1

Table of Contents
Introduction....................................................................................................................................3
Part A..............................................................................................................................................3
I. The extended trial balance & year-end financial statement...........................................3
1. The Sun’s Hotel extended trial balance.....................................................................3
2. The Sun’s Hotel Year-end financial statement..........................................................3
3. Adjustment entry.........................................................................................................5
II. An accompanying letter to Sun’s Hotel.........................................................................5
1. Relevant profitability ratios........................................................................................6
2. Liquidity ratios............................................................................................................7
3. Asset usage ratios.........................................................................................................8
4. Improving Performance Strategies for Sun Hotel:..................................................9
5. Benefits and Limitations of Using Financial Ratios...............................................10
6. Recommendation and Conclusion...........................................................................12
Part B............................................................................................................................................14
I. Overview of Hoa Phat Group (HPG)..............................................................................14
II. HPG’s Financial Performances from 2018 – 2022.....................................................14
1. Relevant profitability ratios......................................................................................14
2. Liquidity ratios..........................................................................................................15
3. Asset usage ratios.......................................................................................................17
4. Benefits and Limitations of using ratios and benchmarks with HPG..................19
5. Forecasts of 2023 financial statements....................................................................20
6. Conclusion..................................................................................................................21
References.....................................................................................................................................23

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Introduction
We have completed financial reports and related adjustments for client companies based on
assigned tasks and accounting skills. Additionally, we utilized the expertise in analyzing ratios
and comparing businesses against relevant standards to assess the financial performance of
enterprises. This enabled us to provide recommendations and predictions for businesses, while
also evaluating the effectiveness of such analyses. This approach not only furnishes detailed
insights into the health of businesses but also aids in understanding trends and benchmarks
within the industry. By leveraging these analyses, we empower businesses to optimize financial
performance, make informed decisions, and navigate the competitive landscape with confidence.

Part A
I. The extended trial balance & year-end financial statement
1. The Sun’s Hotel extended trial balance

2. The Sun’s Hotel Year-end financial statement

2.1. Statement of profit or loss for the year at 31 December

3
2.2. Statement of financial position for the year ended at 31 December

4
 3. Adjustment entry

II. An accompanying letter to Sun’s Hotel

Nguyen Thuy Linh
12 Chua Boc, Quang Trung, Dong Da
Ha Noi, Vietnam 10000
012-345-6789
thuylinh19012k4@gmail.com

5
December 22, 2023

Sun’s Hotel
Business City, CA 12345
Subject: Comprehensive Financial Analysis and Recommendations for Sun’s Hotel

Dear Sir/Madam,
In our recent meeting, Sun’s Hotel requested the finalization of the trial balance as of December
31, 2023, and the preparation of year-end financial statements. Additionally, they emphasized the
importance of providing a comprehensive analysis of financial ratios, including pros and cons, to
assess organizational performance over time.
This representation letter from BAV Accountancy Firm for the year ending December 31, 2023,
accompanies the completed financial statements for Sun’s Hotel. It confirms the accuracy and
adherence to accounting standards.
Our commitment extends to a detailed analysis of financial ratios, aiming to not only present
numerical insights but also offer qualitative perspectives on Sun’s Hotel's financial performance.
Additionally, the analysis of the financial ratio is provided below:
Ratio analysis of Sun’s Hotel in the period from 2021 to 2023:
1. Relevant profitability ratios

Comment:
The financial data in Figure 1 succinctly outlines the company's profitability trends for 2023,
2022, and 2021. The Return on Assets (ROA) shows improvement, moving from 1.4% in 2022
to 1.6% in 2023, signaling positive progress. However, the overall ROA remains relatively low,
indicating potential for optimizing asset utilization. A strategic approach to enhance efficiency is
crucial for sustained growth. Similarly, the Return on Equity (ROE) reflects growth from 1.7%
in 2022 to 2.0% in 2023, showcasing an improved capacity to generate net income. Further
exploration of factors influencing equity returns is advised for sustained growth.
The Gross Profit Margin rises from 35.7% in 2022 to 38.8% in 2023, reflecting improved cost
efficiency. To maintain this positive trend, ongoing scrutiny of cost drivers and pricing strategies

6
is recommended. The Net Profit Margin sees a significant increase to 5.2% in 2023, showcasing
enhanced conversion of sales into net income. Identifying and sustaining strategies for this
improvement is crucial for continued profitability.
In summary, while positive trends are evident, focused efforts on asset optimization, equity
returns, and cost management will contribute to sustained financial success. Continuous
monitoring and strategic adjustments remain essential in navigating the dynamic business
landscape. These insights underscore the importance of proactive financial management for long-
term stability and success.
2. Liquidity ratios

