INTRODUCTION 3 CHAPTER 1: GENERAL OVERVIEW OF FPT CORPORATION 4 1.1. General information about Company 4 1.2. Business environment of the company 5 1.2.1. External environment 5 1.2.2. Internal environment 7 1.3. Achievement of FPT Corporation 8 1.4. Financial statements of FPT Corporation. 9 CHAPTER 2: ANALYZE FINANCIAL RATIOS OF FPT CORPORATION 17 2.1. Liquidity of shortterm assets and related debtpaying ability of FPT Corporation. 17 2.2. Longterm debtpaying ability of FPT Corporation. 29 2.3. Profitability of FPT Corporation. 32 CONCLUSION 42
GENERAL OVERVIEW OF FPT CORPORATION
General information about Company
• Headquarters: FPT Building, Cau Giay District, Hanoi City, Vietnam
• Website: www.fpt.com.vn
• Main business sectors: Technology, Telecommunications, and Education
• Date of stock listing: December 13, 2006 (the stock code FPT)
• Organizational structure of the company:
FPT Corporation, a leading IT company in Vietnam with over 30 years of development, ranks among the Top 100 global outsourcing service providers In 2017, it was recognized as the 14th largest company in Vietnam by the United Nations Development Program, and in 2012, it was the third largest private enterprise according to VNReport Currently, FPT holds the 17th position in the Top 500 largest private enterprises in Vietnam, as evaluated by VNReport With its core business sectors in Technology and Telecommunications, FPT boasts a telecommunications infrastructure that spans all 63 provinces and cities in Vietnam and is actively expanding its global presence with 46 offices in 22 countries.
Business environment of the company
FPT Corporation has established long-term, strategic partnerships with suppliers, significantly enhancing the value of their products and services As a trusted partner to global leaders such as Microsoft, Amazon, and Apple, FPT Corporation demonstrates its commitment to delivering exceptional value and fostering strong relationships in the tech industry.
On August 25, 2015, FPT Shop established a comprehensive partnership with Apple, allowing them to import iPhone and iPad devices directly This partnership signifies that FPT Retail now sources all its products directly from Apple, enhancing customer access to authentic Apple devices.
FPT serves a diverse clientele, encompassing both corporate and individual customers across multiple sectors, including government, defense, finance, education, telecommunications, and banking The company is committed to expanding its footprint beyond the domestic market into international territories, reflecting its growth strategy and the broad applicability of its products.
6 services provided by FPT, its customers are primarily large organizations and enterprises
Some major partners/customers of FPT Corporation as follow:
• Rheem Australia partnered with FPT Software in mid-2021 with the goal of integrating and implementing SAP ERP into their business operations
• Hitachi Solution has been collaborating with FPT Software since 2003, not only in software development but also in various other business areas
• Toshiba's IT solutions company started working with FPT in 2002
• Denso Manufacturing Vietnam is collaborating with FPT in various areas, particularly in digital transformation for business operations
• Toppan Forms Operation collaborates with FPT in the field of process automation
• Other customers include Sanyo, Panasonic, Dell, Nissen, HP, and more c Economy - Society
In 2022, the global economy is experiencing substantial challenges marked by unpredictable fluctuations and heightened instability Inflation has surged to its highest levels in decades, compelling nations to implement stricter monetary policies.
However, the economy of Vietnam has shown strong recovery in 2022 after the Covid-19 pandemic The macroeconomic indicators are stable, inflation is under control, and major balances are ensured
According to the Digital 2020 report by We Are Social, Vietnam boasts 145.8 million mobile subscriptions, surpassing its total population by 150% The country has 68.17 million internet users, representing 70% of the population, and 65 million social media users, accounting for 67% The Covid-19 pandemic has significantly transformed digital engagement, with over one-third of digital users in the region beginning to utilize online platforms in 2020.
The Covid-19 pandemic has led to a surge in online service usage, with 95% of users planning to continue utilizing these services post-pandemic In Vietnam, new digital service users represent 41% of the total, making it the country with the highest rate of new internet users in the region This trend is fueled by globalization, international integration, and the fourth industrial revolution, which have created numerous opportunities and significant value in the digital landscape, contributing to the robust growth of FPT Corporation.
