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MINISTRY OF FINANCE
ACADEMY OF FINANCE
FACULTY OF FOREIGN LANGUAGES
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GRADUATION THESIS
FINANCIAL ANALYSIS OF SAI GON – DONG XUAN
BEER AND ALCOHOL JOINT STOCK COMPANY


Academy of Finance

Graduation paper

MINISTRY OF FINANCE
ACADEMY OF FINANCE
FACULTY OF FOREIGN LANGUAGES
-----*****-----

FINANCIAL ANALYSIS OF SAI GON – DONG XUAN
BEER AND ALCOHOL JOINT STOCK COMPANY
SUMMITED IN PARTIAL FULFILMENT OF THE
REQUIREMENTS FOR THE DEGREE OF BACHELOR OF ART IN
ENGLISH FOR FINANCE AND ACCOUNTING


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DECLARATION

I hereby declare that this thesis is my own work and effort. It has not been
submitted anywhere for any award. Where other sources of information have
been used, they have been acknowledged.

Signature:

…..........................

Mông Hữu Lộc

Date:

…………………


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ACKNOWLEDGEMENT

Firstly, I want to express my deep gratitude to Ms Bui Thi Tuyet Mai for her
supports and advices to help me complete this study. She has been an
outstanding advisor; always very flexible and willing to let her students work at
their own pace, while making sure that things are going all right. I always found

her highly accessible and I thank her for the weekly meeting that kept me
motivated and suggested idea to complete my study.
Secondly, without the kind support of board of directors, managers and
employees of Sai Gon – Dong Xuan Beer and Alcohol Joint Stock Company for
their participation in my study, it never becomes such a real case so I would like
to express my great acknowledgement to them.
Last but not least, I also want to express my thanks to my family who gave me
enthusiastic support and shared house work with me during the last years while I
was doing my study.

Thank you very much.

Mông Hữu Lộc


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ABSTRACT

In the business world, managers understand that constantly posting profits
requires careful planning. Corporate finance analysis determines useful
interrelations in operating information and also enables firms to find suitable
ways to raise funds, usually on financial markets. Therefore, this study, titled
“Financial analysis of Sai Gon – Dong Xuan Beer and Alcohol Joint Stock
Company”, focuses on the following main content:
Firstly, this study analyzes the liquidity, performance and profitability position of
the company in order to determine in an effective manner by using financial
tools combined.

Secondly, it is carried out to evaluate the financial situation, the operational
results as well as financial progress of a business based on financial statements
Ratio Analysis and Comparative balance sheet.
Finally, this study also explains ways in which ratio analysis can be of assistance
in long-term planning, budgeting and asset management to strengthen financial
performance and help avoid financial difficulties.
In conclusion, I hope that this study will help to identify and bring out
suggestions about weak position of business transactions at Sai Gon – Dong
Xuan Beer and Alcohol Joint Stock Company.


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TABLE OF CONTENT
CHAPTER I: SOME BASIC THEORIES ABOUT CORPORATE FINANCIAL
ANALYSIS

1.1 Definition, objectives and missions of corporate financial analysis.
1.1.1 Definition of corporate finance and corporate financial analysis.
1.1.1.1 Definition of corporate finance.
1.1.1.2 Definition of corporate financial analysis.
1.1.2 Objectives and missions of corporate financial analysis.
1.1.2.1 Objectives of corporate financial analysis.
1.1.2.2 Missions of corporate financial analysis.
1.2 Information used in financial analysis.
1.2.1 The balance sheet.
1.2.2 The income statement.
1.2.3 The cash flow statement.

1.3 Methods of financial analysis.
1.3.1 Comparison method.
1.3.2 Ratio analysis method.
1.3.3 DuPont analysis method.
1.4 Content of financial analysis.
1.4.1 Liquidity ratios.
1.4.2 Asset and Debt structure ratios.


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1.4.3 Asset Management ratios.
1.4.4 Profitability ratios.

CHAPTER II: FINANCIAL ANALYSIS OF SAI GON – DONG XUAN BEER
AND ALCOHOL JOINT STOCK COMPANY.

2.1 Overview about Sai Gon – Dong Xuan Beer and Alcohol Joint stock
company.
2.1.1 History and development progress.
2.1.2 Some characteristics of the company.
2.1.2.1

Product key

2.1.2.2

Organization structure


2.1.2.3

Characteristics of input and output market

2.2 Financial analysis of Sai Gon – Dong Xuan Beer and Alcohol Joint stock
company.
2.2.1 Financial ratio analysis.
2.2.1.1

Liquidity ratio analysis.

