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Financial- Statement- Analysis-OF- Masan- Company-

Masan- Group
Business Administration (The Pennsylvania State University)

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FINANCIAL STATEMENT ANALYSIS OF MASAN COMPANY

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1. Financial Statement Analysis: An overview

1.1. Financial statement
Financial statements are pieces of paper with numbers written on them, but it is
important to also think about the real assets behind those numbers. After
transaction has been recorded and summarized, reports are prepared for users. The
accounting reports providing this information are called financial statement. There
are four types of financial statement, namely Income statement, Retained earnings
statement, balance sheet and statement of cash flows. In the scope of this project,
two financial statements which are collected in three accounting years between
2018 and 2020 are used. They are balance sheet and Income statement of Kinh Do
Corporation.
1.1.1. Balance sheet
Balance sheet is a snapshot of a firm’s position at a specific point in time. It shows
what assets the company owns and who has claims on those assets as of a given
date. The table 2.1 shows the balance sheet of KDC within 3 years from 2018 to
2020.
TABLE 2.1 Masan Corporation: December 31 Balance sheet
KINH DO CORPORATION
BALANCE SHEET
AT AS DECEMBER 31

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MASAN GROUP CORPORATION

Million VND MillionVND Million VND

2020 2019 2018
A. CURRENTS ASSETS 29,760,685 24,261,892 12,499,618
I. Cash and cash equivalents 7,721,442 6,800,528 4,585,889
II. Short-term investments 447,250 784,454 375,848
III Short-term receivables
.
7,051,442 5,417,776 2,412,555
IV. Inventories 12,497,917 9,621,821 4,333,191
V. Other current assets 2,042,634 1,637,313 792,135
B. LONG-TERM ASSETS 85,975,877 73,035,359 52,078,995
I. Long-term receivables 1,592,008 1,599,646 1,377,124
II. Fixed assets 49,582,187 40,791,699 29,203,764
III Investment property 14,518
.
IV. Long-term work in progress 2,274,759 3,278,972 2,171,342
V. Long-term financial investments 20,353,099 17,505,857 15,347,915
VI. Other long-term assets 12,159,306 9,859,185 3,978,850
TOTAL ASSETS 115,736,562 97,297,251 64,578,613
OWNER'S EQUITY
A. LIABILITIES 90,706,283 45,408,844 30,498,935
I. Current liabilities 38,874,663 30,492,191 15,795,515
1 Short-term Debt 22,545,046 18,340,185 9,243,779
2 Current Account Payable 6,832,649 5,635,395 2,668,610
3 Advance from Customers 1,074,932 1,178,905 334,553
4 Tax Payable 941,302 770,004 429,861
5 Payroll Payable 239,074 291,683 300
6 Accrued Expense 4,705,417 4,110,502 2,791,050
7 Other Payable 2,536,243 165,517 327,362
II. LONG TERM LIABILITIES 51,831,620 14,916,653 14,703,420
1 Accounts payable to suppliers – long-term 27,668 31,013 36,330
2 Other long-term payables 180,397 180,939 23,804
3 Long-term borrowings, bonds and finance
lease 39,466,043 11,675,842 12,751,649
liabilities
4 Deferred tax liabilities 4,651,174 2,455,415 1,351,446
5 Provisions – long-term 7,506,338 573,444 540,191
B. EQUITY 25,315,231 51,888,407 34,079,628
1 Chartered Capital 11,746,832 11,689,464 11,631,495

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2 Capital Surplus 11,084,297 11,084,357 11,084,417

3 Other Capital -8,563,690 -8,563,690 -9,426,958
6 Differences in Forex Revaluation -226,972 11,033 4,402
7 Retained Earnings 2,182,124 28,558,952 16,193,338
8 Minority Interest 9,092,640 9,108,291 4,592,934
TOTAL RESOURCES 116,021,514 97,297,251 64,578,563

1.1.1. Income statement

Income statement is a report summarizing a firm’s revenues, expenses, and profits
during a reporting period, generally a quarter or a year. The table 2.2 represents The
Company’s 2018, 2019 and 2020 income statement.

