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PART 1: COMPANY INTRONDUCTION

1. Company overview
American Vietnamese Biotech Incorporation (AMVI BIOTECH,INC) established on
26/ 08/ 2002 with the capital of 15 billion Vietnam Dong was the corporation of The Sun
company (100% foreign investment), Incomex SaiGon (100% state investment) and Dopharco
(100% state investment).

AMVI BIOTECH, INC. is operating in the field of manufacturing and trading of Bio
Medical Diagnosis, which is the first leading enterprise in Vietnam to develop and manufacture
the series product quick bio diagnosis with modern technology and high quality. These
products are as good as exotic products but with cheaper prices. They are Quick Test for
pregnant HCG, HIV, Hepatitis B HBsAg, Hepatitis C, Malaria, Dengue Hemorrhagic fever,
Syphilis, prostate cancer PSA, LH Ovulation, Opirates Heroin Morphine, combo 5 categories
of Hepatitis B (HbsAg, HbeAg, HbcAb, HbsAb, HbeAb), combo 5 categories of Drugs.
All of the equipment of the firm is imported from the USA, German, Japan, Swiss, China,
which can meet the requirements of quality, capacity, manufacture demand and R&D.
Main business activities:

Pharmaceutical business, trade of medical equipment, tools and chemicals for


medical tests.
Manufacture of medical test tools
Manufacture and trade of vaccines, medical biological.
Agents for consigning goods.
Financial Investment.
Real estate business.
Technology transfer.
Manufacture and trade of soap, antibacterial hand gel, mouthwash, dishwashing
liquid, detergent chemicals.
AMVI BIOTECH, INC runs under the mission of To enhance the lives and health of
citizens by preventing disease from the provision of reliable diagnostic tests with the most
effective cost., which is the task that all the employers of the company have to implement.

Operational function
1.
-

Industry
AMV Vaccine
AMV Diagnostic
AMV Pharmaceutical
AMV Food Supplement
Comestic

2. Development and investment strategies


- Keep maintaining and expanding business activities: Manufacture rapid diagnostic
-

tests, expanded its business, develop some additional rapid diagnostic test products.
Expand distribution network inland to run business of biologicals qualitative

diagnostic, quantitative diagnostic, DNA diagnostic


Promote market expansion, export products to new and potential markets such as
Laos, Cambodia and some countries in Africa, Eastern Europe and Middle East

investors.
Strengthen cooperation in depth research, workshops with hospitals and research
institutes in the whole country to serve the development of new products, such as
Rapid Tests (Qualitative diagnosis biologicals), Elisa (quantitative diagnostic

biologicals), disinfectants (germicidal solution), DNA, RNA


Construct a new factory in Ho Chi Minh City Hi-Tech Park meets the standards of
WHO GMP, ISO to enhance the production capacity and production of new
products.

The organizational structure and


the companys management.
ANNUAL GENERAL MEETING
1.1 The organization chart:
EXECUTIVE COMMITTEE
BOARD OF DIRECTORS

BOARD OF MANAGEMENT

ACCOUNTING DEPARTMENT
ADMINISTRATION DEPARTMENT
SALES DEPARTMENT
MANUFACTURING PLANTS

Northern General Agency

Manufacturing Dept.

Quality Control Dept.

Middle General Agency

Printing Dept.

Packing Dept.

R&D Dept.

