Group Assignment: Analysis of Pharmaceutical Company's Financial Report

GROUP ASSIGNMENT
Analysis of Pharmaceutical Company’s

Financial Report
Lecturer: Cô Tô Thụy Thùy Dương

Course: Principles of Accounting
Class: BA01D
Group members:
 Nguyễn Tuấn Anh
 Huỳnh Dương Ngọc Châu
 Lê Thu Phương
 Lê Hoài Thu
 Lý Kim Biên
FPT UNIVERSITY HCM

Contents
I. Introduction of selected companies................................................................................................................ 2
A. TRAPHACO Joint Stock Company................................................................................................................ 2
1. Background..................................................................................................................................................... 2
2. The board of directors and management............................................................................................ 2
B. DHG Pharmaceutical Joint Stock Company............................................................................................. 3
1. Background..................................................................................................................................................... 3
C. OPC Pharmaceutical Joint Stock Company.............................................................................................. 4
1. Background..................................................................................................................................................... 4
II. Data Analysis............................................................................................................................................................ 5
A. Liquidity ratios........................................................................................................................................................ 5
1. Current ratio........................................................................................................................................................ 5
2. Acid-test ratio...................................................................................................................................................... 6
B. Activity ratios.......................................................................................................................................................... 8
1. Account receivable turnover ratio.............................................................................................................. 8
2. Inventory turnover......................................................................................................................................... 10
3. Total assets turnover ratio.......................................................................................................................... 14
4. Day’s sale uncollected................................................................................................................................... 17
5. Sale inventory................................................................................................................................................... 19
C. Solvency Ratio....................................................................................................................................................... 21
1. Debt to Asset Ratio......................................................................................................................................... 21
2. Times interest earned ratio........................................................................................................................ 24
3. Working capital ratio..................................................................................................................................... 28
D. Profitability ratios............................................................................................................................................... 32
1. Return on assets.............................................................................................................................................. 32
2. Return on equity.............................................................................................................................................. 35
3. Gross margin ratio.......................................................................................................................................... 37
4. Profit Margin Ratio........................................................................................................................................ 39
E. Market ratios......................................................................................................................................................... 41
1. Earnings per share.......................................................................................................................................... 41
2. Book value per share..................................................................................................................................... 43
3. Price to earnings ratio................................................................................................................................... 45
4. Price to book ratio.......................................................................................................................................... 47
III. References:........................................................................................................................................................ 49
1
I. Introduction of selected companies
A. TRAPHACO Joint Stock Company
1. Background
- Originated from the Railway Medical Company, established on
November 28, 1972. With 15 officials and employees, the main
task is to prepare prescription drugs. Producing serum, fluids, and
distilled water to serve for the Railway Hospital in the period of the
resistance war against the US to save the country.
- Headquartered in 75 Yen Ninh - Hanoi with the Railway Medical
Company.
2. The board of directors and management

- Chairman of the Board: Ms. Vu Thi Thuan
- General manager: Mr. Tran Tuc Ma
- Chief accountant: Mr. Dinh Trung Kien
- Head of Supervisory Board: Mr. Duong Duc Hung
2
B. DHG Pharmaceutical Joint Stock Company
1. Background
- Originated from Hau Giang Pharmaceutical Joint Stock Company,
established on September 02, 1974, at Channel 5 Dat Set, Khanh
Lam commune (now Khanh Hoa commune), U Minh district, Ca
Mau province.
- DHG Pharmaceutical Joint Stock Company is considered as one
of the leading enterprises in Vietnam's pharmaceutical industry.
With the system of factories, advanced transfer lines, modern
technology, DHG Pharma brings high-quality products and
services.

- Chairman of the Board: Ms. Dang Thi Thu Ha
- General manager: Mr. Masashi Nakaura
- Director-General: Mr. Doan Dinh Huy Khuong
- Finance director: Ms. Le Thi Hong Nhung
3
C. OPC Pharmaceutical Joint Stock Company
1. Background
- Formerly known as the Central Pharmaceutical Factory 26, was
established on October 24, 1977. OPC transformed into OPC
Pharmaceutical Joint Stock Company, an international transaction
name: OPC Pharmaceutical Joint Stock Company.
- OPC Pharmaceutical Joint Stock Company is one of the leading
companies in Vietnam in the field of manufacturing and trading
pharmaceutical products originating from medicinal herbs, being
the first manufacturer of medicines with medicinal herbs.