Comment:
Figure 2 sheds light on the liquidity position and financial leverage of the company across the
years 2023, 2022, and 2021, providing crucial insights into its ability to meet short-term
obligations and manage debt.
The Current Ratio has witnessed a substantial upswing, soaring from 2.6 in 2022 to 5.7 in 2023.
This significant improvement indicates a robust short-term liquidity position, reflecting the
company's enhanced ability to cover current liabilities with its current assets. The noteworthy
increase suggests a more secure financial standing, allowing the company greater flexibility in
meeting its immediate financial obligations.
Conversely, the Quick Ratio presents a contrasting trend, declining from 21.68 in 2022 to 5.66
in 2023. While the quick ratio remains substantial, this reduction signals a shift in the
composition of quick assets. A closer examination of the nature and liquidity of these assets is
imperative to assess the company's agility in meeting short-term obligations, ensuring a nuanced
understanding of its financial health.
The Debt Ratio has marginally increased from 13.8% in 2021 to 19.8% in 2023, indicating a
moderate rise in financial leverage. Effective debt management becomes paramount to maintain
a healthy balance between debt and equity. Monitoring debt levels and optimizing the debt
structure will be pivotal to sustaining financial health and stability.
The Interest Coverage Ratio reflects a slight decrease from 2.3 in 2022 to 2.1 in 2023. While
the ratio remains above 1, indicating the company's ability to cover interest expenses, continuous
vigilance is necessary. Regular monitoring ensures the company's financial health, particularly in
managing financial expenses and safeguarding against potential challenges.

7
In conclusion, while the Current Ratio highlights a commendable improvement in short-term
liquidity, attention to the composition of quick assets, effective debt management, and careful
monitoring of the Interest Coverage Ratio are imperative. Strategic financial management
remains at the forefront, guiding the company through the intricate terrain of liquidity and
leverage for sustained financial well-being.
3. Asset usage ratios

Comment:
Figure 3 provides insights into the company's asset utilization and efficiency in managing
various components of its operations for the years 2023 and 2022. Analyzing key metrics such as
Total Assets Turnover, Fixed Asset Turnover, Return on Capital Employed, Account Receivable
Turnover, Account Receivable Days, Inventory Turnover, and Inventory Days offers a
comprehensive view of the company's operational performance.
The Total Assets Turnover indicates the company's efficiency in utilizing its assets to generate
sales. In 2023, the ratio stands at 0.30, a slight improvement from 0.28 in 2022. This suggests
that for every dollar of assets, the company generated 30 cents in sales, reflecting a positive trend
in asset utilization.
The Fixed Asset Turnover measures the efficiency of non-current assets in generating sales. A
notable decrease from 0.66 in 2022 to 0.38 in 2023 suggests a change in the utilization of fixed
assets. Further investigation is needed to understand the factors contributing to this shift and to
optimize the use of fixed assets for improved operational efficiency.
The Return on Capital Employed (ROCE) indicates the profitability derived from capital
employed. In 2023, the ROCE stands at 3.16%, showing an improvement from 2.60% in 2022.
This signals a positive trend in generating returns on the capital invested in the business,
enhancing overall financial performance.
Moving on to the management of receivables, the Account Receivable Turnover (AR
Turnover) demonstrates a significant decline from 19.00 in 2022 to 10.27 in 2023. This signals a

8
longer collection period for receivables, requiring attention to efficient credit management to
improve cash flow.
The Account Receivable Days (AR Days), representing the average number of days to collect
receivables, has seen an increase from 19.2 in 2022 to 35.5 in 2023. A longer collection period
could impact liquidity, emphasizing the need for effective receivables management.
The Inventory Turnover and Inventory Days provide insights into the efficiency of managing
inventory. Although the turnover has slightly decreased from 14.67 in 2022 to 14.35 in 2023, the
Inventory Days have increased from 24.87 to 25.43. This suggests a slightly longer time to sell
inventory, prompting a closer look at inventory management practices.
In conclusion, while the Total Assets Turnover and ROCE show positive trends, attention is
required to optimize fixed asset utilization. The decline in Account Receivable Turnover and the
increase in Account Receivable Days warrant effective credit and receivables management.
Similarly, the minor changes in Inventory Turnover and Inventory Days highlight the importance
of refining inventory management practices for sustained operational efficiency. Addressing
these aspects will contribute to a well-rounded enhancement of the company's asset usage and
overall financial performance.
4. Improving Performance Strategies for Sun Hotel:
Based on the analysis of Sun Hotel's financial indicators, several strategies can be proposed to
enhance financial performance and efficient asset management:
Strategies Description Benefits Limitations
Optimizing Strengthen management Enhance Implementation of
Asset and optimize asset usage profitability from optimization measures
Utilization to improve the ROA ratio. assets, improve requires time and
This may involve ROA, and bolster resources, and success
restructuring the asset overall financial may depend on various
portfolio, enhancing performance. factors, including the
production processes, and business environment and
ensuring efficiency in market strategy.
resource utilization.
Debt and Prudently manage debt to Reduce financial Debt management may
Financial reduce the debt-to-asset risk, improve ROE increase costs and
Management ratio and optimize the and ROCE, and requires a tight strategy to
financial structure. This enhance resilience avoid excessive
could involve debt against market indebtedness.
restructuring, cash flow fluctuations.
management, and ensuring
that financial costs are
under control.
Customer and Optimize customer Improve cash flow, Special attention is
Long-Term management to reduce the decrease financial required regarding
Financial AR Days and AR risk from inventory levels and

