NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM BACHELOR THESIS FINANCIAL ANALYSIS AND RECOMMENDATIONS FOR HAANJSC Student Nguyen Khuong Duy Student ID CQ500394 Class Advanced Education Pro[.]
NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM BACHELOR THESIS FINANCIAL ANALYSIS AND RECOMMENDATIONS FOR HAANJSC Student: Nguyen Khuong Duy Student ID: CQ500394 Class: Advanced Education Program Intake: 50 Supervisor: Mrs Hoang Thi Lan Huong, MBA Hanoi, 2012 Contents ACKNOWLEDGEMENTS ABBREVIATION .5 LIST OF TABLES LIST OF FIGURES ABSTRACT CHAPTER 1: INTRODUCTION .8 1.1 Rationale 1.2 Research objective .8 1.3 Research methodology 1.4 Scope of research CHAPTER 2: BACKGROUND KNOWLEDGE ABOUT THE FINANCIAL ANALYSIS 10 2.1 Definition .10 2.2 Necessity of financial analysis 11 2.3 Methods used in the financial analysis .12 2.3.1 Comparative analysis method 12 2.3.2 Sectional analysis method 14 2.3.3 Ratio analysis method 14 2.3.4 Dupont analysis method 15 2.4 Content used in financial analysis 15 2.4.1 Information used in the financial analysis: 15 2.4.2 Main content of the financial business analysis 20 CHAPTER 3: FINANCIAL ANALYSIS TO HAANJSC 33 3.1 Establishment and general description of the company 33 3.1.1 Operation criteria: 33 3.1.2 Aims and ambitions: .33 3.1.3 Organization structure 33 3.1.4 The industry potential competitors .35 3.1.5 Advantages of HaanJSC in the technogical basis .36 3.2 Financial results: 39 3.2.1 The financial analysis of HaanJSC 39 3.2.2 The evaluation and problems for the financial result of HaanJSC .48 CHAPTER 4: RECOMMENDATION 51 4.1 Business orientation of HaanJSC in the near and far future .51 4.2 Recommendation for the company 52 4.2.1 Enhance the competencies in the finance aspects of the personnel 52 4.2.2 Analyze the industry competitor who has the higher financial capacity to assure more liquidity 53 4.2.3 Strengthen the financial result by paying more attention and preparing the financial personnel for the future 53 4.2.4 Expand the relationship with other banks in the Vietnamese banking system to maintain the liquidity .54 4.2.5 The potential illiquidity should be solved by adding more capital through projects or attracted investors 54 CHAPTER 5: CONCLUSION .56 REFERENCES .57 COMMENTS 58 INTERNSHIP REPORT ASSESSMENT 59 ACKNOWLEDGEMENTS This thesis is about the financial analysis of HaanJSC, a company specializing in the information technology projects in concern about the payment and money transference system In the time that I my internship, the report is also in the process of being completed, either with gathering information and analyzing them In the process of having all the tasks done, I had the very good experience about being helped by a lot of nice people who without them there were no chance for me to come up and go along with the complicated, time-consuming tasks that are required to complete the job that I did I would like to share my very high appreciation and gravity to all these nice people, who come along and helped me so much with the report and also the process of being an intern student at my last year in the university: Mrs Hoang Thi Lan Huong, MBA who is a very nice lecturer from the Department of International Finance, Faculty of Banking & Finance, National Economics University She is an extremely helpful and dedicated in being a supervisor through this particular moment of my internship time I had a very restricted time to meet and communicate with her, but in the very each moment that I had a chance to so, she used it very effectively in sharing her knowledge and ideas about the report which is so useful for me to come up with ideas and implement it to the complete task for me Mr Phan Liem Chi, President of HaanJSC, the company I did my internship A big friend, a helpful guide and definitely a talented person in the technological sector; those are things that I first claimed to be in this man He is always available for me when I need professional guidance and also the outside-of-business talk which helps me to understand more about the difficulties of the real business environment in Vietnam but keeps a good attitude for me in the doing anything I have the desire to Mrs Nguyen Thanh Quyen, member of the Advanced Education Program Office, who spends a great deal of time helping us to follow the procedure, did save us a lot of time The Advanced Education Program Manager who raise the credibility and reputation so that we did have a very enjoyable time with the internship period I want to also send an appreciation to all of my friends in the class who support me very much throughout the 4-year learning at the Program ABBREVIATION FIFO: First in first out method (an accounting basis) LIFO: Last in first out method (an accounting basis) CAPM: Capital Asset Pricing model (to calculate or estimate the cost of equity of a firm) SMPg: Social Micro Payment gateway (a project of HaanJSC) LIST OF TABLES Table 1: The salary system of HaanJSC p29 Table 2: Cursory Balance Sheet of HaanJSC in the 2010 and 2011 p31 Table 3: Cursory Income Statement (In VND million) of HaanJSC in the 2010 and 2011 p32 Table 4: Return for the market and HaanJSC p38 LIST OF FIGURES Figure 1: The Organization Structure of HaanJSC p29 Figure 2: Current ratio and quick ratio of the HaanJSC in 2010 and 2011 p32 Figure 3: Asset turnover ratio of HaanJSC in 2010 and 2011 p33 Figure 4: Financial leverage ratio of the HaanJSC in 2010 and 2011 p34 Figure 5: Gross profit margin ratio and Net profit margin ratio of HaanJSC in 2010 and 2011 