TABLE 2.2 Masan Corporation: Income statement for 3 years ending December 31

MASAN GROUP CORPORATION

Million VNĐ
2020 2019 2018
1. Total Revenue
78,868,319 38,818,747 39,378,747
2. Less Sales Deductions
1,650,511 1,464,660 1,191
3. Net sales
77,217,808 37,354,087 38,187,617
4. Cost of Goods Sold
59,329,111 26,412,939 26,306,208
5.Gross profit
17,888,697 10,941,148 11,881,409
6. Financial income
1,430,663 1,188,183 1,901,793
7. Financial expenses
4,556,671 2,200,562 3,090,914
In which: Interest expense
3,770,283 1,866,015 2,667,531
8. Share of profit in associates
2,640,068 2,182,410 1,914,340
9. Selling expenses
13,166,087 3,994,895 4,314,253
10. General and administration expenses

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3,040,896 2,103,408 2,015,388

11.Net operating profit
1,195,774 6,012,876 6,276,987

12. Other income

1,613,262 1,325,350 14,708

13. Other expenses

484,197 233,136 47,871
$
14. Results of other activities
1,129,065 1,092,214 (33,161)
15. Accounting profit before tax
2,324,839 7,105,090 6,243,824

16. Income tax expense – current

1,089,193 790,583 726,692

17. Income tax benefit – deferred

-156,367 -50,108 -104,373

18. Net profit after tax

1,395,013 6,364,615 5,621,505
Attributable to:
18.1. Equity holders of the Company 1233982
5,557,591 4,916,497
18.2.Non-controlling interests 161031
807,044 705,008
19.Earnings per share 1054
4,766 4,561

1.2. Analysis of financial statement

The primary goal of financial management is to maximize shareholders’ wealth
over the long run, not to maximize accounting measures. Financial statement
analysis shows how the statements are used by managers to improve performance;
by lenders to evaluate the likelihood of collecting on loans; and by stockholders to
forecast earnings, dividends, and stock prices.
If management is to maximize a firm’s value, it must take advantage of the firm’s
strengths and correct its weaknesses. Financial analysis involves

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1) Comparing the firm’s performance to other firms, especially those in the same
industry
(2) Evaluating trends in the firm’s financial position over time.
We use various tools to evaluate the significance of financial statement data. Three
commonly used tools are as follows.
• Horizontal analysis evaluates a series of financial statement data over a period of
time.
• Vertical analysis evaluates financial statement data by expressing each item in a
financial statement as a percentage of a base amount.
• Ratio analysis expresses the relationship among selected items of financial
statement data.
2. Financial statement analysis of Kinh Do Corporation
2.1. Vertical and horizontal analysis
2.1.1. Balance sheet
Vertical and horizontal analyses of Kinh Do Corporation’s balance sheet are presented
in the table 2.3 and 2.4.
1) Comparing the firm’s performance to other firms, especially those in the same
industry
(2) Evaluating trends in the firm’s financial position over time.
We use various tools to evaluate the significance of financial statement data. Three
commonly used tools are as follows.
• Horizontal analysis evaluates a series of financial statement data over a period of
time.
• Vertical analysis evaluates financial statement data by expressing each item in a
financial statement as a percentage of a base amount.
• Ratio analysis expresses the relationship among selected items of financial
statement data.
3. Financial statement analysis of Kinh Do Corporation
3.1. Vertical and horizontal analysis
3.1.1. Balance sheet
Vertical and horizontal analyses of Kinh Do Corporation’s balance sheet are presented
in the table 2.3 and 2.4.

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2020

Million VND 2020 Percenttage of 2020 M

A. CURRENTS ASSETS 29,760,685 25.71%
I. Cash and cash equivalents 7,721,442 6.67%
II. Short-term investments 447,250 0.39%
III
Short-term receivables 7,051,442
. 6.09%
IV. Inventories 12,497,917 10.80%
V. Other current assets 2,042,634 1.76%
B. LONG-TERM ASSETS 85,975,877 74.29%
I. Long-term receivables 1,592,008 1.38%
II. Fixed assets 49,582,187 42.84%
III
.
Investment property 14,518 0.01%
IV. Long-term work in progress 2,274,759 1.97%
V. Long-term financial investments 20,353,099 17.59%
VI. Other long-term assets 12,159,306 10.51%
TOTAL ASSETS 115,736,562 100.00%
OWNER'S EQUITY
A. LIABILITIES 90,706,283 78.18%
I. Current liabilities 38,874,663 33.51%
1 Short-term Debt 22,545,046 19.43%
2 Current Account Payable 6,832,649 5.89%
3 Advance from Customers 1,074,932 0.93%
4 Tax Payable 941,302 0.81%
5 Payroll Payable 239,074 0.21%
6 Accrued Expense 4,705,417 4.06%
7 Other Payable 2,536,243 2.19%
II. LONG TERM LIABILITIES 51,831,620 44.67%
1 Accounts payable to suppliers – long-term 27,668 0.02%
2 Other long-term payables 180,397 0.16%
Long-term borrowings, bonds and finance
lease 39,466,043 34.02%
3 liabilities
4 Deferred tax liabilities 4,651,174 4.01%
5 Provisions – long-term 7,506,338 6.47%
B. EQUITY 25,315,231 21.82%
1 Chartered Capital 11,746,832 10.12%
2 Capital Surplus 11,084,297 9.55%
3 Other Capital -8,563,690 -7.38%

