OVERVIEW OF THE RESEARCH PROJECT 1.Origin Of the study In the current market economy, constantly innovating and increasingly fierce competition among businesses, so sustainable development and profitable business are a practical target for any business sector. To achieve that, the enterprise must regularly conduct financial analysis to clearly see the current state of financial activity, business performance of the enterprise as well as fully identify the cause and level of image impact. The influence of factors to help managers come up with effective solutions and accurate decisions to improve the business and production efficiency of enterprises. Recognizing the importance of analyzing the financial situation of businesses, I chose the graduation thesis topic: ―Analyzing the financial situation at Quang Trung Industrial Group Co.
for the period of 2017- 2019 ‖ 2. Objective of the Study The topic focuses on analyzing the financial situation of the company to see the financial situation at the company, thereby offering solutions and proposals with the following specific objectives: - Overall assessment of the financial situation - Analyzing financial structure and capital guarantee situation for business activities - Analyzing the situation and solvency of the company - Analyzing business efficiency - Analysis of financial ratios through the financial statements of the company - Analyzing the efficiency of capital use, profitability of capital sources 3. Scope of the Study The scope of study is the financial situation of the enterprise through financial statements including balance sheet, income statement, cash flow statements and financial statement footnotes for the period of 2017-2019. Research Methodology of the study - Data collection method: collect data through company reports and documents - Data processing method: the basic reason is mainly followed by specific analysis of actual data through reports and documents of enterprises.
- Using analytical methods: comparison method, ratio method, Dupont method to analyze data, synthesize variables over years 5. Structure of the study The graduation thesis consists of 3 chapters: Chapter 1: Literature review Chapter 2: Financial statement analysis at Quang Trung Industry Group Joint Stock Company in the period of 2017-2019 Chapter 3: Solutions to improve the financial situations of Quang Trung Industry Group Joint Stock Company Chapter 1: Literature review 1.1 Overview of financial statements 1.1 Definition of financial statements According to the Institute of Certified Public Accountants (AICPA) :― The financial statements are prepared for the periodic review or report on the operation of the enterprise, the investment situation in the business and the results achieved in the reporting period. The financial reporting system reflects the combination of recorded events, accounting principles and assessments that are primarily applicable to the recording of events. According to the Vietnamese accounting system, Financial statements are types of accounting reports that generally and comprehensively reflect the situation of assets, capital sources, the situation and results of production and business activities of enterprises in a certain period.
As such, financial statements not only provide information primarily to entities outside the business such as investors, tax authorities, banks and other financial institutions, but also provide information. providing information to corporate executives, helping them assess and analyze the financial situation as well as business results of enterprises. Within the scope of the thesis, the author uses the definition of financial statements as follows: ―Financial statements are a system of statements made according to the current accounting standards and regime reflecting the most general information about the financial statements. Main economic and financial news of the unit.
Accordingly, the financial statements contain the most comprehensive information on the situation of assets, equity and liabilities as well as the financial situation, business results in the period of the enterprise ‖.2 Functions of financial statements The system of financial statements of enterprises is made for the following purposes: - Summarizing and presenting in a general and comprehensive manner the situation of assets, capital sources, debts, situation and results of business operations of enterprises in an accounting period. - Providing key economic and financial information for assessing the situation and performance of the enterprise, assessing the financial status of the enterprise in the past operating period and future forecasts. Financial statements are important in the field of economic management, attracting the attention of many objects inside and outside the enterprise. Each subject cares about the financial statements on a different level, but generally aims to get the information needed to make decisions that are appropriate to their goals.
- For business managers, the financial statements provide general information about the situation of assets, sources of asset formation as well as the situation and results of business after an operation period, on which Management will analyze, evaluate and propose timely management solutions and decisions suitable for the future development of the enterprise. - With relevant state agencies such as finance, auditing bank, tax. Financial statements are important documents in checking, supervising, guiding and advising enterprises to implement policies, economic and financial regimes of enterprises. - For investors, lenders financial statements help them identify their financial capacity, the situation of the use of assets, capital, profitability, efficiency of production and business activities.
, level of risk. for them to consider, choose and make an appropriate decision. - With suppliers, financial statements help them identify solvency, payment methods, from which they decide to sell goods to businesses again, or need to apply payment methods. for the reasonable.
- With customers, financial statements help them have information about the ability, production capacity and product consumption, reputation level of the business, customer treatment policies. so they have right decision in the purchase of the business. - For shareholders, employees, they are interested in information about the ability and policy to pay dividends, salaries, social insurance, and other issues related to their interests shown on financial report.3 Categories of financial statements 1.1 Balance sheet Definition: A balance sheet is a statement of the financial position of an enterprise stating assets, liabilities and equity at a given time. In other words, the balance sheet illustrates the net value of a business.
