FINANCIAL ANALYSIS

THANH CONG TEXTILE – INVESTMENT –

TRADING JOINT STOCK COMPANY (TCG)

CF- T321WSB-3
Lecturer: Vo Hong Duc
Group 3

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Table of Contents

1. INTRODUCTION ................................................................................................................................ 5
3. ANALYSIS OF THE INCOME STATEMENT................................................................................. 10
4. RATIO ANALYSIS ............................................................................................................................ 17
4.1. Liquidity ratios ..................................................................................................................................... 17
4.1.1 Current ratio .......................................................................................................................... 17
4.1.2 Quick ratio ............................................................................................................................ 17
4.1.3 Cash ratio ................................................................................................................................. 18
4.2 Efficient ratio .................................................................................................................................... 19
4.3. Long-term solvency ratios .............................................................................................................. 21
4.3.1 Total debt ratio ........................................................................................................................... 21
4.3.2 Debt to Equity Ratio .................................................................................................................. 22
4.3.3 Equity multiplier ........................................................................................................................ 22
4.3.4 Time interest earned ratio .......................................................................................................... 23
4.3.5 Cash coverage ratio .................................................................................................................... 24
4.4 Profitability ratios ........................................................................................................................... 24
4.4.1 Profit margin .............................................................................................................................. 25
4.4.2 Return on assets ......................................................................................................................... 25
4.4.3 Return on equity ......................................................................................................................... 26
4.5 Market value ratios ......................................................................................................................... 27
4.5.1 Earnings per share ...................................................................................................................... 27
4.5.2 P/E ratio .................................................................................................................................... 28
4.5.3 Market-to-book ratio .................................................................................................................. 28
5. CONCLUSION ................................................................................................................................... 30
6. REFERENCES ................................................................................................................................... 31

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 1. INTRODUCTION
Company name: Thanh Cong Textile - Investment - Trading Joint
Stock Company (TCG)
Telephone: (+84)3815.3962 - (+84)3815.3968
Email: tcm@thanhcong.com.vn
Address: 36 Tay Thanh, Tay Thanh Ward, Tan Phu District, Ho Chi
Minh City, Vietnam
Website: https://www.thanhcong.com.vn/
Thanh Cong company is one of the leading enterprises in the field of textile and garment in Vietnam. The
company was established in 1976 and was taken over by the State and renamed as Thanh Cong Textile
Factory under the Union of Textile Enterprises - Ministry of Light Industry. Its mission is to work for the
customers, the suppliers, the investors, and the employees by hard-working and continuous innovation
aiming to achieve substantial development.

1.1 The company’s primary line(s) of business

The product lines of Thanh Cong diversify from weaving fabric, knitting fabric, rib, collar, and cuff to
chemicals, dyeing substances. The company also provides the supplies and equipment dedicated to textile
and garment production. Besides manufacturing and exporting these products, it also takes part in real
estate development projects such as residential buildings and resorts, supermarket operations, ... The firm
operates four yarn plants with a combined capacity of 21,000 tons per year and a textile factory with a 7
million meter per year capacity. A garment factory with a total capacity of 18 million goods per year is
also part of the firm. The company's products mainly serve export markets in the US, Japan, Europe,
Korea and China. Thanh Cong's growth goal is to concentrate on expanding its core textile-garment
industry while also enhancing production capacity and optimizing the present closed manufacturing
process. Improve product manufacturing processes, worker productivity to boost production speed, and
existing research and development capacity to satisfy design and development needs for new goods all at
the same time accommodate the ever-changing demands of consumers.

1.2 The company's independent (external) audit firm

Thanh Cong’s audit firm in 2018 and 2019 was Deloitte. However, in 2020, it collaborated with PWC.
Thanh Cong company was officially listed on the stock exchange of Ho Chi Minh City in October 2007
with the stock exchange code TCM. From the day of the beginning, Thanh Cong has continuously
increased charter capital nearly 3 times in only 3 years, the dividends paid out every year fluctuating from
10% to 15%.

1.3 The company’s board of directors

1. Mr. Tran Nhu Tung - Chairman of the board

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2. Mr. Park Heung Su - Vice chairman of the board
3. Mr. Lee Eun Hong - Member of the board
4. Mr. Jung Sung Kwan - Member of the board
5. Ms. Nguyen Minh Hao - Member of the board
6. Mr. Nguyen Van Nghia - Member of the board
7. Mr. Kim Il Kyu - Member of the board
8. Mr. Kim Jong Gak - Independent member of the board
9. Mr. Dinh Tan Tuong - Independent member of the board
10. Ms. Huynh Thi Thu Sa - Secretary Of BOD

1. 4 The company’s achievement

Through the operation period, Thanh Cong has many famous achievements, ranked in top 500 largest
companies in Vietnam and top 500 enterprises with the best growth in Vietnam

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 2. ANALYSIS OF THE BALANCE SHEET
THANH CONG - BALANCE SHEET

As of the end of 2018 2019 2020

December

VND % VND % VND %

Total current 1,893,146,267,570 58.30 1,624,461,031,246 55.58 1,783,900,889,021 59.93

asset

Total non- 1,354,179,751,084 41.70 1,298,343,694,169 44.42 1,192,521,760,253 40.07

current assets

Total assets 3,247,326,018,654 100 2,922,804,725,415 100 2,976,422,649,274 100

Total liabilities 1,970,927,570,370 60.69 1,497,537,641,889 51.24 1,337,687,708,547 44.94