- Chairman of the Board: Mr. Trinh Xuan Vuong
- General manager: Mr. Nguyen Chi Linh
- Finance director: Ms. Nguyen The De
4
II. Data Analysis
A. Liquidity ratios
1. Current ratio
a. Definition
This coefficient is used to measure the company's ability to pay short-
term debts with short-term assets, such as cash, receivables,
inventories, etc.
The higher the result, the greater the company's ability to repay the debt.
If the ratio is less than 1, the company is likely to be unable to pay its
debts, but that does not mean that the company will be bankrupt
because there are many ways to raise more capital.
Current Asset
Current ratio = Current liabilities
TRA
2017 2018 2019
Current asset 745,856,234,430 859,394,250,379 888,025,065,162
Current liability 380,752,817,539 312,184,478,659 343,492,701,045
Current ratio 1.958898792 2.752841058 2.585280742
OPC
2017 2018 2019
Current asset 603,344,990,064 692,766,199,851 824,478,243,009
Current ratio 1.242799429 1.242838763 1.694032054
DHG
2017 2018 2019
Current asset 2,939,184,938,924 3,147,636,450,849 3,133,924,348,700
Current liability 1,264,936,829,442 1,001,487,737,988 704,899,493,292
Current ratio 2.323582388 3.142960549 4.445916586
5
Chart1. Current ratio
b. Comment
Overall, the current ratio of all 3 companies is good, higher than 1. This
means all three companies are able to pay off their debts. In particular,
DHG had the highest rate throughout 3 years with 2.32, 3.14, 4.45, this
is a good ratio. Meanwhile, OPC had the lowest one with 1.24 in
2017and 2018, 1.69 in 2019, seems quite low. Specially, the current
ratio of TRA increased from 2017 to 2018 but after that it decreased from
2.75 to 2.59.
2. Acid-test ratio
a. Definition
A ratio indicates whether a company has enough short-term assets to
pay off its short-term debt without having to sell inventory. The quick
ratio is calculated by dividing the sum of the most liquid assets such as
cash, short-term investments, and accounts receivable by the total short-
term debt. Inventory is not included because it is difficult to transfer to
cash; prepaid expenses are not included in the same reason. The quick
ratio is much more rigorous than the current ratio because it excludes
inventory from the calculation.
6
Quick assets Current assets−Inventory
Acid-test ratio = Current liabilities = Current liabilities
7
TRA
2017 2018 2019
Current asset 745,856,234,430 859,394,250,379 888,025,065,162
Inventory 305,363,642,369 332,830,780,428 337,532,727,721
Quick Asset 440,492,592,061 526,563,469,951 550,492,337,441
Acid-test ratio 1.1568991 1.686706118 1.602631834
OPC
2017 2018 2019
Current asset 603,344,990,064 692,766,199,851 824,478,243,009
Inventory 313,876,983,352 435,878,567,196 550,577,884,952
Quick Asset 289,468,006,712 256,887,632,655 273,900,358,057
Acid-test ratio 0.596260314 0.46086242 0.562775295
DHG
2017 2018 2019
Current asset 2,939,184,938,924 3,147,636,450,849 3,133,924,348,700
Inventory 633,807,876,593 891,486,976,436 725,438,891,568
Quick Asset 2,305,377,062,331 2,256,149,474,413 2,408,485,457,132
Current liability 1,264,936,829,442 1,001,487,737,988 704,899,493,292
Acid-test ratio 1.822523472 2.252797901 3.416778534
8
b. Comment
In general, we can see that OPC had an acid-test ratio under 1, it will
not be able to pay all the short-term debts immediately.
DHG and TRA remained relatively stable, DHG still has the highest ratio
from 1.82 in 2017 to 3.42 in 2019, which shows that the company does
not need to worry about whether it can pay off its debt in the short term
or not. While the ratio of OPC decreased from 0.6 in 2017 to 0.56 in
2019.
B. Activity ratios
1. Account receivable turnover ratio