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6 Differences in Forex Revaluation -226,972 -0.20%

7 Retained Earnings 2,182,124 1.88%
8 Minority Interest 9,092,640 7.84%
TOTAL RESOURCES 116,021,514 100.00%

Current assets
As regards current assets, cash and cash equivalents and current account receivables
are the two main components. Cash and cash equivalents have a percentage fluctuating
from more than 6.99% to approximately 7.10% within the three year, in which the year of
2019 witnesses a highest of 16.59% then this figure decrease to 15.04% in 2020. 2019
witnesses a 13,54% increase of cash, equivalent to 920,914 million VND in comparison
with 2018 but there is an amount of million VND fall (14.25%) from 2018 to 2020.
Despite the irregular increase or decrease, cash and cash equivalents still remain strong
position to take advantages of opportunistic investments in the food and beverage space,
and also to prepare for the roll out of new products in the future.
For accounts receivable, there is an outstanding thing in 2018 that this component
accounts for highest proportion in the current assets category, over 20% but fall deeply to
12.43% in 2019 and keeps a relative high figure of 16% in 2020. Current accounts
receivable has a downward trend between 2018 and 2019 but it increases from 2018 to
2020.
Inventories constitute 10.80% of total assets and continuously decrease through year
down to 9.89% in 2019 and 5.74% in 2018. From 2010 to 2011, inventories are down by
8.36% equaling 36,296,267 million VND and continue decreasing by 20.46% in 2012.
This occurs thanks to improvements of KDC in distribution activities such as
improvements across distribution channel including the flow of goods from warehouse to
the distributors and from distributors to the retailers. An important aspect of this change
is the implementation of the DMS (Distribution Management System) which is the
primary driver in providing marketing intelligence to the team in creating targeted and
effective strategies that change with the dynamics of the market.
Non-current assets
In non-current assets section, long-term investments always seizes a remarkable
proportion with around 24% in 2010, over 21% in 2011 and about 23% in 2012. Though
long-term investment has a downward trend, KDC still focuses on this type of investment
and predominantly puts center on investments in associates and jointly controlled entity

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and real estate projects to maintain its core business of Food and Beverage. From the
year of 2011 on, The Company shifted its strategy to focus on food only businesses
bringing about the decrease percentage of long-term investments in the last two given
years. Despite that, through years, long-term investment slightly increases by 3.78%
(about 45,737,784 million VND) from 2010 to 2011 and by 1.23% (about 15,384,651
million VND) from 2011 to 2012.
Fixed assets only make up 18.61% of total assets in 2010; rising suddenly to
approximately 25% in 2019 and stay a high portion in 2020 with 26.33%. In 2020, fixed
assets rises by over 516,224,418 million VND compared with 2018 and in 2020, it has an
inconsiderable decrease by 2,019,702 million VND (0.14%) compared with 2019. This is
the results of investment activities in infrastructure for expanding economic of scale and
maintaining to take advantages in the food and beverage business. Especially in 2019,
MASAN had large investments in the group infrastructure and platform after a merger
with MASAN at the end of 2018 and in 2020, as a part of the process to increase
efficiency, non-core and inefficient assets were sold off leading to a decrease of fixed
assets in this year.

a. Total liabilities and owners’ equity

The two key sources of short-term debt of MASAN are short-term loans and trade
payables. The two key sources of common equity are common stock and retained
earnings. In total liabilities and owners’ equity section, the level of increase or decrease
of this section is similar to assets section. However, the increase or decrease of total
liabilities and owners’ equity is responsible mainly by the change of total liabilities.
In category of total liabilities and owners’ equity, it is clear that owners’ equity has a
significant proportion with 52.775% in 2018, 53.33% in 2019 and 21.82% in 2020.
Liabilities are at a far less level with the highest is only 78.18% in 2020 and then
decreases to 44.67% in 2019. These results reinforce the conclusion that most of The
Company’s assets are financed primarily by equity.
In 2019, the current debt portion increases while owners’ equity proportion decreases
compared with 2020. Furthermore, the year 2020 experiences a 99.75% increase of
current liabilities (about 45,297,439 million VND). The reasons come primarily from the
economic depression after a small recovery in 2010. This leads to a high cost of
borrowing and a low liquidity of Dong in the market. Against this disadvantage, Masan