Total current 1,701,087,853,546 52.38 1,331,355,715,842 45.55 1,256,932,784,884 42.23

liabilities

Total non- 269,839,716,824 8.31 166,181,926,047 5.69 80,754,923,663 2.71

current
liabilities

Total 1,276,398,448,284 39.31 1,425,267,083,526 48.76 1,638,734,940,727 55.06

stockholders’
equity

Total liabilities 3,247,326,018,654 100 2,922,804,725,415 100 2,976,422,649,274 100

and
stockholders’
equity

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 SONG HONG - BALANCE SHEET

As of the end of 2018 2019 2020

December

VND % VND % VND %

Total current 1,869,648,282,341 74.17 1,940,921,455,877 75.63 2,001,242,577,202 76.16

asset

Total non- 651,328,967,119 25.83 625,290,224,260 24.37 626,512,690,087 23.84

current assets

Total assets 2,520,977,249,460 100 2,566,211,680,137 100 2,627,755,267,289 100

Total liabilities 1,587,254,104,564 62.96 1,330,468,181,943 51.85 1,185,555,218,921 45.12

Total current 1,485,759,651,787 58.93 1,269,619,775,866 49.48 1,185,555,218,921 45.12

liabilities

Total non- 101,494,452,777 4.03 60,848,406,077 2.37 0 0

current
liabilities

Total 933,723,144,896 37.04 1,235,743,498,194 48.15 1,442,200,048,368 54.88

stockholders’
equity

Total liabilities 2,520,977,249,460 100 2,566,211,680,137 100 2,627,755,267,289 100

and
stockholders’
equity

Firstly, a closer look at the current assets of Thanh Cong company and its rival has shown that
the figures of Song Hong are overall higher throughout the duration of 2018 to 2020 in comparison. With
respect to Thanh Cong, there was a little fluctuation starting from 1,893,146,267,570 VND in 2018, then
decreasing mildly 2.72% in the next year before reaching 1,783,900,889,021 VND in 2020. Conversely,
Song Hong statistics were much higher with a start point of 1,869,648,282,341 VND in 2018. Following
that, there was a gradual improvement of 1.46% and 0.53% respectively in the last two consecutive years
of duration. Generally speaking, Song Hong percentage of current assets over total assets accounted for

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much more compared to its opponent (15% - 20%), and it also experienced an upward trend throughout
the period. However, there is a contrast between two companies when it comes to the total long-term
assets. In particular, Thanh Cong experienced a marginal rose of 2.72% in 2019 after the previous year.
Nevertheless, the number significantly dropped the amount of 105,821,933,916 VND during the final
year of the period. On the other hand, Song Hong non-current assets percentage indicates a downward
tendency. Initiate the figure at 651,328,967 VND in 2018 then decline significantly to 625,290,224,260 in
the subsequent year and finally finish the period with a slight increase of 1,222,465,827 VND.

Secondly, in terms of liabilities, it is clear from the above data that there is a quite similar pattern
between Thanh Cong and Song Hong. Both followed a slightly decreasing trend across the period of 2018
to 2020. Particularly, Thanh Cong’s total liabilities dropped by 9.45% in 2019 compared to the previous
year and this trend continued with a decline of 6.3% in 2020. The similarity of Song Hong's figures
indicates that there is also a decrease from 62.96% in 2018 to 45.12% in 2020. The financial status of
Thanh Cong improved over time as debt and financial leasing liabilities were reduced, cutting risks while
the world faced unanticipated changes that directly impacted the clothing sector in general and Thanh
Cong in particular. However, the total liabilities were still lower than its competitor.

The number of Thanh Cong’s current liabilities was moderately higher than the one of Song
Hong. Both values of the two corporations have a propensity to drop which means that they have higher
capacity to pay their debts on time. In particular, the current liabilities of Thanh Cong began at
1,701,087,853,546 VND in 2018, fell to 1,331,355,715,842 VND in 2019, and continued slightly
decreased about 74 billion VND in the final year. As regards Song Hong, the figures steadily reduced
from 1,485,759,651,787 VND in 2018 to 1,185,555,218,921 VND at the end of this period.

Looking at non-current liabilities, there was a steady decline of Thanh Cong and its rival, Song
Hong, over the given term. Generally, both companies had a small proportion of non-current liabilities.
Distinctly, it is very noticeable that in the year 2020, Song Hong successfully eliminated all the non-
current liabilities while Thanh Cong made an attempt to gradually reduce this figure. In detail, the non-
current liabilities rate of Thanh Cong doubled Song Hong in 2018 (8.31% and 4.03% respectively). A
year later, this ratio of Thanh Cong fell to 5.69% and stopped at 2.71% in 2020. By having a downward
trend of long-term liabilities, the business has shown their capability to pay off debt. On the other hand,
with a lower starting point, Song Hong quickly reduced this rate to 2.37% in 2019 and remarkably pushed
it to 0% in 2020. This, hence, helped the company to maintain its financial structure at a very safe level.

Finally, contrary to total liabilities, the figures of either firms’ total stockholder's equity climbed
steadily over the period of 3 years. During the time, Thanh Cong stockholders’ equity grew slightly from
1,276,398,448,284 VND to 1,638,734,940,727 VND which accounting for 39,31% and 55,06% of total
liabilities and stockholder's equity. In a similar pattern, the equity of stockholders of Song Hong also rose
gradually from 37,04% to 54,88% between 2018 and 2020. However, in terms of the money, the gap
between them went down rapidly from 342,675,303,400VND to 196,534,892,400VND in three years.

