FOREIGN TRADE UNIVERSITY

FALCULTY OF INTERNATIONAL ECONOMICS

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

MID-COURSE INTERNSHIP REPORT

FINANCIAL PERFORMANCE ANALYSIS OF AVIATION

PRINTING JOINT STOCK COMPANY

Name : Nguyen Thu Hang

Student ID : 1514450013

Class : English 10 – High quality – K54

Major : International Economics

Instructor : Assoc. Prof. Dr. Tu Thuy Anh

Hanoi, August 2018

 Table of Contents
LIST OF ABBREVIATIONS...............................................................................iv

LIST OF TABLES.................................................................................................v

LIST OF FIGURES..............................................................................................vi

Acknowledgment.................................................................................................vii

Introduction............................................................................................................1

1.1 Background..................................................................................................1

1.2 Objectives....................................................................................................1

1.3 Object and scope..........................................................................................2

1.4 Research questions.......................................................................................2

1.5 Structure of the report..................................................................................2

Chapter 1. Theoretical framework.........................................................................3

1.1 Definition.....................................................................................................3

1.2 Related thesis on financial analysis..............................................................3

1.3 Methodology................................................................................................4

1.3.1 Income statement analysis.....................................................................5

1.3.2 Balance sheet analysis...........................................................................6

1.3.3 Cash flow analysis................................................................................9

1.3.4 Profitability analysis............................................................................10

Chapter 2. Analysis of financial performance of AVIPRINT., JSC.....................11

2.1 Overview of AVIPRINT., JSC...................................................................11

2.1.1 History of formation and development................................................11

2.1.2 Industry and business location............................................................12

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 2.1.3 Management model, business organization and management apparatus
.............................................................................................................................. 13

2.1.4 Oriented development.........................................................................14

2.2 General evaluation.....................................................................................14

2.3 Calculation and results evaluation..............................................................16

2.3.1 Income statement analysis...................................................................16

2.3.2 Balance sheet analysis.........................................................................19

2.3.3 Cash flow analysis...............................................................................25

2.3.4 Profitability analysis............................................................................27

2.4 Strength and Weakness..............................................................................28

2.4.1 Strengths.............................................................................................28

2.4.2 Weaknesses.........................................................................................29

Chapter 3. Solutions and Recommendations........................................................30

3.1 Enhance asset utilization efficiency...........................................................30

3.2 Improving profitability...............................................................................30

3.2.1 Increase sales.......................................................................................30

3.2.2 Control cost.........................................................................................31

3.2.3 Improve quality of human resources...................................................31

3.3 Strengthening financial management.........................................................31

Conclusion...........................................................................................................33

References............................................................................................................ 35

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 LIST OF ABBREVIATIONS

AVIPRINT., JSC. Aviation Printing Joint Stock Company

COGS Cost of Goods Sold

D/A Debt to Asset

D/E Debt to Equity

EBIT Earnings Before Interest and Taxes

FL Financial Leverage

GPM Gross Profit Margin

IC Interest Coverage

n.e.c not elsewhere classified

NPM Net Profit Margin

OM Operating Margin

ROA Return On Asset

ROE Return On Equity

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 LIST OF TABLES
Table 2.1 Main financial data dated from 2014-2017......................................15
Table 2.2 Vertical analysis of income statement 2014 – 2017.........................17
Table 2.3 Horizontal analysis of income statement 2014 – 2017.....................18
Table 2.4 Liquidity ratios from 2014 – 2017....................................................19
Table 2.5 Leverage ratio....................................................................................22
Table 2.6 Activity ratio......................................................................................24
Table 2.7 Cash flow 2014 – 2017.......................................................................26
Table 2.8. Profitability analysis 2014 – 2017....................................................27

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 LIST OF FIGURES
Figure 1.1 Management Model.........................................................................13
Figure 2.1 Current ratios from 2014 – 2017.....................................................20
Figure 2.2 Quick ratios from 2014 – 2017........................................................21
Figure 2.3 Compare current ratios and quick ratios.......................................22
Figure 2.4 Assets structure 2014 – 2017...........................................................23
Figure 2.5 ROE, ROA........................................................................................28

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 Acknowledgment
Firstly, I would like to express my sincere gratitude to my advisor Associate
Professor Dr. Tu Thuy Anh for the continuous support and guidance, who provided
insight and expertise to help me with this report.

I would also like to thank AVIPRINT., JSC’s board of director as well as

employees, especially at financial – accounting division for facilitating and providing
support during my internship period.

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 Introduction
1.1 Background
For businesses, "Finance" is an important factor that directly influences survival
and development. A business that wants to survive and develop sustainably must have
activities such as market research, analysis of the current situation of both the economy
and the business. Financial performance is a crucial sign for investor to identify and
analyze the health of the company. Financial performance analysis is an important tool
for the company as well as the investors, especially for joint-stock company. Financial
analysis helps managers to see the real situation of their business: increasing or
decreasing, the good and bad aspects of financial situation, business situation, capital
situation, debt..., from which to devise measures and strategies timely and effectively
to stabilize the situation. From this, the financial status of the company can be rational
and strong, increasing the value of assets for owners.

The most efficient financial analysis is the analysis of financial statements, which
not only provides the most financially clear information to managers, but also provides
useful information to investors, suppliers, lenders and employees, as well as state
management agencies. In particular, for joint-stock companies, this work is particularly
prominent because it greatly influences the decision-making of investors - a factor that
plays a significant role in the performance of enterprise.

For those reasons, along with studying the financial situation in Aviation Printing
Joint Stock Company, I have decided to choose the topic: “Financial Performance
Analysis of Aviation Printing Joint Stock Company.”

1.2 Objectives
The main objectives of this report is based on the current and past financial data
of AVIPRINT., JSC, calculate and determine the indicators reflecting the financial
status of the company, anticipate financial capacity and financial risk the company may

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encounter in the future and thereby providing solutions, recommendation to improve
the financial capacity as well as business efficiency of the company.