a. Definition
Account receivables turnover reflects the rate at which receivables are
converted into cash. This coefficient is an important measure to evaluate
the performance of enterprises, calculated by dividing net sales by the
average account receivables in the period.
Net sales
Account Receivable turnover ratio= Account receivable
TRA
2017 2018 2019
Net sales 1,870,441,856,927 1,798,349,666,292 1,710,439,468,422
Beginning AR 322,648,686,984 216,210,305,614 214,838,737,402
Ending AR 260,417,369,821 174,773,496,962 170,592,226,504
Average AR 291,533,028,403 195,491,901,288 192,715,481,953
AR Turnover 6.42 9.20 8.88
9
OPC
2017 2018 2019
Net sales 961,734,848,206 1,002,477,640,022 989,389,861,098
Beginning AR 113,383,865,635 130,246,042,901 131,183,457,522
Ending AR 87,417,909,171 100,762,072,264 101,248,713,136
Average AR 100,400,887,403 115,504,057,583 116,216,085,329
AR Turnover 9.58 8.68 8.51
DHG
2017 2018 2019
Net sales 4,062,753,464,495 3,882,128,209,711 3,896,753,829,224
Beginning AR 719,249,119,395 731,782,427,552 713,195,095,904
Ending AR 642,389,311,764 651,089,030,818 631,263,453,548
Average AR 680,819,215,580 691,435,729,185 672,229,274,726
AR Turnover 5.97 5.61 5.80
Chart3. Account receivable turnover ratio
10
b. Comment
This may be important for you, because the customer owes the company
money, paying it early or late, and the money still belongs to the
company eventually. But it is quite important. In summary, the larger the
receivable turnover, the faster the rate of debt collection, the ability to
convert receivables to cash, which helps businesses improve cash flow.
Generally, the ratio of TRA increased markedly from 6.42 to 8.88 and
reached the peak at 9.20 in 2018 while OPC and DHG decreased
slightly. Although OPC had the highest ratio with 9.58 in 2017 but in
2018 and 2019 the TRA was the highest.
2. Inventory turnover
a. Definition
Inventory turnover shows the number of times a company has sold and
replaced inventory in a given period.
This helps businesses make better decisions about prices, production,

marketing and purchasing new inventory.
Low sales implies weak sales and possibly excess inventory, while a
high percentage implies strong sales or insufficient inventory.
Cost of good sold

Inventory turnover ratio=
Average Inventory
11
2017
Traphaco Hậu Giang OPC
COGS 829783773501 2279637916449 555630752620
Beginning Inventory 305363642369 732860670514 279944032845
Ending Inventory 332830780428 633807876593 313876983352
Average Inventory 319097211399 683334273554 296910508099
Inventory Turnover 2.60 3.34 1.87
12
2018
COGS 863658955814 2165405025080 571410793173
Beginning Inventory 332830780428 633807876593 313876983352
Everage Inventory 335181754075 762647426515 374877775274
Inventory Turover 2.58 2.84 1.52
13
2019
COGS 770011246983 2183050050341 615535503139
Beginning 305363642369 891258048542 352695006031

Inventory
Everage Inventory 319097211399 808348470055 332788008499
Inventory Turover 2.41 2.70 1.85
14
b. Comment
We can see that inventory sales of traphaco and Hau Giang have
decreased over the years, whereas OPC's inventory has shown
fluctuations. But the percentage of inventory of Hau Giang is always the
highest among the 3 companies from 2017-2019. This shows that if the
company ranks a large customer, it may not be enough and cause loss
of reputation for the company.
3. Total assets turnover ratio

a. Definition
The asset turnover ratio measures the value of a company's sales or

revenues relative to the value of its assets. The asset turnover ratio can
be used as an indicator of the efficiency with which a company is using
its assets to generate revenue.
The higher the asset turnover ratio, the more efficient a company.
Conversely, if a company has a low asset turnover ratio, it indicates it is
not efficiently using its assets to generate sales.
15
2017
Net sales 1,807,441,856,927 4,062,753,464,495 961,734,848,206
Average Total Asset 1,509,701,866,803 4,089,479,990,857 1,062,633,720,000
Total Assets 1.20 0.99 0.91

Turnover
2018
Net sales 1,798,349,666,292 3,882,128,209,711 1,002,477,640,022
Total Assets Turnover 1.13 0.92 0.84
16
2019
Net sales 1,710,439,468,422 3,896,753,829,224 989,389,861,098
Total Assets Turnover 1.09 0.94 0.84
 Comment
From 2017- 2018 Traphaco has a high total asset turnover, which shows
that this is a company that uses assets effectively. In contrast, OPC has
a low total asset turnover, which indicates that the company is not
effectively using its assets to generate sales.
17
4. Day’s sale uncollected
a. Definition
This is an index calculated by the number of days a company needs to