Southern General
Agency

1.2 The organization chart explanation:


- Annual General Meeting
Annual General Meeting is the most powerful part of the Company according to the
Enterprise of Law and Corporate Charter. Annual General Meeting is responsible for discussing
and approving long-term and short-term policies about the development of the Company, the
decision on capital structure, electing the board of directors and executing business operation of
the Company.
- Board of Directors
Board of Directors includes five members, have full authority to represent the Company to
decide all matters relating to the objectives and benefits of the Company except matters within
the jurisdiction of the Annual General Meeting that was not authorized. Board of Directors is
responsible for developing strategic decisions of the Company; construction of production and
business plans; building organizational structure, management regulations; giving the measures
and decisions to achieve the objectives set by the Annual General Meeting.
- Executive Committee
Executive Committee is the agency responsible for assisting the Annual General Meeting
to supervise and evaluate the results of business operations of the Company in an objective
manner in order to ensure benefits for shareholders.
- Board of Management
Board of Management includes: General Manager and Deputy Manager.
Board of Management is the executive agency of all business and production activities of
the Company, is responsible for Annual General Meeting and Board of Directors of the entire
production and business operations, implement measures aimed to achieve the objectives of the
Company.
- Departments
Accounting Department
- Develop financial plans in short-term and long-term to ensure appropriate funding sources
for the operation and reinvestment.
- Assist Sales Department for sales statistics and billing.

- Summarize the information, analysis and report to the Board of Director for reference and
decision-making of business operations.
Administration Department
- Recruit new employees, train employees.
- Decide salary scale, approve day off.
- Receive and draft documents, application documents to register products, organize
workshops to introduce products.
Sales Department
- Manage the entire distribution systems and general agencies throughout the country,
support agencies the implementation of the marketing for the procurement and sale of
products.
- Forecast product demand; propose business policies consistent with market conditions.
Manufacturing Plants include following departments:
Quality Control Department: Deploy, implement and monitor quality control activities and
ensure the quality of the Company's products. Establish, implement plans in standards and
maintain quality-test equipment.
Printing Department: design sample packaging, order printing frame and packages.
Operate and organize the printing of packaging products.
Packing Department: Package and storage products.
PART 2: FINACIAL ANALYSIS
Items
A. CURRENT ASSETS
I. Cash and cash equivalents
1. Cash
2. Cash equivalents
II. Short-term investments
1. Short-term investments
2. Provision for diminution in
the value of short-term
investments
III. Account receivables
1. Trade accounts receivable
2. Prepayments to suppliers
3. Intercompany receivables
5. Other receivables
6. Provision for doubtful debts
IV. Inventories
1. Inventories
V. Other current assets
1. Short-term prepayments
2. Value Added Taxed

2012
6,507,419,017
1,784,426,962
1,784,426,962
-

2013
9,455,003,249
2,181,523,772
2,181,523,772
-

2014
8,887,993,228
1,503,535,227
1,503,535,227
-

1,408,344,076
1,209,473,633
98,330,000
100,540,443
2,758,273,074
2,758,273,074
556,374,905
299,344,060
81,183,970

4,982,321,443
3,068,323,064
1,913,232,730
765,649
1,999,663,847
1,999,663,847
291,494,187
67,337,685
177,693,595

4,529,774,607
334,846,232
4,194,928,375
2,095,996,728
2,095,996,728
758,686,666
226,616,485
430,863,330

2012
27.12%
7.44%
7.44%
-

2013
34.96%
8.07%
8.07%
-

5.87%
5.04%
0.41%
0.42%
11.50%
11.50%
2.32%
1.25%
0.34%

18.42%
11.35%
7.07%
0.00%
7.39%
7.39%
1.08%
0.25%
0.66%

2
35
5
5

17
1
16

8
8
3
0
1

deductibles
4. Other current assets
B. NON CURRENT
ASSETS
I. Non-current account
receivables
II. Fixed assets
1. Tangible fixed assets
Cost
Accumulated depreciation
2. Financial leasehold of
Fixed assets
Cost
Accumulated depreciation
3. Intangible fixed assets
Cost
Accumulated amortisation
4. Construction in progress
III. Goodwill
IV. Long-term investments
1. Investment in subsidiaries
2. Investment in joint ventures
and associates
V. Other non-current assets
1. Long-term prepayments
2. Other long-term assets
TOTAL ASSETS

175,846,875

46,462,907

101,206,851

17,485,851,127 17,588,083,001 16,332,930,693


-

16,249,118,468 16,831,298,998 13,454,601,975


1,296,225,276 2,798,948,052 6,476,595,157
4,078,423,396 6,052,066,506 10,173,918,646
-2,782,198,120 -3,253,118,454 -3,697,323,489
2,014,068,211

