Assignment on Telecommunication
30 Pages2084 Words109 Views
Added on 2021-04-16
Assignment on Telecommunication
Added on 2021-04-16
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2Brief look at VNPT.Vietnam Posts and Telecommunications Group (VNPT), a state-run company, is one of the
3biggest company in Vietnam, they are within the top 3 biggest organization. They specialize inselling of telecommunication, technology, media and posts services and products. VNPTacomplished many things, including putting Vietnam in the top 10 countries with the fastestgrowing posts and telecommunication sector. VNPT has 5 subsidiaries and 15,000 activeemployees. VNPT is valued at 1.6 billion USD and their profit always increase by 20% each year(VNPT, 2020). Report1. Liquidity ratio.VNPT's current ratioFPT's current ratioVNPT's quick ratioFPT's quick ratio00.20.40.60.811.21.41.61.821.751.451.651.351.781.271.671.181.821.181.731.1VNPT vs FPT's Liquidity Ratio2017201820191.1. Current ratio.From the chart above, there were two opposing trends, VNPT’s current ratio witnessed angradual increase (2 to 3% each year), from the liquid assets equals to 1.75 times their currentliabilities in 2017, up to 1.82 times in 2019. While FPT showed a steady decrease from 2017 to2019 (8 – 13% drop). VNPT’s ability to fulfil their short term debts was increasing over theyears, in addition with the fact that VNPT’s current ration always larger than 1, they can payshort-term obligations when it is due, while FPT’s ability was deteriorating over the 3 yearsperiod. The reason why VNPT’s current ratio increased was because their current liabilities
4decreased over the years, this shows that VNPT has good structuring that helps reduce liabilities(VNPT, 2020), while their current assets maintained an overall increase. Thus, VNPT was betterat managing their assets (better usage, higher efficiency) and their liabilities (cost saving) thanFPT. 1.2. Quick ratio.Quick ratio figures, communicated a similar trend to current ratio, specifically that VNPT’squick ratio also rose for over 3 years (2 to 4%), hence VNPT’s most quick asset equals to 1.65times the quick assets in 2017 and up to 1.73 times in 2019. In contrast, FPT’s quick ratio wasdeclining from 2017 to 2019 (7 to 13%). Thus, in terms of how well a company can pay off shortterm duties (within 90 days), specially using liquid assets to cover the short term debts, VNPTwas capable and much better than FPT. VNPT’s quick ratio is higher than 1, therefore, theirquick assets can cover liabilities very well. Similar to why VNPT’s current ratio increased,VNPT’s current asset was the answer for the increase of their quick ratio, they have managedtheir liabilities and assets very well.2. Solvency ratio.VNPT's D/AFPT's D/AVNPT's D/EFPT's D/E00.20.40.60.811.20.320.470.480.890.320.50.471.010.310.50.460.99VNPT vs FPT's Solvency Ratio201720182019Note: D/A = Debt to asset; D/E = Debt to equity
52.1. Debt to assets.Two companies reported two different direction, VNPT’s debt to assets ratio saw a flatline trendin two years, then in the third year it dropped by a very small figure of 0.01, which VNPT’s totaldebts equal to 0.31 of the total assets, which is less risky, since the business is less financed bydebts and the assets can cover the debt. However, FPT cited their debt to assets ratio increasedfrom 2017 to 2018, then remains flatlined, FPT is being financed by more debts than their assets.The reason for the decrease in debt to asset ratio of VNPT was the stronger increase in their totalassets (95,633 to 98,855 billion VND) and weaker increase in total liabilities (30,932 to 31,023billion VND).2.2. Debt to equity.VNPT reflected a steady decrease in debt to equity ratio while FPT saw a fluctuated trend. In2019, VNPT’s debt to equity ratio decreased to 0.46, the total debts equal to 0.46 times the totalequity, meaning the capital structure of the company mainly earns from equity and equity cancover debts. The reducing debt to asset ratio indicated VNPT’s operations were increasinglyfinanced by equity, which means less risky business. While FPT’s numbers were much higherand overall increasing, their business was being financed more by debts as time went by, implymore risky business. The reason why VNPT’s debt to equity decreased was because of theirstronger total equity increase (64,700 to 67,862 billion VND) compare to the much smallerincrease in total debts (30,932 to 31,023 billion VND). 3. Profitability ratio3.1. Dupont AnalysisDupont AnalysisVNPTFPT201720182019201720182019ROE6.64%8.14%8.39%26.65%21.87%23.28%ROA4.49%5.54%5.76%14.11%10.86%11.71%Equity multiplier1.48%1.47%1.46%1.89%2.01%1.99%Asset turnover0.570.540.531.560.850.88Net profit margin8.13%10.45%10.93%8.27%13.91%14.11%Assets95,633,02797,482,77598,885,63424,999,67529,725,92833,394,161Net income21,928,67920,583,03121,104,8130,897,3108,250,41611,122,087
61Revenue52,861,16851,692,38152,127,85142,658,61023,213,53627,716,960Green = increase; red = decrease; yellow = slightly unstable; brown = highly unstable.VNPTVNPT showed an increase in ROE, specifically 6.64% in 2017 to 8.39% in 2019. The ROAshowed the same trend either, meaning they were able to make higher return from efficient usageof equity and asset resources. What caused both ROA and ROE to grew is the increase in theassets, the profit margin and with contribution from net income and revenue. The increase ofprofit margin implied that VNPT’s businesses was doing extremely well, likely caused by theincreased revenue, profit after tax and reduced costs. Luckily for VNPT, the equity multiplierwas not the source of the rise of ROE, as it can be seen that it decreased over the years, whichmade the business less risky. While their assets turnover, unfortunately decreased over the yearswhich communicated an inefficient usage of assets to make money by VNPT, likely caused bystrong increase in inventories and very weak increase in revenue. VNPT’s assets saw an upwardtrend which indicate that they had been purchasing stuffs lately, probably telecommunicationrelated, so that contributed to the increase in ROA and ROE. Another good thing about VNPT’sperformance was their decrease of the equity multiplier, it was slow but commendable, it showsthat VNPT’s had attempts to reduce the amount of money financed by borrowing, which reducedthe risk when investing.
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