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focused on short-term funding rather than long-term one to sustain liquidity in funding
The Company’s operation. As liquidity was squeezed out of the money market, equity
markets decline along with investor sentiment. This left very little opportunity for The
Company to issue equity to substitute the high cost of borrowing.
3.1.2. Income statement
Vertical and horizontal analyses of Kinh Do Corporation’s income statement are
presented in the table 2.4 and 2.5
TABLE 2.4 Vertical and Horizontal analysis of Masan Income statement

2020
Percenttage of
Million VND 2020 Million VND 201
2020
1. Total Revenue 100.00%
78,868,319 38,818,747
2. Less Sales Deductions 2.09%
1,650,511 1,464,660
3. Net sales 97.91%
77,217,808 37,354,087
4. Cost of Goods Sold 75.23%
59,329,111 26,412,939
5.Gross profit 22.68%
17,888,697 10,941,148
6. Financial income 1.81%
1,430,663 1,188,183
7. Financial expenses 5.78%
4,556,671 2,200,562
In which: Interest expense 4.78%
3,770,283 1,866,015
8. Share of profit in associates 3.35%
2,640,068 2,182,410
9. Selling expenses 16.69%
13,166,087 3,994,895
10. General and administration
3.86%
expenses 3,040,896 2,103,408
11.Net operating profit 1.52%
1,195,774 6,012,876
12. Other income 2.05%
1,613,262 1,325,350
13. Other expenses 0.61%

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484,197 233,136
14. Results of other activities 1.43%
1,129,065 1,092,214
15. Accounting profit before tax 2.95%
2,324,839 7,105,090
16. Income tax expense – current 1.38%
1,089,193 790,583
17. Income tax benefit – deferred -0.20%
-156,367 -50,108
18. Net profit after tax 1.77%
1,395,013 6,364,615
18.1. Equity holders of the Company 1233982 1.56%
5,557,591
18.2.Non-controlling interests 161031 0.20%
807,044
19.Earnings per share 1054 0.00%
4,766

a. Sales, income and profit

It can be seen from the table 2.4 that net revenue increases drastically by 103.17%%
equivalent to about 40,049,572 thousand VND from 2020 to 2019. This component
continues increasing trend to 2018 but with a slow speed, just by 1.42% (560, 000
thousand VND). The incredible increase of net sales in 2019 comes from changes in
business strategies including shifting its strategy to focus on food only businesses. The
Company’s focus continues to be downstream from manufacturing and focuses on sales
and marketing. This is also the first year The Company operates using the merged
platform which resulted in positive results in both sales growth and market share.
Moreover, in this year, Masan has a large investment in selling activities such as
marketing, building brand. The Company at the same time improves distribution channel,
invests more in activities to release new products.

Gross profit as a percentage of net revenue constitutes 30.17% in 2018, and then
increases gradually to 28.19% in 2019 and 22.68% in 2018. Compared with 2018, gross
profit of 2019 decreases by7.91% (about 940,261 thousand VND) and in comparison
with 2019, gross profit of 2020 has a slight increase by 63.50%. The speed of increasing
of gross profit over years depends on the relative speed of increasing or decreasing of
both net revenue and cost of goods sold.

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Net income or after-tax income of The Company makes up a very small portion with a
downward trend over years with nearly 14.28% in 2018, only16.40 % and 1.77% in 2019
and 2020 respectively. The highest proportion of net income in 2018 is contributed partly
by a high portion of income from financial activities and operating profit. 2018 witnesses
a remarkably high part of income from financing activities with 34.34% while it is only
around 3% in the rest two years. From 2019, because of the change in business strategies,
Masan just focuses on core-business in food and beverage, so most of financial activities
were cut off leading to a low percentage of this component in income statement and a
significant fall of financial income in 2019 by up to 81%. The year of 2020 experiences
an increase of financial income but just a small amount of 5,788,964 thousand VND
(about 4.5%).
As a result of higher percentage of net income, the company’s shareholders enjoy a
highest portion of dividends in 2010 with 27.03% whereas in 2011 and 2012 the
dividends paid only 6.44% and 8.22% respectively.
b. Costs and expenses
At first glance, it is apparent that cost of goods sold as a percentage of net revenue
represents a largest single component of expenses with the highest percentage of 96.98%
in 2018 and then inclines through each year to 97.91% in 2020. This resulted in a below
50% proportion of gross profit within 3 years though this percentage increases through
each year from 35.45% in 2018 to 43.61% in 2020. In 2019, cost of goods sold increases
more than 100%, by about 1,325,502,071 thousand VND. However, turning to 2020, cost
of goods sold shows a decreasing trend though the figure only reaches about over 6%. A
high cost of goods sold of Masan originated from the fact that The Company is a
manufacturing company which must spend much on raw materials, manufacturing cost
and finished goods inventories. A high cost of 2019 was a result of inflation which is
responsible for rising price of raw materials, increasing in labor, electricity and fuel costs
for production activities.
In expenditure group, selling expense is ranked second when holding a pretty large
percentage with 10.96% in 2018 and then increasing gradually to 10.29% in 2019 and
16.69% in 2020. In 2019, selling expense escalates by 229.57% (about
9,171,192thousand VND) compared to 2018, but in 2012, this expense slightly increases,
just only by 7.40% in comparison with 2011.