2,609,442,583
-595,374,372
9,348,306,480 8,892,914,988 4,614,523,496
13,530,830,000 13,530,830,000 9,707,830,000
-4,182,523,520 -4,637,915,012 -5,093,306,504
3,590,518,501 5,139,435,958 2,363,483,322
2,510,208,355
-

2,510,208,355

1,236,732,659
43,072,059
1,193,660,600

756,784,003
31,446,003
725,338,000

368,120,363
368,120,363
-

23,993,270,144 27,043,086,250 25,220,923,921

0.73%

0.17%

72.88%

65.04%

64

67.72%
5.40%
17.00%
-11.60%

62.24%
10.35%
22.38%
-12.03%

53
25
40
-14

8.39%
10.88%
-2.48%
38.96%
56.39%
-17.43%
14.96%
-

32.88%
50.03%
-17.15%
19.00%
-

5.15%
0.18%
4.97%
100.00
%

2.80%
0.12%
2.68%
100.00
%

1. Financial structure
1.1 Assets structure
Structure of total assets of the company Amvi Biotech as follows:
Current assets of the company over the years 2012-2014 tended to rise gradually, from 27% to
35% of total assets and long-term assets decreased from 73% to 65% in total assets. Specifically,
in 2014 the company's total assets reached 25,220,923,921 VND, of which current assets reached
8,887,993,228, representing 35.24% of total assets and long-term assets reached 16,332,930,693,
representing 64.76% of total assets. In particular, the structure of current assets and long-term
assets as follows:
Current assets mainly consist of accounts receivables and inventories. Specifically,
receivables represent high proportion in total assets 17.96% ( 4,529,774,607VND),

18
38
-20
9

9
1
1

10

inventories account for 8.31% of total assets (2,095,996,728 VND). Cash accounted for
5.96% and the company has no short-term financial investments .
Long term assets mainly fixed assets are accounted for 50% to 60% of total asset in this
period.

Assets
fluctuation
Items
A. CURRENT ASSETS
I. Cash and cash equivalents
II. Short-term investments
III. Account receivables
IV. Inventories
V. Other current assets
B. NON CURRENT ASSETS
I. Fixed assets
II. Long-term investments
III. Other non-current assets
TOTAL ASSETS

Growth
2012/2011
-37.51%
-29.02%

Growth
2013/2012

Growth
2014/201
3
45.30%
-6.00%
22.25%
-31.08%

Through the
table shows that the
-52.53%
253.77%
-9.08%
total assets of the
-18.16%
-27.50%
4.82%
company have strong
fluctuations over the
-64.38%
-47.61%
160.28%
years. Specifically, in
-1.15%
0.58%
-7.14%
2012 total assets
-0.45%
3.58%
-20.06%
growth is -14.62%
compared with 2011.
-9.52%
-38.81%
-51.36%
In 2013, it got a
-14.62%
12.71%
-6.74%
positive growth rate of
12.71%, but in 2014 it was -6.74%. The variation in total assets is mainly caused by fluctuations
in current assets. Details are as follows:
Current assets show a abnormal fluctuations, in 2012 all the items in of current assets
decreased compared with the previous, especially, short-term assets and accounts
receivable decreased over a half (yoy) . The period 2013-2014 also fluctuated erratically.
Revenue fell steadily through the year, while short-term assets showed abnormal
movements, this show that company are facing up with many difficulties in business and
inventory, debt, account receivables management are not effective.

Long-term assets of the company also declined in recent years, in 2014 it decreased to
20% compared to previous year.
1.2 Capital-sources structure

A. LIABILITIES
I. Current liabilities
1. Short-term loans and
borrowings
2. Trade accounts payable
3. Advances from
customers
4. Tax and other payables
to the State Budget
5. Payables to employees
6. Accrued expenses
7. Other current liabilities
II. Non-current
liabilities
Long-term loans and
borrowings
B. OWNERS' EQUITY
1. Contributed capital
2. Investment and
Development fund
3. Retained earnings
TOTAL RESOURCES

