is small, the businesses have more profitable and higher
58
solvency. In Table 3.1 we can see that this type of assets accounted for a large proportion of
the 2nd value of current assets in 2010 to 2012 .This leaded to unfavorable to manage the
company's debt. In 2013, net receivable decreased significantly and having the lowest value.
The short-term assets decreased gradually within 4 years from 2010 to 2013. This is also a
factor in the company's total assets decreased.
The company did not have any short-term investments in 4 year, from 2010 to 2013 shortterm investments is as a way to generate cash, and the company was loose the this source to
make money .
4.2 Problems and Cause
4.2.1 Problem
a) In cash flow statement analysis

In 2010, Ha Bac fail in taking back receivables, This Company has not collected 86
billion from account receivable. Cash almost came from in financing activities with short
term liabilities. Ha Bac used these liabilities to repay for the previous debt. In this year,
company primarily sold on credit.
 In 2011, the company has done well in taking back the receivables. However, there was a
high level of inventory in this year which leads to the result that the company must
increase the level of debt to keep running. It did not just stop there, in this year, the
company also spends money in building the office for lease, but unluckily, for some
reasons, this project must be stopped and the money the company invested was stuck in
there.
 In 2012, the company’s sales sent some positive signals and the inventory problem was
solved. Therefore, the operating activities contributed the main proportion in the cash flow
of company. But the high level of debt in the previous years putted pressure in debt
repayment of this year which decreased the cash flow of company in this year. In addition,
the company also spent money in fixed asset, so the cash flow in the end of the year was
not much.
 In the previous years, the debt received of the company is very high, but in 2013, this
account decreased rapidly from nearly 2000 billion VND to over 34 billion VND. The
decrease of debt has two types of effect: Negative effect and Positive effect. When the
debt ratio decreases significantly, the company will save a big amount of interest expense.
59
However, decrease debt using also meant that they will increase using equity while the
cost of equity usually higher than cost of debt. Moreover, low debt ratio will lower the
benefit of tax shield that company will get by using debt.
 Because of low level of debt receive in 2013 but the debt repayment still at a high level, so
the cash flow from finance activities was negative which also explain why the cash flow
of the company in 2013 was negative although the operating activities’ cash flow was
positive.
b) In horizontal analysis
After perform horizontal analysis, we realize that the most ratio of Ha Bac company were fall
down in 2011 to 2012. They were raise up from 2012 to 2013. Current and quick ratio were
not good. Both of them were less than one while the ideal ratio is 1.Thus, Ha Bac finance
ratios showed the bad situation finance.
c) In Cross-section analysis
The most positive finance ratios of Ha Bac Company were less than CAP. Some other ratios
such as DSO, CCC, and Debt to asset were higher but it didn’t bring a positive situation for
Ha Bac.
d) In current liabilities
In conclusion, based on analysis above, we can see the company's current liabilities are
accounted for the highest proportion of total liabilities from 2010 to 2013. Current liabilities
mainly due to loan and short-term debt very large. This proved that structure of short-term
debt was imbalance. The company borrowed heavily to buy inventory and debt last year. In
addition, the funds that the company occupant from prepayments of buyers decrease
continuously. Thus, the ability of capital’s rotation and cash in are low, that affects negatively
the financial and business activities of the company.
e) In Receivable
In summary, net receivables decreased, it suggests that the company’s capital was occupied
by partners declined. The scale of net receivables of the company for 4 years from 2010 to
2013 accounted small proportion of the total assets of the company. This is beneficial for the
management of capital and cash flow of the company.
60
4.2.2 Causes and factor effect
4.2.2.1 Causes
a) Objective reasons.
In 2011 the price of rice in the world fluctuates constantly, besides that Thailand is the largest
rice exporter in the world’s most heavily flooded. Thailand government also gave information
to prepare for the purchase of rice to support farmers with high prices.
Some Southeast Asian countries such as Philippines, Indonesia flooded, India is also the
largest rice exporter in the world but to ensure food security in the domestic so many years
continuous rice export ban. In domestic, flood situation in the Mekong River Delta huge
impact on food production. Along with these factors in the world and according to the
Vietnam Food Association and food experts have identified export prices will rise, world
demand businesses need to compete to buy more made for domestic raw materials prices rose
too high.
b) Subjective reasons
From the above factors the Company has boosted buying in bulk in order to achieve higher
profits, mostly borrowed money to buy banks' short-term (3-4 months). By the end of 2011
the first months of 2012 the world market change suddenly, India unexpectedly lifted the ban
on rice exports massively sold large quantities with prices much lower than export prices of
Vietnam and the world although similar quality. Vietnam's high price has not sold, inventory
more.
