UNIVERSITY OF ECONOMICS AND BUSINESS FACULTY OF FINANCE AND BANKING ---- 008 ÍLEll@xe@--~- INSTRUCTOR: ASSOC.LE TRUNG THANH STUDENT: LE THU GIANG STUDENT?’S ID: 17050742 CLASS: QH-2017-E TCNH-CLC (TT23) Hanoi, April 2021 UNIVERSITY OF ECONOMICS AND BUSINESS FACULTY OF FINANCE AND BANKING ---- 00 ÍLEll@xe@--~- INSTRUCTOR: ASSOC.LE TRUNG THANH STUDENT: LE THU GIANG STUDENT?’S ID: 17050742 CLASS: QH-2017-E TCNH-CLC (TT23) INSTRUCTOR STUDENT (Sign and full name) (Sign and full name) LE TRUNG THANH LE THU GIANG Hanoi, April 2021 TABLE OF CONTENTS TABLE OF CONTTIEENTTTS.G-Ghi gh H ng 1 ABBREVIATIONS. Án HH ng ng HH TH nh 11 LIST OF FIGURES. 1 CHAPTER 1: THEORETICAL FRAMEWORK AND LITERATURE REVIEW OF FINANCIAL ANALYSIS AND FORECASTTING. Literature review about Financial analysis in COTpOTAf.
Financial analysis in corporate OV€TVICW. Financial Analysis framework. Financial Analysis element. Financial analysis techniques .- - --- 5 2c 33+ + ESEEseeseeerrerseree 12 I ah or i00.
25 CHAPTER 2: ANALYSING FINANCIAL PERFORMANCE OF VIETNAM [14010 S00. Overview about Vietnam Airlines JSC. History of formation and deveÏopImeI(. Milestones and achievements.
TH TH HH net 31 2. Position 1n aviation INCUSEIY! oo. Financial Performance of Vietnam Airlines over 2017-2020 period. Asset — Equity AnaÏYSIS.
Revenue — Cost of Goods Sold — Profit AnaÏyS1S. Cash flow analySis. c1 TH TH HT TH HH HH 56 2. Financial ratios aïIaÏyS1S.-- --- «+ + + E3 911911 1E TH ng ngư 59 lì CHAPTER 3: FORECASTING, SOLUTION PROPOSAL FOR VIETNAM 4011-1117.
Solution proposal and policy recommendation for Vietnam Airlines. Developing orientation for Vietnam A1TÏ1n€S. Solution proposal to improve financial performance of Vietnam Airlines. 81 1H ABBREVIA TIONS No.
AGM Annual Greeting Meeting 2. ASEAN The Association Of Southeast Asian Nations 3. BEP Basic Earning Power 4, CAPA Centre for Asia Pacific Aviation 5. CAPEX Capital Expenditure 6.
CFF Financing Cash Flows 7. CFI Investing Cash Flows 8. CFO Operating Cash Flows 9. CPI Consumer Price Index 10.
COGS Cost of Goods Sold 11. EBIT Earning Before Interest and Tax 12. ECA Export Credit Contracts 13. EPS Earning per Share 14.
IATA International Air Transport Association 15. IFRS International Financial Reporting Standards 16. P/E Price to Earning 17. ROA Return on Assets 18.
ROCE Return on Capital Employed 19. ROE Return on Equity 20. ROI Return on Investment 21. VNA Vietnam Airlines 22.