2012

2013

2012

2013

2014

6,038,550,759
4,525,416,539

2014
13,420,419,67
0
2,058,885,450

3,133,450,674
2,056,017,826

13.06%
8.57%

22.33%
16.73%

53.21%
8.16%

1,500,000,000
230,231,950

500,000,000
117,026,800

930,183,461
587,100,180

6.25%
0.96%

1.85%
0.43%

3.69%
2.33%

64,866,608

8,218,935

164,430,320

0.27%

0.03%

0.65%

157,753,751
44,742,776
17,172,741
41,250,000

42,128,441
96,792,363
3,761,250,000

0.66%
0.19%
0.07%
0.17%

0.16%
0.36%
13.91%

0.65%
0.68%
0.16%

1,077,432,848

1,513,134,220

4.49%

5.60%

45.05%

1,077,432,848
20,859,819,47
0
21,157,500,00
0

1,513,134,220
21,004,535,49
1
21,157,500,00
0

163,639,105
172,282,384
41,250,000
11,361,534,22
0
11,361,534,22
0
11,800,504,25
1
21,157,500,00
0

4.49%

5.60%

45.05%

86.94%

77.67%

46.79%

88.18%

78.24%

83.89%

1,562,792,834

1,562,792,834

6.51%

5.78%

6.20%

1,860,473,364
23,993,270,14
4

1,715,757,343
27,043,086,25
0

-7.75%
100.00
%

-6.34%
100.00
%

43.30%
100.00
%

1,562,792,834
10,919,788,58
3
25,220,923,92
1

Capital
86.94%
100%

77.67%

46.79%

90%
80%
70%
60%

45.05%

50%
40%
30%

5.60%
16.73%

20%
4.49%
8.57%
10%

8.16%

0%
2012

2013
Current liabilities

2014

Non-current liabilities

Owner's equity

a. Self-funded Analysis:
Table 4.4: Quota to analyze financial resoures by years
Ratio
1. Liabilities
2. Current liabilities
3. Non-current liabilities
4. Owners' equity
5. Total asset
6.Dept ratio = (1):(5)
7.Self- funded ratio = (4):(5)

2014
13,420,419,670
2,058,885,450
11,361,534,220
11,800,504,251
25,220,923,921
53.21%
46.79%

2013
6,038,550,759
4,525,416,539
1,513,134,220
21,004,535,491
27,043,086,250
22.33%
77.67%

2012
3,133,450,674
2,056,017,826
1,077,432,848
20,859,819,470
23,993,270,144
13.06%
86.94%

8.Permenant sources =(3)+(4)

23,162,038,471

22,517,669,711

21,937,252,318

2,058,885,450

4,525,416,539

2,056,017,826

91.84%

83.27%

91.43%

8.16%

16.73%

8.57%

9.Temporary sources = (2)


10.Permenant sources ratio=
(8):(5)
11.Temporary sources ratio=
(9):(5)

As we can see from the table, in 2014 the self-funded ratio is increasing significantly
(30,88%) from 2013 to 2014. The main reason is that the owner equity decrease by 56,2% (while
other items in equity remains stable, the retained earning has a sharpen decrease in 2014 by
536% (-10,919,788,583 VND) compared with that in 2013 (-1,715,757,343 VND) and 2012 (1,860,473,364) while the liabilities has a considerable rise by 122% equal to 7,381,868,911 VND
(while current liabilities goes down 54,55% and the non-current liabilities goes up to 650%).
This lead to the increase in the dept ratio of the company because the company need to finance
themselves by other resources besides the equity.

b. Stability of funded source analysis


As we can see from the table, permenant sources ratio in 2014 is 91,84% and in 2013 is
83,27%.
The structure of liabilities in 2014 includes: current liabilities accounts for 8,16 % of total equity
and non-current liabilitis accounts for 45,05% of total equity. The non-current liabilities accounts
for most of the amount of the liabilities (while the proportion of current liabilities is very small)
so the permenant sources ratio v the self-funded ratio have a big difference. Although the selffunded ratio decreases and the dept ratio increases due to the sharpend decrease in equity and
increase in the long-term liabilities, the high permenant sources ratio during 3 years (over 83%)
shows the high stability of
c. Analysis of financial balance
Table: Summary of financial balances analyzed indicators by years
Units: dong
2012