From these reasons the company has not sold goods leading up to the end of year inventory
2011lon, switch to 2012 export prices low, low output, high inventory cost plus high interest
rates on bank loans (interest centered average 19% / year) required the company to urgently
release inventory in 2012 led to more losses.
Due to losses in 2012 many companies do not have the money to pay the bank loan, the banks
are not lending anymore, the Company does not have the capital to boost demand and supply
of rice lost Export Company and still be subject to interest penalties and interest of overdue
loans in 2013 led to further losses
61
4.2.2.2 Factor effect
a) Inventory.
During a period of 4 years from 2010 to 2014, based on calculations and the indices are
calculated in the financial statements of Ha Bac Food Joint Stock Company, inventory index
is one of the main factors affecting the liquidation of the company. In this case Ha Bac Food
Joint Stock Company kept inventory in stock quite far from being sold out.
Day inventory outstanding:
2010
2011
2012
2013
Ha Bac
58.66
64.62
55.44
62.27
CAP
51.01
46.89
37.05
40.61
However, Ha Bac is a company specializing in food, foods also have expiry date, so the
inventory is stored for a long time will make use of shorter, which means reducing the value
of the product, resulting in the value of inventory affected. Besides that, the Day sales
outstanding also affect to Inventories the same with Day inventory outstanding.
Day sales outstanding:
Ha Bac
CAP
2010
2011
2012
2013
17.81
15.26
8.31
26.51
8.97
7.28
7.68
8.86
According to the formula:
Quick ratio = (Current Assets – Inventories)/ Current Liabilities
The change of inventories, so do the quick ratio. This ratio reflects the ability of the enterprise
to pay immediately in short-term. This ratio is a measure for arbitrary, because it excludes
62
inventory value, but in many cases business willing to sell inventory with a lower listed price
to get cash. In general, they often use cash from selling current assets for reinvestment.
b) Relationship with the bank and Sale policy
The company's bank loans to business (PG bank, Dong A Bank, Lien Viet Post Bank, MB
Bank) and not for other company to borrow. Affiliates of company do not have bank loan
function, so the company borrows and transfer to affiliates of business. Particularly at the
Dong Thap affiliate, the company transferred the loan to Dong Thap affiliate to buy rice for
export (planned purchase by the delivery company, affiliate directly implemented). When
exporting rice trading losses as mentioned above affiliate do not have the money transferred
to the company to repay bank loans. So look over the report to understand the lending
company without earning it. This is not a positive sign when the company does not manage to
borrow money, so the liquidity of the company will not be guaranteed.
c) Economic context
In 2011, the Southeast Asian countries of Thailand, the Philippines, Indonesia, affected by the
floods should governments give information to prepare for the purchase of rice to support
farmers with high prices. Meanwhile, India to ensure food security in the country so many
years constantly banned rice exports. Therefore, according to the association Viet Nam food
and food experts have identified export prices will raise, because of the world demand,
businesses need to compete to buy more. From the above factors, the company has boosted
buying in large quantities in order to achieve higher profits; funds purchased mainly shortterm bank loans (3-4 months). By the end of 2011 the first months of 2012 the world market
change suddenly, India unexpectedly lifted the ban on rice exports massively sold large
quantities with prices much lower than export prices of Vietnam and the world although
similar quality. Vietnam's high price has not sold, inventory was stagnant. This is the reason
why the company must sell urgently inventory at low prices, causing much loss in 2012, then
unable to pay debts.
4.3 Net working capital requirement of the company in 2014
The working capital requirement is the minimum amount of resources that a company
requires to effectively cover the usual costs and expenses necessary to operate the business.
63
The basic formula for determining working capital involves only two factors: demand of
payment and source of payment. Demand of payment can be known cash out. This includes
both short-term liabilities, such as the usual and general monthly operating expenses, as well
as any long-term debt.
Table 5.2.1 Cash out in 2014
Total Liabilities
244,603,829,383
Short-term Liabilities
244,543,829,383
Long-term Liabilities
60,000,000
Estimated interest expense
23,238,563,791.39
Cost for production
Purchase good in 2014
125,000,000,000
Cost of sales
2,880,000,000
Firms management expenses
12,000,000,000
Cost of Production
14,880,000,000
Total Expense
163,118,563,791
The second is source of demand. it is important to define the current liquid assets that the
company has. This may be somewhat different from general assets, since the focus is on those
resources that can be converted into cash quickly and easily. Liquid assets may be such
resources as the outstanding current accounts receivable balance, property that is not directly
used in the operation of the business, and balances in various operating accounts.