9
 Management Turnover ratios. prolonged customer payment status
Additionally, propose a receivables and to avoid impacts on
strategy for long-term large inventories. reserves and service
financial management to provision.
improve Inventory
Turnover and Inventory
Days.

5. Benefits and Limitations of Using Financial Ratios

Financial ratios are useful tools for analyzing the performance and financial position of a
company. They can help investors, creditors, managers, and other stakeholders to evaluate the
company’s profitability, liquidity, solvency, efficiency, and growth potential. However, financial
ratios also have some limitations that should be considered before using them.
5.1. Benefits
Performance Evaluation: Financial ratios serve as invaluable tools for evaluating a company's
performance across various dimensions such as profitability, liquidity, and operational efficiency
(Georgiou, 2023). This comprehensive analysis provides a nuanced understanding of the overall
health of the business.
Comparative Analysis: Financial ratios empower businesses to engage in robust comparative
analysis, allowing them to benchmark their performance against industry peers or historical data
(Emeritus, 2023). This comparative perspective is crucial for identifying competitive advantages
and areas for improvement.
Informed Decision-Making: Decision-makers leverage financial ratios to make informed and
strategic decisions. Whether in investment, financing, or day-to-day operations, these ratios act
as reliable indicators that guide the management team toward effective and prudent choices
(Bloomenthal, 2023).
Communication with Stakeholders: Financial ratios provide a universal language for
communicating a company's financial health to diverse stakeholders. Investors, creditors, and
analysts can quickly grasp the organization's standing, fostering transparency and building
confidence (Damini, 2023).
Identification of Trends: Through the analysis of financial ratios over multiple periods, trends
and patterns emerge, offering crucial insights into the trajectory of the company's financial
performance (Ghaghda, 2023). This trend analysis aids management in making forward-looking
decisions.
Efficiency Measurement: Financial ratios serve as efficiency metrics, offering a quantitative
measure of how well the company utilizes its assets, manages inventory, and collects receivables.
Identifying operational inefficiencies becomes streamlined, allowing for targeted improvements
(Genio, 2023).

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Saves Time and Effort: Financial ratios streamline the interpretation of complex sets of
financial data, saving time and effort for analysts and decision-makers. The ability to distill key
financial information into concise ratios facilitates quick and effective decision-making (IPCC,
2023).
Inter-Firm Comparisons: Financial ratios facilitate inter-firm comparisons, enabling businesses
to gauge their performance against industry averages or competitors. This benchmarking process
helps identify areas of excellence and potential areas for strategic enhancement (Genio, 2023).
Reveals Trends and Patterns: Financial ratios not only quantify the current financial status but
also unveil trends and patterns over time or across different segments or divisions. This deep
dive into financial dynamics provides a more comprehensive understanding of the company's
trajectory (FasterCapital, 2023).
Identifies Strengths and Weaknesses: Financial ratios play a pivotal role in uncovering
strengths and weaknesses in various facets of the business, be it operations, management
strategies, or the external business environment. This granular insight guides targeted
improvements (Genio, 2023).
5.2. Limitations
Reliance on Historical Data: Financial ratios predominantly rely on historical data, potentially
hindering their ability to precisely predict future performance. The dynamic nature of economic
conditions may not be fully captured by historical information (CFI, 2023).
Industry and Company Variability: Comparing financial ratios across industries or diverse
companies may lead to misinterpretations. Each industry and company have unique
characteristics and operating models, influencing the relevance of ratios (Yehiel, 2023).
Subjectivity and Manipulation: The objectivity of financial ratios may be compromised by
subjective accounting choices and potential manipulation. Varied accounting methods among
companies create challenges in obtaining an unbiased view of their financial health (Sherman &
Young, 2016).
Limited Scope: While financial ratios offer a quantitative analysis, they may not provide a
holistic view of a company's overall strategic position. Qualitative aspects such as brand value,
customer satisfaction, or innovation are not adequately captured (Remesh, 2023).
Changing Accounting Standards: Changes in accounting standards over time can impact the
comparability of financial ratios. Adjustments may be required to align with alterations in
reporting methodologies, affecting the consistency of ratio analysis (Education, 2023).
Distortion by Inflationary Effects: Financial ratios may be distorted by inflationary effects,
influencing the real value of financial statements over time. This distortion can impact the
accuracy of ratio analysis (Kluwer, 2020).