2013

2014

1.Owner equity

23,993,270,144

27,043,086,250

25,220,923,921

2. Long-term assets

17,485,851,127

17,588,083,001

16,332,930,693

= (1)-(2)

6,507,419,017

9,455,003,249

8,887,993,228

4.Inventory

2,758,273,074

1,999,663,847

2,095,996,728

5.Short-term receivable

1,408,344,076

4,982,321,443

4,529,774,607

556,017,826

4,025,416,539

1,128,701,989

=(4)+(5)-(6)

3,610,599,324

2,956,568,751

5,497,069,346

8.Net budget = (3)-(7)

2,896,819,693

6,498,434,498

3,390,923,882

3.Net Working capital


(NWC)

6.Short-term debts
( without bank loan )
7.Need for NWC

From the table we can see that NWC always positive implying financing from capital is quite
good. And even though company not only has enough long-term capital to support its long-term
assets but also surplus to finance short-term needs.
In addition, owner equity always greater than zero and increases steadily over years, hit the
top in 2013. Otherwise, long-term debts rising continuously and unevenly in 2014 shows that
company has invested such relatively large projects and has possibility to face to uncertainty in
safety as well as ability of autonomy in capital.

Net working capital analyzing: is the short-term capital that company needs to offset part of
current assets including inventory and account receivable.
Need for NWC is low, however does not remain constant due to poor inventory and account
receivable management, and ineffective financing support seeking also. However, positive
numbers indicate that financial balance is still in safe because company is not required to borrow
in order to offset the lack of demand for NWC.
Net buget : although NWC of company quite low and the pace of growth is not high,
however, the need still larger than NWC. Positive net budget shows that company does not
encounter harship in short-term payment and its enabled to maintain current business.
Inconclusion, companys financing reaches the equilibrium in short-term and NWC meets the
needs of short-term capital.
2. The operational efficiency analysis
2.1 Assets use efficiency
3. Items

2014

2013

2012

1.Sales and
revenues (net
revenue from
sales + Financial
income + other
income)

7,093,913,253

9,094,600,906

9,807,380,538

26,132,005,086

25,518,178,197

26,047,625,067

3. Average fix
assets

15,142,950,487

16,540,208,733

16,285,592,264

4. Net sales

4,172,714,450

7,740,903,709

9,583,300,417

5.Average
working capital

9,171,498,239

7,981,211,133

8,460,255,695

4,361,282,599

5,449,016,139

6,969,518,062

7.Average
inventory

2,047,830,288

2,378,968,461

3,064,232,760

8.Average account
receivables

4,756,048,025

3,195,332,760

2,187,497,381

9.Assets turnover
= (1):(2)

0.27

0.36

0.38

10.Fix assets

0.47

0.55

0.60

2. Average total
assets

6.Cost of goods
sold

turnover = (1): (3)


11. Working
capital turnover=
(4) : (5)

0.45

0.97

1.13

12. Number of
days of working
capital turnover

791.27

371.18

317.81

2.13

2.29

2.27

169.04

157.17

158.28

15.Acount
receivables
turnover = (4): (8)

0.88

2.42

4.38

16.Account
receivable period

410.33

148.60

82.17

13.Inventories
turnover =(6) : (7)
14.Inventories
turnover period

2.2 Profitability of sales extimation:


Profit over sales ratio
From the table below, we can easily see the ratio between profit before tax and total sales
decreases by years. This is because the speed of the decrease in the profit before tax is higher
than that of the total sales.
Table: 4.8: Quota for estimating the profitability of sales and assets.
Ratio

2014

2013

38,742,467,046

25,518,178,197

1. Revenue

4,172,714,450

7,740,903,709

9,583,300,417

3.Total revenue = net revenue from


sales + Financial income + other
income

7,093,913,253

9,094,600,906

9,807,380,538

4.Net sale +financial income

4,177,507,086

7,747,600,906

9,628,449,174

-7,592,624,458

122,412,495

-356,415,307

4,792,636

6,697,197

45,148,757

2,916,406,167

1,347,000,000

178,931,364

1.Average total asset.