1.3 Object and scope

Object of the report is analysis of financial performance. The spatial scope of the
report is the Aviation Printing Joint Stock Company and the time-based scope is from
2014 – 2017.

1.4 Research questions

This report aims to answer these following question:

1. What is the indicator system for analysis of financial statements and how are
they calculated?
2. Financial status of Aviation Printing Joint Stock Company through the
analysis of financial statements.
3. Through the analysis of financial statements, what are the advantages and
limitations of the company? What measures should be taken to improve the
financial situation of the company?

1.5 Structure of the report

Chapter 2. This report will be divided into three parts. First is the
Theoretical framework. The second part will be the Analysis of
financial performance of AVIPRINT., JSC. And finally, we will
have the Solutions and recommendations.

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 Chapter 3. Theoretical framework
3.1 Definition
According to Verma (2017), financial performance is used when talk about the
act of executing financial activity. Financial performance in the boarder sense, it can
refer to extent to which financial objectives being or has been achieved or the process
of estimating the aftereffects of a company's strategies and tasks in financial terms.
Financial performance can be used to gauge company's general financial health over a
given timeframe and can likewise be utilized to look at comparative firms over a
similar industry or to compare enterprises or areas in conglomeration.

“Financial analysis is the process of assessing relationship between components

of financial statements to get a better understanding of the company’s position and
performance.” (Mohana, 2011)

Myer (1969) had stated that “Financial statement analysis is largely a study of the
relationship among the various financial factors in a business as disclosed by a single
set of statements and a study of the trend of these factors as shown in a series of
statements.”

“Income statement is a summary of a firm’s revenues and expenses over a

specified period, ending with net income or loss for the period.” (Verma, 2017)

“Balance sheet is a summary of a firm’s financial position on a given date that

shows Total assets = Total liabilities + Owner’s equity.” (Verma, 2017)

According to Helfert (2001), cash flow statement is a financial statement which

express the varies in the balance sheet account and income influence the cash and cash
equivalents and separates the analysis to operating, investing and financing activities.

3.2 Related thesis on financial analysis

There had been multiple researches relating to the study of financial analysis,
especially corporate financial analysis. Peyrard (1994) confirms that financial indicator

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systems are an important tool in corporate financial analysis. Meanwhile, Walsh (2006)
sets the criteria for assessing the business performance of an enterprise based on return
on equity, return on total assets, return on investment. The author also sets his criteria
for assessing the business performance of the enterprise on the above criteria.

Quang (2011) introduced system of methods and indicators to assess the situation
financial analysis, financial structure analysis, business efficiency and financial risk,
providing insights into the financial picture of the whole enterprise. Chi and Cơ (2008)
presented the basic theories of analyzing corporate financial reports. While Quang, et
al. (2006) present a report, which is an in-depth study of the financial analysis of joint
stock companies, which refers to the system of financial analysis indicators, methods
of financial analysis of joint stock companies and guidelines of the pressure procedure.

There had also been a lot of thesis focus on a specific company such as Lan
(2017) with indept analysis introducing a system of methods and indicators to assess
the financial situation, analysis of financial structure, business efficiency and financial
risk using the comparative method, ratio method and Dupont model. Or the thesis of
Huong (2017) had generalized theoretical issues on financial situation, conducting
financial analysis and proposing specific solutions for financial improvement for Xuan
Anh Investment and Trading Co., Ltd.

However, both of the aforementioned thesis using the comparative method, in this
thesis, I will use the method provide by CFI for the indept analysis covered all aubjects
of the financial statement.

3.3 Methodology
In this report, I collected the financial statement of AVIPRINT., JSC from 2013-
2017 and examined the financial performance of the company based on 4 analyses: (1)
income statement, (2) balance sheet, (3) cash flow, and (4) profitability, following the
method of CFI (2018).

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3.3.1 Income statement analysis
The income statement is often considered to be the most important financial
statement. An income statement summarizes revenues and expenses and gains and
losses, and ends with the net income for a specific period. (Gibson, 2008) The income
statement reveals a company’s earnings over a specific period of time to investors and
managers, so they can understand the company’s performance on a financial basis.
However, income statement analysis can report much more than earnings. It can clarify
the effectiveness of management in controlling expenditure, the amount of interest
income and expense, and the taxes paid (Kennon, 2018).

As stated by Bragg (2018), the analysis of the income statement involves

comparing the different line items within a statement, as well as following trend lines
of individual line items over multiple periods. This analysis can be used to understand
the cost structure of a business and its ability to earn a profit. There are two main types
of analysis we will perform: vertical analysis and horizontal analysis.

3.3.1.1 Vertical analysis

According to Nikolai, et al. (2010), “In vertical analysis, a company shows the
monetary relationships between items on its financial statements for a particular period
in percentages as well as in dollars.” Vertical analysis can show the relative sizes of
different account on the financial statement.

Vertical analysis can help understand the composition of a financial statement. It

also can be very effective in understanding key trends over time.

This report’s use of vertical analysis in an income statement is to show the

various line items as a percentage of revenue. The key metrics are:

- COGS as a percent of revenue

- Gross profit as a percent of revenue
- Operating cost as a percent of revenue
- Operating profit as a percent of revenue

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 - EBIT as a percent of revenue
- Tax as a percent of revenue
- Net income as percent of revenue

3.3.1.2 Horizontal analysis

Horizontal analysis is used to show the change of corresponding financial
statement items over a number of accounting period. Horizontal analysis enable the
investors to evaluate trends and growth patterns as well as identify the driving force of
the company’s performance.

With horizontal analysis, we look across the income statement at the year-over-
year (YoY) change in each line item. We will analyze with following formula:

a.

b.

3.3.2 Balance sheet analysis

According to Gibson (2008), a balance sheet shows the financial condition of an
accounting entity as of a particular date. The balance sheet consists of assets, the
resources of the firm; liabilities, the debts of the firm; and stockholders’ equity, the
owners’ interest in the firm.