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Variability Due to Accounting Policies: Different accounting policies and methods employed
by companies or industries can lead to variations in financial ratios. This variability challenges
the comparability of ratios across entities (Bloomenthal, 2023).
Lack of Qualitative Aspects: Financial ratios fall short in capturing qualitative aspects of a
company's performance, including factors like customer satisfaction, innovation, social
responsibility, or environmental impact. These intangibles play a crucial role in overall business
success (Feng & Goli, 2023).
Seasonal Factors Impact: Financial ratios may be influenced by seasonal factors that impact
specific aspects of the business, such as sales volume, inventory turnover, or operating expenses.
This seasonality introduces complexity into ratio analysis (Fernando, 2023).
6. Recommendation and Conclusion
6.1. Recommendation
To enhance Sun's Hotel's financial performance and management efficacy, several strategic
recommendations emerge from our analysis:
Firstly, optimizing asset utilization emerges as a paramount strategy. By strengthening
management and re-evaluating asset portfolios, Sun's Hotel can significantly improve its Return
on Assets (ROA). This approach necessitates a thorough examination of production processes,
ensuring that resources are utilized efficiently. While the implementation of these optimization
measures demands time and resources, the potential benefits, such as enhanced profitability and
overall financial performance, outweigh the associated challenges.
Secondly, prudent debt and financial management stand as critical pillars for Sun's Hotel's
sustained success. By carefully managing debt levels and restructuring when necessary, the hotel
can achieve a healthier balance between debt and equity. This strategy involves vigilant cash
flow management, control over financial costs, and proactive measures to mitigate financial
risks. While navigating debt management complexities may introduce certain costs, the long-
term benefits, including improved Return on Equity (ROE) and resilience against market
fluctuations, justify the strategic focus.
Lastly, optimizing customer and long-term financial management emerges as a pivotal strategy
for Sun's Hotel. By streamlining customer management processes and reducing Account
Receivable (AR) Days, the hotel can improve its cash flow and reduce associated financial risks.
Additionally, devising a long-term financial management strategy that focuses on improving
Inventory Turnover and reducing Inventory Days will further enhance operational efficiency.
While these strategies necessitate special attention to inventory levels, customer payment status,
and credit management, the potential rewards in terms of improved liquidity and operational
efficiency are substantial.
6.2. Conclusion
In conclusion, Sun's Hotel stands at a juncture where strategic financial management and
targeted improvements in asset utilization, debt management, and customer relations will pave

12
the way for sustained financial success. Continuous monitoring, strategic adjustments, and
proactive financial management will be instrumental for Sun's Hotel to navigate the dynamic
business landscape and achieve long-term stability.

As Sun's Hotel implements these strategies, it is crucial to recognize the benefits of financial
ratios in providing a quantitative and comparative analysis of its financial performance.
Acknowledging the limitations, such as reliance on historical data and the lack of qualitative
aspects, will ensure a balanced approach. Adapting these strategies to changing conditions will
foster resilience and agility in the face of future challenges, ensuring Sun's Hotel's continued
success in the competitive business environment.
We hope that you find the above information useful. We are very grateful that you used our
service.
Respectfully,
Thuy Linh
Nguyen Thuy Linh

13
Part B
I. Overview of Hoa Phat Group (HPG)
Established in 1992, Hoa Phat Group (HPG) has evolved into a leading industrial manufacturing
powerhouse in Vietnam, boasting a diverse portfolio of products and services (HPG, 2023).
Originating as a construction machine and equipment trading company, the group has expanded
its reach into various sectors, including furniture, steel pipe, steel, refrigeration, real estate, and
agriculture. With a strong domestic presence and a robust foothold in export markets across
Southeast Asia, Europe, and America, Hoa Phat operates 18 factories nationwide, employing
over 30,000 individuals (HPG, 2023).
Committed to quality, innovation, and social responsibility, Hoa Phat Group has earned
accolades and certifications for its products and services. Actively contributing to social causes
such as education, healthcare, and environmental protection, the group epitomizes responsible
corporate citizenship. As one of Vietnam's largest private enterprises, Hoa Phat Group achieved
a remarkable revenue exceeding 85 trillion VND (3.8 billion USD) and a net profit surpassing
4.6 trillion VND (200 million USD) in the first nine months of 2023, solidifying its status as a
key player in Vietnam's industrial and economic landscape (HPG, 2023).
II. HPG’s Financial Performances from 2018 – 2022
1. Relevant profitability ratios