5.Profit before tax


6.Financial income
7.Other income

2012

8.Net profit from operating

-3,108,615,140

438,607,209

507,811,663

302,557,523

307,467,642

903,712,250

10. Net operating profit + interest


expense

-3,411,172,663

746,074,851

1,411,523,913

11. Profit before tax+ Interest


expense

-7,290,066,935

429,880,137

547,296,943

-107.03%

1.35%

-3.63%

-74.41%

5.66%

5.27%

-82%

10%

15%

4.19

11.95

-0.20

0.0048

9.Interest expense

12. Profit before tax/ Total revenue =


(5) : (3)
13. Net profit from operating /( Net
sale +financial income) =(8) : (4)
14.
(Net operating profit + interest
expense)/ ( Net sale +financial
income) = (10) :(4)
Profitability of sales estimation
15.ROA
16.RE

Ngun: S liu c tnh ton t BCTC ca TRC

Ratio between net operating profit/ net operating revenue:


As we can see in the table above, we can see that the ratio between the net profit from
operating and net revenue from oprerating is very low (5.27% in 2012, 5.66% in 2013) and
become negative in 2014 (-74,41%).
.
Ratio between profit over net operating revenue excluding financial structure:
This ratio decreases continuously from 15% to -82% through 3 years. This is because the
speed of the decrease in net profit from operating and interest expenses higher than that of
revenue..
2.3 Return on assets (ROA):
ROA of company is at very low levels over recent years, especially is the sudden fall to
minus 35% in 2014. In other words, executives are using inefficient assets, stemming from
excessive debt to invest in assets (long-term investments 2.5 billions for upgrading the plant in
2014) rather than investing for the sale of products to customers. In more detal, in 2012, total

debt was approximately 6 billions and about 5 billions in 2013 but jumped to 13.5 billion at the
year of 2014.
To illustrate clearly about the factors affecting the rising in ROA, we have Dupont
equation

Profit before

tax
ratio * Property efficiency
revenue

Criteria analyzing:
ROA= ROA2014 ROA2013 = (34,67%) - (-1,51%) = (-33,16%)

Effect of

Profit before

AERe

tax
ratio :
revenue

Profit before tax


== over revenue ratio in
2014

Profit before tax


over revenue ratio in
2013

*x

Property
efficiency
in 2013

= [(-220,58%) 1,87%] * 0,28 = (-62,286%)

Effect of Property efficiency:


EPr =
Property efficiency

Property efficiency

Profit before tax over


revenue ratio in 2014

in 2014

in 2013

= ( 0,28 0,47) * 1,87% = (-0,3553%)

E = ERe + EPr = (-62,286%) + ( -0,3553%) = (-62,6413%)


Conclusion: Negative ROA stems from the company performed perfunctorily production
business in parallel with the construction and upgrading factories making serious revenue decline;
costs (mainly interest expenses) increased leading to ROA are not as good as the shareholders
expected.
Return on equity (ROE):

ROA

From 2013 to 2014, the owner equity had got nearly halved, despiting the company's assets have
not changed much, making the ratio of assets to owner equity double, or we can see that
possibilities of ROE changes proportionaly (in the same direction) with ROA.