VND Vietnam dong 1V LIST OF FIGURES List of tables No. | Table Table name Page 1 Table 1.1 Financial Analysis Framework 8 2 Table 1.2 | Financial Ratios 19 3 Table 1. |SWOT Analysis 31 4 Table 2. | Vietnam Airlines’ Total Assets in 2017-2020 44 5 Table 2.
| Vietnam Airlines’ Total Resources in 2017-2020 48 6 Table 2. | Vietnam Airlines’ Income Statemnet in 2017-2020 52 7 Table 2.4 | Vietnam Airlines’ Cash Flow Statement in 2017-2020 56 8 Table 2.5 | Vietnam Airlines’ Activity Ratios in 2015-2020 59 9 Table 2.6 | Vietnam Airlines’ Liquidity Ratios in 2015-2020 60 10 | Table 2.7 | Vietnam Airlines’ Solvency Ratios in 2015-2020 62 II | Table 2.8 | Vietnam Airlines’ Earning before Interest and Tax in 2015-2020 63 12 | Table 2.9 | Vietnam Airlines’ Return on Assets in 2015-2020 64 13 | Table 2.10 | Vietnam Airlines’ Return on Equity and Return on Investment in 2015-2020 64 14 | Table 2.11 | Vietnam Airlines’ ROCE & Basic Earning Power in 2015-2020 65 15 | Table 2.12 | Vietnam Airlines’ Market Value Ratios in 2015-2020 66 List of charts No. | Chart Table name Page 1 Chart 2. | Vietnam Airlines’ Asset Structure in 2015-2020 45 2 Chart 2.
| Vietnam Airlines’ Equity in 2015-2020 50 INTRODUCTION Competition in the market economy is becoming increasingly fierce. Production and business activities must be stable in order for businesses to survive and thrive in the marketplace. The issue here is how the financial performance of the business occurs in attempt to ensure that the business will succeed in the future. That is one of the principal contents of the enterprise's business activities, so as to solve the economic relationships that arise in the business process that are expressed in the form of currency.
Financial analysis is a tool for evaluating the efficiency of production and business activities, the use of capital and capital resources, the business's solvency. through which to discover the ability and advantages. In addition, financial analysis assists business decision-makers in making effective management policies. As a result, the financial issue should be of primary concern, as it determines the business's survival.
Enterprises must analyze their financial situation on a regular basis so that boards of manager can understand current financial performance therefore, make business decisions that are appropriate for their business operations. Recognizing that, this is a rationale for an enterprise as financial analysis contributes significantly to reduce subjective judgments, predictions, and intuitions, thereby deminishing uncertainties in business purposes. Financial analysis helps businesses make the best decisions, avoids wasting resources, and identifies potential risks early on. Simultaneously, during the period when the world economy was severely impacted by the Covid-19 epidemic, the aviation industry was one of the most seriously affected economic sectors.
Financial analysis and forecasting are critical factors in determining whether or not a national airline, such as Vietnam Airlines, can overcome the challenges of the crisis. According to the foregoing reasons, as well as the desire to learn and contribute ideas based on the theory learned in my major, I have chosen the topic: Analysing and forecasting financial performance of Vietnam Airlines JSC. This graduation thesis consists of 3 chapters: Chapter 1: Theoretical framework offinancial analysis and forecasting Chapter 2: Analysing financial performance of Vietnam Airlines JSC Chapter 3: Forecasting, solution proposal for Vietnam Airlines JSC Finally, I would like send a sincere thanks to my instructor — Assoc.Le Trung Thanh for supporting me during my graduation thesis. CHAPTER 1: THEORETICAL FRAMEWORK OF FINANCIAL ANALYSIS AND FORECASTING 1.
Theoretical framework of Financial Analysis in corporate 1. Financial analysis in corporate overview Financial analysis has caught the attention of managers since the late nineteenth century. From the beginning of the twentieth century up to now, the need for effective corporate governance, the strong development of the financial system along with business groups and the ability to make extensive use of information technology have all pushed financial analysis to new heights. Financial development research is now considered to be a vital step in corporate governance and administration.
Definition of corporate finance andfinancial analysis Corporate finance is the division of finance that deals with how corporations deal with funding sources, capital structuring, and investment decisions. Corporate finance is primarily concerned with maximizing shareholder value through long and short-term financial planning and the implementation of various strategies. Corporate finance activities range from capital investment decisions to investment banking.’ Corporate finance departments are charged with governing and overseeing their firms' financial activities and capital investment decisions. Such decisions include whether to pursue a proposed investment and whether to pay for the investment with equity, debt, or both.