The balance sheet may also contain details from previous years for comparison purposes. This data will help businesses track their performance and will identify ways that companies can build their finances and see where businesses need improvement. In essence, the balance sheet is a general balance sheet between assets and equity and liabilities. Function: Balance sheet: Provides information about the situation of assets, liabilities, sources of assets formation of the enterprise at a given period, helping to assess the financial status of the business, such as fluctuations in the size and structure of assets, sources of assets formation, solvency, profit distribution.
At the same time, it helps to evaluate the ability to mobilize capital into the production and business process of the enterprise in the coming time.2 Income statement Definition The report on business results shows the movement of capital in the production and business process of the enterprise. In addition, the report on business results reflects revenue, income, expenses and business results. Through this report, information users can assess business performance of the business. Also know the scale of costs, revenues, income and results of business activities as well as the net profit before and after corporate income tax.
Function Income statement: Providing information on business results of the enterprise in the period, providing information on the fulfillment of obligations to the State budget. From the analysis of the data on the analysis of business results, the enterprise can control potential changes in future economic resources, assess the profitability of the business, or cost effectiveness of additional resources that businesses can implement.3 Cashflow statement Definition A cash flow statement is one of four mandatory financial statements that an enterprise must prepare to provide its users with information about the enterprise. The statement of cash flows reflects issues related to the source of cash in and out in the enterprise, the situation of short-term revenue and expenditure of the enterprise. Sources of cash in and out of businesses and amounts considered as cash are divided into three groups: cash flows from investing activities, cash flows from financial activities and cash flows from operating activities.
Function Cash flow statement: Provides information on financial fluctuations in the enterprise, helps to analyze the investment, financial and business activities of the enterprise, to assess the ability to generate money and cash equivalents in the future, as well as the use of these sources of money for business activities, financial investment of enterprises.4 Notes Definition Notes to the financial statements are also an annual financial report that must be prepared for an enterprise. Notes to the financial statements are also used to explain and add to the criteria that other financial statements have not shown or explained complicated items. Function Provide more detailed information about the characteristics and general situation of the business; about the income of the employee; on the causes of increase or decrease of fixed assets (according to their original prices, their remaining values); on the increase and decrease of capital sources, enterprise funds; contingent liabilities, commitments and other financial information, which helps in a specific analysis of some indicators, reflecting the financial position that other financial statements cannot present.2 Overview of financial statements analysis 1.1 Definition of financial statements analysis Financial statement analysis is the process of reviewing, checking, comparing and comparing financial data in the past business period. Through data on the analysis of financial statements will provide users with information that can assess the potential, business performance as well as future financial risks of the business.
Analyze financial statements to provide useful information not only for corporate governance but also to provide economic - financial information mainly for non-business information users. Therefore, analyzing financial statements does not only reflect the financial situation of the enterprise at a given time, but also provides information on the results of production and business activities of the enterprise in a given period.2 Role of financial statements analysis Analyzing the financial statements of an enterprise is an extremely important job in corporate governance. It is not only meaningful to the business itself, but also necessary for other management entities related to the business. Analyzing the financial statements of enterprises will help corporate governance overcome shortcomings, promote positive aspects and predict the development of enterprises in the future.
On that basis, corporate governance has come up with effective solutions to select and decide the optimal plan for production and business activities of the enterprise. The role of financial statement analysis is to provide sufficient information to help business managers to see the vivid features on the "financial picture" of the enterprise expressed through the following aspects: - Providing timely, complete and truthful financial information necessary for business owners and investors, lenders, customers, suppliers. - Provide information on the situation of capital use, ability to raise capital, profitability and production and business efficiency of the business. - Provide information on the situation of liabilities, the ability to recover receivables, the solvency of payables as well as other factors affecting the production and business activities of enterprises.3 Process of financial statements analysis – EIC analysis 1.1 Economy analysis Economic analysis is a process followed by experts to understand important economic factors affecting the operation of an organization, industry, region or any other specific population group, with The purpose of making wiser decisions for the future.
In business, economic analysis allows incorporating factors from the economic environment such as inflation, interest rates, exchange rates and GDP growth into the company's plans. Each organization is an open system that is impacted and influenced by the external context. This means that proper evaluation of economic variables will facilitate the identification of opportunities and threats that may affect the performance of the company. Organizations tend to implement business planning processes every one or two years and often identify two or three possible economic scenarios for short and medium term terms.