• Truong Gia Binh, Chairman of the Board of Directors, holds 76,741,442 shares, representing 7.00% ownership
• State Capital Investment and Trading Corporation holds 63,506,626 shares, representing 5.79% ownership
• Macquarie Bank Ltd holds 37,075,015 shares, accounting for 4.735% ownership b The workforce
As of December 31, 2021, FPT's workforce grew by 21.3% year-over-year, totaling 37,180 employees The Technology division remains pivotal, comprising 24,068 employees, which represents 64.7% of the company's total workforce and reflects a significant increase of 28.5%.
The core team driving the expansion of the ecosystem and the "Made by FPT" digital transformation solution is essential for fostering long-term growth for the Corporation In the Telecom sector, there are 10,346 employees, representing 27.8% of the total workforce Additionally, the Education, Investment, and other sectors collectively account for 7.4%, employing 2,766 individuals in these areas.
Achievement of FPT Corporation
• Labor Medal Grade 1 (1998-2002), received in 2003
• Hero of the People's Armed Forces (1998)
• Top 500 Largest Enterprises in Vietnam according to VNR500 rankings (from
• Top 20 Largest Private Enterprises in Vietnam according to VNR500 rankings (from 2007 to 2021)
• Top 50 Most Valuable Company Brands in Vietnam (from 2015 to 2021)
• Number 1 in Vietnam in terms of revenue and workforce in the integrated system integration field; providing IT services, online advertising, and technology product distribution
• Number 2 in Vietnam for fixed broadband internet access services (ICT White Paper - Vietnam ICT - by the Ministry of Information and Communications in
• FPT has been awarded the title of #1 Best Workplace in the IT/Software & - Application/E-commerce industry and is in the Top 50 Vietnamese Companies with an attractive employer brand in 2021
• 'Made by FPT' products have been honored with the Sao Khue Award (from
• FPT has been recognized by Forbes Vietnam in the Top 50 Best Listed Companies (from 2012 to 2022)
• FPT is among the top 3 large-cap companies with the most preferred Investor Relations (IR) activities and the highest rated IR activities by financial institutions (2022)
• FPT is in the Top 100 Outsourcing Service Providers (IAOP) (2014)
• FPT is in the Top 300 Best Performing Businesses in Asia (2015)
• FPT is in the Top 130 companies with the best workplace environment in Asia
• FPT is recognized by Asia Money as the most outstanding company in the field of IT and Telecom services in Vietnam (2021 and 2022)
• The only Vietnam enterprise honored in the Most Valuable Corporate Response category for effective Covid-19 response according to the Stevie® Award
• FPT University is the first university in Vietnam to be ranked by QS, a leading global university ranking organization, achieving a 3-star rating for three consecutive terms.
Financial statements of FPT Corporation
No For the Year Ended
II Short-term financial investments 4,534,100,000,000
1 Short-term trade accounts receivables 103,692,219,466
2 Short-term prepayments to suppliers 100,494,422,801
5 Provision for short-term doubtful debts (8,500,269,376)
Taxes and other receivables from the
III Long-term assets in progress 1,340,743,130,808
1 Long-term construction in progress 1,340,743,130,808
IV Long-term financial investments 6,722,613,409,012
3 Equity investments in other entities 500,000,000
1 Short-term trade accounts payables 473,313,612,285
2 Short-term advances from customers 365,063,567
Taxes and amounts payables to the State budget 4,357,222,239
- Ordinary shares carrying voting rights 7,839,874,860,000
Undistributed post-tax profits of previous years 1,028,610,004,465
Undistributed post-tax profits of current year 2,100,416,662,746
For the Year Ended December 31, 2020 December 31, 2021 December 31, 2022
1 Revenue from rendering of services 291,964,092,178 401,008,821,298
3 Net revenue from rendering of services 291,964,092,178 401,008,821,298
4 Cost of goods sold, and services rendered 70,845,327,323 88,563,927,849
5 Gross profit from rendering of services 221,118,764,855 312,444,893,449
14 Net accounting profit before tax 2,893,129,946,816 2,929,621,491,877
ANALYZE FINANCIAL RATIOS OF FPT CORPORATION
Liquidity of short-term assets and related debt-paying ability of FPT Corporation
1 Day’s Sales in Receivables = Gross Receivables
Account Receivable, net (A) 1,746,098,321,469 1,879,162,382,953 Provision for short-term doubtful debts (B)
Net sales (Net revenue from rendering of services) (D)
Average daily on sales on account (net sales on account divided by 365) (E)
Day’s sales in receivables (C/E) 1,590.55 days 1,440.49 days
Day’s Sales in Receivables for 2022 decreased significantly in compared with
In 2021, the Day’s Sales in Receivables for the company was 1,590.55 days, reflecting an average collection period of over four years This high ratio is primarily due to FPT Corporation being the parent company, resulting in gross receivables largely stemming from dividend receivables and transactions with related parties, including subsidiaries and associates, while net sales from core business activities remain relatively low, thereby impacting the calculation of the Day’s Sales in Receivables.