The assets are derived from two sources, creditors and owners. At any point in
time, the assets must equal the contribution of the creditors and owners. The
accounting equation expresses this relationship:

Balance sheet analysis can help to evaluate the operational efficiency of the
company using following ratio: Liquidity ratio, Solvency ratio and Activity ratio.
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3.3.2.1 Liquidity ratios
It is important for company to maintain its short-term debt-paying ability. Even a
very profitable entity will find itself bankrupt if it fails to meet its obligations to short-
term creditors (Gibson, 2008). In order to calculate the coverage of short-term debts in
an emergency, current liabilities are analyze in relation to liquidity assets. Liquidity
ratios measure a company’s ability to pay debt obligations and its financial position
through the calculation of metrics including the current ratio and quick ratio (Lee, et
al., 2009).

Current ratio is a liquidity ratio used to measure the ability of a company to pay
back its liabilities with its assets. Current ratio shows how efficient a company is in
turning its products into cash or whether the company is operating efficiently. (Axel,
2012). Current ratio is calculated using the following formula:

Quick ratio provides a more precise assessment of company’s abilities to pay

back its liabilities compare to current ratio. Quick ratio only factor the assets which can
be liquidated quickly such as cash or marketable securities. Therefore inventory is
excluded from the calculation of quick ratio despite being a current asset (Lee, et al.,
2009). The formula for quick ratio is:

3.3.2.2 Leverage ratios

According to Lee, et al., (2009), in order to measure the extent of a company’s
debt financing, it is advisory to use leverage ratios. These ratios can reflect the
financial risk posture of the company and assess the ability of a company to meet its
financial obligations.

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 High level of debt is consider to be a dangerous sign for investors, however, if
company can generate a higher rate of return than the interest rate on its loans, then the
debt is contributing to the growth of profits. Nonetheless, uncontrolled debt levels can
lead to credit downgrades or worse. On the other hand, too few debt or a reluctance or
inability to borrow may be a sign that operating margins are too tight.

Some main leverage ratios include: Debt to Equity (D/E), Debt to Asset (D/A),
Financial Leverage ratio (FL) and Interest coverage ratio (IC) calculated as follows:

3.3.2.3 Activity ratios

Activity ratios, also called efficiency ratios, are used to evaluate the liquidity of
certain current assets by estimating the length of various segments of a company’s
operating cycle. These ratios can be used to analyze how well a company uses its assets
and liabilities internally. Activity ratios can be used to measure a company’s ability to
use its assets to generate income (Axel, 2012). This makes activity ratios important,
because an improvement in the activity ratios usually translates to improved
profitability.

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 Some common efficiency ratios are accounts receivable turnover, asset turnover,
inventories turnover and fixed asset turnover. We will calculate them using following
formula:

3.3.3 Cash flow analysis

Gibson (2008) had stated that, “The statement of cash flows provides an
explanation of the changes that occurred in the firm’s cash balances for a specific
period.”

The statement of cash flows classifies cash receipts and cash payments into
operating, investing, and financing activities. In general, operating activities involve
income statement items. Investing activities generally result from changes in long-term
asset items. Financing activities generally relate to long-term liability and stockholders’
equity items.

Cash from operations reflect how much cash is generated from a company’s
products or services. Generally, changes made in cash, accounts receivable,
depreciation, inventory, and accounts payable are reflected in cash from operations.

Cash from investing include the purchase or sale of an asset, loans made to
vendors or received from customers or any payments related to a merger or acquisition.

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 Cash from financing include the sources of cash from investors or banks, as well
as the uses of cash paid to shareholders. Changes in cash from financing are “cash in”
when capital is raised, and they’re “cash out” when dividends are paid.

3.3.4 Profitability analysis

Profitability is the ability of a company to generate earning. It is a vital concern of
stockholder as they derive revenue in form of dividends. Profitability ratios are the
most popular metrics used in financial analysis. In general, the primary financial
analysis of profit ratios should include only the types of income arising from the
normal operations of the business (Gibson, 2008).

Some key insights we are looking at when analyzing profitability are net profit
margin (NPM), gross profit margin (GPM), operating margin (OM), Return on Assets
(ROA) and Return on Equity (ROE), each calculated as follows:

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Chapter 4. Analysis of financial performance of AVIPRINT., JSC
4.1 Overview of AVIPRINT., JSC
- Company name: Aviation Printing Joint Stock Company
- Abbreviation: AVIPRINT., JSC
- Headquarter: 200 Nguyen Son Road, Long Bien, Ha Noi
- Charter capital: 21,419,280,000 VND
- Owner’s equity: 21,419,280,000 VND
- Telephone: (024) 38 720 376
- Fax: (024) 38 725 372
- Website: aviprint.com.vn
- Email: ihk@netnam.vn
- Stock code: IHK
- Business license: AVIPRINT., JSC operates under the business registration
certificate No. 0100108014 issued by Hanoi Department of Planning and
Investment, first registration on October 03, 2005 and 11 th registration on August
23, 2016.

4.1.1 History of formation and development

AVIPRINT., JSC was transformed from State-owned Aviation Printing Company
under Vietnam Airlines following Decision No. 1900 / QD-BGTVT dated June 07,
2005 of the Ministry of Transport. The company operates under the business
registration certificate No. 0103009389 issued by the Department of Planning and
Investment of Hanoi on 03/10/2005 with the initial charter capital of 17 billion VND.

On March 04, 2010, officially trading on the Upcom market at Hanoi Stock
Exchange.

In October 2010, the company was approved by the State Securities Commission
to register the additional transaction of 441,928 shares (issued from dividend payment
in 2009 by shares and bonus shares) bringing the total number of shares registered for

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trading to 2,141,928 shares, equivalent to the total value of the certificate transaction
price of 21,419,280,000 VND.

On September 23, 2015, Vietnam Airlines Corporation has withdrawn 100% state
capital at the IHK, equivalent to 1,092,420 shares.

