FINANCIAL STATEMENT ANALYSIS OF TUONG AN VEGETABLE OIL JOINT STOCK COMPANY

TUONG AN OVERVIEW

General Information

Address: No 138-142 Hai Ba Trung Street,

Da Kao Ward, District 1, Ho Chi Minh, Vietnam

Email: tuongan@tuongan.com.vn

Website: www.tuongan.com.vn

Establishment and development history

1977 Established in 1977, Tuong An has been a trademark associated with all generations of Vietnamese families for the past 42 years.

1986 After being empowered to self-supervise production and business activities, plus the completion of a new production facility, Tuong An quickly expanded its development between 1985 and the early 1990s.

1990 In the late 1990s, Tuong An faced new challenges as the economy began to integrate with the world and fierce competition from imported brands of avocado and vegetable oil

Tuong An has demonstrated flexibility and creativity in promoting nutritional cooking oil, successfully raising consumer awareness through the launch of innovative products fortified with essential micronutrients By utilizing high-quality raw materials and increasing the production of bottled refined cooking oil, the company is effectively catering to the growing demands of the domestic market.

1991 In October 1991, "Cooking Oil - Tuong An Cooking Oil" - the most famous product of the

Company until now has been officially introduced to the market and since then Tuong An brand

TIEU LUAN MOI download : skknchat@gmail.com has been and has been leading market leader in edible oil production in Vietnam

Currently, Tuong An cooking oil continues to lead the market share and Cooking Oil becomes Tuong An key product always trusted and used by consumers.

In December 2003, the Company initiated an experimental study to enhance edible oil products by incorporating micronutrients This included pure soybean oil, known for its heart health benefits, and ViO oil, enriched with nutrients from Gac fruit oil, which supports children's brain development and promotes healthy skin, eyes, and heart.

Tuong An is committed to becoming a leader in the essential food market, providing nutritious, safe, and high-quality products for millions of Vietnamese families With a focus on preserving core values and sustainable development, Tuong An has earned a place in the hearts of the Vietnamese people over its 42-year history, establishing itself as a "national brand." Dedicated to enhancing the happiness of every meal, Tuong An strives to deliver exceptional products at affordable prices.

Organization and human resources

As of December 31, 2019, Tuong An employed a total of 1,407 individuals Recognizing the importance of a large and expanding workforce, the Board of Directors (BOD) and Board of Management (BOM) prioritize human resource development, viewing it as essential to the company's success and operational effectiveness.

Nguyen Thi Hanh Tran Le Nguyen

Nguyen Thi Thanh Van Nguyen Van Thuan

Vu Duc Thinh Nguyen Duc Thuyet

Supervisory Board Ho Minh Son

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Corporate structure

Tuong An plays a pivotal role in the packaged food sector, significantly enhancing KIDO Group's distribution platform To meet established objectives, it is essential for the management systems of all member units to be closely integrated, ensuring the delivery of the right products with the correct specifications, precisely where and when consumers need them.

Each company is guided by the Executive Management Committee (EMC), which oversees the implementation of the Group's strategic goals and promotes business performance at the unit.

Tuong An operates under a three-team structure, offering various support services to its member companies The Group aims to achieve a harmonious balance between long-term and short-term objectives.

Tuong An owns 2 large-scale factories: Phu My Oil Factory (80,000m2) and Dau Vinh

Vision & Mission

Vision: The Vietnamese brand is the most popular of the delicious dishes that help nurture and unite the happiness of the Vietnamese family.

Tuong An is dedicated to providing high-quality, delicious, and healthy food to the community and every Vietnamese family, demonstrating a strong commitment to understanding and fulfilling their responsibilities to people and society.

BUSINESS STRATEGY ANALYSIS

Industry Analysis

In the national cooking oil market, Tuong An and Neptune are the two dominant brands, collectively holding a significant share Tuong An faces strong competition from Neptune, making the market landscape quite challenging.

Neptune, produced by Cai Lan Vegetable Oil Company and part of KUOK OILs & GRAINS PTE, has recently entered the Vietnamese market, following Tuong An With a strong financial backing, Neptune effectively promotes its brand through television advertising, cooking lessons, and food manuals in newspapers Additionally, Neptune's competitive pricing makes it accessible to a wide range of consumers, posing a significant challenge for Tuong An in the market.