In 2022, the Day’s Sales in Receivables improved to 1,440.49 days This reduction represents progress in the company's efforts to reduce collection times
The reduction in Day’s Sales in Receivables from 2021 to 2022 indicates a positive trend in the company’s collection efficiency This improvement highlights advancements in accounts receivable management, including the adoption of more effective payment collection processes and proactive measures to address delinquent accounts.
2 Accounts Receivable Turnover = Net Sales
End-of-year receivables, net 1,746,098,321,469 1,879,162,382,953 Beginning-of-year receivable, net 1,531,080,636,913 1,746,098,321,469 Provision for short-term doubtful debts:
Ending gross receivables (net plus provision) 1,747,468,169,302 1,887,331,931,908
Beginning gross receivables (net plus provision) 1,539,580,906,289 1,747,468,169,302
Average gross receivables (B) 1,643,524,537,795.5 1,817,400,050,605 Accounts receivables turnover (A/B) 0.24 times 0.26 times
2 Accounts Receivable Turnover 0.24 times 0.26 times 0.02 8.33%
Accounts Receivable Turnover for 2022 increased slightly in comparison with
The fluctuation in the Accounts Receivable Turnover ratio from 2021 to 2022 indicates changes in the effectiveness of the company's management of accounts receivable
In 2021, the Accounts Receivable Turnover ratio was 0.24 times This means that, on average, the company collected its accounts receivable 0.24 times during the year
A lower ratio suggests a slower turnover of receivables, indicating that customers took longer to pay their outstanding balances
In 2022, the Accounts Receivable Turnover ratio rose to 0.26 times, reflecting a modest improvement in the speed at which customers settle their outstanding balances This increase indicates that the company has likely adopted effective strategies to enhance the collection process and manage receivables more efficiently.
The increase in the accounts receivable turnover ratio from 2021 to 2022 reflects the company's improved effectiveness in collecting receivables Although the rise is modest, it demonstrates a positive trend in receivables management To further enhance cash flow efficiency, the company must persist in monitoring and optimizing its collection practices.
3 Accounts Receivable Turnover in Days = Average Gross Receivables
Accounts Receivable Turnover in Days for 2021 = 1,643,524,537,795.5
Accounts Receivable Turnover in Days for 2022 = 1,817,400,050,605
Accounts Receivable Turnover in Days for 2022 declined slightly in compared with 2021 at 108.82 days, equivalent to 7.27%
The decline in Accounts Receivable Turnover in Days from 2021 to 2022 reflects a positive trend for the company, attributed to the worsening of Days Sales in Receivables during this period To sustain this momentum, the company should maintain its focus on improving its receivables management strategies.
21 optimizing its accounts receivable management activities to further reduce turnaround times and improve cash flow efficiency
4 Day’s Sales in Inventory = Ending Inventory
Day’s Sales in Inventory for 2021 = 947,836,253
Day’s Sales in Inventory for 2022 = 355,438,253
4 Day’s Sales in Inventory 3.91 days 2.49 days (1.42) (36.32%)
The Day’s Sales in Inventory ratio dropped from 3.91 days in 2021 to 2.49 days in 2022, reflecting a significant improvement of approximately 36.32% This decline indicates that the company has enhanced its inventory management efficiency and sales strategy, successfully reducing excess inventory levels while achieving a better balance between production and demand.
