5038 Assignment 2 Accounting [PDF]

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5038 Assignment 2 - accounting Accounting and Financial Practice (University of Greenwich)

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ASSIGNMENT 02 FRONT SHEET Qualification

BTEC Level 4 HND Diploma in Business

Unit number and title

Unit 5: Accounting Principles

Submission date

25/08/2022

Date received (1st Submission) Date received (2nd Submission)

Re-submission date Student Name

Tran Ha Phuong

Student ID

Class No.

GBH1102

Assessor Name

GBH210599 Tran Thuy Tien

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 Signature Phuong

Grading Grid P3

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Assessor Signature:

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Internal Verifier’s Comments:

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Table of Contents 1. Introduction.................................................................................................................................2 2. Task 1..........................................................................................................................................2 3. Task 2..........................................................................................................................................4 4. Task 3..........................................................................................................................................6 4. Conlusion....................................................................................................................................8 5. References...................................................................................................................................8

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1. Introduction I have received assignments that include providing accounting and consulting services to businesses to find high growth potential clients and scalable business models. In addition, I provide advice and direction on business budgeting with the goal of understanding how budgeting can be used to allocate resources efficiently and aid in control and decision-making. In this report, I will prepare basic financial statements that comply with accounting principles, conventions and standards for small and unincorporated commercial companies. Finally, use spreadsheets to create budgets for planning, control, and decision-making.

2. Task 1 As an ABC accountant, I am in charge of analyzing raw data for ABC's unadjusted trial balances as of December 31, 2020 summarized in the table below. Adjusting entries

General Ledger

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Adjusted Trial Balance

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Financial Statements

3. Task 2 Note: HNX: HaiHaCo MCM: Moc Chau Milk

Liquidity is an important group of financial measures used to determine a debtor's ability to repay debt in the short term without raising external capital (vietnambiz, 2020). In which, researchers generally employ current ratio and fast ratio the most. First off, a company's capacity to cover its short-term liabilities (debt due within a year) with short-term assets like cash, accounts receivable, and inventory is determined by its current ratio. warehouse (vietnambiz, 2020). This index at Moc Chau Milk varies from 2.53 to 7.65 between 2017 and 2021, with an upward trend. The index for HaiHaCo decreased from 2.55 to 1.27 during this time as well. In 6 Downloaded by Lê Th? Minh Trang ([email protected])

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general, MCM outperforms HaiHaCo in terms of current ratio. Second, the Quick Ratio measures how well a firm can pay its short-term debt commitments with its most liquid assets (vietnambiz, 2020). In MCM, this index varies from 1.57 to 6.99, whereas HaiHaCo varies from 2.16 to 1.07.

Efficiency is the ability of performance indicators to assist small business owners and managers in running their operations more effectively by evaluating how a company uses credit, inventory, and assets. These financial ratios can demonstrate how quickly a business receives payment from credit sales or how long it takes for inventory to turn over during a specific time frame. Managers can use this data to assess the suitability of the company's loan conditions and the efficiency of its purchasing initiatives. Inventory turnover, Asset Turnover, and Day's Sales in Inventory are frequently used in it by academics. First, inventory turnover is a financial indicator that may be used to examine a company's revenues as well as how effectively it manages production, inventory, and distribution of its products. This indicator varies in Moc Chau Milk from 6.43 to 10.21 between the years of 2017 and 2021 and generally rises. The Vinamilk index also changed over this time, going from 3.61 to 5.15. In general, MCM's inventory turnover is larger than HaiHaCo's. Second, Asset Turnover is this financial indicator that shows the portion of assets tied to inventory. In MCM, this index fluctuates from 1.51 to 2.46 in 5 years and drops the most in 2021, while HaiHaCo 1.29 - 0.76 tends to decrease year by year. Finally, Inventory Day Sales is this financial metric that measures the average number of days a company's receivables have not been paid, from the date of sale on credit to the date of collection. For MCM, the index is in the range of 35.74 to 5.73 for 5 years and has a decreasing trend year by year which is a bad sign, it is similar to HaiHaCo, this index tends to decrease in the range of 101.23 to 83.98.