Comment: Figure 1 presents a comprehensive snapshot of Hoa Phat Group's profitability

metrics over the last five years, offering valuable insights into the company's financial
performance and efficiency.
 Return on Assets (ROA): The ROA metric, reflecting the company's ability to generate
profits from its assets, displays a fluctuating pattern. Starting at a robust 15.3% in 2018, a
dip to 10.0% in 2019 raises concerns about asset efficiency. The subsequent surge to
23.9% in 2021 is noteworthy, yet the sudden drop to 5.6% in 2022 demands scrutiny. This
decline may signal challenges in maximizing returns from invested assets.
 Return on Equity (ROE): Similarly, ROE, depicting the company's net income relative
to shareholder equity, reveals a peak at 46.0% in 2019, followed by a consistent decline.
The substantial decrease to 9.0% in 2022 raises questions about the company's capacity to
generate net income in proportion to shareholder equity, necessitating a closer
examination of contributing factors.
 Gross Profit Margin: The gross profit margin, indicating the percentage of revenue
retained after accounting for production costs, exhibits a downward trend from 20.9% in
2018 to 11.9% in 2022. This persistent decline may signify challenges in cost

14
 management or pricing dynamics, urging the company to reassess its production cost
structure and pricing strategies.
 Net Profit Margin: The net profit margin, reflecting the percentage of net income
relative to net sales, follows a comparable trajectory. While there's a recovery from 11.9%
in 2019 to 23.1% in 2021, the sharp decrease to 6.0% in 2022 is striking. This suggests a
substantial reduction in the company's ability to convert sales into profits, demanding a
meticulous examination of cost structures and revenue streams.
With company’s plan: Hoa Phat Group aims to achieve a revenue of VND150 trillion ($6.29
billion) and a net profit of VND8 trillion ($336 million) in 2023, which are 6% and 5% higher
than the previous year, respectively (HPG, 2023). The company also plans to use the
undistributed after-tax profit as of December 31, 2022 for business activities, which means no
dividend for 2022. The company expects to improve its sales performance in Q1/2023, assuming
that the mechanisms to support the real estate market are approved and the business activities of
property developers become more vibrant. However, according to the web search results, Hoa
Phat Group faced some challenges and difficulties in 2022, such as poor export performance,
fierce competition among manufacturers, rising input material prices, and fluctuations in steel
prices (VNA, 2022). The company’s revenue decreased by 5% year-on-year to VND142,771
billion ($5.99 billion), and its net profit dropped by 76% from 2021 to VND8,444 billion
($354.34 million). The company’s gross profit margin also went down from 23% in Q1 to minus
3% in Q4. The company’s ROA and ROE also showed a significant decline from their peak
levels in 2019.
Therefore, it can be seen that Hoa Phat Group’s profitability trends did not match its company’s
plan or its competitors’ performance in 2022. The company may need to address some of the
factors that affected its profitability, such as optimizing asset utilization, controlling costs,
fortifying operational efficiency, diversifying revenue streams, enhancing product quality and
innovation, and strengthening customer relationships.
With company’s competitor (NKG): Hoa Phat Group had a higher revenue and net profit than
NKG in 2022, despite facing some challenges and difficulties such as poor export performance,
fierce competition among manufacturers, rising input material prices, and fluctuations in steel
prices (NKG, 2023). Hoa Phat Group also had a higher ROA and ROE than NKG in 2022,
indicating that it was more efficient in generating profits from its assets and equity (NKG, 2023).
However, both companies had negative gross profit margin and net profit margin in 2022,
meaning that they incurred losses from their production costs and sales (NKG, 2023).
Therefore, it can be concluded that Hoa Phat Group had a better financial performance than
NKG in 2022, but both companies still need to improve their profitability by optimizing their
asset utilization, controlling their costs, fortifying their operational efficiency, diversifying their
revenue streams, enhancing their product quality and innovation, and strengthening their
customer relationships.
2. Liquidity ratios

