Cash Flow Statement

3.
Net cash flow

Because the business must spend money to buy and construct new fixed assets or
increase external capital investment, the net cash flow from investment activities is
negative in 2021 and 2020, demonstrating that the organization is increasing its
investment. Positive net cash flow from investing activities in 2022 indicates that the
company's investment is decreasing as a result of the sale of fixed assets or the
recovery of financial investments. The income from investments might be used to pay
dividends, repay loans, or make up a shortfall in operating expenses.
Second, Vinamilk has a positive operating cash flow, indicating that its primary
business generates a lot of resources for the company. promising its stockholders the
possibility to receive dividends. It also demonstrates that the company has the extra
financial capacity to increase its business operations when the time is right. This
implies that there is no plan for the company to raise production in order to increase
shareholder value.
Last, a negative net cash flow from financing operations shows that the company does
not require financing, that debt has been paid off, that interest has been distributed to
owners, or that a portion of contributed capital has been returned to owners. Negative
net cash flow from financing activities may indicate a capital restructuring for the
company or a downsizing when the market becomes saturated.
2. Liquidity ratios
a. Current ratio
Figure 1: The current ratio of Vinamilk from 2020 to 2022

The current ratio demonstrates the company's capacity to earn cash to cover its
immediate liabilities (Kenton, 2020). Obviously, the business benefits from a greater
current ratio. As in this situation with Vina milk's current ratio of 2.06, a suitable
current ratio is between 1.2 and 2. In other words, the company has two times as many
current assets as obligations to pay down its debts. The difference between 2021 and
2022 is a decline in this ratio, which can be attributed to a rise in short-term debt, a
fall in current assets, or a mix of both. Whatever the cause, a reduction in this ratio
indicates a decreased capacity for cash generation.
b. Quick ratio
Figure 2: The quick ratio between Vinamilk and Industry average from 2020 to 2022
A ratio greater than 1.0 indicates that the business has more cash than it requires. A
ratio of 2.0, for instance, suggests that the business has two dollars on hand for each
dollar that it owes. This is often advantageous because it shows that the business can
pay off all of its debts with ease. An abnormally high quick ratio, however, may
occasionally be a sign that a corporation is not managing its capital well and is instead
opting to cling onto cash rather than reinvesting it in the company.
Even though the quick ratio can offer a useful overview of the company's health, it
also has the potential to overlook significant problems (Reed, 2020). For instance, the
ratio includes accounts receivable as an asset of the business. This is crucial since
omitting it could create a misleading impression that the company is economically
worse than it in fact is. However, this is contingent upon the customers of the business
completing their payments on schedule. The organization could not have the amount
of money that the quick ratio suggests if a customer doesn't complete their payments
on time. On the other side, the quick ratio may understate the company's ability to
handle its debt.
3. Asset management ratios

a. Inventory turnover ratio
Figure 3: The inventory turnover ratio between Vinamilk and Industry rate from 2020
to 2022.
The inventory turnover ratio calculates how quickly a current batch of stocks are
replaced and converted into sales (Mukhopadhyay, 2023). Vinamilk's greater ratio
reveals that its product is in high demand and moves swiftly because it is higher than
the industry average. Additionally, the corporation has been controlling its inventory
pretty well, as evidenced by the inventory turnover ratio rising in 2022 from 9.01 to
10.58, with lower holding costs and fewer risks of obsolescence.
b. Total asset turnover ratio

Figure 4: The total asset turnover ratio between Vinamilk and Industry average from
2020 to 2022.
The ability of a company to effectively produce sales is gauged by the total asset ratio
(Hayes, 2022). Only the ratios of businesses in the same industry should be compared
because asset turnover ratios change across various industries. It is evident that
Vinamilk's ratio in 2022 is 1.24 while the industry average is just 0.91, indicating that
the business is operating more effectively than its competitors because the ratio
indicates that they are making more money per dollar of assets.
Hayes, A. (2022, June 15). Asset Turnover Ratio. Investopedia.
https://www.investopedia.com/terms/a/assetturnover.asp
‌ ukhopadhyay, S. (2023, February 27). Inventory Turnover Ratio. WallStreetMojo.

M
https://www.wallstreetmojo.com/inventory-turnover-ratio-formula/#:~:text=The
%20inventory%20turnover%20ratio%20measures
Reed, E. (2020). Quick Ratio: Definition, Formula and Usage. Yahoo Finance.
https://finance.yahoo.com/news/quick-ratio-definition-formula-usage-202924719.html
Kenton, W. (2020, August 19). Current Ratio. Investopedia.
https://www.investopedia.com/terms/c/currentratio.asp#:~:text=The%20current%20ratio
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3.

Net cash flow

Figure 1: The current ratio of Vinamilk from 2020 to 2022

3. Asset management ratios

b. Total asset turnover ratio

Hayes, A. (2022, June 15). Asset Turnover Ratio. Investopedia.

‌ ukhopadhyay, S. (2023, February 27). Inventory Turnover Ratio. WallStreetMojo.

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