Tuong An faces significant competition in the Vietnamese cooking oil market, sharing space with various domestic brands like Tan Binh, Vinadaco, and Marvela, as well as international products such as Ship, Floria, and Sun Flower These brands are establishing a strong presence, particularly among low-income consumers, due to their high quality and affordability Imported products, while priced higher, attract consumers with their appealing designs and diverse offerings Consequently, Tuong An's market share is challenged, highlighting the competitive landscape it must navigate.

Many cooking oil products originating from Malaysia, Singapore, Indonesia rushed into Vietnam But Tuong An cooking oil has become familiar and close to most Vietnamese consumers.

Regarding monopoly of input: Tuong An still does not have this advantage because it has not found a major oil-bearing tree.

About conversion costs (costs that customers want to convert their shopping to other suppliers): easy to change without any cost.

In particular, in the Vietnamese market, the psychology of preferring to use imported goods and the ASEAN tax preferential policy, the selling price is almost equal.

The choice and replacement of products is not difficult so the threat of new entrants is not small. c) Threat of substitute products:

Living conditions improved, so people look for more advanced products or products from abroad In contrast, low-income people: Find cheaper products when the same volume of bottle.

Tuong An faces competition in the market from various products, including cheese butter and sauces For instance, consumers are increasingly opting to mix their salads with cheese instead of traditional oil, highlighting the diverse choices available to enhance their meals.

To minimize fat in cooking, many people opt for a versatile non-stick pan for frying without the need for vegetable oil However, this method is only a temporary solution and is not suitable for long-term use in cooking.

Therefore, Tuong An's products still retain their market value. d) Buyer’s power:

The Vietnamese food market is projected to experience ongoing growth driven by rising disposable incomes As the quality of life improves, consumers in Vietnam are increasingly prioritizing their health, leading to a greater focus on the nutritional value of their food choices.

In 2018, Vietnam's cooking oil market reached a revenue of over 25,000 billion VND; however, the country's edible oil consumption remains lower than that of other regional nations The oil industry is projected to experience continued growth over the next five years.

Is one of the big manufacturing cooking oil companies Vietnamese, Tuong An is taking advantage of great opportunity to capture the potential of the industry.

When income increases, people's living standards are improved and the demand for cooking oil is required of the people will get bigger and bigger.

TIEU LUAN MOI download : skknchat@gmail.com e) Supplier’s power:

The main input is raw vegetable oils produced from oil fruits and seeds, of which palm and soy beans are the two most used nuts (about 60% and 30%).

For cooking oil industry, source of auxiliary production materials large dependence on imports from abroad, mainly from Malaysia and Indonesia (accounting for nearly 80%).

The ability to negotiate with suppliers is very low.

Tuong An has yet to identify a primary oil-bearing tree suitable for large-scale cultivation, which poses challenges in securing a consistent supply of raw materials.

Competitive Strategy Analysis

TAC employs a competitive strategy that integrates cost leadership and differentiation, guided by its mission to provide high-quality, delicious, and healthy food to Vietnamese families while committing to community welfare The Phu My factory, TAC's largest vegetable oil manufacturing facility, stands out as one of Vietnam's most eco-friendly factories, with green coverage comprising 40% of its total area.

For nearly 40 years, TAC has prioritized both quality and affordability in its cooking oil products With competitive pricing, such as their soybean oil listed at approximately 36,000 VND per liter—significantly lower than Simply's price of over 40,000 VND—TAC ensures that customers have access to high-quality options without breaking the bank Additionally, TAC is committed to leveraging advanced technology in their production processes, further enhancing the quality and efficiency of their products.

As a traditional Vietnamese brand, TAC leads the way in technological advancement, showcasing state-of-the-art machinery in its manufacturing processes The company's vegetable oil refining lines, imported from Belgium, are recognized as the most modern in the industry, highlighting TAC's commitment to quality and innovation.

In today's production landscape, the continuous operation of systems is facilitated by automatic control through PLC and computer systems, which ensures optimal quality while preserving maximum levels of natural Vitamin A and E in oil Additionally, the human element remains a crucial component in this process.

TAC's commitment to excellence is driven not only by state-of-the-art technology but also by a team of skilled professionals with extensive experience and strong business ethics Regular professional training ensures that staff stay updated on the latest market trends, enabling them to develop innovative solutions This approach allows TAC to enhance production efficiency while simultaneously reducing costs, thereby delivering exceptional value in their products.

