FOREIGN TRADE UNIVERSITY

SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS

--------***-------

FINANCIAL STATEMENT ANALYSIS: PETROLIMEX

Group 15 – TCHE422(2-2122).1
1 Lê Thị Thùy Linh 1810530065
2 Trần Thu Phương 1815530044
3 Phạm Thị Quỳnh Anh 1810530008
4 Chu Thị Quỳnh 1815530048

Instructor: Dr. Nguyen Do Quyen

Ha Noi, 2021 Dec

 TABLE OF CONTENTS

I. Introduction ................................................................................................................ 2

II. Overview of the company ............................................................................................. 2

III. Ratio analysis ................................................................................................................. 4

1. Liquidity ratios.................................................................................................................... 4
2. Efficiency ratios .................................................................................................................. 5
3. Profitability ratios ............................................................................................................... 6
4. Leverage ratios.................................................................................................................... 7
IV. Common-size analysis: Comparison between Petrolimex and PV Oil ...................... 8

V. Time-series techniques ........................................................................................................ 9

1. Trend (indexed) statement .................................................................................................. 9

2. Variability measurement................................................................................................... 12
VI. Conclusion ..................................................................................................................... 13

VII. References ...................................................................................................................... 14

APPENDIX: FINANCIAL STATEMENTS ............................................................................ 15

i
 LIST OF FIGURES
Figure 1. Organizational structure of Petrolimex ............................................................................ 4
Figure 2. Liquidity ratios of Petrolimex (2018-2020)..................................................................... 5
Figure 3. Trend statement chart .................................................................................................... 11

LIST OF TABLES
Table 1. Efficiency ratios ..................................................................................................... 5
Table 2. The gross profit - sales ratio .................................................................................. 6
Table 3. Net profit - sales ratio ............................................................................................ 6
Table 4. Debt-equity ratio .................................................................................................... 7
Table 5. Interest Coverage Ratio ......................................................................................... 7
Table 6. Common-size ratios analysis of Petrolimex .......................................................... 8
Table 7. Common-size ratios of PV Oil .............................................................................. 8
Table 8. Trend statement calculation ................................................................................. 10
Table 9. Variability measurement...................................................................................... 12

ii
I. Introduction
In business lending, the financial statement analysis is frequently carried out by lending
institutions as the businesses are required by law to keep financial records and prepare
financial statements as well as have these statements certified by authorized accountants.
By analyzing financial statements and relevant documents, lenders can decide whether the
business is financially sound enough to be granted the loan.
Therefore, in order to examine the Petrolimex’s situation further, this report will conduct
the financial statement analysis, based on the firm’s balance sheets and income statements
in 2018, 2019 and 2020, particularly used three approaches: ratio analysis, common-size
analysis and time series analysis. The amount of money is in VND billions.
II. Overview of the company
The majority of companies want to increase the capital invested thanks to borrowing from
banks,
including Petrolimex group. In this report, a credit appraisal report will be presented to
resolve
whether the application of Petrolimex is approved. Based on cafes.vn source, Petrolimex
group
was founded in 1956 and has been officially listed on the Stock Exchange (Stock Code:
PLX).
Petrolimex’s main operations are exporting, importing, and trading petroleum, refining
petrochemicals, investing in other enterprises to conduct business. PLX saw the potentials
in the
Vietnam market and they know they cannot miss this chance, so they decide to catch the
opportunity. In many years, PLX expend retails in 63 provinces and cities and has more
than
14,000 stores Oil of all economic sectors, including more than 5,500 oil cargo windows in
the
whole country. In 2020, PLX has 12,938 VND billion-chapter capital.

2
Petrolimex maintains its position as one of the largest corporations in Vietnam, a leader in
the
petroleum business. Besides, the firm becomes one of the most enterprises surrender the
whole
country to the field and regulatory effect economic results.
As a whole organization, PLX has different departments to lead and manage the firm.
First of all, The Board of Directors (BOD) has responsibilities to maintain the company’s
affairs
as well as try to meet the interest of shareholders. Supervisory Board assist the Chairman
of the
Board of Directors and the Board of Directors manages the daily production and business
activities
of the Group.
PLX managed 47-member petroleum companies (with 100% capital ownership) and
operated all
over the country and the Office of the Vietnam National Petroleum Corporation. 52
ssubsidiaries
were held by the Group (more than 50% equity), including 3 units in which the Group owns
100%
capital, which are Petrolimex Singapore One Member Limited Company, Petrolimex Laos
Co.,
Ltd. and Petrolimex Water Transport Corporation.

3
 Figure 1. Organizational structure of Petrolimex
III. Ratio analysis
1. Liquidity ratios
It can be said that liquidity ratio analysis is one of the most important criteria for examining
a company's financial condition since it measures a company's ability to fulfil short-term
obligations and helps investors and creditors to get a sense of a company's financial
situation before granting credit.