2.4 Financial efficiency analysis


Return on Equity
Table 4.9: Items reflect financial efficiency and factors impact on financial efficiency

Items
1. Owner's Equity
2. Profit before tax and interest
3. Interest expenses
4. Profit after tax
5. Return on Equity (ROE)
(5) = (4):(1)

2014
11,800,504,251
(8,901,473,717)
302,557,523
(9,204,031,240)

2013
21,004,535,491
452,183,663
307,467,642
144,716,021

2012
20,859,819,470
373,953,326
903,712,250
(529,758,924)

-78%

0.69%

-2.51%

(29.42)

1.47

0.41

-0.35

0.02

0.02

6. Interest coverage ratio (from profit)


(6)= (2):(3)
7. The economic rate of return on assets
(RE) (table 4.8)
8. Self-funded ratio (table 4.4)
9. Return on Assets (ROA) (table 4.8)

0.47
-0.3522

0.78
0.87
0.0057
-0.0203
Source: http://ezsearch.fpts.com.vn

According to table 4.9, it can be seen that ROE is fluctuated through years. ROE in 2012
was -2.51%; in 2013 was 0.69% and in 2014 was -78%. If in 2012, each 100 dong of equity
made 2.51 dong of loss in profit after tax, this number in 2014 was 78 dong. This means that
financial efficiency of the company was very bad.

Factors impact on financial efficiency:


To be clearer about which factors impact on financial efficiency, it needs to analyze
factors affecting oprating efficiency and impact of financial leverage ratio.
o Factors affecting operating efficiency:
Table 4.10: Factors impact on operating efficiency
Items
1. Profit after tax
2. Total sales
3. Total assets
4. Owner's equity
5. Profit after tax/ Total sales
(5)= (1):(2)

2014
(9,204,031,240)
4,172,714,450
25,220,923,921
11,800,504,251

2013
144,716,021
7,740,903,709
27,043,086,250
21,004,535,491

2012
(529,758,924)
9,583,300,417
23,993,270,144
20,859,819,470

-220.58%

1.87%

-5.53%

213.73%

128.75%

115.02%

16.54%

28.62%

39.94%

6. Total assets/ Average equity


(6) = (3):(4)
7. Total sales/ Total assets
(7) = (2):(3)
-

We have: ROE =

Profit after tax


Total sales

Source: http://ezsearch.fpts.com.vn
Total sales
Total assets
x
Total assets
Average equity

Indicator to be analyzed:
ROE = ROE2014 ROE2013 = (-78%) - 0.69% = -78.69%
-

Effect of Profit after tax/ Total sales on ROE:


ROE = (Profit after tax/ Total sales in 2014 - Profit after tax/ Total sales in 2013)
x Total assets/ Average equity in 2014 x Total sales/ Total assets in 2014
ROE = (-220.58% - 1.87%) x 213.73% x 16.54% = -78.66%

Effect of Total assets/ Average equity on ROE:


ROE = (Total sales/ Total assets in 2014 Total sales/ Total assets in 2013) x
Profit after tax/ Total sales in 2013 x Total assets/ Average equity in 2014
ROE = (16.54% - 28.62%) x 1.87% x 213.73% = -0.48%

Effect of Total sales/ Total assets on ROE:


ROE = (Total assets/ Average equity in 2014 Total assets/ Average equity in
2013) x Profit after tax/ Total sale in 2013 x Total sales/ Total assets in 2013
ROE = (213.73% - 128.75%) x 1.87% x 28.62% = 0.45%
=> In combination: -78.66% + (-0.48%) + 0.45% = -78.69%
In conclusion, factor(s) which increase ROE is (are) ... and ... dont (doesnt) improve
financial efficiency.

o Impact of financial leverage ratio:


Table 4.11: Factors about financial leverage ratio
Items
1. Liablities
2. Owner's equity
3. Debt-to- Equity ratio
(3) = (1):(2)
4. The economic rate of return on assets
(RE) (table 4.8)

2014
2,058,885,450
11,800,504,251

2013
4,525,416,539
21,004,535,491

2012
2,056,017,826
20,859,819,470

25,89%

37,47%

30,54%

-0.35

0.02

0.02

Source: http://ezsearch.fpts.com.vn
The ROE-RE equation and its factors:
Debt
ROE = RE + (RE I) x Equity

x (1 T)

In which:
I: Average interest rate
T: Income tax rate
From the table above, it can be seen that RE < I, because average interest rate in market
through years always larger than RE. This means that the companys debt didnt increase

financial efficiency. In this case, financial leverage ratio is negative; the company shouldnt
increase their debt for business expansion.
3. Risk analysis
3.1 Business risk

Risk of the fluctuation of input materials prices.