4.1.2 Industry and business location

4.1.2.1 Industry:
- Processing and preserving of fruit and vegetables;
- Manufacture of vegetable and animal oils and fats;
- Manufacture of other products of wood, manufacture of articles of cork, straw
and plaiting materials;
- Manufacture of other food products n.e.c. (Details: Skimmed milk and butter,
spices, dip, sauce, vinegar);
- Manufacture of dairy products;
- Extraction of salt;
- Wholesale of food;
- Manufacture of starches and starch products;
- Manufacture of prepared meals and dishes;
- Packaging activities;
- Repair of machinery;
- Manufacture of plastics products;
- Wholesale of beverages;
- Wholesale of electronic and telecommunications equipment and supplies;
- Wholesale of other machinery and equipment n.e.c;
- Manufacture of pulp, paper and paperboard;
- Manufacture of corrugated paper and paperboard and containers of paper and
paperboard;
- Manufacture of other articles of paper and paperboard n.e.c;
- Retail sale of books, newspapers, journal and stationary in specialized stores;

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 - Wholesale of construction materials, installation supplies;
- Real estate activities;
- Printing (except for form prohibited by the State).

4.1.2.2 Business location:

Besides the head office in Hanoi, the company currently has two branches in the
South and Central of Vietnam.

Central Branch: Address at 39 Tran Tan Moi Street, Hoa Thuan Tay Ward, Hai
Chau District, Da Nang (pause production and business activities from 1/8/2017).

Southern Branch: Address at C5 / 6A1 Hamlet 3, Vinh Loc Commune, Binh

Chanh District, Ho Chi Minh City.

4.1.3 Management model, business organization and management apparatus

General
Meeting of
Shareholders

Control
Board of Board
Director

Board of
Management

Finance and Market

Material
Office Accounting Planning
Department
Department Department

Southern Central
Factory Branch Branch

Figure 1.1 Management Model

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4.1.4 Oriented development
- Main objective of the company: To pursue the long-term goal of serving the
aviation industry.
- Medium and long term development strategy:
o To strive to maintain the growth of profits, ensure a healthy and sound financial
situation, and strictly manage debts.
o Maintain traditional markets, seek, exploit and develop new markets with great
potential.
o Promoting all available resources, especially attaching importance to
sustainability and increasing quality of growth on the basis of improving the
quality of planning work, plans and efficiency, applying technologies and
technical advances, saving raw materials, energy in production and business,
improving product competitiveness in the enterprise.
- Create jobs and maintain stable income for employees. Ensure harmony between
the interests of customers, shareholders and employees.
- Improving the quality of offset printing, expanding the direction of investment in
printing soft packaging, labels, movie tickets, tickets which have the advantage of
flexographic printing, difficult products such as products required continuous
printing, environmental friendly products.

4.2 General evaluation

Table 2 .1 shows that there have been a continuous increase in the company’s
assets and owners’ equity. Within the course of 4 years, the share capital has remained
unchanged at 21,419,280,000 VND, the increases in owners’ equity is the results of
increases in retained earnings. While the increase in owners’ equity is slow and steady,
the company’s assets see a number of leaps and bounds. 2015 saw a jump from
45,503,661,763 VND to 52,527,113,819 VND, increasing 13.37%. Another leap
occurred in 2017, with the total assets recorded at 80,829,002,456 VND, an increase of
33.4%. However, as the increases in owners’ equity were slight and constant, it can be

14
conclude that changes in assets came predominantly from changes in liabilities. This
suggests that the company’s assets acquired was financed by debt. Therefore, the
company may not be generating sufficient cash from its business to grow as it wants to,
so it is forced to take out loans to pay for its growth.

Table 2.1 Main financial data dated from 2014-2017

(Unit of currency: VND)

Year 2014 2015 2016 2017

Assets 45,503,661,763 52,527,113,819 53,828,995,429 80,829,002,456
Current
38,276,670,245 47,198,305,894 46,188,811,442 62,469,105,382
assets
Fixed
7,226,991,518 5,328,807,925 7,640,183,987 18,359,897,074
assets
Liabilities 18,364,039,382 25,081,506,653 26,169,002,355 52,120,575,157
Current
18,364,039,382 25,081,506,653 26,169,002,355 48,220,575,157
liabilities
Owners’
27,139,622,381 27,445,607,166 27,659,993,074 28,708,427,299
Equity
Share
21,419,280,000 21,419,280,000 21,419,280,000 21,419,280,000
capital
Retained
4,432,147,571 4,738,132,356 4,952,518,264 5,633,683,015
earnings
Working
19,912,630,863 22,116,799,241 20,019,809,087 14,248,530,225
capital
Sales 153,752,966,426 174,444,839,445 193,154,415,301 216,993,985,169
Net profit 3,366,815,490 3,525,132,312 3,672,694,740 4,174,290,352
Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017

Regarding asset structure, current assets take up major proportion of total assets,
in 2017, current assets amounted for 77.29% of total assets. The company is holding
more current assets than fixed assets, meaning it has lower liquidity risk and higher
flexibility, however, long-term financing will carry a higher cost.

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 Large liabilities mean the company is depending on debt. Company’s liabilities
make up mostly from short-term debt and have a tendency of rising. However, in 2017,
the company took up a loan with Vietinbank of 5,100,000,000 VND, 5-year loan
period, with the interest rate of 9%, pay 1,200,000,000 VND within 12 months, for the
purpose of investing in used 4-colour flexographic printing machine.

Sales and net income increase over the year. This implies a growing business
results for the company.

The company’s working capital remained positive over 4 years. This means the
company is capable of meeting its financial obligations.

From the financial statements, return on investment (ROI) rate can also be
calculated:

ROI2014 = 7.13% ROI2016 = 6.82%

ROI2015 = 6.71% ROI2017 = 5.16%

The ROI rate from 2014 to 2017 has been on a decreasing trend. These results
may imply a decreasing of cost efficiency.