TAC has achieved a remarkable breakthrough by seamlessly blending technology with human essence, resulting in high-quality products at competitive prices that elevate Vietnamese cuisine The company consistently diversifies and enhances its offerings while keeping prices affordable, which has endeared TAC to a wide range of Vietnamese consumers.

Corporate Strategy Analysis

For Tuong An Company, its core business is cooking oil.

Tuong An is enhancing its partnerships to diversify its product portfolio, focusing on delivering quality products that meet daily food needs for consumers To achieve this strategic goal, Tuong An employs two primary approaches: distributing branded products from strategic partners and offering OEM products under the Kido Group brand This diverse and continuously researched product lineup aims to build consumer trust and secure a prominent position on retail shelves.

Tuong An has successfully implemented its packaged food strategy by leveraging an efficient distribution platform, enabling the quick and cost-effective launch of new products This range includes various food items and spices, such as refined sugar, snack noodles, instant noodles, and sauces.

SWOT Analysis

1 Labor level meets production 1 Qualifications of managers are needs not flexible.

2 Employee income at a reasonable 2 Overlapping organizational level structure.

3 Strong financial ability 3 Form of packaging design is not

4 Strong brand identity and good attractive. reputation 4 Poor advertising strategy.

5 Good relationship with partners 5 Materials are mostly imported

6 Standard product quality from abroad

Macroeconomic policies focus on market penetration through trade agreements such as WTO, ATIGA, VJEPA, and AANZFTA These strategies include product development and enhancing advertising efforts, alongside promotional activities aimed at expanding export markets Additionally, creating a new premium product line with distinctive packaging design will help differentiate offerings from competitors.

2.Economic growth meet needs and tastes) impression for the brand).

3.Inflation remained stable 2 S1,3,6,7,10,12,13 + O1,2,3,4,11: 2 W1,5 + O6,7,8: Joint Ventures

4.Bank interest rates are reasonable Market development strategy (looking for new supply).

5.Gross national income increases 3 S3,6,7,10,12,13 + O1,2,6,11: 3 W1 + O1,7,8: strategy development

6.Government support: developing Forward integration strategy strategy planning capabilities. domestic raw material areas 4 S3,4,8,9,12 + O5,9,10: 4 W5 + O4,6,7,8: Backward

7.Buyers’ purchasing power is differentiation strategy integration strategy (diversify increasing sources of input materials).

8 The market potential increases in the future.

9 Consumers' tastes are running towards good quality products for their health.

1 The exchange rate tends to increase.

2 Instability of the stock market.

3 Competitive pressure from the schedule of reducing cooking oil import tax to 0%.

4 Pressure of raw material supply.

5 The current and potential strong rivals: high level of competition.

1 S1,2,3,4,8,11,12 + T3,5: Product development strategy (Focusing on promoting a new premium product line, outstanding quality for compete with rivals).

2 S3,4,11 + T1,3,4,5: Strategy of integration in horizontal lines- acquisition (acquiring smaller companies in the same industry to increase market share).

3 S3 + T1,3,4,5: Backward integration strategy (diversify and develop its own material areas).

1 W1,2,3 + T2,3,4,5,6: decline strategy (regulating organizational structure

&management, eliminating products that are not competitive in the market).

2 W5 + T1,3,4,5: Joint Ventures (looking for new supply).

3 W1,2,3,4 + T1,2,3,5: Strategy of integration in horizontal lines (merging powerful companies to increase their resilience to the fiercely competitive market).

PEST Analysis

The Government ended the safeguard tariff on imported oil, leading to the influx of imported goods, putting competition pressure on domestic companies. b) Economic analysis

The growth of the economy, as well as the growth of the cooking oil industry of

The Vietnamese marketplace is increasingly appealing to both foreign and domestic businesses, particularly within the cooking oil sector, which presents significant growth potential Cooking oil is a versatile product with high demand elasticity, meaning that even minor price fluctuations can significantly influence consumer behavior As a result, competition in this industry is exceptionally intense.

Vietnam's growing population and shifting consumption patterns are driving a heightened demand for health-oriented products, particularly in the cooking oil sector This trend is leading to a more diverse cooking oil industry as consumers increasingly prioritize healthier options.

The rapid development of science and technology plays an important role in improving labor productivity, contributing to increasing production efficiency.

Besides, oil production technology is not too complicated, so the cost of production and the price of oil is not too high.