4
 Figure 2. Liquidity ratios of Petrolimex (2018-2020)

As can be seen from Figure 1, the current ratio of Petrolimex (PLX) slightly increased in
2019 but fell in 2020. Although a ratio of 2 is optimal, it is rare for a corporation to have
the ratio exactly at two. The ratio could fluctuate between 1.5 and 2, which is not a concern.
However, this ratio is just half of the benchmark of 2. Looking further at the composition
of current assets and current liabilities, we observe that cash and cash equivalents (highly
liquid assets) just account for onethird proportion of current assets whereas short-term
liabilities are too large.
Besides, the quick ratio, commonly known as the acid test ratio, is another indicator of
liquidity. It's similar to the current ratio except that inventory is excluded from its
calculation. Petrolimex has a relatively stable quick ratio over three years but all is less
than the optimal level of 1. From what has been analyzed, it can be concluded that short-
term obligations are urgent and the company has low liquid assets to settle short-term
commitments.
2. Efficiency ratios
Year 2018 2019 2020

Inventory Turnover Ratio 18.63 16.10 13.18

Average Collection Period 14 16 21

Table 1. Efficiency ratios

5
As shown in the above table, the inventory ratio of Petrolimex plunged from 18.83 to 13.18
between 2018 and 2020, which means that days inventory held were increasing over three
years. It is troublesome because it shows a weak ability to sell inventory to customers. If
this trend continues, the capital may be tied up in inventory. Besides, the average collection
period rose from 2018 to 2020. It indicates that the company collected cash slowly and
increased the likelihood of bad debt.
3. Profitability ratios
We reviewed and calculated the profitability ratio in the table below based on our analysis
of audited consolidated financial statements from 2018 and 2020.
The gross profit – sales ratio measures the pricing and production cost control aspect which
helped leaders to have a clearer view of the profit of PLX.
Year 2018 2019 2020
Gross profit 13,906 14,169 10,040
Net sales 191,932 189,604 123,919
Gross profit - sales 7.25% 7.47% 8.10%
ratio
Table 2. The gross profit - sales ratio
The net profit-sales ratio provides a valuable understanding of the cost and profit structure
of the firm. The following table demonstrates the net profit – sales ratio of Viet Nam
National Petroleum Group. The ratio is applied by the following formula:
𝑵𝒆𝒕 𝒑𝒓𝒐𝒇𝒊𝒕
The net profit-sales ratio=
𝑵𝒆𝒕 𝒔𝒂𝒍𝒆
Year 2018 2019 2020
Net profit 3,748 4,158 988
Net sales 191,932 189,604 123,919
Net profit - sales 1.95% 2.19% 0.80%
ratio
Table 3. Net profit - sales ratio
There was a slight increase in PLX's net profit – sale ratio from 2018 - 2019 but declined
significantly in 2020 due to the effect of the Covid epidemic. Overall, the figure is quite

6
high. This favorable level can be explained partly by the amount of PLX's net profit, which
increased from 2018 to 2019 ( 3,748 - 4,158). This was an optimistic sign because the Viet
Nam National Petroleum Group controls the costs very effectively. However, net sales
declined significantly resulting from having less control over pricing because the market
decides price. (no benchmark for this ratio).
4. Leverage ratios
Leverage ratios are used to assess the proportions and manageability of debt carried by a
firm. In this report, our group used the debt-equity ratio and interest coverage ratio to
analyze the PLX group. The formula is: Debt – equity ratio=Debt/Equity.
Year 2018 2019 2020
Debt 33,191 35,839 36,980
Equity 56,283 61,762 61,106
Debt – equity ratio 0.5897 0.5802 0.6051
Table 4. Debt-equity ratio
The debt ratio plays an important factor for financial units to approve loans. The PLX’s
debt ratios tend to fluctuate over 3 years, especially in 2020 peaking at 0.6051, which is
the result of increasing debt from 33,191 to 36,980 . However, the ratio does not exceed 2,
so it is a good sign for the firm. That means PLX has fewer financial difficulties. Therefore,
this provides bankers adequate protection. Leverage ratios are used to assess the
proportions and manageability of debt carried by a firm. In this report, our group used the
debt-equity ratio and interest coverage ratio to analyze the PLX group.
Year 2018 2019 2020

EBIT 6,043 6,439 2,116

Interest Payable Loans 865 791 706

Interest Coverage Ratio 6.99 8.14 3.00

Table 5. Interest Coverage Ratio
The interest coverage ratio showed whether the firm has sufficient resources to cover the
interest portion of the debt. Looking at the table above, we can see that the PLX’s interest