Table 5.2.2 Cash in
Base on income statement
Total cash collected beginning of
the year
Revenue from sales
Short-term assets
Cash
account receivable
Inventories
Other current assets
164,333,560,179
120,000,000,000
44,333,560,179
18,801,585,328
7,556,965,974
9,976,043,132
7,998,965,745
64
Actual predict
120,673,967,724
84,000,000,000
36,673,967,724
18,801,585,328
5289876182
6983230192
5599276022
Base on net working capital requirement in 2014 of HaBac, we estimate the total production
cost with interest expense in 2014 was 38,118,563,791. Current liquidity asset of the company
is 44,333,560,179 include cash was 18,801,585,328 accounts receivable was 7,556,965,974,
inventory was 9,976,043,132, and other short-term assets were 7,998,965,745. But we don’t
hope to receive 100% inventory and account receivable,other current asets. the finger estimate
about 70% into cash to use in 2014. So, total cash can be collected of the year is
120,673,967,724.
With estimated as above, we can see that the company will continue to increase more
inventories in 2014 when revenue is smaller than COGS. Total expense is 163,118,563,791
but total cash collected of the year is 120,673,967,724. So, total cash collected only pay
73.4% total expense. In 2014, the company needs some solution to pay about 43,659,592,455.
The amount of cash flow during the period is not high. The current cash position at the end of
the period in 2013 was 18,801,585,328 will not be enough to pay for the cost of production
and interest in the company 38,118,563,791. So company have to have measures to recovery
cash of receivables and settle of all existing inventory from the previous period while
increasing the buy on credits in account payable.
4.4 Finding
 As reported cash flows, in 2010 and 2011, cash from operations primarily to finance about
1,200 billion. The company was mainly borrowing short-term loan to repay old debt.
Between 2011 and 2012, although Ha Bac lacked of cash, the Company still spend money
in building the office for lease, but unluckily, for some reasons, this project must be
stopped and the money the company invested was stuck in there. It did not just stop there;
Companies borrow large amounts of money to buy inventories, about 197 billion.
 In 2010, the company's cash just was 14.46% of the total. From 2011 to 2012, this number
was not quite more. As we know, cash asset is highest liquidity. Since this as proved in
recent years the liquidity of the company was not high and not stable.
 Cash conversion cycle was very high, as we have analyzed this ratio of Ha Bac is longer
approximately two times than the CAP from 2010 to 2012, in 2013 is three times. The
longer the cycle, the more time capital is tied up in the business process.
 Inventories accounted a very large proportion (always standing in the highest) in the total
current assets of the company. It proved that the liquidity of the company in recent years
was not high because of reserve a large amount of inventory compared to the value of
current assets.
 Because, in 2010 to 2011, Ha Bac sold on credit for customers, so that receivables from
customers had tend to increase from 2010 to 2011. Especially in 2011 and 2012, the
65
proportion of receivable from customers very high in total accounts receivable. By 2013,
this proportion has decreased significantly. However, this is still not low level. This
proves in these years, the amount of money which was occupied by customers of the
company was very high; the Company usually sold on credit. Situation of payment
receivables was difficult.
 DSO of Ha Bac decreased steadily, from 2011 to 2012, the reduction of this ratio shows
that and the company is less occupied the capital. However in 2013 this ratio is very
high , ability to recover cash from account receivable of the company is not good
 As we analyzed debt to asset above, debt to asset ratio is very high from 2010 shows the
company's financial depend on the creditor. In 2011 the company expanded its business
asset. It not only decrease the equity also raises the short-term debt. So interest expense in
2012 and 2013 was to high that lead the negative profit of company in the next years.
Therefore interest coverage ratio of the company is very low from 2010 to 2013. As a
result , ability to pay interest was bad
 From analysis about structure of debt, we see that short-term debt accounted for a large
proportion of the company’ s liabilities, over 99% in 4 years 2010 to 2013, it shows that
the company raises capital mainly from short-term sources. This also shows that the
authorized capital and liquidity of the company is low, the company is unlikely to pay
accounts.
