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 h[.]
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 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 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 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 JSC 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 will provide some recommendations for GERMAN FOODS JSC’s development basing on the general knowledge and assessments which have been achieved in chapter and of the study In conclusion, the thesis has already been completed in comparison with proposed objectives and targets in the introduction Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance LIST OF ABBREVIATIONS No Abbreviation GERMAN Full Phrase FOODS German Foodstuff Processing Joint JSC Stock Company DSO Days sales outstanding BEP Basic earning power EBIT Earnings before interest and tax ROA Return on assets ROE Return on equity ROS Profit margin Acc Account M&A Mergers and Acquisitions Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance 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 CHAPTER I:LITERATURE REVIEW 1.1 Corporate finance 1.1.1 Definition 1.1.2 Role of corporate finance 1.2 Corporate financial management 1.2.1 Definition 1.2.2 Role of corporate financial management 1.2.3 Factors influencing corporate financial management 1.2.3.1 Form of business organization 1.2.3.2 Financial regulations 1.2.3.3 Corporate solvency 10 1.2.3.4 Securities markets 10 1.2.3.5 Business lending 10 1.3 Corporate financial analysis 10 1.3.1 Definition 10 1.3.2.1 Financial statement analysis is useful to different parties to obtain the required information about the organization 11 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance 1.3.2.2 Knowing profitability, solvency of business and judging the growth of business 11 1.3.2.3 Making comparison and selection of appropriate policy as well as forecasting and preparing budgets 12 1.3.4 Methods of corporate financial analysis 13 1.3.4.1 Horizontal and vertical analysis 13 1.3.4.2 Ratios analysis 15 1.3.4.3 Dupont Analysis 21 CHAPTER 2:ASSESSMENTS OF FINANCIAL POSITION THROUGH FINANCIAL RATIOS ANALYSIS OF GERMAN FOODS JSC THROUGH 2011-2013 23 2.1 Overview of GERMAN FOODS JSC 23 2.1.1 Business history 23 2.1.2 Business structure 24 2.1.3 Business activities 25 2.1 Corporate financial analysis 26 2.2.1 Liquidity ratios 26 2.2.2 Leverage ratios 29 2.2.3 Efficiency ratios 30 2.2.4 Profitability ratios 33 2.2.5 Dupont analysis 34 2.2 Assessments 36 2.2.1 Cash management 36 2.2.2 Receivable management 37 2.2.3 Inventory management 39 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance CHAPTER 3: RECOMMENDATIONS FOR GERMAN FOODS JSC’S DEVELOPMENT 41 3.1 Evaluation of business’s performance through financial analysis 41 3.1.1 Strengths 41 3.1.2 Weaknesses 42 3.2 Recommendations for GERMAN FOODS JSC’s development 43 3.2.1 Quality as a key driver Reducing mistakes 43 3.2.2 Investing in training 44 3.2.3 Focusing on the customer 45 3.2.4 Exploring new markets or improving marketing 45 3.2.5 Financial forecasting 46 CONCLUSION 47 REFERENCES 48 SUPERVISOR’S EVALUATION 49 REVIEWER’S EVALUATION 50 Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance LIST OF APPENDIXES Appendix Tables Table 2.1 Liquidity ratios 27 Table 2.2 Leverage ratios 29 Table 2.3 Efficiency 4ratios 31 Table 2.4 Related indicators 32 Table 2.5 Profitability ratios 33 Table 2.6 ROA 34 Table 2.7 ROE 35 Table 2.8 Cash management 36 Table 2.9 Receivable management 37 Table 2.10 Inventory management 39 Appendix Charts Chart 2.1 Liquidity ratios Chart 2.2 Leverage ratios Chart 2.3 Efficiency ratios Tran Thu Huong Class: CQ50/51.02 Luan van Graduation thesis Academy of finance INTRODUCTION 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 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 ... importance of the corporate financial analysis, the researcher has chosen ? ?Corporate financial analysis through financial ratios and recommendations for German Foods JSC’s development? ?? Aims of... Horizontal and vertical analysis 13 1.3.4.2 Ratios analysis 15 1.3.4.3 Dupont Analysis 21 CHAPTER 2:ASSESSMENTS OF FINANCIAL POSITION THROUGH FINANCIAL RATIOS ANALYSIS OF GERMAN FOODS JSC THROUGH. .. 3: RECOMMENDATIONS FOR GERMAN FOODS JSC’S DEVELOPMENT 41 3.1 Evaluation of business’s performance through financial analysis 41 3.1.1 Strengths 41 3.1.2 Weaknesses 42 3.2 Recommendations for GERMAN