Student: Le Anh Tuan

Class: 14

FINACIAL STATEMENT ANALYSIS

VTC Telecommunications Joint Stock
Company

A. Solvency Measures

1. Working Capital

Working Capital = Current Assets Current Liabilities

= (Cash and Cash Equivalents + Short-term

Investments + Short-term Receivables +
Inventory + Others Short-term Assets) Short-
term Debt

= ( 3,584,709 +2,617,442 + 5,534,209 +5,268100

+ 1,954,549 ) 14,967,554

= 3,991,455

2. Current Ratio

Current Assets /
Current Ratio =
Current Liabilities

18,959,009 /
= = 1.27
14,967,554
 This ratio indicates that VTC Telecommunication Joint
Stock Company is in a good shape. It would be able to meet
its short-term obligations.

3. Quick ratio
Assets
Quick /
Quick ratio =
Current Liabilities

InventoryShort Term Debt

Current Assets /
=
Current Liabilities
18,959,009 5,268,100
=

= 1.51
This ratio indicates that for every dollar of VTC
companys Current Liabilities, the firm had $1.51 of every
liquid asset to cover those immediate obligations.
VTC Company had enough cash on hand to meet
Accounts Payable, Interest Expenses and other bills when
they became due.

4. Accounts Receivable Turnover

Accounts
Net Sales /
Receivable =
Average Account Receivable
Turnover
=
Net Sales
[( Beginning +Ending Accounts Receivable)]/2
 =37,959,699 +
= 2.35
This means that VTC company collected its average
receivables twice during 2015
This company is collecting its money from customers
every 6 months

5. Numbers of Days Sales in Receivables

Numbers of Days Average Accounts Receivables

=
Sales in Receivables
/ Average Daily Sales

Average Accounts Receivables

=
Net Sales/365

==
It took VTC Company approximately 155 days to collect
cash from customers on average.
This company might be unable to pay for their
purchases because it was unable to convert sales into cash as
quickly as firms with lower ratios.

6. Inventory Turnover
Cost of Goods Sold
Inventory Turnover =
/Average Inventory
 =
30,465,879/
=
( 5,278,908+4,738,188+ 4,810,243+4,837,489)/4

3,09
76,101
= 5
15,868
Translate: 73 times in 2015
This means that VTC Companys Inventory turned over
73 times during 2015 and was on hand for approximately 5
days.
7. Number of Days Sales in Inventory

Numbers of Days Average Inventory

=
Sales in Receivables /Average Daily Cost of Goods Sold
15,868
= 76
76,101/365

It took VTC Company approximately 76 days to turn its

inventory into sales.

8. Ratio if Fixed Assets to Long-term Liabilities

Ratio if Fixed Assets to Fixed Assets (Net)

=
Long-term Liabilities /Longterm Liabilities
4,292,253/727,906
= 5,89
 The ratio indicates that VTC company had Fixed Assets
that bought from Short-term Fund.
It was not good because short-term financial position
might be affected from this.

9. Ratio of Liabilities to Stockholders Equity

Total Liabilities
Ratio of Liabilities to =
Stockholders Equity Stockholders =
/Total

Total Liabilities
=
Total AssetsTotal Liabilities
15,863,303/3,991,455
= 3,97

VTC Company had taken on relatively little debt and

thus had low risk.

10. Number of Times Interest Charges Earned

Income Before
Number of Times Income Tax/Interest Expense
=
Interest Charges
Earned =2 2,851,149/920,253=3,09
VTC Company made enough income to pay for its total
interest expense approximately 3 times over.
Credit risk.

B. Profitability Measures
1. Ratio of Net Sales to Assets

Net Sales/
Ratio of Net Sales to = Average Total Assets
Assets ((excluding longterm investments)

Net Sales
=
[Beginning Ending Total Assets]/2

=37,959,699/[18,959,009+[(798,044+78
7,761)/2]-727,906

1.07

This means that VTC Company generated $1.07 in

revenue for every $1 of Assets it held during 2015.
It also means its Sales were 1.07 times its Average Total
Assets

2. Rate Earned on Total Assets

Net Income+Interest Expense
Rate Earned on Total Asset =
Average Total Assets
11,435+3,536
=
(87,572+128,067)/2

0.14
Every dollar that VTC Company invested in assets during
2015 produced $14.0 of net income. Depending on the
economy, this can be a healthy return rate no matter what
the investment is.
3. Rate Earned on Stockholders Equity
Rate Earned on Stockholders Equity
Net Income
=
Average Total Stockholders
11,435
=
(67,577+67,192+66,798+78,324)/4

0.16
This means that every dollar of shareholder's equity
earned about $0.16 during 2015. In other words,
shareholders saw a 16 percent return on their investment.
This could indicate that VTC is not a growing company.

4. Rate Earned on Common Stockholders Equity

Rate Earned on Common Stockholders Equity
Net IncomePreferred Dividends
=
Average Common Stockholders
Net Income(Dividend Rate x Par Value)
=
(Beginning + Ending Common Stockholders )/2
11,435(100/12 x 0.01)
=
(67,577 + 78,324)/2

0.16
Return on common stockholders equity ratio shows
that every $0.16 of net income have been earned for each
dollar invested by the common stockholders.
High profitability.
5. Earnings per Share on Common Stock

Earnings per Share on Common Stock

Net IncomePreferred Dividends

=
Shares of Common Stock Outstanding

11,435(100/12 x 0.01)
= 0.002
4,530,000

This means that if VTC Company distributed every

dollar of income to its shareholders, each share would
receive 0.002 dollars.

6. Price Earnings Ratio

Market Price per Share of Common Stock
Price Earnings Ratio =
Earnings per Share on Common Stock
0.01
=
0.002
=5
This means that investors are willing to pay 5 dollars for
every dollar of earnings. In other words, this stock is trading
at a multiple of 5.

7. Dividends per Share of Common Stock

Dividends per Share of Common Stock
 Dividends
=
Shares of Common Stock Outstanding

=
Shares of Common Stock Outstanding