ACKNOWLEDGEMENT MASTER IN FINANCIAL MANAGEMENT THESIS PROPOSAL THE FINANCIAL STATEMENT ANALYSIS AT TID FAÇADE COMPANY Graduate student: Nguyen Minh Thu Supervisor: Dr. Tran Tat Thanh HANOI, 2023 1 ACKNOWLEDGEMENT First of all, thanks to the VNU - International School for organizing a very useful master's program and giving me the opportunity to learn more about finance in general and financial management in particular. I would like to express my sincere gratitude to my instructor Dr. Tran Tat Thanh for the continuous support of my research, for his patience, motivation and immense knowledge.
His guidance helped me in all the time of the research and writing the thesis. Besides my instructor, I would like to thank my colleagues at TID FACADE company throughout the course of work and research, for giving me a chance to work and gain knowledge. Without your support and motivation, I couldn’t complete this graduation thesis. Last but not the least, thanks to my family for supporting me spiritually throughout my life.
Signature of thesis author 2 DECLARATION OF AUTHORSHIP I hereby declare that this thesis was carried out by myself under the guidance and supervision of Dr.Tran Tat Thanh; and that the work contained and the results in it are true by author and have not violated research ethics. The data and figures presented in this thesis are for analysis, comments, and evaluations from various resources by my own work and have been duly acknowledged in the reference part. In addition, other comments, reviews and data used by other authors, and organizations have been acknowledged, and explicitly cited. I will take full responsibility for any fraud detected in my thesis.
Hanoi, date ………… month 11 year 2022 Author (signature and full name) 3 ABSTRACT Thesis Title: “The Financial Statement Analysis at TID FACADE Company” Pages：87 University: Vietnam National University Graduate School: International School Date: October, 2019 Degree: Master Graduate Student: Nguyen Minh Thu Supervisor: Dr. Tran Tat Thanh Financial statements are considered an important source to both financial managers and financial analysts to properly assess financial position and financial performance and to make appropriate decisions about their business. TID FACADE is a company operating in Vietnam and it focuses on aluminum and glass production. Actual observation at TID FACADE shows that the financial analysts are facing an obstacle concerning.
Therefore, the overarching goal of this research is to ensure that the financial analysts at TID FACADE Company have a common understanding of financial statement analysis. Based on the above findings, the author has proposed some suggestions to TID FACADE Company. The suggestion covered recommendations to improve revenue management, liquidity management, leverage management, cost management, resource and asset utilization. Keywords: Financial statement, cash flow, revenue management, liquidity management, leverage management, cost management.
4 TABLE OF CONTENT TABLE OF CONTENT .5 LIST OF TABLES ………………………………….…………………………………………………………7 LIST OF FIGURES …………………………………………………………………………………………….8 TABLE OF NOTATION AND ABBREVIATION. Background of the research. Research goal, research objective and research questions. Scope of the research.
Significance of the research. Structure of the research. Corporate finance and financial management. Financial reporting system.
Financial statement analysis methods and the meaning of financial statement analysis. Financial statement analysis methods. Meaning of financial statement analysis. Financial ratios used in financial statement analysis.
Business performance analysis. Evaluation of TID FACADE Company’s Financial Position and Performance. Overview of TID FACADE Company. History and development.
Organizational characteristics of the business management apparatus. Organizational characteristics of the accounting system at TID FACADE Company. Financial ratios analysis of financial statements at TID FACADE Company. Analysis of capital structure of TID FACADE Company.
Analysis of liquidity position of TID FACADE Company. Analysis of cashflow of TID FACADE Company. Analysis of business performance of TID FACADE Company. The forecast of the financial situation .68 Chapter 6: Solutions for Improving Financial Position and Performance of TID FACADE Company.
Discussing research results. The limitations exist. Basic requirements and principles of perfecting the financial reporting system with the analysis of the financial position at the Company. Solutions to improve the financial capacity of TID FACADE Company.
Overview of financial situation and funding. Improve revenue management. Improve liquidity management. Improve leverage management.
Improve cost management. Improve assets and resource utilization. Taking advantages from COVID-19 pandemic .90 6 LIST OF TABLES TABLE 5. LIQUIDITY POSITION RATIOS.
CASHFLOW POSITION RATIOS. BUSINESS PERFORMANCE RATIOS. BALANCE SHEET STATEMENT OF TID FACADE COMPANY. INCOME STATEMENT OF TID FACADE COMPANY.
CASHFLOW STATEMENT OF TID FACADE COMPANY. 94 7 LIST OF FIGURES Figure 1. Core Values of TID FACADE Company……………. Organisation Structure of TID FACADE Company…………………….
49 8 TABLE OF NOTATION AND ABBREVIATION Abbreviation Meaning MoF Ministry of Finance VAS Vietnam Accounting Standards IFRS International Financial Reporting Standards ROE Return On Equity ROA Return On Total Assets ROI Return On Investment ALM Asset - liability management LDR Loan to deposit ratio EBITDA Earning Before Interest, Taxes, Depreciation and Amortization ALCO Asset-Liability Committee CEO Chief Executive Officer LDR The loan-to-deposit ratio 9 Chapter 1: Introduction 1. Background of the research Financial statement is being considered as important source to both financial managers and financial analysts to properly assess financial position and financial performance and to make appropriate decisions about their business (Hasanaj and Kuqi, 2019). It is true since financial statement provides comprehensive financial information and financial outcomes of the companies that may be treated as inputs for future project planning (Bondu and Sangisetti, 2020). According to Al- Nasser (2014), financial statement analysis involves the interaction between balance sheet and income statement to capture the changes over the time and to compare with other companies in the industry.
