ASSIGNMENT 2 FRONT SHEET Qualification BTEC Level 4 HND Diploma in Business Unit number and title Unit 5: Accounting Principles (5038) Submission date 03/12/2023 Date received (1 st submission) Re-submission date Date received (2 nd submission) Student name To Thi Khanh Hoa Student ID BH01255 Class MA06204 Assessor name Hoang My Linh Student declaration I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism. I understand that making a false declaration is a form of malpractice. Student’s signature: Grading grid P3 P4 P5 P6 P7 M2 M3 M4 D2 D3 1 Summative Feedbacks: Resubmission Feedbacks: Grade: Assessor Signature: Date: 2 Internal Verifier’s Comments: Signature & Date: 3 Contents Task 1: Producing Financial Statements .5 Task 2: Analyzing and Interpreting Financial Statements. Financial performance of the company.
Benefits of budgeting. Limitations of Budgeting.32 4 Task 1: Producing Financial Statements Adjustments: 15/12/2020, ABC owes its employees unpaid wages for the two weeks: 10 days @ $700 10 day = $7000 Debit Credit Salaries expense 7000 Salaries payable 7000 15/12/2020, ABC agrees to provide training services to a client for a fixed fee of $6,000 for 30 days. All services are to be completed by 15/1/2021, and the client will pay in full at that time. From the 15th to the 31st of December, the unearned training fee from the customer is (6,000/30)*17=3,400.
Training service the customer owes will be put on account receivables. Debit Credit Accounts receivable 3400 Training fees earned 3400 5 On December 1st, 2020, ABC purchased equipment for $16,900, by cash. Debit Credit Equipment 16900 Cash 16900 The equipment has an estimated useful life of three years (36 months) and ABC expects to sell the equipment at the end of its life for $7,000 cash. Depreciation Expense in Dec 2020 = (16900 – 7000)/36m = 275 per month.
Debit Credit Depreciation expense, Equipment 275 Accumulated depreciation, equipment 275 UnadjustedTrialBalance Adjustments AdjustedTrialBalance Debit Credit Debit Credit Debit Credit Cash $34.000 Accumulated depreciation, professional library $10.900 Accumulated depreciation, equipment 15.000 Unearned training fees 12.000 Tuition fees earned 123.900 Training fees earned 40.400 Depreciation expense, Professional library - Depreciation expense, Equipment - 275 275 Salaries expense 50.000 Insurance expense - Rent expense 33.000 Teaching supplies expense - 7 Advertising expense 6.075 Income Statement: For the Month Ended December 31, 2020 Tuition fees earned $ 123.900 Training fees earned $ 43.400 Depreciation expense, Professional library Depreciation expense, Equipment $ 275 Salaries expense $ 57.000 Insurance expense Rent expense $ 33.000 Teaching supplies expense Advertising expense $ 6.000 Accumulated depreciation, professional library $ 10.900 Accumulated depreciation, equipment $ 15.125 Liability Accounts payable $ 26.000 Unearned training fees $ 12.500 9 Equity ABC, capital $ 90.625 Total equity $ 104,625 Total equity and liability $ 150.125 Task 2: Analyzing and Interpreting Financial Statements. IDICO Corporation (Industrial Construction Corporation) is a joint stock company operating in the field of industrial construction and infrastructure investment. (VietstockFinance vn , 2002) Field of activity: IDICO Corporation mainly operates in the field of industrial construction and infrastructure investment. The company has participated in the construction of many important projects such as bridges, highways, factories, seaports, industrial parks and other infrastructure projects (VietstockFinance vn , 2002) Scale and influence: IDICO is one of the leading construction companies in Vietnam, with a scale of operations spanning across the country.
The company contributes significantly to the country's economic and infrastructure development, contributing to improving quality of life and attracting investment. (VietstockFinance vn , 2002) 10 Typical projects: IDICO Corporation has participated in the construction of many important projects, including national highway projects, road and bridge projects, power plants, industrial parks and other infrastructure works. These are projects with great influence and important contributions to the country's economic and infrastructure development. (VietstockFinance vn , 2002) Partners and customers: IDICO has established partnerships and cooperation with many companies, organizations and governments in Vietnam and internationally.