ACCOUNTING ANALYSIS

Identifying Key Accounting Policies

TAOIL, a key player in the essential food sector, emphasizes critical success factors such as effective material planning, raw material supply regulation, and optimized inventory management to ensure stable prices and sufficient goods for consumers The company focuses on advancing and diversifying its product offerings, prioritizing high nutritional value to align with health protection needs TAOIL invests in research and development to create products enriched with micronutrients, catering to the specialized health care requirements of Vietnamese consumers In terms of inventory management, inventories are recorded at the lower of the cost incurred to bring them to their current location and condition or their net realizable value, which accounts for the estimated selling price minus completion and selling costs.

The perpetual method is used to record inventories, which are valued as follows: Raw materials, consumables and goods for resale.

Actual cost on a weighted average basis.

Finished goods and work in process.

Cost of direct materials and labor plus attributable overhead based on the normal level of activities.

An inventory provision is established to account for estimated losses from impairments such as obsolescence, damage, or reduction in value of raw materials, finished goods, and other inventories held by the Group This provision is based on relevant evidence of impairment as of the balance sheet date.

The provision balance is recorded as a cost of goods sold in the consolidated income statement, while receivables are reflected in the consolidated financial statements at their carrying amounts owed by customers and other debtors, after accounting for provisions for doubtful receivables.

The provision for doubtful receivables represents amounts of outstanding receivables at the balance sheet date which are doubtful of being recovered

Adjustments to the provision balance are reflected in the general and administration expense account within the consolidated income statement Tangible fixed assets are recorded at their cost, minus accumulated depreciation, which includes the purchase price and any directly related costs necessary to prepare the asset for its intended use Costs for additions and improvements are capitalized, while maintenance and repair expenses are recognized in the consolidated income statement as they occur Any gains or losses from the sale or retirement of tangible fixed assets, determined by the difference between net disposal proceeds and the carrying amount, are also reported in the consolidated income statement.

Construction in progress refers to tangible fixed assets that are currently under development and are recorded at their cost, which encompasses construction expenses, equipment installation, and other direct costs These assets are not subject to depreciation until they are completed and operational.

Depreciation of tangible fixed assets and amortization of intangible fixed assets are calculated on a straight-line basis over the estimated useful life of each asset as follows:

The policies and estimates for recording research and development (R&D) expenses align with accounting standards and the specific characteristics of the firm However, the evaluation and recording of R&D expenses present challenges due to the difficulty in precisely determining these costs Additionally, borrowing costs play a significant role in the overall financial assessment of R&D activities.

Borrowing costs, which include interest and associated expenses incurred by the Group when borrowing funds, are recorded as expenses in the year they are incurred, unless they are capitalized Specifically, borrowing costs that are directly linked to the acquisition, construction, or production of an asset requiring a significant amount of time to prepare for its intended use or sale are capitalized as part of the asset's overall cost.

Revenue from the sale of goods is recognized only when all five conditions outlined in Article 79 of Circular 200/2014/TT-BTC are met The Group maintains that revenue will not be recognized if there are significant uncertainties concerning the collection of payment or the potential return of goods.

Under the circumstances, revenue is recognized based on principle of

“substance over form” and allocated to each sales obligation.

Revenue is recognized when it is likely that economic benefits will accrue to the Group and can be measured reliably It is calculated at the fair value of the consideration received or expected, excluding any trade discounts or rebates.

TIEU LUAN MOI download : skknchat@gmail.com and sales return The following specific recognition criteria must also be met before revenue is recognized:

Sale of goods: Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually upon the delivery of the goods.

Rendering of services: Revenue is recognized when service is rendered and completed.

Interest: Revenue is recognized as the interest accrues (taking into account the effective yield on the asset) unless collectability is in doubt.

Dividends: Income is recognized when the Group’s entitlement as an investor to receive dividends is established g) Segment information

A segment refers to a distinct component identified by the Group, focusing on either the provision of products or related services (business segment) or the delivery of products or services within a specific economic context (geographical segment) Each segment faces unique risks and returns that differentiate it from other segments.

Assess Accounting Flexibility

To tangible fixed assets, TAC uses flexible estimate accounting for computing on a straight-line over the estimated useful lives of tangible fixed assets as follows:

Buildings and structures 10 years 6 - 50 years

Machinery and equipment 5 - 10 years 5 - 25 years

Means of transportation 6– 10 years 6 – 12 years

Land use rights 46 years 10– 25 years

This illustrates that managers have possibility to perform the nature of their business by the flexibility in their estimating Due to the same asset

Class, there are still many different types of assets with different useful lifetime and therefore it correctly reflects the nature of the use of property.