66
CHAPTER V: CONCLUSION AND RECOMMENDATIONS
5.1 Conclusion
The purpose of this research is to analyze Ha Bac Food Joint stock company’s liquidity in the
period of 2010-2013. A specific judgment of interaction among different factors concerning
the liquidity has been made. The thesis has analyzed and explained the results to deal with the
questions researched. A complete document has been carried out. Based on this document, all
the researching efforts focus on HA BAC’s performance between 2010 and 2013 under the
influence of financial and producing activities, estimates the liquidity and irrational
management in the above period so as to lead to the fact that investment and producing
activities has very low profit during this period. In this thesis, we can see that this company’s
profit is not very high in 4 years, financial potential is not good and effective. Inventory
expenses are huge, affecting on sale and profit. Moreover, debt management and account
receivables are also in difficulties, resulting in ineffective. Besides, through researching
several other theses, our group focus on how to develop the company’s liquidity and achieve
some certain solutions.
Based on results gathered by estimating methods, our group has learned the current situation
of the company. Therefore, we have come up with effective solutions for the company’s
liquidity in the future. The current situation of HA BAC company’s liquidity has been
analyzed in chapter 4 based on current data of HA BAC that reflected on financial record.
In conclusion, the research of this thesis has helped us find out and understand the reason
causing liquidity problems. We have also come up with efficient solutions for the company.
67
5.3 Solution
To maintain optimal cash flow should be good at juggling on all aspects of the business,
strictly managed of accounts receivable and accounts payable, an increase in credit limit, and
inventory management. The key to help manage cash flow effectively is to regulate the flow
of money flowing in and money flowing out of business. The improved cash flow will reduce
the number of fixed capital, which Ha Bac Food Joint Stock Company needs to invest in the
business. A steady cash flow growth also foresees a business model, which makes Ha Bac
Food Joint Stock Company easier in the planning and budgeting for business development in
the future.
5.3.1 Improved cash flow of the business through the accounts payable (AP)
Firm must ensures that does not have to pay account payable immediately by trying to extend
the payment as long as possible, so Ha Bac Food Joint Stock Company will have more time in
the stage of raising cash from the proceeds to pay for account payable.
- Renegotiate contracts and insurance policies of supplier.
Take full advantage of term payment. If providers require payment within 30 days, firm
should not pay within 15 days. Negotiate with supplier is the best way to extend the time for
payment of account payable. Some providers will allow payment period up to 90 days if the
enterprise is one of their prestigious clients before and they believe that the businesses will
not 'ruffled' debt. Even the increased payment period from 30 to 45 days is also very useful
for business, because businesses will have more time to collect the money from the accounts
receivable to be used to pay for the provider.
In this case, the accounts payable of Ha Bac Food Joint Stock Company in 2010 was paid
average once a day, and in 2013 was paid a three-day visit. To ensure cash flow, extending
the payment period is essential for Ha Bac Food Joint Stock Company. Negotiate payment
period with suppliers to help Ha Bac Food Joint Stock Company manages the business
effectively and has more time to raise sufficient cash resources needed. Therefore, before
working with vendors, let's discuss the terms of payment and try to negotiate payment period
long as possible. Specifically, in order to increase the repayment period for goods, Ha Bac
68
Food Joint Stock Company must timely payment of the costs of priorities such as electricity,
water (utilities), and the cost required to pay as bank interest, health insurance, taxes. Besides
that, using the reasonable answer to get help from the vendor to resolve difficulties.
- Slow-pay.
Ha Bac Food Joint Stock Company need to deal with this vendor for the first time dealing
with them. Slow-pay means that allows Ha Bac Food Joint Stock Company pays bills lately if
the customer's business is not paid on time, or when it has problems about cash. If Ha Bac
Food Joint Stock Company foresee cash problems, please notify the provider as soon as
possible so that they can adjust the billing period.
Notice that slow-pay is not a business tool should be used regularly because if it occurs more
than 1 or 2 times, vendors will begin to doubt the effectiveness of business operations of
enterprises and can stop the transaction or make prepayment request to the business.
5.3.2. Management effective account receivable (AR)
The more business increasingly collect money fast, the more capital of business development.
Accounts receivable is one of the main reasons decided cash flow of the company. Therefore,
good at management and recovery of account receivable will contribute the cash flow much
better.
- Collaboration with customers
Ha Bac Food Joint Stock Company needs have policies to encourage customers to pay early,
or to cooperate with clients in resolving accounts receivable. Ha Bac Food Joint Stock
Company should use the cash discount to encourage customers to pay before the due date.
Discount’s company is larger the discount’s bank. The company have the discount policy for
customers who pay early (in 2013, the average number of days that customers pay money
within 26 days, but in 2014, the company has incentives to customers who pay money within
12 days.
- Improved processes
There are three processes related to accounts receivable, which is to transfer money, customer
credit management and collect money. When conducting improved, Ha Bac Food Joint Stock
Company needs to do all three processes.