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 3. ANALYSIS OF THE INCOME STATEMENT
THANH CONG – INCOME STATEMENT
As the end of 2018 2019 2020
December

Items Code VND % VND % VND %

Gross revenue 1 3,664,444,938,573 100.00 3,645,052,763,643 100.00 3,470,465,500,295 100.00

from goods sold
and services
rendered
Deduction 2 2,434,220,386 0.07 852,721,450 0.02 748,691,547 0.02

Net revenue from 10 3,662,010,718,187 99.93 3,644,200,042,193 99.98 3,469,716,808,748 99.98

goods sold and
services rendered

Cost of goods sold 11 2,983,239,599,733 81.41 3,065,482,106,713 84.10 2,849,533,813,239 82.11

and services
rendered

Gross profit from 20 678,771,118,454 18.52 578,717,935,480 15.88 620,182,995,509 17.87

goods sold and
services rendered

Financial income 21 31,910,214,044 0.87 34,621,835,590 0.95 47,765,129,225 1.38

Financial expenses 22 89,470,564,130 2.44 62,099,259,065 1.70 48,057,458,679 1.38

Interest expenses 23 51,903,106,747 1.42 49,405,369,438 1.36 27,743,219,256 0.80

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Income from 24 1,101,784,438 0.03 4,036,714,308 0.11 6,202,234,752 0.18
associates

Selling expenses 25 143,797,019,977 3.92 133,661,898,115 3.67 143,976,177,586 4.15

General and 26 230,042,701,865 6.28 152,923,322,848 4.20 141,947,995,876 4.09

administrative
expenses

Net operating 30 248,472,830,964 6.78 268,692,005,350 7.37 340,168,727,345 9.80

profit

Other income 31 75,594,581,588 2.06 6,653,874,581 0.18 3,242,733,067 0.09

Other expenses 32 638,018,765 0.02 1,312,927,681 0.04 156,775,706 0.00

Profit from other 40 74,956,562,823 2.05 5,340,946,900 0.15 3,085,957,361 0.09

activities

Accounting profit 50 323,429,393,787 8.83 274,032,952,250 7.52 343,254,684,706 9.89

before tax

Current corporate 51 78,055,995,578 2.13 47,592,471,844 1.31 68,090,938,163 1.96

income tax

Deferred corporate 52 15,062,240,587 0.41 9,593,031,085 0.26 1,064,152,737 0.03

income tax

Net profit after 60 260,435,638,796 7.11 216,847,449,321 5.95 276,227,899,280 7.96

corporate income
tax

Basic earnings per 70 4,069 3,166 3,775

share

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 SONG HONG – INCOME STATEMENT
As the end of 2018 2019 2020
December

Items Code VND % VND % VND %

Gross revenue 1 3,950,893,821,662 100.00 4,411,871,787,236 100.00 3,817,925,016,346 100.00

from goods sold
and services
rendered

Deduction 2 67,105,662 0.002 619,023,385 0.01 4,516,183,141 0.12

Net revenue 10 3,950,826,716,000 99.998 4,411,252,763,851 99.99 3,813,408,833,205 99.88

from goods sold
and services
rendered

Cost of goods 11 3,157,344,913,122 79.91 3,482,814,704,917 78.94 3,062,364,766,267 80.21

sold

Gross profit 20 793,481,802,878 20.08 928,438,058,934 21.04 751,044,066,938 19.67

from goods sold
and services
rendered

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Financial income 21 58,672,627,009 1.49 61,432,083,045 1.39 62,708,805,757 1.64

Financial 22 45,762,927,549 1.16 28,749,456,247 0.65 18,187,144,376 0.48

expenses

Interest expenses 23 33,763,704,660 0.85 22,555,989,911 0.51 15,184,168,524 0.40

Selling expenses 25 147,605,857,785 3.74 180,273,548,988 4.09 136,931,095,574 3.59

General and 26 208,438,705,276 5.28 235,356,819,389 5.33 375,930,331,229 9.85

administrative
expenses

Net operating 30 450,346,939,277 11.40 545,490,317,355 12,36 282,704,301,516 7.40

profit

Other income 31 315,023,041 0.01 1,863,100,807 0.04 2,132,247,258 0.06

Other expenses 32 760,450,601 0.02 818,610,511 0.02 1,553,397,078 0.04

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Profit from other 40 445,427,560 0.01 1,044,490,296 0.02 578,850,180 0.02
activities

Accounting profit 50 449,901,511,717 11.39 546,534,807,651 12.39 283,283,151,696 7.42

before tax

Current corporate 51 80,075,443,156 2.03 96,689,027,413 2.19 51,488,506,939 1.35

income tax

Net profit after 60 369,826,068,561 9.36 449,845,780,238 10.20 231,794,644,757 6.07

corporate
income tax

Basic earnings 70 10,232 9,113 4,635

per share

The following tables describe the variations between Thanh Cong and its competitor, Song Hong, based
on the income statements available for 2018, 2019, and 2020.

Firstly, a look at the tables indicates that the net revenue from goods sold and services rendered by Song
Hong mildly surpassed Thanh Cong in terms of currency during the course. From 2018 to 2019, the
percentage of Thanh Cong figures and its counterpart experienced only a slight change, but the pattern
went in contrast talking about the amount of money. Despite the marginal drop in Thanh Cong
(17,810,675,994 VND), Song Hong encompassed a huge upward trend of 460,426,047,851 VND. By
2020, either entity continued the decreasing path with the percentage over total sales staying the same for
Thanh Cong and falling by 0.11% for Song Hong.

Secondly, for the Cost of goods sold and services rendered of Thanh Cong, there has been a spike by
2.69% in 2019 and decrease by 1.99% in 2020, In contrast, the figure for Song Hong’s Cost of goods sold
and services rendered went in the opposite direction, with a slight 0.97% decrease and rise by 1,27% in
2019 and 2020, respectively.