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In this group, because of heavy investment in property development in 2018, there is

remarkableness with financial expenses of 12.54% in the year, but this expense declines
steeply to only 4.44% in 2020.
The act of spending too much on cost of goods sold and selling expense indicates that
Masan focuses mostly on its core business in the food category and selling activities,
including marketing and promotion activities, distribution channel, and brand building
but that leads to a result that net income or net profit after tax as a percentage of net
revenue holds a quite small portion

b. Assets section
In term of assets section, in general, non-current assets occupy a higher proportion
with 74.29%, 75.06% and 80.64%% in 2020, 2019, and 2018 respectively while this of
current assets is 25.71%, 24.94% and 19.36%. It is clear that non-current assets have an
increasing proportion through years whereas there is an opposite for current assets.
When taking a look at horizontal analysis of balance sheet, it can be seen that from
2018 to 2019 current assets increase by 11,762,274 million VND (about 94.10%) and in
comparison with the year of 2019, in 2020 this type of assets increase by 5,498,793
million VND, equivalent to 22,66%. Non-current assets owns the same pattern but the
story is far more different when in 2019 the increasing rate amounts to nearly 40.24%
equivalent to about 20,956,364 million VND and a moderate amount of 12,940,518
million VND (17,72%) declines from 2018to 2020. These are reasons for an increase of
15.72% of total assets (about 792,473,868 million VND) from 2018 to 2019 and a
increase of 5.45% total assets from 2018 to 2020.
These above figures indicate that MASAN invested more in non-current assets for
their production activities and operations of business.

2.2. Ratio analysis

2.2.1. Liquidity ratios
Liquidity ratios of Masan in three given years are presented in the table 2.6

TABLE 2.5 Kinh Do Corporation’s Liquidity ratios

MASAN GROUP CORPORATION

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NO. YEAR 2020 2019 2018 2020/2019

LIQUIDITY RATIOS
1 Current assets (Million VND) 29,760,685.00 24,261,892.00 12,499,618.00 22.66%
2 Inventory (Million VND) 12,497,917.00 9,621,821.00 4,333,191.00 29.89%
3 Current liabilities (Million VND) 38,874,663.00 30,492,191.00 15,795,515.00 27.49%
4 Current ratio 0.77 0.80 0.79
5 Quick ratio 0.44 0.48 0.52

The comparison of liquidity ratios between KDC and industry average is

illustrated in the table 2.6
2020 2019 2018
Ratio MASA Industr MASA Industr MASA Industr
N y N y n y
LIQUIDITY RATIOS
Current ratio 0.77 1.08 0.80 0.38 0.79 0.65
Quick ratio 0.44 0.15 0.48 0.28 0.52 0.22

a. Current ratio
It can be seen from the table that 2019 experienced a highest current ratio of 0.80
which means 1 VND of current liabilities can ensure by 2.25 VND of current assets. This
ration, however, drops drastically to only 0.77 in 2018 and then shows an insignificant
decrease sign in 2020 of 0.77. As can be seen from that compared to this ratio of BBC
and industry average, current ratio of Masan was well above both ones in 2010 but well
below in 2011 and showed a poor sign with the competitor in 2012. The Company in year
of 2010 appeared to have greater ability to cover current liabilities when they became
mature than the rest.