69
Transfer money: Instead of manually done, Ha Bac Food Joint Stock Company should have
applied information technology, automating the process to transfer money. This helps Ha Bac
Food Joint Stock Company reduce latency confirmation invoice from the Board of Directors
and confirmation of payment from customers.
Customer credit management: First, Ha Bac Food Joint Stock Company needs to have a clear
credit policy for each customer group. Also, update and monitor credit history of customers
and reduce payment delays. Ha Bac Food Joint Stock Company used credit scoring system
and classify customers according to risk level, to decide whether customers continue to use
their credit or not.
Collecting money: Claiming customers always been to be a boring job, so Ha Bac Food Joint
Stock Company should have a deserved reward for the cashier efficiency. In addition, the
collection of internal operations too costly or encounter obnoxious customers, Ha Bac Food
Joint Stock Company should have hired a professional collection of this work.
- Measuring the effectiveness of receivables
To improve the efficiency of receivables, businesses need to establish indicators to measure
the effectiveness of this activity. Currently, Ha Bac Food Joint Stock Company often use
three basic indicators to measure performance receivable.
Receivables Turnover: Used to measure the average time that revenue exists in the form of
accounts receivable. Ha Bac Food Joint Stock Company offers specific dates for that
assessment is good or bad receivables, for example under 30 days are considered to have the
ability to control it.
The percentage of accounts receivable turnover: Used to effectively assess trends in
receivables. The higher this ratio, Ha Bac Food Joint Stock Company occupied the capital
much more. When this ratio exceeds the norms set out by the company, the Board should
have tightened regulations, avoid shortage of working capital.
Aging: Aging In the analysis, Ha Bac Food Joint Stock Company can identify early those
accounts receivable matter and take appropriate action to protect revenue.
5.3.3 Manage inventory efficiency.
Accumulate too much inventory to make some big money was frozen. Monitor frequently
turnover of inventory will help ensure that they are kept to a reasonable amount for the
70
industry. Businesses can do this by calculating the ratio of turnover of goods (COGS taken
divided by the average value of inventories). Avoid buying more than what Ha Bac Food
Joint Stock Company need in case of suppliers make some lure operation with big discount.
This can make cash of Ha Bac Food Joint Stock Company exhausted. Check periodically to
identify slow-moving goods and inventory, and should delay the next order to be able to use
the existing quantity in stock or liquidate them at cost to improve cash flow of the business.
5.3.4 Applying the model of inventory management in a manner consistent.
In this case, EOQ (Economic Order Quantity) model will help Ha Bac Food Joint Stock
Company calculate the appropriate quantity for each order and every time it needs to put the
right number on it. Because the state of the Ha Bac Food Joint Stock Company is often stored
inventory number, not quantity estimate how much is needed to fit the amount of storage.
5.4 Further research
This study focuses on the real situation and improving the solvency of one particular
company-Ha Bac food industry in Vietnam. It is an important industry in Vietnam's economy