4.3 Calculation and results evaluation

4.3.1 Income statement analysis
4.3.1.1 Vertical analysis
Table 2 .2 showed key items as a percentage of revenue. From the table, we can
conclude that net profit is only a small fraction in comparison with revenue. The largest
take from revenue through three years is the COGS. Accounting for a decrease of
88.26%, 88.15% and 88.11% in 2015, 2016, and 2017 revenue respectively, a plan to
lessen COGS can be considered as an important approach in strategic planning to
increase net profit. Another cost that need to be take into consideration is operating
cost. Reaching as high as over 9% of revenue, this could show an inefficient managing

16
and planning of the company. Expected strategy for AVIPRINT., JSC is to reduce cost
of goods sold and operating cost in order to increase net income for the company.

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 Table 2.2 Vertical analysis of income statement 2014 – 2017

  Year ended December 31 Year ended December 31

(in VND) 2015 2016 2017 2015 2016 2017

Revenue 174,444,839,445 193,154,415,301 216,993,985,169 100% 100% 100%
COGS (153,968,696,108) (170,233,416,089) (191,188,374,886) -88.26% -88.13% -88.11%
Gross
20,476,143,337 22,920,999,212 25,805,610,283 11.74% 11.87% 11.89%
profit
Operating
(17,350,493,791) (18,383,051,771) (20,732,216,278) -9.95% -9.52% -9.55%
cost
Operating
3,125,649,546 4,537,947,441 5,073,394,005 1.79% 2.35% 2.34%
profit
Other
1,447,060,470 132,348,359 167,924,265 0.83% 0.07% 0.08%
profit
EBIT 4,572,710,016 4,670,295,800 5,241,318,270 2.62% 2.42% 2.42%
Tax (1,047,577,704) (997,601,060) (1,067,027,918) -0.60% -0.52% -0.49%
Net profit 3525132312 3672694740 4174290352 2.02% 1.90% 1.92%
Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017
4.3.1.2 Horizontal analysis

Table 2.3 Horizontal analysis of income statement 2014 – 2017

Year ended December 31 Year ended December 31

2016 2017
2015 2016 2017
(in VND) (+/-) % (+/-) %
Revenue 174,444,839,445 193,154,415,301 216,993,985,169 18,709,575,856 10.73% 23,839,569,868 12.34%
COGS (153,968,696,108) (170,233,416,089) (191,188,374,886) (16,264,719,981) 10.56% (20,954,958,797) 12.31%
Gross
20,476,143,337 22,920,999,212 25,805,610,283 2,444,855,875 11.94% 2,884,611,071 12.59%
profit
Operating
(17,350,493,791) (18,383,051,771) (20,732,216,278) (1,032,557,980) 5.95% (2,349,164,507) 12.78%
cost
Operating
3,125,649,546 4,537,947,441 5,073,394,005 1,412,297,895 45.18% 535,446,564 11.80%
profit
EBIT 4,572,710,016 4,670,295,800 5,241,318,270 97,585,784 2.13% 571,022,470 12.23%
Total cost (170,919,707,133) (189,481,720,561) (212,819,694,817) (18,562,013,428) 10.86% (23,337,974,256) 12.32%
Net profit 3,525,132,312 3,672,694,740 4,174,290,352 147,562,428 4.19% 501,595,612 13.66%
Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017
 From Table 2 .3, it can be conclude that the company has had continuous growth
over the past few years. Revenue had growth consistently since 2015, increase by
10.73% in 2016 and continue to grow another 12.34% in 2017. COGS also increase
over the year but at a slightly slower pace than revenue, 10.56% increase in 2016 and
12.34% increase in 2017. This implies an attempt to reduce cost of selling goods from
the company. Same conclusion could be drawn from Table 2 .2, where it can be
pointed out that the COGS have decreasing reduction effect on the revenue, from
taking away 88.26% in 2015 to only 88.11% in 2017. However, the same thing cannot
be said about operating cost. In 2016, the operating cost increase by 5.95% and in
2017, the percentage increase is more than double the growth of 2016, up to 12.78%.
However, despite large increase in cost, net profit of the company still grow
exponentially. From a slight increase of 4.19% in 2016, net profit has increase 13.66%
in 2017. This increase could be attributed to larger growth in revenue in comparison
with growth in COGS.

4.3.2 Balance sheet analysis

4.3.2.1 Liquidity ratios
Table 2.4 Liquidity ratios from 2014 – 2017
Year 2014 2015 2016 2017
Current
38,276,670,245 47,198,305,894 46,188,811,442 62,469,105,382
assets
Current
18,364,039,382 25,081,506,653 26,169,002,355 48,220,575,157
liabilities
Current
2.08 1.88 1.77 1.30
ratio
Inventories 11,225,273,293 13,060,621,646 15,419,474,001 15,406,701,316
Quick ratio 1.47 1.36 1.18 0.98
Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017

The current ratios of AVIPRINT., JSC from 2104 to 2017 stay steadily above 1.0,
proving that the company’s financial performance is quite normal and that the
company still have the ability to payoff it short-term loan with its current assets. As
seen in Figure 2 .1, current ratio of AVIPRINT., JSC has a tendency to decrease over
the years. This is primarily caused by the quick increase in short-term debt. Figure
2 .1 shows that, although the current assets are still higher than current liabilities, the
current liabilities line has higher slope, which means that current liabilities are growing
at quicker pace than current asset, leading to the decreasing current ratio. The current
ratio plummeted in 2017 as a result of an sudden increase in current liabilities, from
26,169,002,355 VND to 48,220,575,157 VND, an increase of approximately 85%.

