Graduation thesis Academy of finance DECLARATION I hereby declare that this thesis is my own work and effort and that has not been submitted anywhere for any award. Where other sources of information have been used, they have been acknowledged. The data and results described in the thesis are derived from the actual situation of the practice company. Hanoi, 27 April, 2016 Student Tran Thu Huong 1 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance ACKNOWLEDGEMENT Firstly, I am deeply indebted to my supervisor Ms Pham Phuong Oanh who gave me useful suggestions, encouraged me a lot during the time of doing research.
Secondly, I want to thank German Foodstuff Processing Joint Stock Company for giving me permission to commence this thesis in the first instance, to do the necessary research work and to use departmental data. Furthermore, I would like to appreciate the Director and the Sale manager as well as all seniors at German Foodstuff Processing Joint Stock Company for accepting and encouraging me to go ahead with the thesis. My friends from Faculty of Foreign Languages also supported me in the thesis. I am much obliged to them for all their help, support, interest and valuable hints.
Especially, I would like to give my special thanks to my family whose patient love enabled me to complete this work. Finally, because of limitation of time and knowledge, mistakes are unavoidable, so I wish to have more opportunities to receive more contribution and suggestions to make the thesis better. 2 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance ABSTRACT In the modern global economy, especially when there are a lot of organizations founded every day, corporate finance has become increasingly important, for all companies in general, and for GERMAN FOODS. JSC in particular.
Therefore, the thesis with the topic “Corporate financial analysis through financial ratios and recommendations for German Foods. JSC’s development” will point out the importance of having a healthily and effectively financial performance in order to survive and compete with others. The main content is reflected in three chapters. The first chapter is about literature review which provides general knowledge about the global economy as well as Vietnamese economy and introduces the financial situation of GERMAN FOODS.
In chapter 2, by taking a scenario in GERMAN FOODS. JSC, assessments of financial position through financial ratios analysis of GERMAN FOODS. JSC through 2011-2013 will be demonstrated through figures from balance sheets, income statements and charts built from those figures. And chapter 3 will provide some recommendations for GERMAN FOODS.
JSC’s development basing on the general knowledge and assessments which have been achieved in chapter 1 and 2 of the study. In conclusion, the thesis has already been completed in comparison with proposed objectives and targets in the introduction. 3 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance LIST OF ABBREVIATIONS No Abbreviation Full Phrase 1 GERMAN FOODS. German Foodstuff Processing Joint JSC Stock Company 2 DSO Days sales outstanding 3 BEP Basic earning power 4 EBIT Earnings before interest and tax 5 ROA Return on assets 6 ROE Return on equity 7 ROS Profit margin 8 Acc Account 9 M&A Mergers and Acquisitions 4 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance 5 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance TABLE OF CONTENT DECLARATION i ACKNOWLEDGEMENT ii ABSTRACT iii LIST OF ABBREVIATIONS iv TABLE OF CONTENT v LIST OF APPENDIXES viii INTRODUCTION 1 CHAPTER I:LITERATURE REVIEW 5 1.
Role of corporate finance 6 1.2 Corporate financial management 6 1. Role of corporate financial management 7 1. Factors influencing corporate financial management 8 1. Form of business organization 8 1.
Corporate financial analysis 10 1. Financial statement analysis is useful to different parties to obtain the required information about the organization. 11 6 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance 1. Knowing profitability, solvency of business and judging the growth of business 11 1.
Making comparison and selection of appropriate policy as well as forecasting and preparing budgets 12 1. Methods of corporate financial analysis 13 1. Horizontal and vertical analysis 13 1. Dupont Analysis 21 CHAPTER 2:ASSESSMENTS OF FINANCIAL POSITION THROUGH FINANCIAL RATIOS ANALYSIS OF GERMAN FOODS.
Overview of GERMAN FOODS. Corporate financial analysis 26 2. Inventory management 39 7 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance CHAPTER 3: RECOMMENDATIONS FOR GERMAN FOODS. Evaluation of business’s performance through financial analysis 41 3.
Recommendations for GERMAN FOODS. Quality as a key driver -- Reducing mistakes 43 3. Investing in training. Focusing on the customer 45 3.
Exploring new markets or improving marketing. Financial forecasting 46 CONCLUSION 47 REFERENCES 48 SUPERVISOR’S EVALUATION 49 REVIEWER’S EVALUATION 50 8 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance LIST OF APPENDIXES Appendix 1. Liquidity ratios 27 Table 2. Leverage ratios 29 Table 2.
Efficiency 4ratios 31 Table 2. Related indicators 32 Table 2. Profitability ratios 33 Table 2. Cash management 36 Table 2.
Receivable management 37 Table 2. Inventory management 39 Appendix 2. Liquidity ratios Chart 2. Leverage ratios Chart 2.
