Reference no: EM133072501
Question:
Thai Power Generation Public Company Limited (The Company) is a key player of Thailand's electricity industry. The Company currently operates 5 combine-cycle power plants and 15 renewable power plants across Thailand with the total capacity of 10,000 megawatt or 15% of Thailand's electricity demand. The Company has signed the electricity selling contracts with Electricity Generating Authority of Thailand (EGAT) for 30 years (2011-2040) and signed the gas buying contracts with Thai petroleum producers for 30 years (2011-2040) as well as having insurance policies to cover several operational risks. In June 2021, the Board of Directors has a meeting and approves the high-level framework of 10 Year Corporate Plan (2022-2031) with Corporate Direction as follows:
Vision: "Leadership in the AEC Electricity Market"
Mission:
- Reliable electricity generating services for our customers;
- Good working environment for our employees;
- Corporate social responsibility;
- Satisfactory performances for our shareholders and;
- Sustained competitiveness for our future growth.
Goals:
- Increase electricity generating capacity to 15,000 megawatt in 2031;
- Better human resource management practices;
- Minimized environmental problems for local community;
- Revenue growth 8-10% per year and;
- Revenue proportion from the AEC market is at least 50% in 2031.
Strategies:
- Maintain stronghold business in Thailand;
- Business expansion towards AEC member states including Cambodia, Lao PDR, Myanmar, Philippines, and Indonesia;
- Close co-operations with local governments and communities.
- Re-organization and streamline BU/SU to improve efficiency and;
- Reshaping human resource management practices.
In September 2021, John has been appointed to be Chief Financial Officer (CFO) of the Company. CEO has requested John to summarize the Company's financial performances before proposing 10 Year Corporate Plan (2022-2031). In so doing, CFO assigns you to perform financial statement analysis using the Company's financial statements from 2018-2020 displayed in Tables 1 and 2.
(i) Liquidity ratios (i.e., Current Ratio, Quick Ratio and Working Capital).
(ii) Profitability ratios (i.e., Gross Profit Margin and Net Profit Margin).
(iii) Efficiency ratios (i.e., INVDOH, ARDOH, APDOH, FN, ROA and ROE).
(iv) Leverage ratios (i.e., Debt Ratio and D/E Ratio).
(v) Future outlooks of the Company's financial performances.
Table 1 Profit/Loss Statement (Unit: MB)
|
Profit/Loss Profile
|
2018
|
2019
|
2020
|
|
1. Total Revenue
|
55,000
|
60,000
|
70,000
|
|
2. Cost of Goods Sold (-)
|
(39,000)
|
(42,000)
|
(48,000)
|
|
3. Gross Profit
|
16,000
|
18,000
|
22,000
|
|
4. Selling & Admin Costs (-)
|
(10,000)
|
(10,200)
|
(10,900)
|
|
5. Earning before Interest and Tax (EBIT)
|
6,000
|
7,800
|
11,100
|
|
6. Interest Payment (-)
|
(1,500)
|
(1,600)
|
(1,700)
|
|
7. Profit before Tax
|
4,500
|
6,200
|
9,400
|
|
8. Tax: 10% of Profit before Tax (-)
|
(450)
|
(620)
|
(940)
|
|
9. Net Profit
|
4,050
|
5,580
|
8,460
|
Table 2 Balance Sheet: Assets (Unit: MB)
|
Asset Profile
|
2018
|
2019
|
2020
|
|
1. Cash
|
3,000
|
3,500
|
4,500
|
|
2. Account Receivable
|
7,500
|
8,000
|
10,000
|
|
3. Inventory
|
14,000
|
14,500
|
16,000
|
|
4. Other Current Assets
|
2,000
|
2,700
|
3,200
|
|
(1) Total Current Assets
|
26,500
|
28,700
|
33,700
|
|
5. Equipment and Machines
|
17,500
|
18,600
|
19,800
|
|
6. Buildings and Premises
|
34,000
|
34,000
|
34,000
|
|
7. Accumulated Depreciation
|
(10,000)
|
(12,000)
|
(14,000)
|
|
(2) Total Fixed Assets
|
41,500
|
40,600
|
39,800
|
|
Total Assets = (1) + (2)
|
68,000
|
69,300
|
73,500
|
Table 2 Balance Sheet: Liabilities and Equity (Unit: MB)
|
Liability Profile
|
2018
|
2019
|
2020
|
|
Note Payable (Short-term Debt)
|
4,000
|
4,500
|
5,500
|
|
Account Payable
|
8,500
|
8,700
|
10,500
|
|
Accruals (e.g. Tax, Expense)
|
700
|
900
|
1,100
|
|
(3) Total Current Liabilities
|
13,200
|
14,100
|
17,100
|
|
Corporate Bond
|
7,000
|
7,000
|
7,000
|
|
Long-term Loan
|
16,300
|
15,600
|
14,900
|
|
(4) Total Long-term Liabilities
|
23,300
|
22,600
|
21,900
|
|
Common Stock
|
5,000
|
5,000
|
5,000
|
|
Preferred Stock
|
5,000
|
5,000
|
5,000
|
|
Retained Earning (Loss)
|
21,500
|
22,600
|
24,500
|
|
(5) Total Equity
|
31,500
|
32,600
|
34,500
|
|
Liabilities + Equity = (3) + (4) + (5)
|
68,000
|
69,300
|
73,500
|