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Thirdly, when it comes to financial expenses, the figures witnessed a descending trend in both Thanh
Cong and Song Hong from 2018 to 2020. Regarding Thanh Cong, it reduced from 2.44% to 1.70% and
1.38% in the three-year course, respectively. Subsequently, the selling expenses of both enterprises also
confront the similar pattern of fluctuation. Specifically, Thanh Cong had quite unstable figures but
maintained to stay at 143,976,177,568 VND (179,157,591 VND in difference) after three years while its
opponent rocketed between 2018-2019 with 32,667,691,203 increased before the vast decline in the final
year. Looking at general and administrative expenses, it is recognized that two companies saw different
directions over the period. Thanh Cong had a downward trend from 6.28% to 4.09% and Song Hong
constituted a converse move with 4,57% up. Finally, either company had an increasing tendency
regarding the amount of other expenses during 2018 to 2019 (Song Hong percentage remained
unchanged). However, there were two opposite directions for different firms, a massive collapse of
expenses in Thanh Cong (1,156,151,975 VND) and a considerable plunge of its counterpart.

In terms of the research for the gains or losses of profits, Thanh Cong and Song Hong have a contrast in
net profit growth from 2018 to 2020. Thanh Cong statistics rose continuously between 2018 and 2020
from 6.78% to 9.80% at the same time Song Hong dropped exactly 4%. Moving onto the category of
accounting profit before tax, Thanh Cong witnessed the decrease slightly from 2018 to 2019 with from
8.83% to 7.52% but it went up due to the increase of net profit in 2020 with 9.89%, while Song Hong
experienced a growth in accounting profit from 2018 to 2019 by 1% but it showed a decline in the next
year which decreased to 7.2% in 2020. In contrast, the development of accounting profit can affect net
profit after corporate income tax in which Thanh Cong despite the net profit is decreasing from 2018 to
2019 by 1.16% but it will return to growth in 2020 with it reaching 7.96%. On other hand, Song Hong
showed a good result from 2018 to 2019 with growth from 9.36% to 10.20% but it fell significantly in the
next year to 6.07% in 2020.

Finally, the difference between two firms in earning per share presents that Song Hong overall had a
higher and greater earning than Thanh Cong despite a decreasing sign every year. Specifically, Song
Hong showed a gradual reduction every year but surprisingly contributed an abnormal fall in 2020 when
it was only 4.635 VND. This drop implies the decrease in the company's value after the effect of
COVID19. On the other hand, Thanh Cong’s earnings per share illustrate a steady drop in two first years
but then grow to 3,775 VND in 2020 which reduces the distance with their competitor.
The reason for the increase in profits of Thanh Cong before and after tax is that income from financial
activities increased by 37.96% year-on-year and financial expenses decreased by 22.61%. In addition, in
2020 Thanh Cong increased productivity by streamlining the layout and use of machines and equipment
(for example, dyeing production was 14% higher than in 2019). Various solutions are being applied to
reduce production costs, such as reducing power costs and reducing raw material waste. This has
improved the company's annual rate of return.
In 2019, the company signed a Memorandum with Juki Singapore Group, a well-known group in sewing
sector to implement a smart factory project to increase productivity

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and production capacity to add more product value by the brand owned by the company. On average,
each production capacity increased by roughly 10%. In October 2020, the Company increased its charter
capital to VND 620,683,490,000.

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 4. RATIO ANALYSIS
4.1. Liquidity ratios:

4.1.1 Current ratio

The current ratio is used to measure a business's ability to pay its short-term liabilities with its short-term
assets, such as cash, accounts receivable, and inventory.
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 = (𝑡𝑖𝑚𝑒𝑠)
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

As the chart illustrates, Thanh Cong and its rival current ratios were both increasing over time and all
figures were exceeding 1 which demonstrate the high capability to pay off the short-term liabilities over 3
years. Therefore, the risk of investing in both companies has decreased since their liquidity increased over
the time. Regarding Thanh Cong, a slight reduction of both current assets and current liabilities made the
current ratio mildly increase from 1.11 to 1.22 by the end of 2019. In comparison, the current ratio of
Song Hong went up to 0.27 in the same duration. In 2020, the current ratio of Thanh Cong went up 0.20
to reach 1.42 while Song Hong ratio grew only 0,16. Overall, we can clearly see that during the period of
3 years from 2018 to 2020, Song Hong's current ratio is higher than Thanh Cong's current ratio, about 0.1
to 0.3 depending on each year.

4.1.2 Quick ratio

Quick ratio is a metric that measures a firm’s capacity to satisfy short-term obligations with its most
liquid assets. By that, the quick ratio will omit the least liquid current asset that creates an overestimation
in sales and overbought or overproduced product which is inventory.
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 = (𝑡𝑖𝑚𝑒𝑠)
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

17
 Similar to the current ratio, the quick ratio of Thanh Cong is significantly lower than Song Hong figures
for 3 years and both are on an increasing trend. With respect to Thanh Cong, the firm showed a slight
increase beginning from 0.44 (2018) to 0.55 and in 2020, this number has increased to 0.62. With the
figure that is less than 1, it is seemingly that Thanh Cong's available liquid assets could not cover all the
short-term obligations. Besides, there is also a sign of excessive inventory which the company was
carrying. On the other hand, Song Hong's quick ratio had a strong growth from 0.8 in 2018 jumped to
1.67 after two years which is such an excellent performance. Thus, Song Hong possibly can cover its
current liabilities and maintain a better firm’s liquidity with stable financial health.