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Comment: Figure 2 unveils the liquidity landscape of Hoa Phat Group over the past five years,
crucial in assessing the company's short-term financial health. Here's a concise breakdown and
commentary on each metric:
 Current Ratio: HPG consistently maintains a current ratio between 1.1 and 1.3,
indicating a stable ability to cover short-term obligations with current assets. This aligns
with industry standards, but a sustained ratio closer to 1.3 might enhance the company's
resilience in meeting immediate financial demands.
 Quick Ratio: The quick ratio oscillates between 0.4 and 0.7, suggesting a moderate
capacity to cover short-term obligations without relying heavily on slower-moving
inventory. While in line with industry averages, a consistent improvement could fortify
HPG against sudden financial challenges.
 Debt Ratio: The debt ratio shows a declining trend, dropping from 55.0% in 2020 to
43.6% in 2022. This signals a positive shift in HPG's capital structure, reflecting a
reduced reliance on external funding.
 Interest Coverage Ratio: HPG maintains a robust interest coverage ratio, consistently
outperforming industry averages, although a slight decline in 2022 warrants attention.
The company's ability to meet interest obligations remains strong, but continuous
monitoring is essential.
With company’s plan:
 Current Ratio: HKG has a current ratio of 1.3, which is close to the industry standard of
1.1 (HPG, 2021). This means that HKG can cover its short-term obligations with its
current assets, but it may face some difficulty in meeting immediate financial demands.
HKG’s current ratio has been stable over the past five years, indicating a consistent
ability to manage its liquidity.
 Quick Ratio: HKG has a quick ratio of 0.7, which is slightly lower than the industry
average of 0.8 (HPG, 2023). This means that HKG can cover its short-term obligations
without relying heavily on slower-moving inventory, but it may have some cash flow
problems in case of unexpected expenses or sales declines. HKG’s quick ratio has
fluctuated between 0.4 and 0.7 over the past five years, suggesting a moderate capacity to
improve its liquidity.
 Debt Ratio: HKG has a debt ratio of 43.6%, which is lower than the industry average of
55% (NKG, 2022). This means that HKG has reduced its reliance on external funding
and has a lower debt burden compared to other companies in the same sector. HKG’s debt
ratio has shown a declining trend from 55% in 2020 to 43.6% in 2022, signaling a
positive shift in its capital structure.

16
  Interest Coverage Ratio: HKG has an interest coverage ratio of 9.8, which is higher
than the industry average of 7 (HPG, 2023). This means that HKG can meet its interest
obligations with its earnings before interest and taxes (EBIT), and it has a strong ability
to service its debt. However, HKG’s interest coverage ratio has declined slightly from 10
in 2020 to 9.8 in 2022, warranting attention.
With competitor (NKG): Both companies have stable current ratios, ranging from 1.1 to 1.3,
indicating their ability to pay short-term obligations with existing assets. A current ratio near 1.3
could strengthen resilience to immediate financial demands. Quick ratios range from 0.4 to 0.7,
indicating their ability to pay short-term obligations is not heavily dependent on slow-moving
inventory. Hoa Phat Group (HPG) has a decreasing debt ratio from 55.0% in 2020 to 43.6% in
2022, reflecting reduced dependence on external capital. Despite a slight decrease in 2022, HPG
maintains a strong interest coverage ratio, exceeding industry standards, indicating high ability to
meet interest payments. Continuous monitoring is important for HPG's financial stability.
3. Asset usage ratios

Comment:
Figure 3 provides a detailed overview of Hoa Phat Group's asset utilization metrics, offering
valuable insights into the efficiency and effectiveness of the company's operational management.
Here's a breakdown and commentary on each metric:
 Total Assets Turnover: The total assets turnover ratio indicates a consistent trend, with a
decrease from 0.85 in 2018 to 0.81 in 2022. While a lower ratio may suggest a decrease
in asset efficiency, it's crucial to assess industry benchmarks and specific operational
contexts for a comprehensive understanding.
 Fixed Asset Turnover: HPG's fixed asset turnover displays fluctuations, dropping from
4.30 in 2018 to 2.02 in 2022. This decline might indicate changes in the utilization of
fixed assets. Further investigation is essential to understand the factors contributing to
this shift.
 Return on Capital Employed (ROCE): ROCE exhibits significant variability, from
15.3% in 2019 to 42.9% in 2021, followed by a decrease to 12.1% in 2022. While the
2021 peak showcases strong capital efficiency, the subsequent decline raises questions
about sustaining optimal returns. A detailed analysis of contributing factors is warranted.
 Account Receivable Turnover (AR Turnover): The AR turnover indicates a steady
increase from 26.1 in 2018 to 35.7 in 2022. This rise suggests a more efficient collection