2.2.1.2

Asset and Debt structure ratio analysis.

2.2.1.3

Asset Management ratio analysis.

2.2.1.4

Profitability ratio analysis.

2.2.2 DuPont analysis.
CHAPTER III: RECOMMENDATIONS FOR IMPROVING FINANCIAL
SITUATION OF SAI GON – DONG XUAN BEER AND ALCOHOL JOINT
STOCK COMPANY.



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3.1 Development orientation of company.
3.2 Recommendations for improving financial situation of company.

CONCLUSION
REFERENCES


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LIST OF ABREVIATIONS

DSO

: Days’ sales outstanding

EBIT : Earning before interest and tax
ROA

: Return on assets

ROAE : Economic return on assets
ROE

: Return on equity

ROI


: Return on investment

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LIST OF TABLES, CHARTS AND FIGURES

Figure 2.1: Organization structure of Sai Gon – Dong Xuan Beer and
Alcohol Joint Stock Company.
Table 2.1: The liquidity ratios
Table 2.2: Asset and Debt structure ratios
Table 2.3: The asset management ratios
Table 2.4: Profitability ratios
Table 3.1: Business plan of the company in 2013
Table 3.2: Relation between current assets and equity
Table 2.5: DuPont analysis
Chart 2.1: Liquidity ratios
Chart 2.2: The debt ratio
Chart 2.3: Short-term asset ratio
Chart 2.4: Days’ sales in inventory
Chart 2.5: Days’ sales outstanding
Chart 2.6: Fixed asset turnover and Total asset turnover
Chart 2.7: The profitability ratios



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INTRODUCTION

1. Rationale of the study
As the competition in business is becoming more and more acute, financial
situation now is the concern of not only the business owners but also the concern
of many components of the economy such as investors, lenders, government and
employees. Thereby they will see the actual situation of the enterprise after each
business cycle, and analyze business activities. Through the analysis, they can
make the right decisions related to business and create conditions to improve
financial viability of the enterprise.
The regular analysis of the financial situation will help businesses find the actual
situation of financial activities, business activities results in the period as well as
determine fully and correctly potential, efficiency of the businesses. Besides, it
also presents business risks so managers can bring out effective solutions,
accurate decisions to improve the quality of economic management and the
production efficiency of the business. Therefore, the financial analysis of a
business is very essential.
Financial statements is the primary document used to analyze the financial
situation of enterprises because it shows a general way about the situation,
capital, asset indicators as well as the financial situation, business performance
of the enterprise. However, the information that financial statements provide is
incomplete because it does not explain clearly about financial activities, risks,


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prospects and trends development of the business. Analysis of the financial
situation will be filled for this deficiency.
Carrying out my internship period in Sai Gon – Dong Xuan Beer and Alcohol
Joint Stock Company, I have a chance to study the company’s financial situation
and find the solution to improve or overcome shortcomings. Thus, I chose the
study “Financial analysis of Sai Gon – Dong Xuan Beer and Alcohol Joint Stock
Company” with the aim of having an overview of financial activities, risks and
economic efficiency of Sai Gon – Dong Xuan Beer and Alcohol Joint Stock
Company.
2. Aims of the study
This study gains a full view of financial situation, advantages and disadvantages
of financial activities in order to find out solutions to improve the efficiency of
financial activities. Moreover, some recommendations are brought out to get a
better management method at Sai Gon – Dong Xuan Beer and Alcohol Joint
Stock Company.
3. Methodology
In order to perform this study, I first choose the method of analyzing,
summarizing, comparing and synthesizing materials and books to form the
theoretical background. Besides, I also use charts, tables and factual data for
support. From the collected information and data, I can assess and analyze the
financial situation to draw conclusion and find out feasible solutions to improve
economic efficiency of Sai Gon - Dong Xuan Beer and Alcohol Joint Stock
Company.


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4. Scope of the study
This study is intended, as the title suggests: “Financial analysis of Sai Gon –
Dong Xuan Beer and Alcohol Joint Stock Company”, to touch upon the
background and characteristics of Sai Gon – Dong Xuan Beer and Alcohol Joint
Stock Company. Besides, by using financial statements, this study analyzes the
current financial situation of the company and brings out some practical
recommendations to improve economic efficiency of the company.
5. Organization of the study
The study is divided into three chapters:
Chapter 1: Some basic theories about corporate financial analysis.
Chapter one conceptualizes about corporate financial analysis as well as its
objectives and missions. Moreover, this chapter presents an overview of financial
statement such as the balance sheet, the income statement and the cash flow
statement. Based on the literature review, chapter one also elaborates on methods
and content of financial analysis.
Chapter 2: Financial analysis of Sai Gon – Dong Xuan Beer and Alcohol
Joint Stock Company.
Chapter two presents an overview and development progress of Sai Gon – Dong
Xuan Beer and Alcohol Joint Stock Company. This chapter also presents the
crucial part of the study which analyzes the financial situation of the company.
Chapter 3: Recommendations for improving financial situation of Sai Gon –
Dong Xuan Beer and Alcohol Joint Stock Company.