Nowadays, in the pharmaceutical manufacture and business industry, the materials input of most
of the domestic firms depend much on the materials imported from other countries while the
price is always fluctuating. The fluctuation of the input prices has not only affected the prices of
medicine products but also the customer sentiment. This is one of the most risky factors affecting
the cost of production an the capability of the profitability of pharmaceutical companies
generally, including Amvi Biotech. Therefore, production and business operations of the
company are affected much by the fluctuation of raw material prices on the international market.

The risk of exchange rate.


Most of the raw material and machinery of the company are imported from China, Germany,
America, and the currency used to pay mainly is the US dollar (USD) while the companys
products are sold in the domestic market. Hence, the fluctuations in the exchange rate between
Vietnam dong and US dollar would impact negatively on input cost and affect the result of the
business operations.
to minimize the risks that may occur due to the exchange rate fluctuations, Amvi always
monitors and updates the increase and decrease of the exchange rate while predicting the
volatility to offer reserving policy for inventories reasonably.

Risks in product circulation registration


Amvi BIOTECH business is the manufacturing and producing rapid diagnosis (quick test)
categories. Before the distribution on the market, products of the company must comply with the
inspection and licensing stringent product circulation by the Health Ministry. On the other hand,
licenses for distribution of products for the pharmaceutical, health care industry is valid only for
a period of 5 years. Therefore, the time to register their license renewed circulation and
circulation permit for the new products also have significant impact to business operations of the
company.

Competitive risks.
Vietnam is in the process of integration into the region and world economy. Especially when
Vietnam joins the WTO, along with the removal of tariff barriers, will attract the participation of

abroad companies with strong financial strength and modern technology. Since then, the business
environment will be more intense competitive for pharmaceutical manufacturing enterprises in
the country in terms of price, quality and product categories.
3.2 Financial risk analysis:
Table 4.13: Items reflect financial risk
Items

2014

2013

2012

1. Profit before tax and interest

(8,901,473,717)

452,183,663

373,953,326

2. Profit before tax

(9,204,031,240)

144,716,021

(529,758,924)

0.97

3.12

-0.71

3. The Degree of Financial


Leverage (DFL) = (1):(2)

Source: http://ezsearch.fpts.com.vn
From the table above, it can be seen that the degree of financial leverage was fluctuated
through years and remained at low level. In 2014, there were only 0.0008% of short-term loans
and borrowings over total owners equity and 0.0096% of long-term loans and borrowings over
total owners equity. Interest expenses in 2014 were 302,557,523 dong, a small amount in profit
before tax and interest, so the degree of financial leverage was low. Consequence, the company
used less debts, the lower DOL was, the lesser the financial risk was.
3.3 Insolvency risk analysis:
Table 4.14: Item reflect insolvency risk of the company
Items

2014

2013

2012

Current assets

8,887,993,228

9,455,003,249

6,507,419,017

Cash and cash equivalents

1,503,535,227

2,181,523,772

1,784,426,962

Inventories

2,095,996,728

1,999,663,847

2,758,273,074

Current liabilities

2,058,885,450

4,525,416,539

2,056,017,826

Current ratio

4.32

2.09

3.17

Quick ratio

3.30

1.65

1.82

Cash ratio

0.73

0.48

0.87

Source: http://ezsearch.fpts.com.vn
It can be seen from the table above that quick ratio of the company in 2014 was nearly
doubled compared to 2013. This was because in 2014 current assets growth (-6.00%) was higher
than current liability growth (-54.50%). Quick ratio of the company in 2014 was also higher than
in 2013 even though inventories in 2014 were increased compared to 2013 while inventories in

2013 were decreased compared to 2012. This was also because in 2014 current assets growth
was higher than current liability growth. Cash ratio of the company was improved in 2014. This
was because in 2014 cash and cash equivalents growth (-31.08%) was higher than current
liability growth (-54.50%). While in 2013, cash and cash equivalents growth (22.25%) was lower
than current liability growth (120.11%).