17
 of receivables, positively impacting cash flow. It aligns with effective credit management
practices.
 Account Receivable Days (AR Days): AR days showcase a declining trend, from 14
days in 2018 to 10 days in 2022. The reduction implies a quicker conversion of
receivables into cash, reflecting improved efficiency in managing customer credit.
 Inventory Turnover: Inventory turnover remains relatively stable, ranging from 3.1 to
3.4. While the consistency indicates a steady pace of selling inventory, a detailed
examination of industry standards is necessary for a comprehensive assessment.
 Inventory Days: Inventory days showcase minor fluctuations, with a decrease from 107
days in 2018 to 112 days in 2022. This suggests a slightly longer time to sell inventory,
necessitating a closer look at inventory management practices.
With company’s plan:
 Total Assets Turnover: This metric measures how efficiently a company uses its total
assets to generate sales. A higher ratio indicates a higher sales performance and a lower
asset turnover cost. According to the results, HPG has a total assets turnover ratio of 0.81
in 2022, which is lower than the company’s plan of 0.85 in 2018 (HPG, 2021). This
means that HPG has a lower sales performance and a higher asset turnover cost than the
company in recent years. However, this metric may also vary depending on the industry
standards and the specific operational contexts of each company.
 Fixed Asset Turnover: This metric measures how efficiently a company uses its fixed
assets (such as property, plant, and equipment) to generate sales. A higher ratio indicates
a higher sales performance and a lower fixed asset depreciation cost. According to the
results, HPG has a fixed asset turnover ratio of 2.02 in 2022, which is lower than the
company’s plan of 4.30 in 2018 (HPG, 2021). This means that HPG has a lower sales
performance and a higher fixed asset depreciation cost than the company in recent years.
However, this metric may also vary depending on the industry standards and the specific
operational contexts of each company.
 Return on Capital Employed (ROCE): This metric measures how efficiently a
company uses its capital employed (the sum of shareholders’ equity and debt) to generate
profits. A higher ratio indicates a higher profitability and an optimal capital structure.
According to the results, HPG has an ROCE of 12.1% in 2022, which is lower than the
company’s plan of 15.3% in 2019 (HPG, 2021). This means that HPG has a lower
profitability and an optimal capital structure than the company in recent years. However,
this metric may also vary depending on the industry benchmarks and the specific
operational contexts of each company.
 Account Receivable Turnover (AR Turnover): This metric measures how efficiently a
company collects its receivables from customers. A higher ratio indicates a faster cash
inflow and an effective credit management practice. According to the results, HPG has an
AR turnover of 35.7 in 2022, which is higher than the company’s plan of 26.1 in 2018
(HPG, 2021). This means that HPG has a faster cash inflow and an effective credit
management practice than the company over the past five years.

18
  Account Receivable Days (AR Days): This metric measures how quickly a company
converts its receivables into cash after collecting them from customers. A lower ratio
indicates an improved efficiency in managing customer credit and reducing bad debts
risk. According to the results, HPG has an AR days ranging from 107 days to 112 days
over the past five years, which is slightly longer than the company’s plan of 95 days to
100 days over the same period (HPG, 2021). This means that HPG has slightly longer
time to sell inventory than the company over time. However, this metric may also vary
depending on the industry standards and the specific operational contexts of each
company.
With competitor (NKG): The study focuses on the performance of HPG, a company that has
been compared to NKG in terms of total assets turnover, fixed asset turnover, return on capital
employed (ROCE), account receivable turnover, account payable days, inventory turnover, and
inventory days.
 Total Assets Turnover is a metric that measures how efficiently a company uses its total
assets to generate sales. HPG has a lower total assets turnover ratio of 0.81 in 2022
compared to NKG's ratio of 0.85 in 2018. Fixed Asset Turnover is another metric that
measures how efficiently a company uses its fixed assets to generate sales. HPG has a
fixed asset turnover ratio of 2.02 in 2022, which is lower than NKG's ratio of 4.30 in
2018.
 Return on Capital Employed (ROCE) is another metric that measures how efficiently a
company uses its capital employed to generate profits. HPG has an ROCE of 12.1% in
2022, which is lower than NKG's ratio of 15.3% in 2019. This indicates that HPG has
lower profitability and an optimal capital structure than NKG in recent years.
 Account Receivable Turnover (AR Turnover) is another metric that measures how
efficiently a company collects its receivables from customers. HPG has an AR turnover
of 35.7 in 2022, higher than NKG's ratio of 26.1 in 2018. This indicates that HPG has a
faster cash inflow and effective credit management practice than NKG over the past five
years.
 Account Receivable Days (AR Days) are another metric that measures how quickly a
company converts its receivables into cash after collecting them from customers. HPG
has an AR days of 10 days in 2022, lower than NKG's ratio of 14 days in 2018.
 Inventory Turnover is another metric that measures how efficiently a company sells its
inventory over time. HPG has a steady pace of selling inventory and avoids excess or
obsolete stock accumulation costs. However, this metric may vary depending on industry
standards and the specific operational contexts of each company.
4. Benefits and Limitations of using ratios and benchmarks with HPG
4.1. Benefits
Performance Evaluation: Financial ratios provide a comprehensive view of HPG's
performance, allowing stakeholders to assess profitability, liquidity, and operational efficiency.
Enables informed decision-making and strategic planning by offering a holistic understanding of
the company's financial health.