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As titled, chapter three is going to give some recommendations for improving

financial situation of Sai Gon – Dong Xuan Beer and Alcohol Joint Stock
Company.
6. Significance
It is hoped that this study, to some extent, will be a useful reference material and
inspiration for managers and administrators to build strategic plan in the near
future.


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CHAPTER I: SOME BASIC THEORIES ABOUT CORPORATE
FINANCIAL ANALYSIS.

1.1 Definition, objectives and missions of corporate financial analysis.
1.1.1
1.1.1.1

Definition of corporate finance and corporate financial analysis.
Definition of corporate finance.

Corporate finance is an area of finance dealing with financial decisions that
business enterprises make and the tools and analysis used to make these
decisions. The primary goal of corporate finance is to maximize corporate
value while managing the firm’s financial risks.
The discipline can be divided into long-term and short-term decisions and
techniques. Capital investment decisions are long-term choices about which
projects receive investment, whether to finance that investment with equity or
debt, and when or whether to pay dividends to shareholders. On the other

hand, short term decisions deal with the short-term balance of current assets
and current liabilities; the focus here is on managing cash, inventories, and
short-term borrowing and lending (such as the terms on credit extended to
customers).
1.1.1.2

Definition of corporate financial analysis.

Financial analysis (also named financial statement analysis or accounting
analysis or analysis of finance) refers to an assessment of the viability,
stability and profitability of a business, sub-business or project.


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Corporate financial analysis examines the use of financial statements in
assessing a firm's financial health, its strengths, weaknesses, recent
performance and future prospects. Special issues dealing with financial
statement information are emphasized in some depth. These issues include:
market efficiency, asset pricing, corporate restructuring and business
valuation, debt ratings and financial distress.
1.1.2
1.1.2.1

Objectives and missions of corporate financial analysis.
Objectives of corporate financial analysis.

Financial activities of the business including the following basic contents:

determine the capital needs of the business and look for ways to raise capital
and use it efficiently. Financial activities play an important role in production
and business activities and are crucial in survival and development of
enterprises. This role has been shown since the establishment of the business
when setting up the initial project, scheduled activities and capital
mobilization.
To be able to set up an enterprise, owners need to have a certain amount of
capital, including: fixed capital, working capital and other specialized capital.
Moreover, enterprise needs to take effective capital mobilization and use it
efficiently on the basis of respect for the principles of finance, credit and law
enforcement. The analysis of the financial situation will help the business
managers and the government to know clearly about financial activities and
determine fully the cause and the impact of each indicator to the financial
situation of enterprise. From which managers make effective measures in
order to stabilize and improve the financial situation of enterprises.


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People are only interested in the financial situation of enterprises in different
aspects such as: the investors, the lenders, suppliers, customers. However, the
problem that people are most interested in is the ability to generate cash flow,
profitability, solvency and the maximum profit of the business. Therefore, in
analyzing the financial situation of the enterprise, we need to achieve the
following main objectives:
Firstly, financial analysis have to provide complete, timely, truthful and
useful information systems which is necessary for business owners and other
participants


such

as:

investors,

corporate

board,

lenders,

superior

management agencies and other users of financial information, to help them
make right decision when investing and lending.
Secondly, financial analysis have to fully provide the most important
information for business owners, investors, lenders and other users of
financial information in evaluating ability and stability of cash inflows or
cash outflows of business, the efficiency of using capital, and liquidity of the
enterprise.
Thirdly, financial analysis must provide fully information about the sources of
equity, debt, the result of the process, events, transactions which change the
capital and liabilities of the business.
1.1.2.2

Missions of corporate financial analysis.

The missions of corporate financial analysis is based on the principles of

corporate finance to analyze and assess the current situation and prospects of
financial activities and indicate the advantages and disadvantages of monetary
income and expenditure so as to carry out effective measures to further


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improve the production efficiency of the enterprise. In order to achieve the
main objectives, the basic missions of corporate financial analysis are:
i.

Analysis of general financial situation of the business.

ii.

Analysis of the situation and solvency of the business.

iii.