The reduction in the Day’s Sales in Inventory ratio from 2021 to 2022 highlights the company's effective inventory management strategies This positive trend indicates successful efforts to optimize inventory levels, lower carrying costs, and enhance cash flow efficiency By increasing inventory turnover, the company can better manage its stock and allocate resources more effectively.
5 Inventory Turnover = Cost of Goods Sold
Inventory Turnover (A/B) 19.51 times per year 79.77 times per year
Inventory Turnover for 2022 grew sharply (from 19.51 times to 79.77 times) in compared with 2021 at 60.26 times, equivalent to 308.87%
In 2022, the Inventory Turnover ratio soared to 79.77 times, reflecting the company's ability to sell and replace its inventory nearly 80 times within the year This remarkable increase indicates enhanced inventory management efficiency or a significant surge in demand for the company's products.
23 to optimize inventory levels, reduce carrying costs, and improve cash flow efficiency by effectively managing its inventory
The substantial rise in the Inventory Turnover ratio from 2021 to 2022 highlights improvements in the company's inventory management, showcasing enhanced efficiency in inventory control This growth indicates successful alignment of production and sales with customer demand, allowing the company to lower holding costs, mitigate the risk of obsolescence, and optimize resource allocation.
6 Inventory Turnover in Days = Average Inventory
Inventory Turnover in Days for 2021 = 4,538,875,770.5
Inventory Turnover in Days for 2022 = 651,637,253
Inventory Turnover in Days for 2022 has fallen sharply at 14.13 times, equivalent to 75.52% in compared with 2021
From 2021 to 2022, Inventory Turnover in Days saw a significant decrease, highlighting the company's enhanced efficiency in selling inventory swiftly This improvement indicates a more effective inventory management strategy, contributing to overall operational success.
24 management methods, which can have a positive impact on cash flow, profits, and overall operating efficiency
7 Operating Cycle = Accounts Receivable Turnover in Days + Inventory Turnover in Days
In 2022, the company's Operating Cycle dramatically reduced to 7.07 days from 22.62 days in 2021, reflecting a 68.74% improvement This significant decrease indicates enhanced efficiency in converting resources into cash, driven by better inventory management, improved payment terms, and effective accounts receivable collection methods The implementation of these strategies has positively impacted the company's cash flow, liquidity, and overall financial health.
8 Working Capital = Current Assets – Current Liabilities
In 2021, the Working Capital amounted to 3,798,795,847,942 VND, indicating the difference between a company's current assets, including cash, inventory, and accounts receivable, and its current liabilities, such as accounts payable and short-term debt A higher working capital signifies a greater ability for the company to meet its short-term obligations and effectively fund its operations.
In 2022, the company's working capital fell to 3,339,717,920,468 VND, reflecting a decline in available resources for meeting short-term obligations This reduction may be attributed to factors such as diminished cash reserves, heightened accounts payable, or a decrease in inventory value.
The decline in Working Capital from 2021 to 2022 indicates a possible challenge to the company's liquidity and its capacity to fulfill short-term financial commitments It is crucial for the company to diligently oversee and manage its working capital to maintain adequate resources for operations and to handle unforeseen financial demands.
To effectively address the decline in working capital, the company must analyze the contributing factors and implement strategies to mitigate potential issues Key actions may involve enhancing cash management practices and optimizing inventory management to improve overall financial health.
26 levels effectively, negotiating favorable payment terms with suppliers, and optimizing accounts receivable collection processes
Long-term debt-paying ability of FPT Corporation
1 Times Interest Earned Recurring Earnings, Excluding Interest Expense, Taxes Expense, Equity Earnings, and Noncontrolling Interest Interest Expense, Including Capitalized Interest
Income before income taxes 2,929,621,491,877 3,115,152,613,533 Plus: Interest expense 233,796,715,258 241,666,859,099 Adjusted income (A) 3,163,418,207,135 3,356,819,472,632
Total interest expense (B) 233,796,715,258 241,666,859,099 Times interest earned (A/B) 13.53 times per year 13.89 times per year
In 2022, the Times Interest Earned ratio saw a modest increase to 0.36, reflecting a 2.27% improvement from 2021 This rise indicates the company's enhanced ability to cover interest expenses, showcasing greater operating income relative to interest costs Consequently, it signifies improved profitability and financial stability, highlighting the company's effective debt management and a reduced risk of defaulting on interest payments.