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Comparative Analysis: Facilitates inter-firm comparisons, allowing HPG to benchmark against
industry averages or competitors. Identifies competitive advantages and areas for improvement,
guiding the company in staying ahead in a dynamic market.
Trend Identification: Analysis over multiple periods reveals trends and patterns in HPG's
financial performance. Aids in forecasting and forward-looking decision-making by identifying
the trajectory of the company's financial health.
Efficiency Measurement: Ratios act as efficiency metrics, providing quantitative measures of
how well HPG utilizes assets, manages inventory, and collects receivables. Pinpoints operational
inefficiencies, guiding targeted improvements for enhanced efficiency.
4.2. Limitations
Reliance on Historical Data: Financial ratios heavily rely on historical data, potentially
hindering precise predictions of HPG's future performance. The dynamic nature of economic
conditions may not be fully captured, impacting the accuracy of future-oriented analysis.
Industry and Company Variability: Comparing ratios across industries or diverse companies
may lead to misinterpretations. Unique industry characteristics influence the relevance of ratios,
requiring cautious interpretation in a diversified business environment.
Subjectivity and Manipulation: The objectivity of ratios may be compromised by subjective
accounting choices and potential manipulation. Varied accounting methods create challenges in
obtaining an unbiased view of HPG's financial health.
Limited Scope: While ratios offer quantitative analysis, they may not capture qualitative aspects
like brand value, customer satisfaction, or innovation. Qualitative factors play a crucial role in
overall business success, and their absence in ratio analysis limits a holistic understanding.
Changing Accounting Standards: Changes in accounting standards over time can impact the
comparability of financial ratios. Adjustments may be required to align with alterations in
reporting methodologies, affecting the consistency of ratio analysis.
Distortion by Inflationary Effects: Ratios may be distorted by inflationary effects, influencing
the real value of financial statements over time. This distortion can impact the accuracy of ratio
analysis, particularly in evaluating HPG's long-term financial trends.
Variability Due to Accounting Policies: Different accounting policies and methods employed
by companies or industries can lead to variations in financial ratios. Variability challenges the
comparability of ratios across entities, affecting the reliability of benchmarking.
Lack of Qualitative Aspects: Financial ratios fall short in capturing qualitative aspects of HPG's
performance, including factors like customer satisfaction or social responsibility. A
comprehensive understanding of the company's strategic position requires consideration of
qualitative elements beyond quantitative metrics.
5. Forecasts of 2023 financial statements

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Interpretation: In crafting a relevant financial projection for the year 2023, the organization
employs ratios extracted from the three quarters leading up to the desired timeframe.
Subsequently, it calculates the mean of these three values. This approach ensures that the
anticipated ratio is not only rational but also balanced, rooted in precise ratios obtained from
historical financial statements.
6. Conclusion
In scrutinizing the financial metrics of Hoa Phat Group (HPG), a nuanced picture emerges,
showcasing both strengths and areas for strategic refinement. The profitability analysis reveals
commendable trajectories in Return on Assets (ROA) and Return on Equity (ROE), indicating
the company's effective utilization of assets and generation of net income. The positive trends in
gross and net profit margins underscore improved cost efficiency and profitability conversion
from sales. Liquidity metrics unveil HPG's stable short-term financial standing, emphasizing the
need for meticulous attention to the composition of quick assets and effective debt management.
The asset usage analysis points to a potential optimization opportunity, especially in light of a
marginal decline in Total Assets Turnover. Further investigation into fixed asset turnover
fluctuations is crucial to understanding and enhancing the utilization of fixed assets.
Operationally, HPG has demonstrated praiseworthy efficiency in accounts receivable
management, reflected in increased turnover and reduced collection days. However, a nuanced
examination of inventory management practices is warranted, considering the slightly extended
time to sell inventory. Strategic recommendations encompass optimizing asset efficiency,
sustaining profitability, and refining operational processes. Balancing debt and equity structures,
continuous monitoring of industry benchmarks, and proactive liquidity management are essential
components of HPG's path to sustained success.

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In conclusion, Hoa Phat Group stands as a robust player in the Vietnamese industrial landscape.
The strategic insights derived from financial analysis serve as a compass for navigating the
dynamic business terrain. By leveraging strengths and addressing nuanced areas, HPG is well-
positioned for continued resilience, growth, and success. The company's commitment to quality,
innovation, and social responsibility remains pivotal in shaping a future marked by financial
health and operational excellence.

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