4.1.3 Cash ratio

The cash ratio is an indicator of a company's liquidity which measures the ability of the business to pay
off current liabilities utilizing the company's total cash and cash equivalents.
𝐶𝑎𝑠ℎ 𝑎𝑛𝑑 𝑐𝑎𝑠ℎ 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡𝑠
𝐶𝑎𝑠ℎ 𝑟𝑎𝑡𝑖𝑜 = (𝑡𝑖𝑚𝑒𝑠)
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Although the two liquidity ratios above demonstrate that Song Hong totally achieved a higher position
than Thanh Cong over three years, it turns a little bit converse when it comes to cash ratio. In specific,
Thanh Cong's cash ratio experienced a fluctuation with an increase of 0,54 in 2019 after a previous year,
which was greater than Song Hong. However, during 2020, Thanh Cong's cash ratio dropped to only 1.15
compared to a substantial increase of 2.29 from Song Hong. Overall, Thanh Cong's ability to repay short-

18
term debt by cash and nearly cash resources is quite fluctuating while its counterpart efficiently covers the
current liabilities with a more liquidity ratio.

4.2 Efficient ratio:

THANH CONG
Inventory
turnover Days’ sales in Receivables Days’ sales in Total assets
(times) inventory (days) turnover (times) receivables (days) turnover (times)

2018 2.62 139.24 13.08 27.90 1.13

2019 3.43 106.29 14.08 25.92 1.25

2020 2.83 128.98 17.39 20.99 1.17

SONG HONG
Inventory
turnover Days’ sales in Receivables Days’ sales in Total assets
(times) inventory (days) turnover (times) receivables (days) turnover (times)

2018 4.78 76.42 7.71 47.33 1.57

2019 5.28 69.08 10.54 34.62 1.72

2020 4.98 73.30 9.64 37.87 1.45

Inventory turnover is a financial indicator that analysts use to determine whether a company's operations
are efficient by looking at the times inventory is replaced and sold.
𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑 𝑠𝑜𝑙𝑑
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = (𝑡𝑖𝑚𝑒𝑠)
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
Days’ sales in inventory are a financial ratio that shows the average time in days that it takes a company
to turn its inventory, including goods being sold, into sales.
365 𝑑𝑎𝑦𝑠
𝐷𝑎𝑦𝑠 ′ 𝑠𝑎𝑙𝑒𝑠 𝑖𝑛 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 = (𝑑𝑎𝑦𝑠)
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟
Receivables turnover is an accounting metric used to assess a company's efficiency in collecting
receivables and debts from customers.

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 𝑆𝑎𝑙𝑒𝑠
𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = (𝑡𝑖𝑚𝑒𝑠)
𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑒𝑑 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠
Days’ sales in receivables are calculated as the average number of days it takes a company to collect cash
payments after a sale has been made.
365 𝑑𝑎𝑦𝑠
𝐷𝑎𝑦𝑠 ′ 𝑠𝑎𝑙𝑒𝑠 𝑖𝑛 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 = (𝑑𝑎𝑦𝑠)
𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟
Total assets turnover is an effective measure in gauging how the enterprise makes use of its assets.
𝑆𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = (𝑡𝑖𝑚𝑒𝑠)
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

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Next, the following table illustrates the insight into the key differences of efficiency ratios of Thanh Cong
and Song Hong. A first observation at companies’ inventory turnover highlights that Thanh Cong has a
relatively twice as small amount of turnover during a year as its peers. Alongside, the firm days’ sales in
inventory (about 106,29 days to 139,24 days) also massively greater than Song Hong (from 69,08 days to
76,42 days) through the duration which implies the fact that Thanh Cong is less efficient when it turns to
managing the assets to produce sales. On average, Thanh Cong needed around 2,62 to 2,83 times to turn
over the entire inventory while it took the opponents 4,78 to 5,28 times during the three-year period.
Nevertheless, the situation goes into reverse when people discuss the receivables turnover ratio. Thanh
Cong obviously dominated the ratio with an average of 14,85 times turnover during the period of three
years, indicating the huge efficiency of collecting receivables. Particularly, the year of 2020 has received
a huge improvement of the business with 17,39 times turnover. Accompany that, Thanh Cong also needed
fewer days to collect payment from about 20,99 days to 27.90 days throughout the duration. Meanwhile,
Song Hong ratio conversely illustrates the longer time to collect receivables and turnover averagely 9,30
times for three years. According to equity research from BSC Securities (2021b), Song Hong had an
unforgettable year facing the postponement of contract as well as the bankruptcy of its huge customer
NewYork&Company which leads to the decrease in receivables turnover in 2020. Finally, the total assets
turnover of both companies sees the same pattern, but Song Hong figures emphasize the greater ability to
make use of their assets to create earnings.

4.3. Long-term solvency ratios

4.3.1 Total Debt Ratio

The total debt ratio takes into account all debts of all creditors to offer the view of a company's debt and
how it is financed. (Debitoor, 2021)

2018 2019 2020

Thanh
Cong 0.61 0.51 0.45

Song
Hong 0.63 0.52 0.45

Unit: times
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦
𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡 𝑟𝑎𝑡𝑖𝑜 = (𝑡𝑖𝑚𝑒𝑠)
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

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It is explicitly observed that the total debt ratio of either enterprises had nearly the same ratio. In 2018,
Thanh Cong debt ratio was 0.61 and decreased to 0.51 in the next year while its counterpart ratio fell 0,11
times in 2019. Moreover, it is worth noticing that both organizations have the same ratio in 2020 with
0.45 which implies that Thanh Cong and Song Hong have the same movement in handling their debts.