2 Fixed Charge Coverage Recurring Earnings, Excluding Interest Expense, Tax Expense, Equity Earnings, and Noncontrolling
Interest + Interets Portion of Rentals Interest Expense, Including Capitalized Interest + Interest Portion of Rentals
The result of this ratio is the same as Times Interest Earned, because the company does not have a rental contract, so Interest Portion of Rentals is 0
In 2021, the Debt Ratio was 36.89% A higher Debt Ratio suggests a higher level of debt relative to the company's total assets
In 2022, the company's Debt Ratio fell to 33.57%, reflecting a reduced dependence on debt financing This decline indicates that the company has either decreased its debt levels or increased its total assets, leading to a healthier balance between debt and equity As a result, the company demonstrates an improved financial position with potentially lower financial risk.
4 Debt/Equity Ratio = Total Liabilities
In 2021, the Debt/Equity Ratio stood at 58.46%, reflecting the relationship between a company's total debt and its total equity A higher Debt/Equity Ratio indicates increased financial risk, as it signifies a greater amount of debt compared to the company's equity.
In 2022, the Debt/Equity Ratio decreased to 50.54% This indicates a lower level of debt relative to equity and a reduction in the company's reliance on debt financing
The decrease in the ratio suggests that the company may have paid off a portion of its debt, increased its equity, or both
The decline in the Debt/Equity Ratio from 2021 to 2022 indicates a reduction in the company's debt burden, reflecting enhanced financial stability and a more balanced capital structure between debt and equity.
5 Debt to Tangible Net Worth Ratio = Total Liabilities
In 2021, the Debt to Tangible Net Worth Ratio was 58.57% This ratio measures the proportion of a company's total debt to its tangible net worth A higher Debt to
Tangible Net Worth Ratio suggests a higher level of debt in relation to tangible net worth, indicating a higher financial risk
In 2022, the Debt to Tangible Net Worth Ratio fell to 50.67%, reflecting a reduced dependence on debt financing and a healthier financial position This decline indicates that the company has either lowered its debt levels, enhanced its tangible net worth, or achieved a combination of both improvements.
The decline in the Debt to Tangible Net Worth Ratio from 2021 to 2022 signifies a reduction in the company's debt compared to its tangible net worth, reflecting a stronger financial position with diminished financial risk and a more favorable balance between debt and tangible assets.
Profitability of FPT Corporation
1 Net Profit Margin Net Income Before Noncontrolling Interest, Equity Income and Nonrecurring Items
The Net Profit Margin is a profitability ratio that measures the company's net profit as a percentage of its total revenue
In 2021, the Net Profit Margin was 730.56% A higher Net Profit Margin suggests that the company is generating a higher level of profit relative to its revenue
In 2022, the company's Net Profit Margin fell to 651.40%, reflecting a decline in profitability as a percentage of total revenue This decrease signifies a lower level of net profit, indicating a downturn in the company's overall financial performance.
FPT Corporation, as the parent company, primarily generates income through financial means, including dividends from its eight subsidiaries and two associated companies Despite low net sales from business activities, this structure results in a significantly high net profit margin ratio.
2 Total Asset Turnover = Net Sales
Total asset turnover (A/B) 0.022 times 0.023 times
Between 2021 and 2022, the Total Asset Turnover saw a minor increase to 0.001 times, reflecting a 4.55% improvement This slight rise indicates that the company has enhanced its ability to generate revenue from its total assets, either by boosting revenue or by efficiently maintaining it while optimizing asset utilization.
The slight increase in Total Asset Turnover reflects a positive trend in the company's asset utilization and its ability to generate revenue A higher Total Asset Turnover ratio typically signifies improved financial performance and greater efficiency in asset utilization.
3 Return on Assets Net Income Before Noncontrolling Interest of Earning and Nonrecurring Items
In 2022, the Return on Assets (ROA) fell to 15.53%, marking a 0.63% decline from 2021 This reduction reflects a slight decrease in the company's efficiency in generating profit from its total assets, indicating a diminished profitability relative to the overall size of its asset base.