Figure 2.1 Current ratios from 2014 – 2017

Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017

Although the current ratio of the company has stayed above 1.0 consistently, it
still may not be confirmed that the company is capable of paying back its liabilities
immediately. It is because the current ratio incorporates all of a company’s current
assets, even those that cannot be easily liquidated. Therefore, a look at quick ratio is
necessary. Quick ratio is calculated using the most liquidated assets and as the result,
not included inventories. Inventory, even though it is a current asset, is not considered
a quick asset since it cannot be converted to cash within a very short time frame.
Furthermore, if inventories have to be sold quickly, the company may have to accept a
lower price than the book value. A look at the quick ratio in Figure 2 .2 and Table
2 .4 can tell that from 2014-2016, the company still have the ability to pay back its
liabilities with its most liquidated assets. However, in 2017, the company will be
unable to pay back its debt without selling inventories. In Figure 2 .1, it can be seen
that the inventories are relatively low and increase at a much slower pace than current
assets and current liabilities. Therefore, the main contributor to the decreasing of quick
ratio is the growth of current liabilities.

Figure 2.2 Quick ratios from 2014 – 2017

Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017

Following Figure 2 .3, comparing current ratios and quick ratios of

AVIPRINT., JSC, we can conclude several things. First of all, both of the ratio has the
tendency to decrease over the years. This is cause by the increase in short-term debt
and is an important issue that the company will need to address. Secondly, the gap
between current ratios and quick ratios is relatively small and is decreasing over time.
This implies that the amount of inventory in the company plays not quite big of a role
when it concerning current assets. The company does not rely heavily on inventory or
other assets to pay its short term liabilities.

Figure 2.3 Compare current ratios and quick ratios

Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017

4.3.2.2 Leverage ratio

Table 2.5 Leverage ratio

Year 2014 2015 2016 2017

D/A 0.40 0.48 0.49 0.64
D/E 0.68 0.91 0.95 1.82
FL 1.68 1.91 1.95 2.82
IC 20.48 74.30 - 15.06
Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017

From Table 2 .5, from 2014 – 2016, the D/A ratio is fairly low. This ratio
indicates the liability of the firm to creditors. Generally, creditors prefer moderate rate
because the lower this ratio is, the higher debts are ensured under the circumstance of
financial issue. The ratio is under 0.5 meaning that from 2014 – 2016, the company is
not heavily financed by debt. Following Figure 2 .4, it can be seen that the D/A is
decreasing and the debt is starting to take larger proportion in the asset structure. The
change was slight in 2014 – 2016, however, in 2017, the D/A abruptly increase to 0.64.
This could due to that the owners want profit to quickly rise but it bring about
insolvency. Although it is not too high, this can be a disadvantage in gaining trust from
creditors. Therefore, it is crucial that the board of directors attach special importance to
credit policies and investing in assets.

Similarly, the D/E ratio from 2014 – 2016 stay relatively low. This shows that the
still have the ability to finance itself, as it can proactively meet its capital demands for
production activities. However, a sudden rise of D/E in 2017 is still an concerning
matter. If this situation continue, in future, it can be a financial instability. Small
proportion of owner’s equity can lead to dependence on customers and partner.
Company should have strategy to raise owner’s equity, in order to have a more stable
finance, secure capital for operating and producing as well as lower financial risk. It
also increase the effectiveness of the company’s operation in strong competitive
market.

Figure 2.4 Assets structure 2014 – 2017

Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017

 Financial leverage (FL) ratio shows the relationship between total assets and
owner’s equity; is an indicator of the company’s leverage used to finance the firm.
Companies finance their operations with equity or debt, so a higher financial leverage
ratio indicates that a larger portion of asset financing is attributed to debt. This ratio
also helps to evaluate effect of borrowing to ROE. FL ratio is large and tends to
increase means that the company has taken more and more on substantial debt merely
to remain its business. In 2016, FL ratio was 1.95 but in 2013, it increase to 2.82
meaning that the return on borrowed capital exceeds the cost of that capital. This can
puts the company in jeopardy because the additional debt ratchets up interest costs and
the deteriorating financial position.

Interest coverage ratio is used to determine how easily a company can pay
interest on outstanding debt. The lower the ratio, the more the company is burdened by
debt expense. While EBIT of the company continue to rise, the interest expense
fluctuate, lead to fluctuation in the IC ratio. The current trend of the IC seemed to be
increasing, due to a newly added long-term loan in 2017, but it would be recommended
that further analysis to be made on the company’s future performance to make any
further conclusion.

4.3.2.3 Activity ratio

Table 2.6 Activity ratio

Year 2014 2015 2016 2017

Receivables turnover 8.0 8.7 8.8 8.4
Inventories turnover 11.3 12.7 12.0 12.4
Asset turnover 2.8 3.1 3.2 2.8
Fixed asset turnover 17.3 24.5 26.3 14.7
Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017

Receivables turnover measure how efficient the company is in using its assets.
Receivables turnover ratio indicates the efficiency with which a company collects on
the credit it issues to customers. The lower the ratio, the longer the firm take to collect
the money on its credit sales. As a result, the company will lose more due to the time
value of money principle, as the account receivables is money owed without interest.
As seen in Table 2 .6, the general trend for receivables turnover from 2014 – 2017 is
rising, with the exception of last year, where the receivables turnover ratio drop to 8.4.
This means that the company collect its money 8.4 times on average in 2017, or an
average customer takes 43.45 days to pay their bills. The drop indicate a less efficient
collection of account receivables, as well as unstable receivables growth. The company
still have to have provision for bad debt. However, the company mainly does business
with longtime partners, so the receivables turnover ratio should be expected to rise.

The speed with which a company can sell inventory is a critical measure of
business performance. The inventories turnover ratio calculate how fast the company
sell and replace inventory in a period. High ratio implies quicker material rotation,
lower capital demand for inventories compare to other firms in this industry with the
same revenue, so lower financial risk. If inventories turnover is too low, it implies
weak sales and, excess inventory. According to Table 2 .6, inventories turnover of the
company is fairly high, this mean the company should be able to meet the demand and
the next period contractions.