4.3.2 Debt to Equity Ratio

2018 2019 2020

Thanh
Cong 1.54 1.05 0.82

Song
Hong 1.70 1.08 0.82

Unit: times
𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡
𝐷𝑒𝑏𝑡 − 𝑒𝑞𝑢𝑖𝑡𝑦 𝑟𝑎𝑡𝑖𝑜 = (𝑡𝑖𝑚𝑒𝑠)
𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦
Moving on, debt to equity ratio is a financial as well as liquidity ratio that compares a company’s total
debt to total equity. The debt - equity ratio shows the percentage of company financing that comes from
creditors and investors (My Accounting Course). It can be seen clearly that Thanh Cong and Song Hong
have the same sign with both companies' ratios decreasing every year. Thanh Cong commenced with 1.54
and went down to 1.05 in 2019 while Song Hong started higher from 1.70 in 2018 dropped significantly
to 1.08 in the next year. In 2020, the ratio of both companies continued with a downward tendency and
reached the equivalent ratio of 0,82. Hence, both entities were making an attempt to reduce the leverage
which leads to less risky choices for the investors.

4.3.3 Equity Multiplier:

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 2018 2019 2020

Thanh Cong 2.54 2.05 1.82

Song Hong 2.70 2.08 1.82

Unit: times
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑒𝑡𝑠
𝐸𝑞𝑢𝑖𝑡𝑦 𝑚𝑢𝑙𝑡𝑖𝑝𝑙𝑖𝑒𝑟 = (𝑡𝑖𝑚𝑒𝑠)
𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦
The equity multiplier is a risk indicator that measures the portion of a company’s assets that is financed
by stockholder's equity rather than by debt. (Investopedia). In comparison between two enterprises, it is
conspicuous that Song Hong slightly outperformed its counterpart and dual organizations experiencing a
downward trend over the period. Specifically, the ratio between Thanh Cong and Song Hong was nearly
the same at 2.05 and 2.08 in 2019 then wrapped up the final year with a corresponding ratio of 1.82 times.
Looking at the pattern, either entity was putting efforts into getting rid of debt reliance by financing by
stockholder’s equity instead.

4.3.4 Time interest earned ratio

2018 2019 2020

Thanh Cong 6.23 5.55 12.37

Song Hong 13.33 24.23 18.66

Unit: times
𝐸𝐵𝐼𝑇
𝑇𝑖𝑚𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑖𝑜 = (𝑡𝑖𝑚𝑒𝑠)
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡

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Time interest earned ratio is a measure of a company's ability to meet its interest obligations based on its
current income. (Investopedia) From 2018 to 2019, Thanh Cong and its opponent move in opposite
structure with Thanh Cong having 6.23 times (2018) then slightly reduced to 5.55 times in the next year
while Song Hong has a significant increase from 13.33 to 24.23 times. However, the situation went
twisted during 2020 when the time interest ratio of two companies was reversed, with Thanh Cong rising
to 12.37 while Song Hong fell to 18.66. In short, with the pretax earnings, Thanh Cong successfully
managed to increase their times of financing interest charges over the three years despite an observed
direction in its rival. Nevertheless, Song Hong still overall overtook the dominance of time interest ratio
in comparison.
4.3.5 Cash coverage ratio

2018 2019 2020

Thanh Cong 7.74 7.88 16.67

Song Hong 16.79 29.46 27.34

Unit: times
𝐸𝐵𝐼𝑇𝐷𝐴
𝐶𝑎𝑠ℎ 𝑐𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑖𝑜 = (𝑡𝑖𝑚𝑒𝑠)
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡

Cash coverage ratio measures the liquidity of the firm and considers only the cash or cash equivalents.
(Ratiosys). The table illustrates apparently that Song Hong was completely superior to Thanh Cong
throughout the course. From 2018 to 2019, Song Hong has an epic rocket growth of 16.79 to 29.46 times
(12,67 times) while Thanh Cong has shown no sign of evolving in a year with only 0.14 times rise.
Notwithstanding, the rule has changed significantly in the following year. The ratio of two companies had
been reversed concerning a slight collapse of Song Hong from 29.46 to 27.34 at the same time that Thanh
Cong remarkably uplifted to 16.67 times. Overall, it can be observed that Thanh Cong initially remained
constant but then effortly managed to fulfill its current debt.

4.4 Profitability ratios

Profitability ratios measure either how efficiently a company makes use of its assets or how efficiently the
business controls its operations.

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4.4.1 Profit margin: For every dollar of sales, profit margin gauges how much a firm generates profit in
net income.
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑃𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 = (%)
𝑆𝑎𝑙𝑒𝑠

2018 2019 2020

Thanh Cong 7.11 5.95 7.96

Song Hong 9.36 10.20 6.08

Unit: %
Overall, the figure shows that both companies face the fluctuation of profit which they generate for each
dollar of sales within three years. Regarding Thanh Cong, the company experienced a slight reduction in
2019 (1,16%) before climbing up to 7,96% in 2020. According to BSC Securities (2021), in comparison
with other companies which heavily suffered from the pandemic effects, Thanh Cong appeared to be
well-managed of its operation by their own garment resources and an order of 15 billion USD in quarter 2
of 2020. This, therefore, represents one of the reasons for an increase in the Thanh Cong’s profit margin
in 2020. In comparison, Song Hong conversely originated with a higher starter of 9,36% in 2018, then
slowly rose and ended with a substantial downward trend of 4,12% in 2020 (which can be recognized as
an impact of COVID19 pandemic). As you can see from the chart, Song Hong averagely surpassed Thanh
Cong throughout the time which leads to the better generating profit for each dollar of sales.