To enhance profitability and asset utilization, the company must investigate the causes behind the decline in Return on Assets By efficiently managing resources, controlling expenses, and maximizing revenue opportunities, the company can improve its Return on Assets and drive financial performance.
Year Return on Assets = Net Profit Margin x Total Asset Turnover
5 Operating Income Margin = Operating Income
Operating Income and Operating Assets
Total assets 16,604,172,723,297 19,651,313,685,470 20,464,538,280,354 Less:Deferred income taxes
Operating Income Margin for 2022 increased significantly in compared with
The notable rise in Operating Income Margin between 2021 and 2022 reflects a positive trend in the company's financial performance, indicating successful strategies aimed at improving operational efficiency, cost reduction, and effective pricing management To sustain this growth, the company should persist in implementing strategies that bolster this upward trajectory and further enhance its financial health.
6 Operating Asset Turnover = Net Sales
Operating asset turnover (A/B) 0.022 times per year 0.024 times per year
Operating Asset Turnover for 2022 increased insignificantly in comparison with
The recent increase in the company's revenue generation ratio signifies a modest enhancement in its efficiency with operating assets This improvement indicates that the company has either boosted its revenue or successfully sustained it while optimizing the use of its operating assets.
The rise in Operating Asset Turnover from 2021 to 2022 highlights the company's improved efficiency in generating revenue from its operating assets Although the increase is modest, it reflects a positive trend in asset utilization and revenue generation A higher Operating Asset Turnover ratio typically suggests enhanced financial performance and effective use of operating assets.
7 Return on Operating Assets = Operating Income
Return on Operating Assets for 2021 = 312,444,893,449
Return on Operating Assets for 2022 = 426,243,284,487
In 2022, the Return on Operating Assets increased from 1.72% to 2.13%
The rise in Return on Operating Assets from 2021 to 2022 highlights a significant enhancement in the company's efficiency in generating profits from its operating assets, demonstrating improved utilization of these resources.
37 generating higher profitability The company should continue to pursue strategies that enhance the return on its operating assets to further improve its financial performance
To enhance the Return on Operating Assets, the company should prioritize strategies that boost profitability from its operating assets Key measures include optimizing production processes, increasing inventory turnover, refining sales and marketing initiatives, and effectively managing operating expenses.
8 DuPont Return on Operating Assets
9 Sales to Fixed Assets = Net Sales
Average Net Fixed Assets (Exclude Construction in Progress)
Sales to fixed assets (A/B) 0.34 times per year 0.24 times per year
The decline in the Sales to Fixed Assets ratio from 2021 to 2022, which fell by 0.1 times annually, indicates a reduction in the efficiency of the company's fixed asset utilization for generating sales revenue To address this issue, the company should prioritize strategies to enhance the effectiveness of its fixed assets in driving sales growth.
Implementing 38 effective strategies can significantly boost sales revenue and enhance the efficiency of fixed asset utilization Key measures include optimizing production processes, refining pricing strategies, enhancing marketing efforts, and assessing the necessity for additional fixed assets.
10 Return on Investment Net Income Before Noncontrolling Interest and
Nonrecurring Items +[Interest expense x (1 - Tax Rate)]
Average (Long-term Liabilities + Equity)
Interest expense x (1 - tax rate) 187,037,372,206 193,333,487,279 Net profit before tax + Interest expense x (1 – tax rate) (C)
Total long-term liabilities and shareholders’ equity:
Between 2021 and 2022, the Return on Investment (ROI) experienced a minor decline of 1.76% This slight reduction indicates a diminished capacity for the company to generate profits in relation to its investments, highlighting a decrease in profitability when compared to the scale of its financial commitments.
The decline in Return on Investment (ROI) from 2021 to 2022 may be attributed to several factors, including reduced profitability, rising production or operational costs, increased investments in fixed assets, and shifts in the company's revenue structure Furthermore, external influences such as economic conditions, industry trends, and competitive pressures could also have played a significant role in affecting ROI during this period.
11 Return on Total Equity Net Income Before Noncurring Items - Dividends on Redeemable Preferred Stock
Return on Total Equity for 2022 decreased insignificantly in comparison with