In order to assess, analyze, and evaluate the business's potential for profitability in relation to actual sales, balance sheets, and other factors like operational expenses and shareholders' equity during a specific time period, managers employ profitability ratios (sapp, 2022). Gross Profit Rate, Net Profit Margin, Return on Assets, and Return on Equity are the four sorts of indicators that make up the profitability ratio. To begin with, Gross Profit Rate is This indicator calculates 7 Downloaded by Lê Th? Minh Trang ([email protected])

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the gross profit margin realized from sales. Net sales are calculated as revenue less sales profit, discounts, and allowances, less selling expenditures (vietvuevent, 2021). Second, the percentage of revenue derived from sales is gauged by the metric known as net profit margin. In general, the better the ROS ratio (vietvuevent, 2021). Between 2017 and 2021, MCM's index ranges from 6.53 to 10.9, whereas VNM's ranges from 17.45 to 20.14, or nearly twice as much as MCM. Next is return on assets, which is a metric for return on investment. ROA is used to assess a management team's effectiveness in generating income from its assets (vietvuevent, 2021). While the index ranges from 20.9 to 32.1 for VNM, it ranges from 15.14 to 20.20 for MCM. Compared to VNM, MCM has a lower index. Last but not least, return on equity is an index that calculates the earnings per dollar of equity (vietvuevent, 2021). The range of this index for MCM is 14.68 to 30.81, whereas the range for VNM is 29.66 to 43.5, making VNM's index greater than MCM's.

The solvency ratio, also known as the debt solvency ratio, examines and assesses whether or not a company is able to pay its long-term debts. Banks frequently utilize solvency ratios to evaluate lending and credit activity (sentayho, 2022). Debt/Equity Ratio, Debt/Capital Ratio, and Solvency are frequently used metrics by researchers. First off, the Debt/Equity Ratio is a financial indicator that evaluates a company's capacity to use and manage debt (vietnambiz, 2019). The long-term debt index cannot be calculated at Moc Chau Milk since it is not made available online, while HaiHaco ranges from 7.47 to 12.23. Second, by dividing a company's total interest liabilities, the debt/capital ratio, a gauge of financial leverage, is determined. This indication is not publicly accessible online for MCM, while HaiHaCo ranges from 20.45 to 32.79.

When comparing the share prices of publicly listed firms to other financial metrics like profits and dividend ratios, market prospect ratios are employed. wherein researchers frequently use the P/E ratio and earnings per share. The first definition of earnings per share is the profit that investors receive from one share after taxes. The index ranges just from 2.6 to 3.77 in Moc Chau Milk whereas it ranges from 5.83 to 4.77 in HaiHaCo. Second, the P/E Ratio shows how much you're willing to spend on every dollar in stock earnings. MCM only contains this index from 0 to 19.15, however HaiHaCo has it from 21.54 to 32.80. This MCM index is just half as high as HaiHaCo. 8 Downloaded by Lê Th? Minh Trang ([email protected])

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4. Task 3

A budget is a plan for spending your money that is based on estimates of what the author need and what author earn. A budget is a plan for spending that is important in the management of an organization. Budgeting is a way to keep your business on track and avoid overspending. Forecasting is a process of drawing a map of the future. Businesses will develop a plan to achieve the desired results. Budgeting is a key part of running a successful business. By regularly reviewing and adjusting their budgets, businesses can ensure that their operations continue to run smoothly. Budgets are also used to guide and evaluate management Performance indicators (Goode & Malik, 2011). According to Jae et al., (2011), a budget is a financial plan to control future activities. There are many benefits to budgeting, including having a better understanding of how your money is being spent. It helps to make a clear and detailed plan .Companies know exactly what they need to do now and in the future, which helps them get on track. Businesses that stray from their intended targets can use their resources more effectively, providing a more general view of the performance of businesses. Budgeting has many of the same benefits as planning. A clear, detailed plan helps companies know exactly what they need to do now and in the future, which in turn will help them stay on track. Business intelligence can help companies find and use the best resources, providing a broad view of how businesses are performing. In addition to the impact of the budget, there are negative aspects of the budget. Traditional budgeting methods are considered to be too time-consuming. What follows is a list of five items. Budgets constrain a company's ability to overhaul its business model as it relies on historical accounting methods and management practices. Traditional budgeting is ineffective because it does not have a strategic focus or a goal of creating value. Traditional budgeting methods have the potential to hinder rather than help knowledge sharing across departments, which can ultimately lead to business failure. This policy encourages managers to pursue good luck and an unprofessional attitude towards budget costing. This will be supported flexibility therefore affects the ability to innovate (Hope and Frase,1997). Finally, the success of 9 Downloaded by Lê Th? Minh Trang ([email protected])

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budget control depends on the coordinated effort of several departments. Departmental success affects other departments' performance. A budget officer would be a valuable asset to any business in addressing the coordination of challenges. Not every business can afford to hire one, though. Lack of performance results from a lack of cooperation between several divisions. Conflicting demands from different departments can lead to budget disagreements. This can cause tension and conflict between different parts of the organization. Every department head is self-centered and doesn't think about the company's goals. Both departments try to allocate the highest budget, but this leads to competition between them. The budget control mechanism relies on the cooperation of top management. Management must be satisfied with the success of the system and must ensure that system support. The system is not reliable. Without the support of senior management at any time, it is very difficult to succeed in this position.