affect others in the industry economics also need to study much more than other companies in
the same industry to to reviews are correct about how raising the liquidity of the company.
Furthermore, liquidity directly to financial health and directors also considered the effect on
improving liquidity. Of course, we're still interested in factors related to liquidity in trading to
control everything in every situation
71
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Fundamentals of Corporate Finance, second edition, Robert Parrino, David Kidwell, Thomas
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Bates, p30
73
Appendix 1: Ha Bac Balance sheet
1
A- Tµi s¶n ng¾n h¹n
2
2010
2011
2012
2013
100
469,793,999,314
515,253,250,448
184,672,577,839
44,333,560,179
I. TiÒn vµ c¸c kho¶n t¬ng ®¬ng tiÒn
110
69,596,833,939
17,044,633,351
45,329,719,709
18,801,585,328
1. TiÒn
111
69,596,833,939
17,044,633,351
45,329,719,709
18,801,585,328
2. C¸c kho¶n t¬ng ®¬ng tiÒn
112
II. C¸c kho¶n ®Çu t tµi chÝnh ng¾n h¹n
120
0
0
0
0
1. §Çu t ng¾n h¹n
121
2. Dù phßng gi¶m gi¸ ®Çu t ng¾n h¹n (*) (2)
129
III. C¸c kho¶n ph¶i thu ng¾n h¹n
130
135,600,786,908
36,600,927,457
37,451,490,549
7,556,965,974
1. Ph¶i thu kh¸ch hµng
131
47,321,437,454
31,839,882,834
33,451,759,384
3,190,524,100
2. Tr¶ tríc cho ngêi b¸n
132
88,136,443,659
4,582,383,000
3,896,227,342
3,733,853,818
3. Ph¶i thu néi bé ng¾n h¹n
133
4. Ph¶i thu theo tiÕn ®é kÕ ho¹ch hîp ®ång
134
142,905,795
178,661,623
103,503,823
632,588,056
(100=110+120+130+140+150)
x©y dùng
5. C¸c kho¶n ph¶i thu kh¸c
135
6. Dù phßng ph¶i thu ng¾n h¹n khã ®ßi(*)
139
IV. Hµng tån kho
140
241,526,073,878
438,741,767,752
88,381,833,468
9,976,043,132
1. Hµng tån kho
141
241,526,073,878
438,741,767,752
94,328,332,657
9,976,043,132
74
2. Dù phßng gi¶m gi¸ hµng tån kho (*)
149
-5,946,499,189
V. Tµi s¶n ng¾n h¹n kh¸c
150
23,070,304,589
22,865,921,888
13,509,534,113
7,998,965,745
1. Chi phÝ tr¶ tríc ng¾n h¹n
151
2,954,850,000
25,500,000
140,517,059
41,724,800
2. ThuÕ GTGT ®îc khÊu trõ
152
1,128,242,321
1,440,113,681
6,172,900,195
266,219,524
3. ThuÕvµc¸ckho¶n kh¸c ph¶i thu Nhµ níc
154
5. Tµi s¶n ng¾n h¹n kh¸c
158
18,987,212,268
21,400,308,207
7,196,116,859
7,618,150,331
B- Tµi s¶n dµi h¹n
200
11,538,913,431
19,732,759,341
19,148,636,662
17,531,673,848
I- C¸c kho¶n ph¶i thu dµi h¹n
210
0
0
0
0
1. Ph¶i thu dµi h¹n cña kh¸ch hµng
211
2. Vèn kinh doanh ë ®¬n vÞ trùc thuéc
212
3. Ph¶i thu dµi h¹n néi bé
213
4. Ph¶i thu dµi h¹n kh¸c
218
5. Dù phßng ph¶i thu dµi h¹n khã ®ßi (*)
219
II. Tµi s¶n cè ®Þnh
220
9,599,913,431
17,833,759,341
17,289,636,662
15,671,114,228
1. Tµi s¶n cè ®Þnh h÷u h×nh
221
8,779,294,065
7,940,650,807
7,375,516,664
6,413,456,048
- Nguyªn gi¸
222
17,067,704,374
16,579,532,077
16,743,990,994
15,933,126,042
- Gi¸ trÞ hao mßn luü kÕ (*)
223
-8,288,410,309
-8,638,881,270
-9,368,474,330
-9,519,669,994
72,871,090
(200=210+220+240+250+260)
2. Tµi s¶n cè ®Þnh thuª tµi chÝnh
224
75
- Nguyªn gi¸
225
- Gi¸ trÞ hao mßn luü kÕ (*)
226
227
688,939,366
687,223,558
685,507,750
685,507,750
- Nguyªn gi¸
228
710,909,617
699,427,799
699,427,799
699,427,799
- Gi¸ trÞ hao mßn luü kÕ (*)
229
-21,970,251
-12,204,241
-13,920,049
-13,920,049
4. Chi phÝ x©y dùng c¬ b¶n dë dang
230
131,680,000
9,205,884,976
9,228,612,248
8,572,150,430
III. BÊt ®éng s¶n ®Çu t
240
0
0
0
0
1,659,000,000
1,659,000,000
1,659,000,000
1,659,000,000
1,659,000,000
1,659,000,000
1,659,000,000
1,659,000,000
3. Tµi s¶n cè ®Þnh v« h×nh
- Nguyªn gi¸
241
- Gi¸ trÞ hao mßn luü kÕ (*)
242
IV. C¸c kho¶n ®Çu t tµi chÝnh dµi h¹n