7
coverage ratio increased considerably from 2018 to 2019 (6.99 and 8.11) and then it
declined sharply to 3.00 in 2020. It could be explained by increasing the EBIT in that
period. As effect covid 19, EBIT’s PLX decreases considerably that the result in interest
coverage ratio dropped. Overall, this ratio was still greater than 2, which indicates that the
company can pay interest on the debt.
IV. Common-size analysis: Comparison between Petrolimex and PV Oil
Common-size analysis is usually carried out to compare firms of different size, expressing
components of the balance sheet and income statement as a percentage of total assets (TA)
value. Particularly, the accounts of account receivables (AR), inventories and equity are
frequently adopted in this common form. Applying the technique in the case of Petrolimex,
we retrieve the following data:
Year 2018 2019 2020
Amount Percentage Amount Percentage Amount Percentage
AR 7,577 13.46% 8,367 13.55% 7,247 11.86%
Inventories 10,303 18.31% 11,773 19.06% 9,400 15.38%
Equity 23,092 41.03% 25,923 41.97% 24,126 39.48%
TA 56,283 100% 61,762 100% 61,206 100%
Table 6. Common-size ratios analysis of Petrolimex
In the oil market of Vietnam, Petrolimex is considered as almost a sole player despite the
existence of several other oil companies. However, Petrolimex’s biggest rival – PV Oil,
whose data is presented as followed, is observed to be increasingly competitive in the field.
The following table showed the percentage to total assets without the amount:
Year 2018 2019 2020
AR 35.96% 34.70% 22.36%
Inventories 6.52% 9.24% 8.28%
Equity 43.20% 41.06% 47.86%
Table 7. Common-size ratios of PV Oil
Examining these two tables, it can easily be seen that the account – receivable – to – asset
ratio of Petrolimex is only half of that of PV Oil during three years of analysis. It is common
knowledge that account receivables illustrate money due to a company in the short term,

8
hence based on this ratio alone, lenders may score PV Oil higher than Petrolimex since it
has the capacity of generating more money in the future.
On the other hand, the proportion of inventories of Petrolimex was approximately doubles
PV Oil. Normally, it would represent that the products of the firm are not selling fast and
the bank would prefer a firm that is more efficient. However, in the case of utility
companies, it may be superior to stock more inventories, especially when the oil market
price fluctuates unexpectedly during the Covid pandemic.
The equity – total assets ratios of both companies were relatively equal in 2018 and 2019,
however, in 2020, while Petrolimex’s decreased by more than 2%, that of PV oil increased
significantly 6%. In the point of view of lending institutions, higher the stake of the owner/s
in the business the more creditworthy is the business. Therefore, if this trend extends in the
future, Petrolimex will be less likely to be granted loans than its opponents.
In conclusion, Petrolimex and PV Oil both have their advantages and disadvantages,
predicting the possibility of more intense competitions between these two companies and
among oil firms in general. However, Petrolimex is still performing excellent and likely to
remain its first place in Vietnamese oil market in the upcoming year.
V. Time-series techniques
1. Trend (indexed) statement
The very first approach is the trend statement or another name is the indexed statement.
One year will be chosen to be the base and the formula applied is (year after / year base)
*100 with the unit measurement - percentage to see the changes over time. The indicators
that would be closely focused on are net sales revenue, cost of goods sold, net profit from
operating acitivities expenses, and pretax profit. They are chosen because in the income
statement, they comprise the largest amount which weight over the business performance
and generating the cash flow internally and externally. The base year was 2018, the period
before the Covid-19 pandemic occured and severely impacted on the whole enconomy in
general and in energy industry in particular.
Year 2018 2019 2020

9
 Net sales 191,932 189,604 123,919
Indexed net sales 100 98.79 64.56
Trend percentage change -1.21 -35.44
Cost of goods sold (COGS) 178,026 175,434 113,879
Indexed COGS 100 98.54 63.97
Trend percentage change -1.46 -36.03
Net profit from operating 4,913 5,511 1,191
activities

Indexed Net profit from 100 112.17 24.24

operating activities

Trend percentage change 12.17 -75.76

Pretax profit 5,178 5,648 1,41
Indexed pretax profit 100 109.08 27.23
Trend percentage change 9.08 -72.77
Table 8. Trend statement calculation
From the table, it can be seen that mostly, the indexes illustrated the downward trend to see
the negative sign in the change between two years. The most dramatical decrease was in
2020 with pretax profit and net profit and operating activities as well. The time witnessed
72.77% and 75.76% dwindling in profit before tax and net profit from operating actitives
respectively. The next highlighted factor was that the trend percentage change between
2018 and 2020 is immensely down from approximately 35-75% for all listed items. The
period of 2018-19 experienced the slightly decrease in net sales and COGS with 1.21% and
1.46% respectively and simultaneously saw the considerably increase in the others by
12.17% for net profit and operating activities and 9.08% for pretax profit.
This chart depicts the downward trend in the listed items between two period of time which
are 2018-19 and 2018-20.