4. Conlusion In summary, the study above shows that accounting has an influence on how a company performs. The income statement and balance sheet are generated in the first stage of the analysis, looking at the financial impact of the accounting In task 2, the financial statements of the HaiHaCo and Moc Chau Milk enterprise are analyzed and interpreted and appraisal. Accountants can be found to be quite important in reviewing a company's financial statements.

5. References finance.vietstock.vn, 2022.HHC. [Online] Available at: https://finance.vietstock.vn/HHC/tai-chinh.htm?tab=BCTT [Accessed 18/08/ 2022]. Goode, M. & Malik, A., 2011. Beyond Budgeting: The Way Forward?. Pakistan Journal of Social Sciences, 21(2), pp. 207-214. Hope, J. and Fraser, R. (2003). Who needs budgets? Harvard Business Review. 81(5), pp. 125- 126. Sentayho (2022). ‘Solvency ratio là gì? Tỷ lệ/Hệ số khả năng thanh toán nợ là gì?’ Available at: https://sentayho.com.vn/solvency-ratio-la-gi.html [ Accessed 23 Aug 2022] Soriaforcongress (2021). ‘Chỉ số EPS là gì? Phân loại & cách tính EPS chuẩn nhất’ Available at: https://soriaforcongress.com/eps-la-gi/ [ Accessed 23 Aug 2022] Thu G (2018). ‘Chỉ số tài chính là gì?’ Available at: https://www.saga.vn/chi-so-tai-chinh-la-gikem-cong-thuc-va-giai-thich~45135#:~:text=CH%E1%BB%88%20S%E1%BB%90%20HI %E1%BB%86U%20SU%E1%BA%A4T%20(EFFICIENCY%20RATIO)&text=Ch%E1%BB %89%20s%E1%BB%91%20t%C3%A0i%20ch%C3%ADnh%20n%C3%A0y%20cho%20th %E1%BA%A5y%20m%E1%BB%A9c%20%C4%91%E1%BB%99%20hi%E1%BB%87u,b %C3%A1n%20h%C3%A0ng%20c%E1%BB%A7a%20c%C3%B4ng%20ty. [ Accessed 22 Aug 2022] Tran T (2020). ‘Chỉ số P/E là gì? Chỉ số P/E như thế nào là tốt?’ Available at: https://govalue.vn/chi-so-pe/ [ Accessed 23 Aug 2022] 10 Downloaded by Lê Th? Minh Trang ([email protected])

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Vietnambiz (2019). ‘Chỉ số thanh khoản (Liquidity Ratio) là gì? Ý nghĩa và các loại chỉ số thanh khoản thường gặp’ Available at: https://vietnambiz.vn/chi-so-thanh-khoan-liquidity-ratio-la-gi-ynghia-va-cac-loai-chi-so-thanh-khoan-thuong-gap-20200610165951841.htm [ Accessed 22 Aug 2022] Vietnambiz (2019). ‘Hệ số nợ trên vốn chủ sở hữu (Debt to equity ratio - hệ số D/E) là gì?’ Available at: https://vietnambiz.vn/he-so-no-tren-von-chu-so-huu-dept-to-equity-ratio-he-so-d-ela-gi-2019081919185477.htm [ Accessed 23 Aug 2022] Vietnambiz (2019). ‘Tỉ lệ nợ trên vốn (Debt-to-Capital Ratio - D/C) là gì? Công thức tính’ Available at: https://vietnambiz.vn/ti-le-no-tren-von-debt-to-capital-ratio-d-c-la-gi-cong-thuctinh-20191126173016729.htm#:~:text=T%E1%BB%89%20l%E1%BB%87%20n%E1%BB %A3%20tr%C3%AAn%20v%E1%BB%91n%20trong%20ti%E1%BA%BFng%20Anh%20l %C3%A0%20Debt,chia%20cho%20t%E1%BB%95ng%20s%E1%BB%91%20v%E1%BB %91n. [ Accessed 23 Aug 2022] Vietvuevent (2021). ‘PROFITABILITY RATIO LÀ GÌ’ Available at: https://vietvuevent.vn/profitability-ratio-la-gi/ [ Accessed 22 Aug 2022]

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