It also includes whether shareholders should receive dividends. Additionally, the finance department manages current assets, current liabilities, and inventory control. Financial analysis is the process of examining a company’s performance in the con- text of its industry and economic environment in order to arrive at a decision or recommendation. Often, the decisions and recommendations addressed by financial analysts pertain to providing capital to companies - specifically, ' CFA institute, CFA Program Curriculum 2020 Level I, Vol 3 (Page 6) whether to invest in the company’s debt or equity securities and at what price.
An investor in debt securities is concerned about the company’s ability to pay interest and to repay the principal lent. An investor in equity securities is an owner with a residual interest in the company and is concerned about the company’s ability to pay dividends and the likelihood that its share price will increase.” In other words, financial analysis is the process of evaluating businesses, projects, budgets, and other finance-related transactions to determine their performance and suitability. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a monetary investment. Financial analysis is used to evaluate economic trends, set financial policy, build long-term plans for business activity, and identify projects or companies for investment.
This is done through the synthesis of financial numbers and data. A financial analyst will thoroughly examine a company's financial statements—the income statement, balance sheet, and cash flow statement. Financial analysis can be conducted in both corporate finance and investment finance settings. Overall, a central focus of financial analysis is evaluating the company’s ability to earn a return on its capital that is at least equal to the cost of that capital, to profitably grow its operations, and to generate enough cash to meet obligations and pursue opportunities.
Roles offinancial statement analysis The role of financial statement analysis is to use financial reports prepared by companies, combined with other information, to evaluate the past, current, and potential performance and financial position of a company for the purpose of making investment, credit, and other economic decisions. Managers within a company perform financial analysis to make operating, investing, and financing decisions but do not necessarily rely on analysis of related financial statements. They have access to additional financial information that can be reported in ? CFA institute, CFA Program Curriculum 2020 Level I, Vol 3 (Page 6) whatever format is most useful to their decision. In evaluating financial reports, analysts typically have a specific economic decision in mind.
Examples of these decisions include the following: eEvaluating an equity investment for inclusion in a portfolio. eEvaluating a merger or acquisition candidate. eEvaluating a subsidiary or operating division of a parent company. eDeciding whether to make a venture capital or other private equity investment.
eDetermining the creditworthiness of a company in order to decide whether to extend a loan to the company and if so, what terms to offer. eExtending credit to a customer. eExamining compliance with debt covenants or other contractual arrangements. e Assigning a debt rating to a company or bond issue.
e Valuing a security for making an investment recommendation to others. eForecasting future net income and cash flow. These decisions demonstrate certain themes in financial analysis. In general, analysts seek to examine the past and current performance and financial position of a company in order to form expectations about its future performance and financial position.
Analysts are also concerned about factors that affect risks to a company’s future performance and financial position. An examination of performance can include an assessment of a company’s profitability (the ability to earn a pro t from delivering goods and services) and its ability to generate positive cash flows (cash receipts in excess of cash disbursements). Financial analysis meaning Financial analysis assists in the provision of analytical data to investors, allowing them to derive significant value from sound investment decisions. Decisions and judgments become more objective, less predictable and informative as a result of financial development.
This work also helps with business integration and investment advice. The outcomes of financial development will reduce negative aspects of corporate governance, assist businesses in identifying their strengths and weaknesses, and add a positive component to their operations. Financial analysis functions For business owners and managers: Because business executives have complete information and a clear understanding of business, they have many advantages for conducting the most comprehensive financial analysis. Many goals can be achieved by analyzing corporate finance from the perspective of management: - Balance the business’s financial goals and counteract the possibilities that have an impact on the business.
- As a premise for forecasts to aid in the development of investment plans, budget plans, and so on. - As the basis for department directors’ decisions as well as a tool to help control enterprise activities. For investors Each investor has their own goals, but make sure that all investors have the same goal of increasing the value of the business, because investing entails taking risks.