A high proportion of current assets (46.22%) compared with 23.52% of current

liabilities brings about a high current ratio in 2018. The decrease in 2019 is explained by
a dramatic raise of current liabilities by 72.49% while the increasing speed of current
assets in this year is just only 9.83%. The cutback of current liabilities by 24.14% in 2020
in comparison with 2019 pushes the current ratio up but it is not a considerable change
because of the decrease of current assets by 10.52%. However, when taking a look at the
percentage of components of current assets in 2018, it presents a somewhat bad sign
when total of current accounts receivable and inventories occupy nearly 29% of total

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assets and are twofold higher than cash and cash equivalents. It means that the high
current ration came mostly from the present of accounts receivable and inventories which
is less liquid than cash and cash equivalents.
b. Quick ratio (Acid- test ratio)
Turning to quick ratio, the picture changes when this ratio, though, is highest in 2010
but is closely to 2020 with 1.83 and 1.46 respectively. These figures demonstrate the fact
that inventories make a great contribution to the high ratio of current one in 2018.
however the instant debt-paying ability of The Company was threatened in 2019 when it
was at the bottom of the group and quite far from this ratio of industry average .

2.2.2. Asset management ratios

Assets management ratios of Masan and its peers in three years are showed in the table
2.7 and 2.8 below.

TABLE 2.7 Assets management ratio of MASAN

No YEAR 2020 2019 2018

ASSETS MANAGEMENT RATIOS
1 Net revenue (Million VND) 77,217,808.00 37,354,087.00 38,187,617
2 Inventory (Million VND) 12,497,917.00 9,621,821.00 4,333,191
Accounts receivable (Million
3 VND) 7,051,442.00 5,417,776.00 2,412,555
4 Net fixed assets (Million VND) 49,582,187.00 40,791,699.00 29,203,764
5 Total assets (Million VND) 115,736,562.00 97,297,251.00 64,578,613
6 Inventory turnover ratio 6.18 3.88 8
7 DOH 59.08 94.02 41
8 DSO 33.33 52.94 23
9 Fixed assets turnover ratio 1.56 0.92 1
10 Total assets turnover ratio 0.67 0.38 0

TABLE 2.8 Assets management ratio of KDC and industry average

2020 2019 2018
Ratio MASA Industr MASA Industr MASA Industr
N y N y N y
ASSET MANAGEMENT RATIOS
Inventory turnover ratio 6.18 11.23 3.88 15.26 8.81 12.32

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DOH 59.08 44.45 94.02 60.23 41.42 70.28

DSO 33.33 22.43 52.94 32.4 23.06 43.57
Fixed assets turnover
ratio 1.56 1.08 0.92 0.93 1.31 0.82
Total assets turnover ratio 0.67 1.24 0.38 1.23 0.59 1.52

Inventory turnover ratio:

It can be seen from the figure 2.7 that inventory turnover ratio is the best. This ratio
jumps from 6.18 in 2018 to 10.64 in 2019 and then increase gradually to in 2020. This is
good news for the company because the ability to turn over inventory of MASAN
increases through each year or the management of inventory of the company improves
each year.

DSO
In 2010, DSO of MASAN reaches a high level at 33.33 which means accounts
receivable is collected within 33.33 days. However, this ratio falls suddenly to 62.30% in
2019 but increase to 75.13% in 2020. A high DSO in 2010 shows that MASAN has some
problems in managing its accounts receivable, and accounts receivable becomes less
liquid. However, this situation is improved in the last two years though it is still high.
The ability to manage accounts receivable in 2019 expressed by the 28.82%
declination of accounts receivable and the increase in net sales in this year helps to
decrease this ratio in 2019.
DSO should be improved by giving policies to decrease accounts receivables, but
noting that it sometimes cause a decrease in net sales.
Fixed assets turnover ratio
Fixed assets turnover ratio increases gradually through years from 1.31 in 2018 to
1.56 in 2020. This means that MASAN’s ability to yield sales from fixed assets is quite
good and The Company has policies to manage its fixed assets such as sell of fixed assets
that are not relevant to its core-business or increase sales through years.
Total assets turnover ratio
Of asset management ratio, total assets turnover ratio may be a worst one. Though it is
improved from 0.59 in 2018 to 0.67 in 2020 .It is not still generating enough sales given
its total assets while this ratio of 3 years all are. It is clear from the table that the

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improvement of total assets turnover ratio through years caused primarily by the increase
of net sales, not proceeded from total assets itself.
This ratio should be decreased by reducing more inventories, accounts receivable and
net fixed assets.
2.2.3. Debt management ratios
The table 2.9 and 2.10 below represents debt management ratio of MASAN and its
competitor through 3 given years.