recover sales proceeds after a sale. If Day's Sale Uncollected is low, it
means the company only needs a few days to collect the liabilities. If this
ratio is high, it means that the company mainly sells to customers on
account, the debt period is longer.
Account Receivable
Day’s Sale Uncollected = Net Sales
x 365
2017
Account Receivable 138,089,031,947 739,281,053,856 157,918,527,673
Net sales 1,807,441,856,927 4,062,753,464,495 961,734,848,206
Day's sale uncollected 27.89 66.42 59.93
18
2018
Net sales 1,798,349,666,292 3,882,128,209,711 1,002,477,640,022
2019
Net sales 1,710,439,468,422 3,896,753,829,224 989,389,861,098
19
b. Comment
All three companies have very different debt collection times. Including
Traphaco, the highest collection time is about 28 days. Hau Giang in
2017 had a high debt collection time of about 66 days but counted in
2019 to 48 days. For OPC, the collection time is also very high, but
gradually decreases over the years.
5. Sale inventory
a. Definition
This indicator tells investors about the amount of time it takes for the
company to fully liquidate its inventory. Normally, if the index is low, it
means that the company is performing well, but it should be noted that
this index is very different between industries.
365 days
Day’s Sales in Inventory = Inventory Turnover
2017
Inventory turnover 2.60 3.34 1.87
Day's sales inventory 140.38 109.28 195.19

2018
20
2019
21
b. Comment
In general, Traphaco only needs about 140 -151 days to sell out its
inventory, Hau Giang needs about 109-135 days - a good product and
Ha Tay needs a very long time to liquidate peak inventory in 2018. is 240
days in 2017-2019.
C. Solvency Ratio
1. Debt to Asset Ratio

b. Definition
- It’s the ratio of total debt and total assets.
- Judging from debt to asset ratio:
- If ratio > 1, the company has more debt than assets.
- The lower the ratio, the better
c. Formula
Total Liabilities
Debt ¿ Asset ratio=
Total Assets
d. Data from selected companies
i. Traphaco
1. Data table
Q4 2017 Q4 2018 Q4 2019

Total liabilities 398,459,388,936 482,837,975,613 453,442,230,206
Total assets 1,517,111,969,665 1,589,862,479,671 1,571,511,988,088
Debt to Asset ratio 0.262643362 0.30369795 0.28853883
22
2. Charts
ii. DHG
1. Data Table
Q4 2017 Q4 2018 Q4 2019

Total liabilities 1,330,373,889,978 1,062,171,766,521 769,267,239,060
Total assets 4,089,604,758,912 4,206,938,395,946 4,146,818,721,257
2. Charts
23
iii. OPC
1. Data table
Q4 2017 Q4 2018 Q4 2019

Total assets 1,058,143,466,900 1,191,271,861,163 1,185,230,536,714
2. Charts
e.
Conclusions:
- Based on the charts, we can see that:
- The company with the highest debt to asset ratio is OPC, whereas
the lowest is DHG.
- The debt to asset ratio of DHG has the tendency to decrease over the
years, which positively displays the potential of the company.
- However, the debt to assets ratio of both Traphaco and OPC has
fluctuated over time.
+When comparing the ratio between Q4 2018 and Q4 2019 of the
companies, OPC has decreased more than Traphaco.
- All of the ratios are below 1, meaning that a considerable portion of
assets is funded by equity, therefore a lower chance of bankruptcy.
24
2. Times interest earned ratio
a. Definition
- Times Interest Earned (TIE) ratio is a measure of a company's ability
to meet its debt obligations based on its current income.
- The result shows how many times a company could cover its interest
charges with its pretax earnings.
b. Formula
Earnings before interest ∧taxes
¿ interest earned =
Interest expense
c. Data from selected companies
i. Traphaco
1. Data tables
2017 2018 2019
Earnings before interest and taxes 322,648,686,984 216,210,305,614 214,838,737,402
Interest Expense 2,583,109,219 12,203,877,990 17,764,076,691
Times interest earned ratio 124.9071021 17.71652468 12.09399966
25
2. Charts
26
ii. DHG
1. Data table
2017 2018 2019
2. Charts
27
28
iii. OPC
1. Data table
2017 2018 2019
2. Charts
29
30
d. Conclusions
- Based on the given charts:
- In 2019:
+ Traphaco has the lowest TIE ratio.
+ Both DHG and OPC saw a slight increase in the TIE ratio.
+ DHG maintains the top of the pack when it comes to the TIE ratio.
- Traphaco experienced the most fluctuations:
+ Earnings before interest and taxes decreased by a fourth from 2017
to 2018.
+ Interest Expense skyrocketed for 2018 and 2019, increased by nine
times in two years.
+ TIE ratio however plummeted by more than 10 times from 2017 to
2018 because of the sudden increase of Interest Expense.
- DHG has a slight fluctuation to all 3 numbers over the years, but TIE
ratio increases slightly when comparing from 2017 to 2019
- OPC also has a slight fluctuation when it comes to earnings and
interest expense, but the TIE ratio increases gradually over the years.
→ Overall, based solely on the TIE ratio, we can conclude that OPC
has the highest chance to complete long-term debt, where Traphaco
is the lowest.
3. Working capital ratio