10
 Trend percentage
2018-19 2018-20
20
10
12,17 9,08
0 -1,21 -1,46
-10 net sales change COGS change Net profit from Pretax profit change
-20 -35,44 -36,03 operating activities
change
-30
-40 -75,76 -72,77
-50
-60
-70
-80
-90

Figure 3. Trend statement chart

In 2019, though the COGS and sales revenue decreases considerably however still
witnessed the positive effects on finalized profit. This results in the falling expenses
especially in financing, interests aspects. In 2019, Petrolimex controlled smoothly the
expense management and got back the higher profit before tax. Socioeconomically, 2020
recorded the huge outbreak of Covid-19 which impacted on every single industry. This
situation explained clearly about the drastic drop in the listed items above. The percentage
change of net sales decrease means that the firm losts its customers or reduces the prices
of the product/ services. Social distance forced people do everything from home. Therefore,
the demand of gas or oil for transportation of all means of vehicles crashed noticeably. The
production and business activities of the entire Petrolimex system were also significantly
affected by the Covid-19 epidemic in all fields: petroleum distribution business, aviation
fuel, transportation, petrochemical, gas, etc. and other ancillary services. (Petrolimex,
2020). Moreover, in the global situation, the crude oil market experienced an
unprecedented crisis (General Statistics Office of Vietnam, 2020). This put a large effect
on demestic oil price and somehow answered for the dropping percentage change of PLX.

11
2. Variability measurement
Variability measurement illustrates how much a population fluctuates over a set period of
time as the statistic concept. In the perspective of financial ratios, it shows the volitality of
the items, that experience the quantity of deviation from the mean financial ratio. The
variability measurement is

conducted by the formula: ! "# $%&’()!*+ $%&’( over the three years.
,(%- /0-%-10%& 2%304
Mean Variability
Liquidity ratios Current ratio 1.10 0.05
Quick ratio 0.79 0.04
Efficiency ratios Net sales 168,485 0.40
Inventory Turnover Ratio 15.97 0.34
Average Collection 17.00 0.41
Period
Profitability Gross profit - sales ratio 7.61% 0.11
ratios Net profit - sales ratio 1.65% 0.84
Leverage ratios Debt – equity ratio 0.59 0.05
Interest Coverage Ratio 6.04 0.85
Table 9. Variability measurement
This table depicts the variability of liquidity, efficiency, profitability and leverage ratio in
a set of 3 years from 2018 to 2020. It can be seen that all those ratios had the variability
measurement under the benchmark of 1. That proves the low volatility of the firm in front
of the marketable changes. The highest variance is interest coverage ratio with 0.85, which
means the leverage still experienced the fluctuation deviated from the mean. However, with
the same classification of leverage, debt-equity ratio owned the nearly lowest variability
which is 0,05. That means the assessment of the firms with the financial obligations was
meetable. The lowest volatility was about liquidity ratios with 0.05 for current ratio and
0.04 for quick ratio. This understandably demonstrated the good financial health of PLX

12
for the capacity to prevent the struggles with paying debts and ability to obtain additional
financing. So we decided to buy Petrolimex’s stock.
VI. Conclusion
To sum up, the above financial statement analysis of Petrolimex has proved that the firm
is doing relatively excellent in the market. Petrolimex is seen to have adequate liquidity,
run sufficiently and profitably enough and not burdened with too much debt. All these signs
show that the firm is preferable from lenders’ point of view and any future possible loan
applications will not be a huge problem.

13
 VII. References
Petrolimex. (2020, April). Petrolimex "Trách nhiệm - Nỗ lực - Sẻ chia" cùng vượt qua
Covid-19.
Retrieved from https://www.petrolimex.com.vn/nd/tin-chuyen-nganh/thong-diep-cua-
bithu-dang-uy-chu-tich-hdqt-pham-van-thanh-petrolimex-trach-nhiem-no-luc-se-chia-
cungvuot-qua-covid-19.html
General Statistics Office of Vietnam. (2020). TÁC ĐỘNG CỦA GIÁ DẦU THẾ GIỚI
ĐẾN CHỈ
SỐ GIÁ TIÊU DÙNG. Retrieved from https://www.gso.gov.vn/du-lieu-va-so-lieu-
thongke/2021/03/tac-dong-cua-gia-dau-the-gioi-den-chi-so-gia-tieu-dung/

14
APPENDIX: FINANCIAL STATEMENTS

PLX’s financial statement 2018

15
16
17
18
19
20
21
PLX’s financial statement 2019

22
23
24
25
26
27
28
29
30
PLX’s financial statement 2020

31
32
33
34
35
36
37
38
39