250
1. §Çu t vµo c«ng ty con
251
2. §Çu t vµo c«ng ty liªn kÕt, liªn doanh
252
3. §Çu t dµi h¹n kh¸c
258
4. Dùphßnggi¶mgi¸®Çut tµi chÝnh dµi h¹n(*)
259
V. Tµi s¶n dµi h¹n kh¸c
260
280,000,000
240,000,000
200,000,000
201,559,620
1. Chi phÝ tr¶ tríc dµi h¹n
261
280,000,000
240,000,000
200,000,000
201,559,620
2. Tµi s¶n thuÕ thu nhËp ho·n l¹i
262
3. Tµi s¶n dµi h¹n kh¸c
268
Tæng céng tµi s¶n (270=100+200)
270
481,332,912,745
534,986,009,789
203,821,214,501
61,865,234,027
76
nguån vèn
1
M·
Sè
Sè
Sè
Sè
sè
cuèi
cuèi
cuèi
cuèi
n¨m
n¨m
n¨m
n¨m
4
4
4
4
2
A- nî ph¶i tr¶ ( 300=310+320)
300
458,543,203,994
512,667,402,574
404,972,262,960
291,482,440,085
1. Nî ng¾n h¹n
310
458,458,203,994
511,113,752,846
403,430,340,505
289,910,972,176
1. Vay vµ nî ng¾n h¹n
311
351,638,969,667
468,893,555,925
363,950,286,741
244,438,829,383
2. Ph¶i tr¶ ngêi b¸n
312
7,042,478,653
3,680,354,325
3,329,443,234
1,593,714,858
3. Ngêi mua tr¶ tiÒn tríc
313
87,100,765,125
23,813,402,000
14,240,000,000
4. ThuÕ vµ c¸c kho¶n ph¶i nép Nhµ níc
314
9,895,280,830
11,524,250,739
18,998,766,818
13,590,239,052
5. Ph¶i tr¶ ngêi lao ®éng
315
6. Chi phÝ ph¶i tr¶
316
115,226,321
2,753,646,396
1,367,546,380
27,752,117,584
7. Ph¶i tr¶ néi bé
317
2,655,272,656
378,894,719
1,323,994,973
2,397,818,940
8. Ph¶i tr¶ theo tiÕn ®é kÕ ho¹ch hîp ®ång x©y dùng 318
9. C¸c kho¶n ph¶i tr¶, ph¶i nép ng¾n h¹n kh¸c
319
10. Dù phßng ph¶i tr¶ ng¾n h¹n
320
11. Quü khen thëng phóc lîi
323
10,210,742
69,648,742
220,302,359
138,252,359
II. Nî dµi h¹n
330
85,000,000
1,553,649,728
1,541,922,455
1,571,467,909
1. Ph¶i tr¶ dµi h¹n ngêi b¸n
331
2. Ph¶i tr¶ dµi h¹n néi bé
332
77
3. Ph¶i tr¶ dµi h¹n kh¸c
333
4. Vay vµ nî dµi h¹n
334
5. ThuÕ thu nhËp ho·n l¹i ph¶i tr¶
335
6. Dù phßng trî cÊp mÊt viÖc lµm
336
7. Dù phßng ph¶i tr¶ dµi h¹n
337
8. Doanh thu cha thùc hiÖn
338
9. Quü ph¸t triÓn khoa häc vµ c«ng nghÖ
339
B-Vèn chñ së h÷u ( 400=410+420)
400
22,789,708,751
22,318,607,215
-201,151,048,459
-229,617,206,058
I. Vèn chñ së h÷u
410
22,789,708,751
22,318,607,215
-201,151,048,459
-229,617,206,058
1. Vèn ®Çu t cña chñ së h÷u
411
18,847,000,000
18,847,000,000
18,847,000,000
18,847,000,000
2. ThÆng d vèn cæ phÇn
412
3. Vèn kh¸c cña chñ së h÷u
413
4. Cæ phiÕu quü (*)
414
5. Chªnh lÖch ®¸nh gi¸ l¹i tµi s¶n
415
5. Chªnh lÖch tû gi¸ hèi ®o¸i
416
262,161
2,247,641
7. Quü ®Çu t ph¸t triÓn
417
1,584,548,835
1,791,671,736
1,791,671,736
1,791,671,736
8. Quü dù phßng tµi chÝnh
418
286,668,744
390,230,194
710,652,009
710,652,009
9. Quü kh¸c thuéc vèn chñ së h÷u
419
10. Lîi nhuËn cha ph©n phèi n¨m nay
420
2,071,229,011
1,287,457,644
-222,500,372,204
-250,966,529,803
11. Nguån vèn ®Çu t XDCB
421
60,000,000
25,000,000
60,000,000
1,493,649,728
60,000,000
1,481,922,455
60,000,000
1,511,467,909
78
12. Quü hç trî s¾p xÕp doanh nghiÖp
422
II. Nguån kinh phÝ vµ quü kh¸c
430
2. Nguån kinh phÝ
432
3. Nguån kinh phÝ ®· h×nh thµnh TSC§
433
Tæng céng nguån vèn (440=300+400)
440
0
481,332,912,745
0
0
0
534,986,009,789
203,821,214,501
61,865,234,027
79
Appendix 2: ha Bac Cash flow statement 2011 – 2013
2,011
2,012
2,013
I. Cash flow from operating activities
1. Profit before tax
2,858,165,850
(221,651,684,416)
(28,466,157,599)
2. Adjust the amounts
Depreciation
885,688,680
The existing provision
Gains or losse foreign exchanges unrealized
Gains losses from investment activities
Interest expense
884,122,678
892,170,102
5,946,499,189
(5,946,499,189)
3,317,222
(674,631,758)
(338,749,685)
(251,597,113)
90,319,073,672
72,983,268,572
31,206,010,542
capital.