a. Definition
- An indicator that reflects an enterprise's ability to pay its current
liabilities with its current assets.
- A representation of the difference between a firm’s current assets and
current liabilities.
b. Formula
Current Assets
WorkingCapital Ratio=
Current Liabilities
31
i. Traphaco
1. Data table
2017 2018 2019
Current Assets 745,856,234 859,394,250 888,025,065
Current Liabilities 380,752,818 312,184,479 343,492,701
Working capital ratio 1.958898789 2.752841053 2.585280742
2. Charts
32
ii. DHG
1. Data table
2017 2018 2019
Current Assets 2,939,184,939 3,147,636,451 3,133,924,349
Current Liabilities 1,264,936,829 1,001,487,738 704,899,493
2. Charts
iii. OPC
33
1. Data table
2017 2018 2019
Current Assets 603,344,990 692,766,200 824,478,243
Current Liabilities 485,472,536 557,406,335 486,695,775
2. Charts
34
d. Conclusions
- Overall, all three companies had a working capital ratio larger than
1 over the years, which indicates that there won’t have any major
potential liquidity problems.
- OPC has the lowest working capital ratio over 3 years compared to
two other companies, but it has the tendency to increase, which
indicates that the company is improving.
- Traphaco’s working capital ratio fluctuates between 3 years and
slightly decreased from 2018 to 2019.
- DHG witnessed the blooming increase in the working capital ratio,
which doubled from 2017 to 2019.
→ In conclusion, solely based on the working capital ratio, DHG has the
highest potential in financial solvency compared to two remaining
companies.
D. Profitability ratios
1. Return on assets.
a. Definition
- Return on assets (ROA) is a financial ratio that shows the percentage

of profit a company earns in relation to its overall resources.
- Net income is derived from the income statement of the company and
is the profit taxes.
b. Formula
Net income
Return on assets = Average total assets
TRAPHACO COMPANY
2017 2018 2019
35
Net income 241,103,175,375 156,277,889,721 153,427,254,762
Average Total Assets 1,070,649,777,022 1,120,084,827,317 1,136,674,480,568
ROA 0.23 0.14 0.13
DHG COMPANY
2017 2018 2019
Net income 642,407,977,142 653,029,446,317 635,388,096,114
Average Total Assets 2,547,019,373,507 2,572,904,013,401 2,609,429,429,676
ROA 0.25 0.25 0.24
OPC COMPANY
2017 2018 2019
Net income 86,830,799,330 98,144,989,961 100,930,837,376
Average Total Assets 617,017,308,443 779,630,164,073 772,473,383,458
ROA 0.14 0.13 0.13
36
Chart 1: Return on Assets of three companies
d. Conclusion
Based on the chart above:
- In 2017, all three companies had the highest return on assets. This
shows that in 2017, all three companies made a lot of profit from the
company's current total assets.
Inside:
- DHG's return on assets is the highest and remains after 1 year but
decreases in 2019 but not significantly.
- Return on assets of Traphaco is the second in 3 companies, but the

rate of return on assets decreases sharply after the next 1 year and still
decreases in 2019.
- ranked last is the ratio of return on assets of the OPC company and
also decreased in 2018 and maintained that rate in 2019.
In short, all three companies have a three-year declining rate of return

on their assets, suggesting that the three companies' profit-making ratios
are declining over time.
37
2. Return on equity
a. Definition
- Return on equity (ROE) is a measure of financial performance

calculated by dividing net income by total equity.
- ROE is considered a measure of how effectively management is using

a company’s assets to create profits.
b. Formula
Net income
Return on equity= Total equity
TRAPHACO COMPANY
2017 2018 2019
Net income 241,103,175,375 156,277,889,721 153,427,254,762
Total equity 1,118,847,849,264 1,107,214,030,390 1,118,029,757,883
ROE 0.22 0.14 0.14
DHG COMPANY
2017 2018 2019
Net income 642,407,977,142 653,029,446,317 635,388,096,114
Total equity 2,759,094,413,820 3,144,262,109,231 3,377,551,482,197
ROE 0.23 0.21 0.19
38
39
OPC COMPANY
2017 2018 2019
Net income 86,830,799,330 98,144,989,961 100,930,837,376
Total equity 570,971,812,400 626,016,108,067 687,663,268,104
ROE 0.15 0.16 0.15
Chart 2: Return on Equity of three companies
40
d. Conclusion
- In 2017, the ratio of return on equity of DHG is the highest, it means