The company's customers include construction companies, industrial enterprises, governments and investment institutions. (VietstockFinance vn , 2002) Development strategy: IDICO Corporation focuses on improving technical capacity, investing in advanced technology and developing high-quality staff. The company also aims to expand its scale of operations and expand its market into fields related to industrial construction and infrastructure. (VietstockFinance vn , 2002) Sustainable commitment: IDICO is committed to implementing projects with high quality, ensuring safety and environmental protection.
The company values maintaining long-term relationships with customers and partners, and adheres to business ethics and rules of fairness. Financial performance of the company. Data information of IDICO 2022 2021 Gross profit 3059823402065 737434719600 Operating profit 2560717684566 716668991312 11 Net profit 2054691195297 578027279840 Net sales revenue 7485389751718 4301236491241 Beginning assets 495132028862 726542767957 Ending assets 1086919534730 495132028862 Average Asset 791025781796 610837398410 Beginning Shareholder's equity 3000000000000 3000000000000 Ending Shareholder's equity 3299999290000 3000000000000 Average Shareholder's Equity 3149999645000 3000000000000 2022 2021 COGS 4425566349653 3563801771641 Beginning Inventory 549370891448 539706732282 Ending Inventory 1094750884655 549370891448 Average Inventory 822060888052 544538811865 Net Credit Sales 7485389751718 4301236491241 Beginning Accounts Receivable 450250688237 436725413093 12 Net sales revenue 7485389751718 4301236491241 Beginning assets 495132028862 726542767957 Ending assets 1086919534730 495132028862 Average Asset 791025781796 610837398410 Beginning Shareholder's equity 3000000000000 3000000000000 Ending Shareholder's equity 3299999290000 3000000000000 Average Shareholder's Equity 3149999645000 3000000000000 Gross profit margin: IDICO's Gross profit margin difference between 2022 and 2021 is 0. Gross profit margin is an important indicator in financial analysis, measuring the ratio of gross profit a company earns from production and sales compared to revenue.
The increase in Gross profit margin from 0.41 in 2022 shows that IDICO has a higher gross profit level and can be due to many factors such as increased selling prices, improved production efficiency or adjust costs. This shows that IDICO is likely to generate larger gross profits in 2022 than in 2021. 15 Operating profit margin: IDICO's operating profit margin difference between 2022 and 2021 is 0. Operating profit margin is an important financial indicator, measuring the ratio of operating profit that a company earns from its main business activities compared to revenue.
The increase in Operating profit margin from 0.34 in 2022 shows that IDICO has improved profit performance from its main business activities. This can be explained by increased revenue from business activities, improved profit margins, reduced costs or more efficient financial management. Net profit margin: IDICO's Net profit margin difference between 2022 and 2021 is 0. Net profit margin is an important financial index, measuring the percentage of net profit that a company earns from business activities after deducting all costs, including operating costs and financial costs.
government and taxes. The increase in Net profit margin from 0.27 in 2022 shows that IDICO has improved its net profit performance. This can be explained by increased net profit from core business activities, reduced costs or more efficient financial management. ROA: IDICO's ROA difference between 2022 and 2021 is 1.
ROA is a financial ratio that measures a company's ability to generate profits from its assets. The significant growth in ROA from 2021 to 2022 shows that IDICO has improved its financial performance. There are a number of factors that can explain this growth, including increased net profit from core business activities, improved asset management and increased capital investment. A high ROA shows that IDICO has used assets effectively and generated high profits from business activities.
ROE : IDICO's Return on Equity (ROE) difference between 2022 and 2021 is 0. ROE is a financial ratio that measures a company's ability to q y( ) p y y generate returns for shareholders based on equity. ROE growth from 2021 to 2022 shows that IDICO has improved its financial 16 performance and profitability for shareholders. There are a number of factors that can explain this growth, including increased net profit from the core business, improved capital management and improved asset performance.