Asset turnover ratio measures how the company is using its assets to generate
revenue. Table 2 .6 shows that the asset turnover ratio fluctuate over the past 4 years.
The asset turnover is also fairly low, this could be an indicator that the company is not
using its assets efficiently. However, due to the fact that the company is a printing
company which require large asset base, it is understandable that the asset turnover is
low. It can also be seen from Table 2 .6 that the fixed asset turnover of the company is
high. This means that the company is efficient in managing fixed-asset investments

4.3.3 Cash flow analysis

Table 2 .7 shows that the main cash inflow come from operating activities. This
is the cash flow come from regular business activities, such as manufacturing and
selling goods or providing a service. From the table, change could be seen in the cash
flow from 2014 – 2017. The reasons are varied, the decrease of cash inflow could be
from the increase in suppliers payment or interest payment, and the increase could be
from increase in sale or other operating activities.

Cash flow from investing activities measures amounts spent on investments in

capital assets, such as plant and equipment. Negative cash flows, however, are not
always indicative of poor performance. The cash outflow from investing activities of
the company are mainly due to investment in fixed assets and purchase of investment
instruments. The company has high capital expenditures, meaning it is investing in
future operations and is in a state of growth.

Cash flow from financing activities indicates the means by which a company
raises cash to maintain or grow its operations. The cash flow from financing activities
of the company remain negative from 2014 – 2016 from retiring debt and making
dividend payments. The cash flow in 2017 is positive from receiving cash from issuing
stock and bonds.

Table 2.7 Cash flow 2014 – 2017

Year 2014 2015 2016 2017
Cash from
operating 11,803,272,232 2,388,084,806 10,104,190,912 4,420,370,131
activities
Cash from
investing (962,972,471) (312,324,520) (4,047,034,350) (12,075,356,100)
activities
Cash from
financing (4,406,217,544) (4,066,253,975) (3,033,866,700) 10,093,960,361
activities
Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017
4.3.4 Profitability analysis
Table 2.8. Profitability analysis 2014 – 2017
Year 2014 2015 2016 2017
GPM 0.136 0.117 0.119 0.119
OM 0.028 0.018 0.023 0.023
NPM 0.022 0.020 0.019 0.019
ROA 0.076 0.073 0.069 0.067
ROE 0.126 0.129 0.133 0.148
Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017

Gross margin number represents the portion of each VND of revenue that the
company retains as gross profit. The GPM in 2017 was 0.119, which implies that the
company earn 11.9 VND for every 100 VND in gross margin. GPM is on the rise after
the drop in 2015, showing the effectiveness in reducing cost of goods sold and
increasing revenue. However, the operating margin is much lower than gross profit
margin. This indicates high operating and financial expense. The company should have
suitable managing and investing strategies to improve OM. The NPM is low and on a
decreasing trend. This indicated that the company still need to find a way to decrease
cost and raise profit.

Another aspect of profitability ratio are the ROA and ROE. ROA shows how
efficient the company is in using its assets to make money. ROA represents net profit
after tax on 1 VND assets base. It is considered as one of the most important target of
investors. As seen in Figure 2 .5, the ROA of the company is reducing over the years.
This is because undepreciated assets raise asset value, which reduces ROA. In 2014,
return on assets is 7.6% but in 2017, it dropped to 6.7% due to higher growth in
revenue than in efficiency.
 Figure 2.5 ROE, ROA

Source: Financial Statements of AVIPRINT., JSC from 2014 – 2017

Unlike the ROA, the ROE ratios of the company tend to rise. From 12.6% in
2014, the ROE has risen to 14.8% in 2017. High ROE tend to make the stock of the
company more attractive to investors due to that the investors get reward more with
their investment.

4.4 Strength and Weakness

4.4.1 Strengths
As a long-standing company, AVIPRINT., JSC has proven its worth and is on its
way of making its own reputation in Vietnamese market. The company has generally
good financial performance over the years and shows consistent growth in net profit
and revenue.

The company has good liquidity ratio and is capable of paying back liabilities
with its assets. It also has low dependency on debt and high interest coverage ratio,
make it less likely to encounter debt risk.
 Efficiency in using fixed asset is high. The company also have high inventories
turnover, meaning it has quick material rotation and lower demand for inventory.

ROE is high and has the tendency to rise, this makes the company more appealing
to stockholders.

4.4.2 Weaknesses
Despite attempt in decreasing COGS, COGS is still high. Together with high cost
of operating and managing, the net profit of the company is still low.

While liquidity ratios are high, both current ratio and quick ratio is decreasing,
make the company more expositional to liquidity risk.

Debt ratios is on the rise, with quick pace increase in short-term liabilities. This
make the company more dependence on debt.

Low OM and NPM due to high cost and decreasing ROA meaning the company
is still not efficient in using assets to make profit.
 Chapter 5. Solutions and Recommendations
Based on the analysis of AVIPRINT., JSC’s financial statement, it is clear that
although there have been efforts in improving financial operation, there still are some
limitations in financial management affecting the efficiency of the firm’s business
performance. Following are some solutions and recommendations for the company:

5.1 Enhance asset utilization efficiency

Organizing of production management to run smoothly, limit the idle time of
machinery, such as downtime due to production errors. When this process is
implemented in a synchronized manner, it will help the company maximize the
capacity of machinery and equipment, improve labor productivity, reduce production
costs in order to raise profit.

In order to achieve this, the material department, the technical department and the
factory workshops must coordinate effectively in production planning, repair planning
and timely changes in production output. due to market volatility.

5.2 Improving profitability

5.2.1 Increase sales
Better exploitation of the market, promote the search for customers, apply the
form of incentives such as discounts for medium and large scale.

Carry out good after-sales service with customers to reinforce the long lasting
relationship with the company.

Implement flexible policies for each individual customer, especially the potential
customers to make a good first impression.

Constantly improve staffing levels, seek reputable suppliers and quality input
products to meet the needs of our customers in the most optimal way.
5.2.2 Control cost
Regarding raw material costs, the company should plan the stockpile, buy
materials and spare parts properly, sufficiently and promptly. Accompanied with it is
the need to find suppliers of supplies of quality products, reasonable price as well as
requires suppliers to ensure delivery time and quality of supplies.