TAC utilizes a perpetual inventory system and determines inventory costs based on the weighted average method, which is commonly adopted by modern businesses As a manufacturing company, TAC's use of the weighted average method is particularly suitable, given that inventory items are frequently stored or mixed, complicating the differentiation between older and newer materials This approach allows for more accurate accounting data, which can be influenced by managerial decisions regarding inventory management flexibility.

It is necessary for managers to give the flexibility in revenue policies to help easily create success for the company by their judging ability.

Some policies do not allow flexibility as: evaluating and recording R&D expenses have difficulties because following to VAS, R&D and marketing expenditures must be expensed However, software development can be capitalized

Managers face some troubles to assess economic benefits in the future so they can’t have enough information to make decision effectively.

Evaluate Accounting Strategy

TAC primarily focuses on producing vegetable oil, and its accounting policies align closely with those of its industry competitors This consistency in practices suggests that the strategies implemented, particularly in the Marvela branch, have been effective in recent years.

Mrs Nguyen Thi Hanh has served as the deputy general director and chairman of the board of directors since June 8, 2017 As of May 2020, she owned 15,000 shares of TAC, representing 0.4% of the company, with a total value of 0.4 billion VND.

To effectively meet the needs of both the Board of Directors and executive directors, she aims to manage the company efficiently, minimizing "agency costs" wherever possible.

TAC's accounting policies have remained consistent for over four years, with any changes implemented alongside other companies in the vegetable oil industry Additionally, there have been no significant adjustments to revenues or estimates in recent financial statements, and there is a lack of evidence indicating any discrepancies.

TIEU LUAN MOI download : skknchat@gmail.com significant manipulation in quarterly reports in efforts to artificially inflate revenues or deflate expenses.

Evaluate Quality of Disclosure

Transparent information disclosure in annual reports is crucial for listed companies TAC stands out among competitors by providing clear details about occupations, business fields, geographical areas, orientations, objectives, and production types as of 2020 Additionally, their accounting policies are presented distinctly, comprehensively, and reasonably.

The corporation announced specific oriented targets at the beginning of each operating years Besides, TAC also published precise information about stocks and transactions.

The corporation provided a concise overview of its operations, supported by footnotes detailing accounting policies and underlying assumptions Through its annual reports, TAC ensured that both internal and external stakeholders received comprehensive disclosures regarding its business strategies, offering a clear understanding of the company's development and operational status.

TAC has identified potential future risks and is actively seeking solutions to mitigate them This proactive approach enables the company to provide investors with comprehensive and informative reports, empowering them to make informed investment decisions in the manufacturing sector.

TAC's commitment to voluntary information disclosure is commendable, especially considering the significant increase in profits during the first quarter of this year compared to the same period last year.

Moreover, this announcement of great performance can attract more investors, customers or suppliers, etc.

Identify Potential Red Flags

The total assets turnover ratio for Tuong An is currently low, indicating inefficiencies in inventory and production management A significant portion of total assets is tied up in inventories, highlighting the need for improved asset utilization.

Tuong An is having excess inventory, products that cannot be sold, or idle proporty

This may affect the product quality, reduce product value and reduce the gross profit.

Net Sales / Net Accounts Receivable

Tuong An experienced a significant decline in its receivables turnover between 2017 and 2018, with the debt recovery rate dropping to 6.62 in 2018, a notable decrease from the previous year This low recovery rate has led to an increase in appropriated funds, indicating potential cash shortages for the company As a result, Tuong An may face challenges in financing its working capital for production and may need to resort to borrowing to address this financial shortfall.

Undo Accounting Distortions

An analysis of Tuong An's audited financial statements reveals no accounting distortions The financial statements present complete and accurate data, providing reliable evidence that facilitates thorough analysis and evaluation.

Analysis of the Statement of Financial Position/ Balance Sheet

a) Financial Structures of WC/WCN/NC

Tuong An Vegetable Oil Joint Stock Company (TAC)

Tan Binh Vegetable Oil Joint Stock Company (NKDC)

TIEU LUAN MOI download : skknchat@gmail.com b) Comparative analysis of TAC and NKDC

TAC's financial structure, categorized as case 2, is typical for manufacturing companies, indicating a lower risk in capital costs compared to its competitor, NKDC, which follows case 1.