A high ROE shows that IDICO has leveraged its equity to generate profits for shareholders. Efficiency 2022 2021 Change Inventory Turnover Ratio 5,38 6,54 -1,16 Accounts Receivable Turnover Ratio 14,43 9,70 4,73 Accounts Payable Turnover Ratio 36,21 27,31 8,89 Assets Turnover Ratio 9,46 7,04 2,42 Day's Sales in Inventory 0,25 0,15 0,09 Data information of IDICO 2022 2021 COGS 4425566349653 3563801771641 Beginning Inventory 549370891448 539706732282 Ending Inventory 1094750884655 549370891448 17 Average Inventory 822060888052 544538811865 Net Credit Sales 7485389751718 4301236491241 Beginning Accounts Receivable 450250688237 436725413093 Ending Accounts Receivable 587495969829 450250688237 Average Accounts Receivable 518873329033 443488050665 Beginning Accounts Payable 171515290302 90143828784 Ending Accounts Payable 103057026569 171515290302 Average Accounts Payable 137286158436 130829559543 Net Credit Purchases 4970946342860 3573465930807 Ending Inventory 1094750884655 549370891448 Inventory Turnover Ratio: IDICO's Inventory Turnover Ratio difference between 2022 and 2021 is 1. Inventory Turnover Ratio is a financial metric that measures a company's sales frequency and inventory management. The growth in Inventory Turnover Ratio from 2021 to 2022 shows that IDICO has improved its management performance and optimized its sales and inventory management processes.
This difference may indicate that IDICO has increased sales speed, reduced inventory time, and maximized operating profits. A high Inventory Turnover Ratio shows that the company has better inventory management and is capable of selling quickly. 18 Accounts Receivable Turnover Ratio: IDICO's Accounts Receivable Turnover Ratio difference between 2022 and 2021 is 4. Accounts Receivable Turnover Ratio is a financial ratio that measures how often money is recovered from customers and how well a company is managing its receivable assets.
The growth in Accounts Receivable Turnover Ratio from 2021 to 2022 shows that IDICO has improved its collection process and receivable asset management. This difference shows that IDICO has collected money from customers more effectively, reducing the average time to collect receivables. This may indicate that the company has improved its debt collection policy, enhanced customer management, and optimized its collection process. Accounts Payable Turnover Ratio: IDICO's Accounts Payable Turnover Ratio difference between 2022 and 2021 is 8.
Accounts Payable Turnover Ratio is a financial indicator that measures the frequency of a company's debt payments to suppliers or sellers. The growth in Accounts Payable Turnover Ratio from 2021 to 2022 shows that IDICO has improved its debt management performance and processed payments to suppliers quickly. This difference shows that IDICO has increased the speed of debt payment and financial management related to suppliers. This may indicate that the company has improved its payment process, enhanced its financial management, and optimized its purchasing process.
Assets Turnover Ratio: IDICO's Assets Turnover Ratio difference between 2022 and 2021 is 2. Assets Turnover Ratio is a financial ratio that measures the ability to use assets to generate revenue. The growth in Assets Turnover Ratio from 2021 to 2022 shows that IDICO has improved its financial performance and ability to leverage assets to generate revenue. This difference shows that IDICO has increased its asset utilization rate and efficiency in generating revenue from its assets.
This may indicate that the company has improved its production processes, asset management, and optimized business operations. 19 Day's Sales in Inventory: The difference in Day's Sales in Inventory (DSI) between 2022 and 2021 for IDICO is: 2022 DSI - 2021 DSI = 90. Day's Sales in Inventory (DSI) is a financial ratio used to measure the average time it takes a company to sell out its inventory. The lower the DSI value, the faster the company will sell out inventory and better manage inventory turnover.
In this case, IDICO has an increase in DSI from 2021 to 2022. This shows that IDICO takes longer to sell out of inventory in 2022 compared to 2021. There can be many reasons for this. These increases include unstable growth in sales or delays in inventory management.
IDICO may need to consider measures to improve management and optimize inventory turnover in the future. Liquidity 2022 2021 Change Current Ratio 1,80 0,37 1,43 Quick Ratio 1,36 0,29 1,07 Data information of IDICO 2022 2021 Current Assets 4167794383011 4034909801433 Current Liabilities 2321858416077 11047798602930 20 Inventory 822060888052 544538811865 Prepaid Expenses 185623983190 294361221510 Current Ratio : IDICO's Current Ratio difference between 2022 and 2021 is 1.