4.4.2 Return on assets

Return on assets (ROA) is an indicator of how profitable the company is in relation to its assets
management. The equation of ROA is:
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑎𝑠𝑠𝑒𝑡𝑠 = (%)
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

25
 2018 2019 2020

Thanh Cong 8.02 7.42 9.28

Song Hong 14.67 17.53 8.82

Unit: %
A look at a chart revealed that Thanh Cong obviously was inferior regarding the ROA of Song Hong firm.
Commencing from 2018, Thanh Cong had 8,02% of profit per dollar of assets. Following that was a
marginal tendency of downward in 2019 and eventually upward during the next year (0,6% and 1,86%
respectively). On the other hand, Song Hong opened the period with quite a high ROA, but it was still
nothing until the following year came with the figure of 17,53% (increased 2,86%). However, after the
prime time of efficiently utilizing the assets, the company profitability considerably decreased to only
8,82%, even lower than its competitor. This specifies the fact that either business overcame an oscillation
concerning the earnings achieved by utilizing assets.

4.4.3 Return on equity

Whereas ROA calculates how profitable the company is with respect to its net income and assets, return
on equity (ROE) indicates the financial performance of firms by looking at the net income and net assets
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑒𝑞𝑢𝑖𝑡𝑦 = (%)
𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦

2018 2019 2020

Thanh Cong 20.40 15.21 16.86

Song Hong 39.61 36.40 16.07

Unit: %

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Generally speaking, Song Hong is obviously dominant in generating profits by utilizing company assets,
however, it also sees a downward trend of percentage. With Thanh Cong, the fluctuation of approximately
5% occurred between three consecutive years. By 2019, the firm had received a moderate fall of 5,19%
but then climbed slightly to occupy 16,86% in the ending year. In contrast, Song Hong had a massive
foundation of 39,61%, which approximately two times higher than the starter of its rival, indicates the fact
that the stockholders fared quite well during 2018. This, therefore, means that the company value is
somewhat soaring which brings benefit to the firm's stockholders and attracts new investors. However,
time passed along with the considerable collapse of Song Hong ROE which eventually reached only
16,07% in 2019 (declined totally 23,54%), even lower than Thanh Cong.

4.5 Market value ratios

4.5.1 Earnings per share

Thanh Cong Song Hong

2018 4,811.33 7764.89

2019 3,744.14 8,995.22

2020 4,457.60 4,635.02

Unit: unit of money

Earnings per share is a ratio that reflects the company’s profitability. The higher the company’s earnings
per share, the more profitable it is (Fernado, 2021).
This ratio is calculated as the company’s net income or profits divided by the outstanding shares in the
market.
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝐸𝑃𝑆 = (𝑈𝑛𝑖𝑡 𝑜𝑓 𝑚𝑜𝑛𝑒𝑦)
𝑆ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
The net income was extracted from the income statement that was already analyzed above. For the Thanh
Cong company, the earnings per share did not fluctuate very much over the period from 2018 to 2020.
The earnings of this company decreased more than 1000 VND per share in 2019 but then recovered in
2020. In the meantime, the figure of Song Hong was not stable. In the first two years, 2018 and 2019
Song Hong company prevailed over Thanh Cong company. However, at the end of the period, the year
2020 the situation went back to its balanced position. To clarify, in 2018, Thanh Cong firm had earnings
per share starting at 4,811.33 VND. This company also witnessed a slight decrease in 2019 (3,744.14
VND) before continuing to be on the right track in 2020 (4,457.60 VND). About its competitor, Song
Hong company had a higher starting point at 7,764.89 VND. A year after this trend remained peaking at

27
8,995.22 in 2019 before suddenly dropping by half in 2020. Although at the end of the period, the
earnings per share of Thanh Cong was still lower than Song Hong, it was still a good sign that the
company still developed substantially while its competitors experienced many waves.

4.5.2 P/E ratio

Thanh Cong Song Hong

2018 3.64 5.28

2019 4.17 4.92

2020 10.16 8.57

Unit: times
The price-to-equity ratio measures the amount of money the investors are willing to pay for that stock.
𝑃𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
𝑃𝐸 = (𝑡𝑖𝑚𝑒𝑠)
𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒

Comparing Thanh Cong with Song Hong, from 2018 to 2019 the ratio of these two companies moved in
different ways. In 2018, Thanh Cong shares sold for 3.64 times earnings, and then after one year, it
increased to 4.17 times while Song Hong witnessed a slight reduction (5.28 to 4.29 times). Nonetheless,
in 2020, both companies tremendously grew. Song Hong doubled its figure of the previous year reaching
8.57 times. It was more surprising that this ratio of Thanh Cong company steadily rose and surpassed its
competitors peaking at 10.16 at the end of 2020. It was indicated that the quantity of investors who started
to pay attention to Thanh Cong company rapidly increased in the year.
4.5.3 Market-to-book ratio

Thanh Cong Song Hong

2018 0.74 2.09

2019 0.63 1.79

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 2020 1.71 1.38

The market-to-book ratio is used to compare a company's current market value to its book value in
financial valuation. When the market-to-book ratio is lower than 1, it means that the company’s stock is
undervalued. In this case, the company performance is not quite good so this stock will be considered as a
bad investment (Kelton, 2021). Otherwise, it is good for the company to have this ratio higher than 1.
This will persuade the investors to buy our stocks.
𝑀𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
𝑀𝑎𝑟𝑘𝑒𝑡 − 𝑡𝑜 − 𝑏𝑜𝑜𝑘 𝑟𝑎𝑡𝑖𝑜 = (𝑡𝑖𝑚𝑒𝑠)
𝐵𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
The situation was not very good for Thanh Cong company at the beginning of the period, in two years
2018 and 2019. This company was always undervalued and even expected a downward trend (0.74 and
0.63 respectively). The trend was also the same for Song Hong company in that period, its ratio decreased
from 2.09 to 1.79 times. However, in 2020 while Song Hong continued its downward movement reaching
the bottom at 1.38, Thanh Cong company moved to a different path. Thanh Cong’s market-to-book ratio
rose very quickly and outshone its competitors at 1.71. To sum up, although Thanh Cong seems to be
undervalued at the beginning of the period, in the end, it startlingly developed and passed its opponent
proving its promising growth future.