Efficiency ratios 9 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance INTRODUCTION 1. Rationale of the study In 1986, a program of broad economic reforms known as the Doi Moi or “renovation” introduced new market rules and improved the business climate. By and large, the “Doi Moi” reforms brought about profound changes in the Vietnamese “social fabric.” In January 2007, Vietnam joined the World Trade Organization (WTO) following a long and tedious negotiation process which lasted over ten years. And most recently, on February 4 2016, Vietnam along with eleven countries: Australia, Canada, Japan, United States,… came to an agreement of signing Trans-Pacific Partnership (TPP), which writes the rules for global trade helping increase Made-in-America exports, grow the American economy, support well-paying American jobs, and strengthen the American middle class.
New opportunities and challenges created by international economic integration have had significant impacts on the economy. Domestic businesses, therefore, must follow the global rules as well as set up strategic plans in order to find potential partners, cooperate and maximize the market value of the business. In order to survive and develop in the modern economy, each company has to show its positive financial performance through one useful tool, which is finance. Finance is the language of business.
It is important to be circumspect in analyzing and choosing an ideal partner. And financial statements are useful tools for managers to have a look through other companies’ financial situations. Not only managers but also other different users could take advantage of financial statements for various purposes: to assess the business’s liquidity, profitability, solvency,… Therefore, corporate financial 10 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance analysis will facilitate users with an overview about financial activities to determine factors impacting on the financial situation and suggest effective solutions to strengthen their financial position. German Foodstuff Processing Joint Stock Company founded in 2008 specializes in the production of German Foods and promotes the brand of sausage “Steffi” to a wide range of people all over the world.
Due to the small business scale and highly competitive business environment, GERMAN FOODS. JSC still has to face difficult challenges to survive and compete with others. Through financial statement’s analysis, GERMAN FOODS. JSC could be able to find out strengths and weaknesses as well as opportunities and potential threats so that managers can build strategic plans to develop the value of the company, Because of the importance of the corporate financial analysis, the researcher has chosen “Corporate financial analysis through financial ratios and recommendations for German Foods.
Aims of the study The study primarily aims to study the financial position of GERMAN FOODS. JSC from 2011 to 2013 through financial statements such as balance sheets, income statements, notes to financial statements. Thus, it is easy to assess the company’s strengths and weaknesses based on financial ratios as well as identify potential opportunities and threats influencing the health of the company. Depending on these analysis, the thesis could also suggest recommendations to enhance position of GERMAN FOODS.
JSC not only in Viet Nam but in global economy as well. Scope of the study 11 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance The thesis mainly focuses on analyzing financial ratios and assessing financial position of GERMAN FOODS. JSC in accounting fiscal year 2011- 2013. Data collection In my study, analysis and assessments will be based on data from two sources The primary sources are materials and statistics from company’s database including annual financial statements, reports and data related to the company from the security market and magazine.
The secondary sources are market data. The company’s financial situation is affected and dominated by the current events in the economic environment of the country as well as of the whole world. Real observation In this method, the researcher must go to the company, observe staff working as well as raising questions if having any problems or misunderstanding. This method will help the researcher to understand the company’s operational process, preparing process of financial statement basing on accounting documents such as VAT bills, delivery bills or invoices,…as well as identify factors affecting to the company’s activities in order to have clear and adequate analysis, true and fair assessments about the company.
Data analysis Comparative analysis along with data summarization and analysis will be used to give out assessments basing on figures and financial statements of the company. Comparative analysis is based on comparing data in the same items on financial statements among years, data summarization and analysis, 12 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance on the other hand, is the calculation using to evaluate the practice of financial analysis based on financial statements. Organization of the study Except for the acknowledgement, table of contents, introduction, abstract, conclusion and references, this thesis is divided into three chapters as follow: Chapter 1: Literature review provides general knowledge about the global economy as well as Vietnamese economy and introduces the financial situation of GERMAN FOODS. Chapter 2: Assessments of financial position through financial ratios analysis of GERMAN FOODS.
JSC through 2011-2013 will be demonstrated through figures from balance sheets, income statements and charts built from those figures. Chapter 3 will provide some recommendations for development of GERMAN FOODS. JSC basing on the general knowledge and assessments which have been achieved in chapter 1 and 2 of the study. 13 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance CHAPTER I LITERATURE REVIEW 1.
Definition Ross, Westerfield cooperated Jordan and Roberts analyzed and illustrated fundamentals of corporate finance, which means that corporate finance is the study of ways to answer these three questions: what long-term investments businesses should take on or what lines of business managers will be in and what sorts of building, machinery and equipment will be needed. The second question is where to get the long-term financing to pay for investment and consider whether or not they will bring in other owners or company bosses will have to borrow the money. Last but not least, they also mentioned the way to manage everyday financial activities such as collecting from customers and paying suppliers. In large corporations, the owners often employ managers to represent the owners’ interests and make decisions on their behalf.
The financial manager would be in charge of answering the three questions above and having general responsibility for a significant corporate financial decisions. Corporate finance has three main areas of concerns: capital budgeting, capital structure and working capital management. Capital budgeting answers the question “What long-term investments should the firm take?” while capital structure displays the solutions for “Where will the firm get the long-term financing to pay for its investments? Or what mixture of debt and equity should the firm use to fund operations?