Analysis of the reserve current assets.

iv.

Analysis of the performance ratios.

v.

Analysis of the profitability.


1.2 Information used in financial analysis.
1.2.1 The balance sheet.
A balance sheet is a snapshot of a business’ financial condition at a specific
moment in time, usually at the close of an accounting period. For example, the
amounts reported on a balance sheet dated December 31, 2011 reflect that
instant when all the transactions through December 31 have been recorded.
A balance sheet comprises assets, liabilities, and owners’ or stockholders’
equity. Assets and liabilities are divided into short- and long-term obligations
including cash accounts such as checking, money market, or government
securities. At any given time, assets must equal liabilities plus owners’ equity.
An asset is anything the business owns that has monetary value. Liabilities are
the claims of creditors against the assets of the business.
A balance sheet helps a small business owner quickly get a handle on the
financial strength and capabilities of the business. Is the business in a position


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to expand? Can the business easily handle the normal financial ebbs and flows
of revenues and expenses? Or should the business take immediate steps to
bolster cash reserves? The balance sheet also allows other participants - like a
creditor - to see what a company owns as well as what it owes to other parties
as of the date indicated in the heading. This is valuable information to the
banker who wants to determine whether or not a company qualifies for
additional credit or loans. Others who would be interested in the balance sheet
include current investors, potential investors, company management, suppliers,
some customers, competitors, government agencies, and labor unions.

The balance sheet provides information that is useful when assessing the
financial stability of a company. A number of financial ratios use numbers from
the balance sheet including gearing, the current assets ratio and the quick assets
ratio. However, ratios based on profits and cash flow is at least as important for
assessing financial stability: the most important of these are interest cover and
cash interest cover. If any assets or (more commonly) liabilities that belong to
the company in their economic effect do not appear on the balance sheet
because accounting standards do not require it, they are referred to as offbalance sheet. A balance sheet is usually presented in two sections that must
reach to same total - this requirement that the two sections balance is the reason
it is called a balance sheet.

1.2.2

The income statement.


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An income statement (US English) or profit and loss account (UK English)
(also referred to as a profit and loss statement (P&L), revenue statement,
statement of financial performance, earnings statement, operating statement, or
statement of operations) is one of the financial statements of a company and
shows the company's revenues and expenses during a particular period. It
indicates how the revenues (money received from the sale of products and
services before expenses are taken out, also known as the "top line") are
transformed into the net income (the result after all revenues and expenses have
been accounted for, also known as "net profit" or the "bottom line"). It displays
the revenues recognized for a specific period, and the cost and expenses

charged against these revenues, including write-offs (e.g., depreciation and
amortization of various assets) and taxes. The purpose of the income statement
is to show managers and investors whether the company made or lost money
during the period being reported. The important thing to remember about an
income statement is that it represents a period of time. This contrasts with the
balance sheet, which represents a single moment in time.
Income statements should help investors and creditors determine the past
financial performance of the enterprise, predict future performance, and assess
the capability of generating future cash flows through report of the income and
expenses. To a serious investor, income statement analysis reveals much more
than a company's earnings. It provides important insights into how effectively
management is controlling expenses, the amount of interest income and
expense, and the taxes paid. Investors can use income statement analysis to
calculate financial ratios that will reveal the rate of return the business is
earning on the shareholders' retained earnings and assets (in other words, how


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well they are investing the money under their control). They can also compare
a company's profits to its competitors by examining various profit margins such
as the gross profit margin, operating profit margin, and net profit margin.
1.2.3

The cash flow statement.

In financial accounting, a cash flow statement, also known as statement of cash
flows, is a financial statement that shows how changes in balance sheet

accounts and income affect cash and cash equivalents, and breaks the analysis
down to operating, investing, and financing activities. Essentially, the cash flow
statement is concerned with the flow of cash in and out of the business. The
statement captures both the current operating results and the accompanying
changes in the balance sheet. As an analytical tool, the statement of cash flows
is useful in determining the short-term viability of a company, particularly its
ability to pay bills. International Accounting Standard 7 (IAS 7) is the
International Accounting Standard that deals with cash flow statements.
The cash flow statement includes only inflows and outflows of cash and cash
equivalents; it excludes transactions that do not directly affect cash receipts and
payments. These non-cash transactions include depreciation or write-offs on
bad debts or credit losses to name a few. The cash flow statement is a cash
basis report on three types of financial activities: operating activities, investing
activities, and financing activities. Non-cash activities are usually reported in
footnotes.
The cash flow statement is intended to provide information on a firm's liquidity
and solvency and its ability to change cash flows in future circumstances.
Moreover, it also provide additional information for evaluating changes in


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assets, liabilities and equity and improve the comparability of different firms'
operating performance by eliminating the effects of different accounting
methods.
The cash flow statement has been adopted as a standard financial statement
because it eliminates allocations, which might be derived from different
accounting methods, such as various timeframes for depreciating fixed assets.