that DHG can bring businesses a high profit with the amount of capital
that the owner has spent, but that rate has steadily decreased year by
year. This shows that DHG's capital use is ineffective.
- Traphaco also uses its capital inefficiently when the ratio of profit to
equity in 2017 is the second highest but declines sharply after the next 1
year and Traphaco's profit rate had lowest in 2018 and 2019.
- In contrast, OPC Company, although the profit earned based on equity

is not high, but that ratio maintains very stable. This shows that the OPC
company uses the equity effectively.
In short, the ability to use capital of two businesses, Traphaco and DHG,
is ineffective despite the very high profits. In contrast, OPC businesses
have low profit margins but use capital extremely effectively.
3. Gross margin ratio.

a. Definition
- The Gross Margin Ratio (Gross Profit Margin Ratio) is a profitability

ratio that compares the gross margin of a company to its revenue. It
shows how much profit a company makes after paying off its Cost Of
Goods Sold (COGS).
- The ratio indicates the percentage of each dollar of revenue that the
company retains as gross profit.
b. Formula
(Net sales−COGS)
Gross Margin Ratio =
Net sales
41
TRAPHACO COMPANY
2017 2018 2019
Net Sales 1,870,441,856,927 1,798,349,666,292 1,710,439,468,422
COGS 829,783,773,501 863,658,955,814 770,011,246,983
Gross Margin Ratio 0.56 0.52 0.55
DHG COMPANY
2017 2018 2019
Net Sales 4,062,753,464,495 3,882,128,209,711 3,896,753,829,224
COGS 2,279,637,916,449 2,165,405,025,080 2,184,461,607,643
Gross Margin ratio 0.44 0.44 0.44
OPC COMPANY
2017 2018 2019
Net Sales 961,734,848,206 1,002,477,640,022 989,389,861,098
COGS 555,630,752,620 571,410,793,173 572,536,741,111
Gross Margin ratio 0.42 0.43 0.42
42
Chart 3: Gross Margin Ratio of three companies
d. Conclusion
Overall, all three companies have very stable gross margins. In

particular, the company with the highest gross profit margin is Traphaco
and the lowest is OPC.
4. Profit Margin Ratio

a. Definition
- The Profit Margin Ratio is a profitability ratio that measures the amount
of net income earned with each dollar of sales generated by company.
- The Profit Margin Ratio shows what percentage of sales are left over
after all expenses are paid by the business.
b. Formula
Net income
Profit Margin Ratio = Net sales
43
TRAPHACO COMPANY
2017 2018 2019
Net income 241,103,175,375 156,277,889,721 153,427,254,762
Net sales 1,870,441,856,927 1,798,349,666,292 1,710,439,468,422
Profit margin ratio 0.13 0.09 0.09
DHG COMPANY
2017 2018 2019
Net income 642,407,977,142 653,029,446,317 635,388,096,114
Net sales 4,062,753,464,495 3,882,128,209,711 3,896,753,829,224
OPC COMPANY
2017 2018 2019
Net income 86,830,799,330 98,144,989,961 100,930,837,376
Net sales 961,734,848,206 1,002,477,640,022 989,389,861,098
44
Chart 4: Profit Margin Ratio of three companies
d. Conclusion
- DHG has the highest profit margin among the 3 companies, and is
maintaining a stable level.
- OPC has the lowest profit margin and is on the rise over time.
- Traphaco has the second highest profit margin in 2017 but tends to
decrease sharply in 2018 and maintain such profit margin in 2019.
E. Market ratios
1. Earnings per share

a. Definition
- Earnings per share is the portion of a company's profit that is
allocated to each outstanding share of its common stock ->
demonstrating the ability to make a profit of the business.
- The higher EPS reflects the stronger the business capability of the
company, the higher the ability to pay dividends, and the stock price also
tends to rise. Therefore, the high EPS shows that the business is doing
45
well and the bonds will tend to be safer. (but considering the number of
shares outstanding)
46
b. Formula
Net income− preferred dividends
Earning per share=
Weighted−average common shares outstanding
c. Data
*DHG 2017 2018 2019
Net income 642,407,977,142 653,029,446,317 635,388,096,114
Appropriation fund 70,050,228,907 71,834,018,091 25,061,642,883
Weighted-average common shares outstanding 130,746,071 130,746,071 130,746,071
EPS 4,378 4,445 4,668
*OPC 2017 2018 2019
Net income 86,830,799,330 98,144,898,961 100,930,837,376
EPS 2,947 3,326 3,401
*TRA 2017 2018 2019