For general expense, minimizing operation which not add value such as material
transfer activities is a cost-effective measure.

Regarding operating cost, it is important that the company strictly manage the
cost of business management, eliminate unreasonable costs, cut costs at the department
without bringing about efficiency, causing costs increase, reduce profits.

5.2.3 Improve quality of human resources

For managers of enterprises, it is necessary to increase the training and fostering
of management knowledge such as attending business management classes and labor
psychology classes.

 For laborers directly involved in production, the company should raise the
knowledge of the laborers on the operation of the production line, the way of operation
and evaluation of the output of the required output, the use instructions. property
damage. On another hand, workers must be provided with labor safety and incentive
policies for employees, such as incentive policies, technical incentives and cost
savings. Appropriate measures need to be made to deal with offenses, as well as
implement the welfare regime for workers.

5.3 Strengthening financial management

Improve the management, arrangement and organization of streamlined
machinery, improve the management capacity of management staff through
standardization of responsibilities and duties.

Developing training plan and improving professional qualification and

management skills for young staffs with a sense of responsibility for their work,
sensitivity to the market situation and business dynamics, capable of harmonizing the
training requirements of schools and practices in business activities, to promptly
supplement qualified staffs to meet the requirements of renewal in the mode of
business of the company.
 Conclusion
Financial Analysis is a crucial aspect of financial management. It is important to
understand the company’s health and for the company, financial analysis is a tool for
identifying their strengths and weaknesses and excelling their growth. Financial
analysis is an indispensable activity of any business that wants to prevail in
competition, stand firm and develop in a market economy. In financial analysis,
analysis of financial statements plays the most important role. Financial statement
analysis provides the most financially accurate financial information on the company's
financial status, business performance, capital status, debt, etc. to the corporate
executives to make investment decisions in a timely manner. Along with the
development of the Vietnamese accounting system, the financial reporting system has
been continually updated and improved to conform with the international accounting
standards, narrowing the difference between the Vietnamese standard with
international standards. The analysis of financial statement had also evolved to
conform more with international standard, which enable enterprises understand their
position and become more attractive for foreign investors.

Through the theoretical research on financial statement analysis together with the
financial statement analysis of Aviation Printing Joint Stock Company, this report had
contributed to the theoretical, the basis of financial analysis of enterprises as well as
reflected the overall picture of the financial situation of the company as well as propose
solutions to improve the financial capacity of the company in the future. There still are
a few constraints in money related administration influencing the proficiency of the
company's business execution, it is essential the company pay attention to the
utilization of efficiency, profitability as well as management. While the report shed
light on mostly the improvement of physical assets, mental and human assets should
also be another point to consider for the sustainable over development of the company.
 From this report, I hope the company can have better management and financial
capacity to achieve the development goals of the enterprise as well as the development
trend of the sector and economic integration.
 References
English:

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Available at: https://www.accountingtools.com/articles/income-statement-analysis.html

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analysis-of-financial-statements/

Gibson, C. H., 2008. Financial Reporting & Analysis. 11th ed. s.l.:s.n.

Helfert, E. A., 2001. The Nature of Financial Statements: The Cash Flow
Statement. s.l.:s.n.

Kennon, J., 2018. Income Statement Analysis. [Online]

Available at: https://www.thebalance.com/investing-lesson-4-income-statement-
analysis-357580

Lee, A. C., Lee, J. C. & Lee, C. F., 2009. Financial Analysis, Planning &
Forecasting: Theory and Application. 2nd ed. s.l.:s.n.

Mohana, R. P., 2011. Financial Statement Analysis and Reporting. s.l.:s.n.

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ed. s.l.:s.n.

Peyrard, J., 1994. Corporate Finance Analysis. s.l.:s.n.

Verma, E., 2017. Financial Performance - Understanding its Concepts and

Importance. [Online]
Available at: https://www.simplilearn.com/financial-performance-rar21-article
 Walsh, C., 2006. Key management ratios: The clearest guide to the critical
numbers that drive your business. s.l.:s.n.

Vietnamese:

Chu Thị Hồng Lan, 2017. Phân tích báo cáo tài chính của công ty Cổ phần Dược
Hà Tây, s.l.: s.n.

Đỗ Thị Hương, 2017. Phân tích báo cáo tài chính của Công ty TNHH thương mại
và đầu tư Xuân Anh, s.l.: s.n.

Ngô Thế Chi & Nguyễn Trọng Cơ, n.d. Phân tích tài chính doanh nghiệp.
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Nguyễn Năng Phúc, Nghiêm Văn Lợi & Nguyễn Ngọc Quang , 2006. Phân tích
tài chính Công ty cổ phần, s.l.: s.n.

Nguyễn Ngọc Quang, 2011. Phân tích báo cáo tài chính. Hà Nội: NXB Tài
chính.
 Internship Journal

Work Instructor: Mrs. Le Thi Thuy Ngan

Intern place: Aviation Printing Joint Stock Company

Department: Finance and Accounting

Position: Intern

Tasks’ descriptions:

Week Time Tasks

Meet up with instructor to arrange schedule

Get to know employees in the department and get use to
2/7/2018 – work environment
1
6/7/2018 Understand the working regulations, overview of the
operating apparatus of the department
Decide on the topic of the internship report

Start learning about the works of the department

9/7/2018 – Observe how other employees handle their duties
2
13/7/2018 Become familiar with the business at the office and start
working with simple task

Practice simple office operations under the supervision

of senior employee
16/7/2018 –
3 Work on detail outline of the report
20/7/2018
Help with simple tasks such as printing, copying
documents, organizing files
 Continue to work with simple tasks
23/7/201 – Study the company’s financial statement
4
27/7/2018 Learn about analysis of financial statement
Finish final draft of the report

Continue to work with simple tasks

30/7/2018 –
5 Finish the report
3/8/2018
Collect confirmations and comments on the internship

4/8/2018 End of internship

Supervisor

Le Thi Thuy Ngan