1.3 Methods of financial analysis.
1.3.1 Comparative method.
In order to apply the comparison method, the financial indicators must be unity
of space, time, content, characteristics, unit of account... and the purpose of
analysis that determining the base year.
Comparative analysis can be used for single comparison to compare
performance of a particular business or an enterprise through time (for
example, comparison of performance in Years 1, 2, 3). It can also be used for
multi-comparison of one enterprise with other enterprises. Content of
comparison method:
The first is comparison of the number made in this period with previous periods
to see a clearly change in corporate finance. Evaluate the growth or lack in the
business activities.
The second is comparison between numbers done and numbers planed to know
clearly about the achievement of the enterprise.


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The third is comparison between enterprise’s ratios with the industry average to
evaluate financial situation of their business.
The final is Vertical Compare to consider the proportion of each indicator with
overall to see the financial structure of the enterprise.
1.3.2

Ratio analysis method.


Financial statement analysis is the process of analyzing financial statements of
a company so as to obtain meaningful information about its survival, stability,
profitability, solvency and growth prospect. The financial statement analysis
can be performed by using a number of techniques such as comparative
statements, common size statements and ratio analysis. Ratio analysis is the
most popularly and widely used technique of financial statement analysis.
In a simple word, ratio is a quotient of two numerical variables, which shows
the relationship between the two figures. Accordingly, accounting ratio is a
relationship between two numerical variables obtained from financial
statements such as income statements and balance sheet. The income statement
or profit and loss account shows the operating results in terms of net profit or
loss of a company for a specific period.
The balance sheet, on the other hand, shows the financial position of the
company at the end of that period. Accounting ratios are used as an important
tool of analyzing the financial performance of the company over the years and
its comparative position among other companies in the industry.
Ratio analysis is the process of determining and interpreting numerical
relationship between figures of financial statements. Since an absolute
accounting figure often does not provide much meaning by itself, it has to be


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analyzed in relation to other figures so that significant information about the
company's financial performance can be derived.
Ratio analysis is a process of determining and presenting the quantitative
relationship between two accounting figures to evaluate the strengths and
weakness of a business. It is important from the point of view of investors,

creditors and management for analysis and interpretation of a firm's financial
health.
1.3.3

DuPont analysis method.

DuPont analysis (also known as the DuPont formula, DuPont Model, DuPont
equation or the DuPont method) is a method for assessing a company's return
on equity (ROE) breaking its into three parts. The name comes from the
DuPont Corporation that started using this formula in the 1920s.
The DuPont Analysis is important determines what is driving a company's
ROE; Profit margin shows the operating efficiency, asset turnover shows the
asset use efficiency, and leverage factor shows how much leverage is being
used.
The method goes beyond profit margin to understand how efficiently a
company's assets generate sales or cash and how well a company uses debt to
produce incremental returns.
Using these three factors, a DuPont analysis allows analysts to dissect a
company, efficiently determine where the company is weak and strong and
quickly know what areas of the business to look at (i.e., inventory management,
debt structure, margins) for more answers. The measure is still broad, however,
and is not a substitute for detailed analysis.


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The DuPont analysis looks uses both the income statement as well as the
balance sheet to perform the examination. As a result, major asset purchases,

acquisitions, or other significant changes can distort the ROE calculation.
Many analysts use average assets and shareholders' equity to mitigate this
distortion, although that approach assumes the balance sheet changes occurred
steadily over the course of the year, which may not be accurate either.

1.4 Content of financial analysis.
1.4.1 Liquidity ratios.
Liquidity ratios are probably the most commonly used of all the business ratios.
Creditors may often be particularly interested in these because they show the
ability of the business to quickly generate the cash needed to pay the bills.
The lack of liquidity can make business to be unable to pay mature debts and
went bankrupt. Therefore attention should be paid to the solvency of the
business.
Liquidity ratios are sometimes called as working capital ratios because that, in
essence, is what the measure. The Liquidity ratios are:
Current ratio =
Current ratio shows the relationship between current assets and short-term debt.
Current assets include cash, short-term securities which is easy to transfer into
cash, receivables, and the cash reserves… Short-term debts include short-term
loans of commercial banks and other credit institutions, payables… Both
current assets and current liabilities have a term of less than one year.