TAC’s net cash of 4 latest year is less than 0, this means TAC use long-term sources to invest in short term activities. c) Statement of financial structure

Analysis of statement of cash flow

Net cash provided by operating activities 115,907 -254,220 336,500 86,107

Acquisitions of fixed assets (tangible and intangible) -14,669 -24,166 -10,932 -10,069

Proceeds from sale of fixed asset 9,928 2,696 30 0

Acquisitions of held to maturity

Proceeds from deposit or repurchase of debt instrument - - - -

Proceeds from sale of held to maturity investments 3,840

Proceeds from issuance of shares and receipt of contributed capital 33,560

Net increase in cash and cash equivalent -500,910 -302,428 -55,517 -99,953

Tuong An Company (TAC)’s excess cash flow in 2018 is less than 0 while the 3 previous years are all more than 0.

TAC’s available cash flow in the 4 latest year are all more than

0 TAC’s free cash flow in the 4 latest year are all less than 0.

Mainly the company's cash generated from operating activities and not investment and financing activities.

In 2019, negative cash flows from investment activities indicated a growing business scale, as income from the sale of fixed assets and financial returns fell short of expenditures on new investments and fixed asset purchases.

FINANCIAL ANALYSIS

Common-size analysis

Because TAC is a manufacturing firm, proportion of inventory and fixed assets is large

Beside that, because of the nature of a selling food company, which is customer usually pay for their products unimmediately, so the proportion of short-term receivable is large.

Income from financial activities not significant not significant

Financial costs not significant not significant

Interest expenses not significant not significant

Gains not significant not significant

Losses not significant not significant

Other profits not significant not significant

Current income tax charge not significant not significant

Deferred income tax charge not significant not significant

Tuong An Company has improved ability of production (decreased cost of goods sold)

Although the other expenses (such as selling expenses, adminnistrave expenses) have increased, profit after tax was still increased. b) Horizontal * Balance sheet

In 2019, long-term assets receivables and long-term assets in progress of TAC has increased really quickly because TAC may expand the business and develop efficiently.

Net profit from operating activities 1,506,216 1,203,647 302,569 25.1%

In 2019, net revenues of TAC increased 16.8%, profit after tax increased 24.4% Profit before tax in 2019 was more than 1,000 billion dongs Gross profit has increased continiously annual year.

TOTAL TOTAL GROSS PROFIT AFTER

Highest for the last 5 years Highest ever Excess expectation

Analysis of Profitability

The net profit margin is a crucial indicator of a company's financial health, allowing for the assessment of current practices and profit forecasting based on revenue fluctuations It reflects the portion of sales that translates into net income after all expenses are accounted for An analysis of the ratios reveals a significant increase in net sales, indicating that the rise in revenue, along with net income growth, positively impacted TAC's performance from 2016 to 2018 Notably, the change in net income in 2017 highlights the effectiveness of TAC's sales strategy during this period.

TIEU LUAN MOI download : skknchat@gmail.com contributed to the increase in the net profit margin Given that the net profit margin in

In 2017, the company's performance saw a rise in net profit margin by 1.38% However, in 2018, this figure declined from 3.06% to 2.46% due to strategic adjustments aimed at enhancing competitiveness Remarkably, in 2019, the net profit margin rebounded to 3.29%, marking a significant achievement for TAC This improvement can be attributed to effective cost management, including reducing expenses and the cost of sales.

Net Sales 4,142,183,115,574 4,408,696,880,121 4,337,772,721,063 3,977,927,992,052 Average Total Assets 1,883,410,708,253 1,801,809,089,681 1,380,959,391,725 1,209,932,489,273

The total asset turnover ratio evaluates a company's efficiency in utilizing its assets to generate sales, with a higher ratio indicating better performance This key efficiency metric provides insights into how effectively a firm manages its assets to produce goods and drive sales, offering valuable information to investors and creditors about the company's operational management.

The company's asset turnover ratio has declined significantly in recent years, reflecting inefficiencies in utilizing its assets to generate sales In 2019, the total asset turnover was only 2.2%, a decrease compared to previous years, particularly from 2016 to 2017, when the ratios were notably higher.

The company's sales strategy, which includes reducing prices to attract more customers, has led to a noticeable decrease in the return on assets, dropping from 3.14% to 2.45% Despite this decline, the company's assets continue to grow.