29
 5. CONCLUSION
In comparison to its competitors, Thanh Cong is a firm with steady financial development. It has greater
future potential than Song Hong due to its stable growth while the ratios of its competitor negatively
fluctuated over the last few years. This will be an ideal opportunity for Thanh Cong to develop and earn
more market shares with its presented ability. Although it has had to overcome several difficult conditions
such as dealing with Covid-19 from 2018 until now, its earnings were initially lower, but they are now
progressively improving, which is beneficial for their own. On the other hand, regarding its efficiency in
collecting receivables and debts from customers, the firm maintained its efficiency ratios in quite a stable
condition.
Whereas there was a positive sign in Thanh Cong's long-run ability to meet its financial leverage as
compared to its competitor because of its cooperation with Juki Singapore Group to expand its own
production capacity and increase productivity through operational analysis from Juki software to remove
redundant operations and speed up finishing products on the sewing line.
Finally, via Thanh Cong's ROE and market value ratios within 3 years, although could be considered as
operating less effectively, however it was expected that having more prospective growth and profitability
in the future than its competitor, which also it demonstrated more stability in its operation as a business,
even during the crisis caused by Covid-19 pandemic.

30
 6. REFERENCES
Annual report 2021. (2021). ThanhCong. https://thanhcong.demo10.maytech.vn/wp-
content/uploads/2021/04/Annual_report_2021_eng.pdf

BSC Securities. (2021a). BÁO CÁO NGÀNH DỆT MAY 2021. Retrieved from
https://www.bsc.com.vn/Report/ReportFile/2738477

BSC Securities. (2021b, May 13). Báo cáo danh nghiệp lần đầu ngành dệt may. Retrieved November 29,
2021, from https://www.bsc.com.vn/Report/ReportFile/2738590

Cơ T. (2019, November 7). Hệ số vòng quay khoản phải thu (Receivable turnover ratio) là gì?
vietnambiz.
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20191107143532182.htm

Dệt may Thành Công ghi nhận doanh thu hơn 13,5 triệu USD trong tháng 6/2021. (2021, November 28).
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62021-d147374.html

Dự án TC 1 – Thành Công Group. (2021c). ThanhCong. https://www.thanhcong.com.vn/vi/du-an-tc-1/

Editor 1 NTV. (2021d, April 15). Chủ tịch Hội đồng quản trị là gì? Giấy phép kinh doanh.
https://giayphepkinhdoanh.vn/chu-tich-hoi-dong-quan-tri-la-gi/

Fernando, J (2021, October 13). Earnings Per Share (EPS). Investopedia.

https://www.investopedia.com/terms/e/eps.asp

Giới thiệu chung – Thành Công Group. (2021f). ThanhCong. https://www.thanhcong.com.vn/vi/gioi-

thieu-chung/

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GIỚI THIỆU CÔNG TY SÔNG HỒNG. (2021g). Song Hong. https://www.songhong.vn/gioi-thieu-cong-
ty-song-hong

Kelton, W (2021h). Book-to-Market Ratio Definition. Investopedia.

https://www.investopedia.com/terms/b/booktomarketratio.asp

Lan M. (2019, November 4). Thời gian thu hồi tiền hàng tồn đọng (Days Sales Outstanding - DSO) là gì?
vietnambiz. https://vietnambiz.vn/thoi-gian-thu-hoi-tien-hang-ton-dong-days-sales-outstanding-dso-la-gi-
20191104163422848.htm

Lịch sử hình thành – Thành Công Group. (2021i). ThanhCong. https://www.thanhcong.com.vn/vi/lich-su-

hinh-thanh/

Ngành may – Thành Công Group. (2021j). ThanhCong. https://www.thanhcong.com.vn/vi/nganh-may/#

Ngành may – Thành Công Group. (2021k). ThanhCong. https://www.thanhcong.com.vn/vi/nganh-may/

P. (2021l, November 23). Inventory turnover là gì? Ý nghĩa của Inventory turnover. An Khang Real.
https://ankhangreal.vn/inventory-turnover-la-gi/
Quan He Co Dong. (2021). Song Hong. https://www.songhong.vn/Quan-he-co-dong-106

V. (2021m). TCM: CTCP Dệt may - Đầu tư - Thương mại Thành Công - TCG. VietstockFinance.
https://finance.vietstock.vn/TCM-ctcp-det-may-dau-tu-thuong-mai-thanh-cong.htm

Vy H. (2020, March 25). Thời gian thanh lí hàng tồn (Days Sales of Inventory - DSI) là gì? vietnambiz.
https://vietnambiz.vn/thoi-gian-thanh-li-hang-ton-days-sales-of-inventory-dsi-la-gi-dac-diem-
20200323231515582.htm

Link video oral presentation: https://youtu.be/C3bfcAnjASI

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