Therefore, it is concluded that financial statement analysis is a must condition to financial manager and financial analysts, and it must be conducted precisely and carefully to ensure converting raw financial statement to insightful information for decision-making purposes. A financial analysis will provide you a more thorough understanding of the company's internal operations in addition to assisting in determining the company's creditworthiness, profitability, and capacity to create wealth. Therefore, this study is a useful health checkup that will aid in understanding the demands of the organization. It can give a more thorough picture of the company's tax condition and aid in management optimization, which could ultimately result in higher earnings and better financial stability.
Additionally, when applying for loans or claiming cash, this kind of analysis is quite helpful. To establish a company's capacity to repay the loans it will receive, the majority of financial institutions want a balance sheet with a financial analysis. The company's position in respect to its industry is determined by a financial analysis, which also enables monitoring 10 of the competitors. It also takes into account any hazards that can have an impact on the market.
This can help minimize exposure to these risks and help develop a successful company plan. Recognize the importance of financial statement analysis, the governments in many countries have developed and issues financial statement standards in which they provide specific regulations to enforce local companies to produce financial statement in correct manner. It is also true in Vietnam whether the Ministry of Finance (MoF) has published Vietnam Accounting Standards (VAS). In addition, the MoF issued several policies such as Circular No.200/2014/TT-BTC and Circular No.202/2014/TT-BTC with an objective of aligned between VAS and International Financial Reporting Standards (IFRS).
In addition, the MoF has provided a roadmap for local and foreign companies in Vietnam to fully adopt IFRS. This roadmap consists of three stages: Stage 1 – MoF provides trainings and guidelines on IFRS during 2019-2020; Stage 2 – MoF chooses selected companies for IFRS piloting purpose during 2022-2025; Stage 3 – IFRS will be mandatory for all State-Owned companies, listed companies and large non-listed companies. It is expected that the adoption of IFRS9 will bring positive impacts such as the clarity and easy to understand of financial statement, increasing information comparability among business worldwide, and reducing frauds in producing in financial statements (Bui et al. Behind of that, the author expects the IFRS adoption will enhance financial statement analysis since all financial items are reported in international standards.
It also ensures the alignment when the financial analysts assess the financial information between different companies. Problem statement In recent years, the trend of globalization and the opening of integration with international countries is gradually becoming one of the effective measures to promote the exchange of nations on 11 culture, education, national defense and especially economy. Vietnam is not out of that trend. Since 2016, Vietnam has participated in signing many treaties to expand the market, bringing Vietnamese products and goods to the international arena.
It also means that products, goods and services of all countries in the alliance will also penetrate into the Vietnamese market. At that time, the competition will become more intense. In order to compete with foreign companies, every company needs to know its strengths and weaknesses, thereby building improvement measures and development policies. And one of the ways to grasp the situation, the position of the business is through analyzing the financial situation.
Financial analysis can be applied in a wide variety of situations to give business’s managers the information they need to make critical decisions. The ability to understand financial data is essential for any business manager. Finance is perceived as the language of business since business goals and objectives are set in financial terms and their outcomes are measured in financial terms also. Among the skill sets required to understand and manage a business is fluency in the language of finance – the ability to read and understand financial data as well as present information in the form of financial reports.
A company’s account and statement contain a great deal of information. In the trend of integration with the world economy, Vietnamese companies are born more and more in terms of both business type and field of operation. In order to exist, develop and compete with other domestic and foreign companies, each company needs a reasonable business strategy within the framework of the laws and regulations of the State. Especially, the financial situation of the company must be clear and transparent.
Ensuring a clean and transparent financial situation is a prerequisite for the development of the company. In order to achieve that, business executives must always be aware of the business and production status and financial status of the enterprise; at the 12 same time regularly analyze and evaluate the financial situation, thereby having appropriate strategies and plans to improve the financial situation of the company as well as orient the future for the development of the whole enterprise. In doing so, enterprises need to deeply analyze business activities, especially financial activities. Thus, by looking at the financial statements and other financial documents, the management team as well as investors can uncover patterns of activities that may not be apparent on the surface and make smarter decisions on managing of investing and thus improve the business efficiency and maximize the potential for financial growth.
One of practical concerns when doing financial statement analysis is how the financial analysists consider pros and cons of financial information and financial ratios to take right decisions. However, many financial analysists often forget this, or they often conduct financial statement analysis without paying attention to the limitation of analysis instrument. In addition, financial analysts may rely on single financial indicator or very few financial indicators and they do not perform adequate check of other financial indicators to construct a holistic view of financial situation of an assessment object. These problems are more critical in small companies where the financial analysts are often doing multiple tasks and they may not receive proper training to understand correctly and comprehensively about financial statement analysis.