The return on assets (ROA) ratio is a key profitability metric that evaluates how effectively a company utilizes its total assets to generate net income over a specific period By comparing net income to average total assets, ROA provides insights into a company's efficiency in converting asset investments into profits This ratio is particularly valuable for both management and investors, as it highlights the company's ability to generate revenue from its capital assets, which often represent the largest investment Ultimately, ROA serves as an important indicator of a company's return on investment in its assets.

In 2019, there was a significant investment in assets, yet overall, these figures remained stable over the years without strong fluctuations Additionally, the DuPont Return on Assets metric provides insight into this stability.

DuPont analysis is a crucial aspect of profitability ratio analysis used to evaluate a company's financial statements It focuses on key ratios such as return on assets, return on equity, net profit margin, total asset turnover, and financial leverage to assess profitability Essentially, this model deconstructs the return on equity ratio, providing insights into how businesses can enhance returns for their investors.

This table shows a declining trend of return on assets in two years from 2017 to 2018 from

9.61% to 6.04% because of reducing both net profit margin and total asset turnover in 2018 This makes ROA decrease dramatically However, in 2019, ROA tended to increase gradually up to

The impressive growth of 7.23% reflects a strong performance within the industry, especially when considering the overall market conditions This increase indicates a high net profit margin generated from revenues, showcasing the company's exceptional business competence.

TIEU LUAN MOI download : skknchat@gmail.com e) Operating Income Margin

Operating Income 163,477,673,869 133,282,551,791 159,577,393,116 81,828,848,263 Net Sales 4,142,183,115,574 4,408,696,880,121 4,337,772,721,063 3,977,927,992,052 Operating Income

The operating margin ratio, or operating profit margin, is a key profitability metric that indicates the percentage of total revenues represented by operating income In 2018, TAC reported an operating income of 163,477 million, reflecting its financial performance in relation to net sales.

– all operating expenses) According to our formula, TAC’s operating margin is 3.94%

Nearly 96.06 dong of every million dongs in sales is allocated to variable costs, leaving just 3.94 dong to cover non-operating and fixed expenses Additionally, the company's figures have shown slight growth from 2016 onwards.

2019, and high or increasing operating margin is preferred because if the operating margin is increasing, the company is earning more per million dongs of sales.

TIEU LUAN MOI download : skknchat@gmail.com f) Return on Operating Asset

Net ome Average Operating Assets ROA %)

Return on assets (ROA) measures a company's efficiency in generating revenue from its operational activities To calculate ROA, experts compare the net income over a specific period with the current value of the assets employed in those operations.

It could be easily seen that, 7.87% return in 2019 This figure showed that, for every million dongs

TAC's investment in operating equipment led to a notable increase of nearly 8 dongs, reflecting a significant rise in variance from 5.61% in 2016 to 8.47% in 2017, indicating a sound investment strategy during that period However, the Return on Assets (ROA) saw a sharp decline in 2018 before rebounding to 5.35% in 2019.

7.87%, respectively ROA is perceived to be the higher the better.

TIEU LUAN MOI download : skknchat@gmail.com g) Operating Assets Turnover

Return on Operating Assets is a key ratio that measures how effectively a company utilizes its revenue-generating assets in ongoing operations A higher operating assets turnover ratio reflects efficient management of funds invested in current assets, indicating strong operational performance.

The ratios of the company over years from 2015 to 2018 are rather high and acceptable although this ratio decreased throughout the years from 2016 to 2018, and then increased in

2019 However, these figures were considered to be stably, with the average of about 2.5.

The growth of operating assets outpaced net sales, resulting in a significant increase in the sales-to-fixed-assets ratio in 2019 due to a decline in assets It is crucial for companies to maintain an optimal level of operating assets relative to their turnover, as higher profits from these assets outweigh the costs associated with investing in larger current asset levels.

Net Sales 4,142,183,115,574 4,408,696,880,121 4,337,772,721,063 3,977,927,992,052 Net fixed assets 79,716,238,436 96,065,602,058 114,848,263,615 138,018,427,809 Sales to fixed

Analysis of Liquidity of Short-term Assets

Net Sales 4,210,240,551,226 4,492,736,545,601 4,427,714,235,206 3,995,040,191,032 Days’ Sales in

TIEU LUAN MOI download : skknchat@gmail.com b) Accounts Receivable Turnover

Turnover c) Accounts Receivable Turnover in Days

Days d) Days’ Sales in Inventory

TIEU LUAN MOI download : skknchat@gmail.com f) Inventory Turnover in Days

Turnover 73.54 67.58 54.33 58.29 in Days g) Working Capital

Cash Ratio 0.33 0.25 0.69 0.50 k) Sales to Working Capital (Working Capital Turnover)

TIEU LUAN MOI download : skknchat@gmail.com l) Liquidity Index Group

Current ratio, acid-test ratio and cash ratio of TAC were considered to match industry averages

However, in 2019 these figures of TAC were in a good growth trend, being slightly better than

TIEU LUAN MOI can be downloaded at skknchat@gmail.com TAC's competitive rates are advantageous, as they enable the company to meet its short-term financial obligations effectively This highlights the importance of efficiency indicators in assessing a company's performance within its industry.