TABLE 2.10 Debt management ratio of KDC

KIDO GROUP CORPORATION

NO RATIO 2020 2019 2018 2020/2019

DEBT MANAGEMENT RATIOS
1 Total debt (Million VND) 90,706,283.00 45,408,844.00 30,498,935.00 99.75%
2 Total assets (Million VND) 115,736,562.00 97,297,251.00 64,578,613.00 18.95%
3 Interest charges (Million VND) 3,770,283.00 1,866,015.00 2,667,531.00 102.05%
4 Income before tax -156,367.00 -50,108.00 -104,373.00 212.06%
5 EBIT 3,613,916.00 1,815,907.00 2,563,158.00 99.01%
6 Debt ratio 0.78 0.47 0.47
7 TIE ratio 0.96 0.97 0.96

TABLE 2.11 Debt management ratio comparison between KDC and BBC

KIDO GROUP CORPORATION

NO RATIO 2020 2019 2018 2020/2019

DEBT MANAGEMENT RATIOS
1 Total debt (Million VND) 90,706,283.00 45,408,844.00 30,498,935.00 99.75%
2 Total assets (Million VND) 115,736,562.00 97,297,251.00 64,578,613.00 18.95%
3 Interest charges (Million VND) 3,770,283.00 1,866,015.00 2,667,531.00 102.05%
4 Income before tax -156,367.00 -50,108.00 -104,373.00 212.06%
5 EBIT 3,613,916.00 1,815,907.00 2,563,158.00 99.01%
6 Debt ratio 0.78 0.47 0.47
7 TIE ratio 0.96 0.97 0.96

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TABLE 2.11 Debt management ratio comparison between KDC and industry

2020 2019 2018

Ratio MASA Industr MASA Industr MASA Industr
N y N y N y
DEBT MANAGEMENT RATIOS
Debt
ratio 0.78 2.28 0.47 0.81 0.47 0.78
TIE ratio 0.96 1.12 0.97 1.02 0.96 1.12

Debt ratio
From the table 2.10 it can be seen that debt accounts for 47% of total assets in 2018,
increases to 47% in 2019 and then decreases to 78% in 2020.
TIE ratio
The TIE ratio of MASAN reaches the highest in the first year with 0.96 which means
100 VND of interest will be ensure by 1687 VND of EBIT. However, this ratio
experiences a deep drop to 3.98 in 2019 and then shows a slight recovery in the last year
with 6.19. It can be seen from the table 2.11 that TIE ratio of MASAN is far higher than
that of BBC in 2018; however. This ratio indicates that in the 2010 MASAN can satisfy
its creditors by a strong ability to pay interest charge, but The Company is put into risk
when this ratio is quite low in the last two year.
2.2.4. Profitability ratio
TABLE 2.12 Profitability ratios and DuPont equation of MASAN

KIDO GROUP CORPORATION

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NO
. YEAR 2020 2019 2018
PROFITABILITY RATIOS
1 Net sales (Million VND) 77,217,808.00 37,354,087.00 38,187,617.00
2 EBIT (Million VND) 3,613,916.00 1,815,907.00 2,563,158.00
3 Net income (Million VND) 1,395,013.00 6,364,615.00 5,621,505.00
4 Total assets (Million VND) 115,736,562.00 97,297,251.00 64,578,613.00
5 Common equity (Million VND) 25,315,231.00 51,888,407.00 34,079,628.00
6 Operating margin 0.05 0.05 0.07
7 Profit margin 0.02 0.17 0.15
8 ROA 0.01 0.07 0.09
9 ROE 0.06 0.12 0.16
DUPONT EQUATION
10 Profit margin 0.02 0.17 0.15
11 Total assets turnover 0.60 0.61 0.55
12 Equity multiplier 4.57 1.88 1.89
Profitability ratios and DuPont equation of MASAN and its peers are showed in the
following tables.

TABLE 2.13 Profitability ratios and DuPont equation of KDC and its peers

2020 2019 2018

Ratio MASA Industr MASA Industr MASA Industr
N y N y N y
PROFITABILITY RATIOS
Operating margin 0.05 0.80 0.05 0.10 0.07 0.28
Profit margin 0.02 0.12 0.17 0.11 0.15 0.12
ROA 0.01 0.48 0.07 0.32 0.09 0.14
ROE 0.06 0.53 0.12 0.80 0.16 0.42
DUPONT EQUATION
Profit margin 0.02 0.12 0.17 0.11 0.15 0.12
Total assets turnover 0.60 1.32 0.61 1.42 0.78 1.28
Equity multiplier 4.57 1.10 1.88 2.50 1.89 3.00

Operating margin
Operating margin of MASAN decreases significantly from 0.05 in 2018 to 0.05 in
2019 and then increases to 0.07 in 2020. The deep fall of operating margin is caused by a
29.19% increase of net sales but a 99.01% decrease of EBIT. In 2020, though there is a