93,388,296,444
(142,173,226,440)
(2,566,073,257)
Increase or decrease in receivables
96,376,416,243
8,512,012,353
29,539,781,710
Increase or decrease in inventories
(197,215,693,874)
334,413,435,095
84,352,289,525
Increase or decrease in accounts payable
(65,630,884,862)
(2,205,393,867)
(18,169,888,463)
Increase or decrease in prepaid expenses
2,969,350,000
115,017,059
138,792,259
(90,319,073,672)
(74,197,418,752)
(4,183,196,834)
(300,000,000)
(100,000,000)
3. Profit from operations before changes in working
Cash Interest paid
Corporate income tax already paid
Receipts from operating activities
Other payments for operating activities
Net inflows from operating activities
7,270,591,000
2,160,321,317
(7,370,234,427)
(63,075,000)
(160,531,233,148)
136,261,671,768
3,773,740,030
(82,050,000)
92,703,394,970
II. Cash flows from investing activities
1. Payments to purchase, construct fixed assets and
other long-term assets.
(8,364,204,976)
(2,709,999,999)
2. Receipts from disposal or sale of fixed assets and
other long-term assets.
122,909,091
109,727,273
674,631,758
338,749,685
17,020,074
(7,671,573,218)
(2,248,314,223)
297,928,007
3. Loans purchase debt instruments of other entities
4. Recovery of loan, sale of debt instruments of other
entities
5. Cash paid for investments in other entities
6. Receipts from investments in other entities
7. Receipts from interest, dividends and profit
sharing
Net cash flow from investing activities.
III. Cash flows from financing activities
1. Receipts from issue of shares, equity owners
2. Repayment of capital for owners, repurchase
corporate stock issued
3. Receipt from short-term, and long term loans
4. Repayment of borrowings
1,989,257,218,374
1,898,350,437,523
34,624,750,000
(1,872,002,632,116)
(2,003,293,706,707)
(154,136,207,358)
5. Payments of finance lease liabilities
6. Dividends and interest paid to the owner
(1,601,995,000)
(784,975,000)
Net cash flows from financing activities
115,652,591,258
(105,728,244,184)
(119,511,457,358)
Net cash flows of period
(52,550,215,108)
28,285,086,358
(26,528,134,381)
69,596,833,939
17,044,633,351
45,329,719,709
45,329,791,709
18,801,585,328
Cash and cash equivalents beginning of period
Effect of changes in foreign currency exchange rates.
Cash and cash equivalents at end of period
(1,985,480)
17,044,633,351
Appendix 3: Ha Bac’s financing ratio from 2010 to 2013
2013
2012
2011
2010
Current ratio
0.15
0.46
1.01
1.02
quick ratio
0.12
0.24
0.15
0.50
DIO
62
55
65
59
DSO
26.51
8.31
15.26
17.81
DPO
3.12
0.74
1.02
1.00
CCC
85.66
63.01
78.86
75.48
Debt to equity ratio
-1.27
-2.01
22.97
20.12
Interest coverage ratio
0.14
(2.06)
0.98
1.10
debt to asset
4.71
1.99
0.96
0.95
Appendix 4: Expenditure plans of the company in 2014
Total cash collected beginning of the year
Revenue from sales
164,333,560,179
120,000,000,000
Short-term assets
44,333,560,179
Cash
18,801,585,328
account receivable
7,556,965,974
Inventories
9,976,043,132
Other current assets
7,998,965,745
Total Liabilities
244,603,829,383
Short-term Liabilities
244,543,829,383
Long-term Liabilities
60,000,000
Estimated interest expense
23,238,563,791.39
Cost for production
Purchase good in 2014
Cost of sales
Total Expense
125,000,000,000
2,880,000,000
Firms management expenses
12,000,000,000
Cost of Production
14,880,000,000
163,118,563,791