From 2016 to 2019, the company's receivable turnover ratio was initially higher than its peers, indicating an effective credit policy However, this ratio experienced a decline during this period Despite the decrease, TAC maintained a relatively stable index compared to other companies in the industry A high receivable turnover ratio could risk losing customers, as clients may prefer competitors offering longer credit terms.

TAC's inventory turnover is below the industry average, indicating an ineffective inventory management strategy This inefficiency can lead to issues such as stuck and stagnant capital, ultimately impacting the company's financial health.

From 2016 to 2019, the average days of inventory increased from 58.29 to 73.54 This rise in inventory levels can serve as a strategic advantage for companies, allowing them to swiftly respond to sudden increases in market demand By maintaining a robust inventory, businesses can capture customer interest and enhance their market share during periods of heightened demand.

Analysis of Long-term Debt-Paying Ability

The debt ratio increased gradually from 2016 to 2018, but dropped sharply in 2019 (down

TAC's financial strategy has led to a reduction in short-term debts, particularly in payables and short-term loans, resulting in a decrease in total assets This decline in cash and cash equivalents is attributed to financial investments and loan repayments Additionally, TAC's inventory levels have significantly decreased, indicating an improvement in production management practices.

But the investor will be concerned about the reduction of assets because it may affect the company's main business, which could reduce profits and shareholders' interests. b) Debt/ Equity Ratio

In 2016, 2017 and 2019, the Debt/ Equity Ratio remained at an average of 1.53 However, in

In 2018, the company's debt ratio surged to 2.25, marking a 1.5 times increase from 2017, likely indicating financial challenges that led to the reliance on short-term debts for business operations For a company like TAC, known for capital mobilization through debt, this strategy is justifiable as it highlights the effective utilization of tax savings By 2019, the Debt to Equity ratio normalized, reflecting a recovery in financial stability.

The Times Interest Earned ratio is a conservative measure compared to the debt ratio and debt/equity ratio, as it excludes intangibles In 2018, TAC demonstrated a significant increase in this ratio, rising 1.4 times higher than in 2017, indicating a strong investment in tangible assets and showcasing TAC's resilience during challenging times.

TAC demonstrates a strong capacity to cover interest payments with its pre-tax income, ensuring annual interest obligations are met This reflects the efficiency of TAC's operations, as the company effectively generates substantial profits from its debts and capital While the times interest earned ratio has seen a gradual decline from 2017 to 2019, it remains consistently high, indicating that TAC's robust business performance will likely sustain this favorable ratio in the future.

Analysis of Ratios in Cash Flows

TIEU LUAN MOI download : skknchat@gmail.com a) Operating Cash Flow to Total Debt

Between 2016 and 2017, the operating cash flow ratio saw a significant rise, reflecting a robust increase in operating cash flow However, in 2018, this ratio turned negative as operating cash flow declined, coinciding with a rise in debts aimed at boosting sales and enhancing distribution systems By 2019, the ratio is expected to improve markedly due to the company's strategic business policies.

Between 2016 and 2017, the company's cash resources significantly increased, allowing for generous cash dividends to shareholders However, by 2018, negative operating cash flow resulted in a concerning decline in this ratio, despite the company still disbursing substantial dividends, leading to a severe cash shortage In 2019, while the ratio showed signs of improvement, it did not recover to the levels seen in 2016 and 2017.

Tiêu đề	Financial Statement Analysis of Tuong An Vegetable Oil Joint Stock Company
Tác giả	Do Thi Nguyet, Ho Nguyen Yen Nha, Nguyen Huong Nhi, Le Kieu Oanh, Phuong Vo Ngoc Thao
Người hướng dẫn	Mr. Nguyen Vinh Khuong
Trường học	Vietnam National University Ho Chi Minh University of Economics and Law
Chuyên ngành	Financial Statement Analysis
Thể loại	Graduation Project

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