Net income 241,103,175,375 156,277,889,721 153,427,254,762
EPS 5,308 3,322 3,269
47
d. Conclusion
- Theoretically, all three companies achieve EPS> 1,500 -> the
profits of all 3 companies are good.
- DHG's EPS ratio was the highest and increased over the years
(although it is a small increase compared to the ideal increase index) ->
DHG's profitability is best among 3 companies.
- In 2017, TRA's EPS was the highest among the three companies
-> stockholders will be the most profitable. However, after that, the sharp
decline in net income made a decrease in EPS.
- In 2018 and 2019, EPS of TRA and OPC was nearly equal.
However, the number of shares outstanding of TRA was higher than that
of OPC -> OPC used capital more efficiently than TRA.
2. Book value per share

a. Definition
- Reflects the amount of stockholders’ equity applicable to common
shares on a per-share basis. BVPS indicates the value of a company's
real assets if it immediately exits the market. BVPS is an accurate
measure of the company's value, which does not change too quickly
and is relatively stable. It is appropriate data to analyze for investors.
That is, buying stocks at the right value to receive annual dividends
rather than for speculators.
48
b. Formula
Total assets−total liabilities
Book value per share=
Weighted−average common shares outstanding
c. Data
*DHG 2017 2018 2019
Total assets 4,087,479,990,857 4,205,964,486,794 4,146,818,721,257
Total liabilities 1,328,385,577,037 1,061,702,377,563 769,267,239,060
BVPS 21,103 24,049 25,833
*OPC 2017 2018 2019

Total assets 1,062,632,720,000 1,189,393,807,996 1,180,031,201,929
BVPS 21,500 23,572 25,874
*TRA 2017 2018 2019
Total assets 1,509,701,866,803 1,589,862,038,209 1,571,511,988,088
BVPS 26,992 26,712 26,973
49
d. Conclusion
- TRA had the highest book value per share, but no growth
- The book value per share of DHG and OPC increased steadily over
the years -> the increased in real value of companies
3. Price to earnings ratio

a. Definition
- The price-to-earnings ratio is the ratio of a company's share price to
the company's earnings per share. It indicates the dollar amount an
investor can expect to invest in a company in order to receive one
dollar of that company's earnings. The ratio is used for valuing
companies and to find out whether they are overvalued or
undervalued.
b. Formula
Market value per share
Price ¿ earnings ratio=
Earnings per share
c. Data
*DHG 2017 2018 2019

Market value per share 115 79 91.5
EPS 4.37 4.44 4.67
P/E 26.32 17.79 19.59

*OPC 2017 2018 2019
50
Market value per share 60 49.6 46
EPS 3.09 3.42 3.40
P/E 19.42 14.50 13.53
*TRA 2017 2018 2019

EPS 5.35 3.35 3.27
P/E 21.87 20.90 18.50
d. Conclusion
- In general, DHG's EPS is much higher than that of OPC and TRA,
this has affected investors' psychology, investors are willing to buy
DHG's shares even though P / E of BHG is higher.
- P / E of DHG tends to fluctuate year by year. In 2018, DHG's P / E
ratio dropped sharply to 17.79 compared to 2017, but in 2019, this
ratio increased slightly again in 2019.
- Although TRA's EPS has been steadily declining over the years, its
P / E ratio has decreased, suggesting that the company's valuation is
lower due to the company's lower business performance than before.
- In 2018, DHG and OPS's EPS increased, but P / E decreased ->
companies are undervalued, the right time to buy stocks.
- P / E ratio of DHG and TRA is high and higher than OPC, showing
that investors' expectation about the future growth in share earnings
of DHG and TRA is higher than that of OPC
51
4. Price to book ratio
a. Definition
- The price-to-book ratio, or P/B ratio, is a financial ratio used to
compare a company's current market price to its book value.
- Similar to P / E, high P / B shows investors' expectations about the
future development of the business. (However, we need to pay
attention to the liabilities of the business, a company with large debt
will make BVPS low leading to high P / B).
-
b. Formula
Market value per share
Price ¿ book ratio=
Book value per share
c. Data
*DHG 2017 2018 2019

BVPS 21.10 24.05 25.83
P/B 5.45 3.28 3.54
*OPC 2017 2018 2019

Market value per share 60 49.6 46
BVPS 22.56 23.55 25.87
P/V 2.66 2.11 1.78
*TRA 2017 2018 2019