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recovery of EBIT by 25.28% increase but its speed cannot catch up with the increasing
speed of sales in the last year. This is not a good sign for the company because it releases
a fact that the operating cost, especially the cost of goods sold of The Company is too
high. In comparison with industry average, this ratio seems to be good in 2018 because of
a relatively high figure but in the last two years, this ratio is well below that of industry
average. However, KDC’s operating margin far surpasses this one of its competitor, BBC
in all of the three years.
This ratio should be improved by decreasing inventories which may reduce cost of
goods sold and reducing manufacturing costs.
Profit margin
Like operating margin, profit margin of MASAN has a high ratio of nearly 30% in the
first year and surpasses industry average of 16% but in the two remaining years, this ratio
decreases significantly and keeps below the industry ratio. It is due to a high increase of
sales in 2011 and a small continuing rise in 2020 but net income falls deeply in 2019 by
15% and increases by 17% in 2020. A low profit margin ratio indicates that the ability to
create net income from sales is bad and activities of operation and trading cost the
company too much.
MASAN should decrease cost of goods sold by decrease level of inventories, decrease
selling expenses by improving the management ability of selling activities, decrease
financial expense by lowering debt or cutting off some of financial investments which are
unrelated to core business of the company to improve profit margin ratio.
ROA
ROA ratio of KDC is highest in 2018 with 1 %, decreasing dramatically to 7 % in
2019 and then makes a mild increase of 9% in 2020. This exposes MASAN’s feeble
ability to bring profit from total assets. This frail ratio results from a deep drop of net
income by 51.84% from 2018 to 2019 and a 15.72% increase of total assets. The year of
2020 experiences a better ratio due to a 5.45% decrease of total assets and a 28.28% raise
of net income.
This situation should be solved by improving net income of the company.

ROE

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The ROE of KDC decrease from 6% in 2020 to 12% in 2019 and then increase to
16% in 2020. This change comes from the decrease of net income and increase of
common equity in 2019 and a 28% increase of net income with a 4.5% increase of
common equity in 2020. In comparison with industry average, ROE is far below in the
first two year and compared with its competitor, this ratio is far higher. The decrease of
ROE through years and the lower industry average ratio shows that KDC’s ability to
bring profit to its stockholders is quite weak.
DuPont Equation
According to DuPont equation, it can be seen that the low level of ROE compared to
industry average caused mainly by the low ratio of total assets turnover (0.38 of MASAn
compared with 1.07 of industry average). The profit margin of MASAN in this year is
nearly two times higher than that of industry average and equity multiplier is somewhat
below. Turning to 2019, though there are minor improvement in total assets turnover and
equity multiplier, a decrease by over 23% of profit margin results in deep fall of ROE in
the year. All of the three components of DuPont equation in this year are left behind by
industry average and profit margin is the worst.
Basing on DuPont Equation, it is clear that in order to improve this ratio, the company
needs to have policies to improve its assets, liabilities and finding ways to increase sales
and decrease cost to increase net income.

2.2.5. Market value

The table 2.14 provides information related to market value ratios of MASAN and the
table 2.15 shows the comparison of this ratio between MASAN.

TABLE 2.14 Market value ratios of MASAN

KIDO GROUP CORPORATION

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N
O RATIO 2020 2019 2018 2020/2019 2019/2018
MARKET VALUE RATIOS- MASAN
1 Earnings/ share 1054.00 4766.00 4561.00 -77.89% 4.49%
2 Market price/ share 37000.00 37000.00 37000.00 0.00% 0.00%
3 Book value/ share 23367.92 24532.81 25214.74 -4.75% -2.70%
4 P/E ratio 35.10 7.76 8.11
5 M/B ratio 1.59 1.51 1.5

P/E ratio
It can be seen from the table 8.11 that P/E ratio of MASAN increases from 35.10 in
2020. This means that the amount of money investors spend on MASAN s stocks to gain
one unit of earning increases through years. This may dissatisfy investors because to get
profit, the money they expense increases through years. However, this high ratio indicates
that KDC’s stocks are high evaluated by the market.

TABLE 2.15 Market value ratios of KDC

M/B value
It is obvious from the table 1.5 that M/B of MASAN in 2018 and 2020 exceed 1 with
1.51and 1.59 respectively. This means that the market price of MASAN’s stocks in
market surplus the real value. It indicates that in the market, stocks of MASAN are very
strong but it may cause a risk that investors will lose their money if the company
bankrupts. The lost amount is the different between market price and book value.
It seems safer to buy BBC because it M/B always less than 1 and P/E ratio always less
than that of MASAN.

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