BVPS 26.99 26.71 26.97
P/B 4.33 2.62 2.24
52
d. Conclusion
- In general, both the P / B and the market value per share of OPC was
the lowest -> Small business size, investors evaluate the
development potential of OPC lower than TRA and DHG
- DHG and TRA had high P / B (market value> book value) ->
companies perform quite well
- However, all 3 companies decreased P / B ratios over the years,
especially in 2018 compared to 2017 -> in general, P / B valuations
are down in the pharmaceutical industry.
53
III. References:
https://s.cafef.vn/hose/DHG-cong-ty-co-phan-
duoc-hau-giang.chn
http://www.dhgpharma.com.vn/en/
https://s.cafef.vn/hose/OPC-cong-ty-co-phan-
duoc-pham-opc.chn
https://opcpharma.com/
https://s.cafef.vn/hose/TRA-cong-ty-co-phan-
traphaco.chn
https://traphaco.vn/
54

Group Assignment: Analysis of Pharmaceutical Company's Financial Report

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GROUP ASSIGNMENT

Analysis of Pharmaceutical Company’s

Lecturer: Cô Tô Thụy Thùy Dương

FPT UNIVERSITY HCM

2. The board of directors and management

2. The board of directors and management

2. The board of directors and management

1. Account receivable turnover ratio

Chart3. Account receivable turnover ratio

This helps businesses make better decisions about prices, production,

Cost of good sold

Traphaco Hậu Giang OPC

COGS 829783773501 2279637916449 555630752620

Beginning Inventory 305363642369 732860670514 279944032845

Ending Inventory 332830780428 633807876593 313876983352

Average Inventory 319097211399 683334273554 296910508099

Inventory Turnover 2.60 3.34 1.87

Traphaco Hậu Giang OPC

COGS 863658955814 2165405025080 571410793173

Beginning Inventory 332830780428 633807876593 313876983352

Ending Inventory 337532727721 891486976436 435878567196

Everage Inventory 335181754075 762647426515 374877775274

Inventory Turover 2.58 2.84 1.52

Traphaco Hậu Giang OPC

COGS 770011246983 2183050050341 615535503139

Beginning 305363642369 891258048542 352695006031

Ending Inventory 332830780428 725438891568 312881010967

Everage Inventory 319097211399 808348470055 332788008499

Inventory Turover 2.41 2.70 1.85

3. Total assets turnover ratio

The asset turnover ratio measures the value of a company's sales or

Net sales 1,807,441,856,927 4,062,753,464,495 961,734,848,206

Average Total Asset 1,509,701,866,803 4,089,479,990,857 1,062,633,720,000

Total Assets 1.20 0.99 0.91

Net sales 1,798,349,666,292 3,882,128,209,711 1,002,477,640,022

Average Total Asset 1,589,862,038,209 4,205,964,486,794 1,189,393,807,996

Total Assets Turnover 1.13 0.92 0.84

Traphaco Hậu Giang OPC

Net sales 1,710,439,468,422 3,896,753,829,224 989,389,861,098

Average Total Asset 1,571,511,988,088 4,146,818,721,257 1,180,031,201,929

Total Assets Turnover 1.09 0.94 0.84

This is an index calculated by the number of days a company needs to

Account Receivable 138,089,031,947 739,281,053,856 157,918,527,673

Net sales 1,807,441,856,927 4,062,753,464,495 961,734,848,206

Day's sale uncollected 27.89 66.42 59.93

Traphaco Hậu Giang OPC

Account Receivable 119,920,467,304 618,503,855,955 160,305,714,690

Net sales 1,798,349,666,292 3,882,128,209,711 1,002,477,640,022

Day's sale uncollected 24.34 58.15 58.37

Traphaco Hậu Giang OPC

Account Receivable 131,073,852,304 510,101,306,774 141,829,241,633

Net sales 1,710,439,468,422 3,896,753,829,224 989,389,861,098

Day's sale uncollected 27.97 47.78 52.32

Traphaco Hậu Giang OPC

Inventory turnover 2.60 3.34 1.87

Day's sales inventory 140.38 109.28 195.19

Inventory turnover 2.58 2.84 1.52

Day's sales inventory 141.47 128.52 240.13

Traphaco Hậu Giang OPC

Inventory turnover 2.41 2.70 1.85

Day's sales inventory 151.45 135.19 197.30

1. Debt to Asset Ratio

Q4 2017 Q4 2018 Q4 2019