p35 ABSTRACT This thesis has the intention of an approach in the financial point of view to a business situation of a company that has a vision of taking part in the financial and commercial world in the future This company named HaanJSC, is an information technology based company but specializing on providing online services with the vision of becoming a payment system provider The beginning part will be about the overall information about the subject, what content is particularly available in this document, why I choose this subject and the range that I focus on There will be a background knowledge chapter which explains the background knowledge of the financial analysis process that has significant importance on the subjects being studied in this document In this chapter, the definition of a financial analysis and the steps that conducting an analysis will be step by step explained clearly It is also as a vital element of the background knowledge, the financial statements and the kind of information we can exploit from them will also be gone over so that the process coming after that can become easier and more comfortable for the interpretation For financial analysis task, there will be a whole chapter for the figures of the company to be shown As the study is about the financial situation of the firm, the figures is all taken from the balance sheet provided by the company Having a good look at the figures will gives us a better view about the progress of the company and how it is should expected by investor and the society Along with the financial analysis, it is an irrefutable thing that in all the company there is something which is not totally good at the moment I would like, after some time in the company, to try to make some recommendations about the operation and also the business of the company These recommendations have been discussed with the instructor and he is more than paying attention to and agrees with me about the problem CHAPTER 1: INTRODUCTION 1.1 Rationale I choose to start my second internship in a company that specializes in the electronic process of all services available on the market Their orientation from the beginning and will continue to be in the future will be to build themselves up into a payment system provider The society now is really in a depressing state than many of the time in the past There may be no other times when the liquidity and cash become the most serious problem to all the people and even the nations around the world; there are no exceptions to Vietnam And it is the financial point of view that every company should pay their very attention to if they want to maintain the business state and also the vision into the future HaanJSC is built up with a quite small capital and that is really a big disadvantages in this world where the financial condition is evaluated very much and harshly like today So, the aim of the company tends to provide the information technology is reasonable because they really needs less capital to start The difficulties in this sector lie mainly in the technical field But there are no exceptions that financial situation, the capital structure still play a vital role in the company So taking care of the financial aspect of the company means they really care about their company, their staff, themselves and also the vision they are looking forward to In the view of a student specializing in finance, the problem addressed in my thesis will be to find out about the capital structure of the company by conducting a financial analysis based on the figures that have been provided by the instructor at the company Because of the constraint of the resources, I mainly focus on the data and resources that available for the year before of HaanJsc, since it is a very young company and also because of the nature of the IT sector is the regularly and gradually changing situation in a very short term And I also want to know what a small company but has a big vision already has and what they should fulfill in order to achieve it 1.2 Research objective With the aim of conducting a financial analysis to study about the capital structure and financial analysis of the company, this thesis intends to indicate the following content: Studying the figures stated in the financial statements and their meaning in related to the financial situation of the company so that we can have a view about this company’s health Some possible recommendations for the company to be more feasible and effectively than right now 1.3 Research methodology The financial analysis process is a process that requires lots of information and calculations So the method I use here is: The quantitative method: I collect the data available for me from the company where I my internship, to calculate the necessary figures in a formal financial analysis The qualitative method: Based on the calculations, I would like to draw out comments and conclusion about the current situation of the company 1.4 Scope of research Due to the resource constraints, such as human, financial and time resource, my thesis will then be limited to only about the figures in the most recent year, which is last year, that are available for me that is already decided by the company The documents will look at some basic financial aspect of the company along with the evaluation process to consider the financial health of the company and to provide some possible solutions for the development of the company in the aspects of finance (and more if possible) CHAPTER 2: BACKGROUND KNOWLEDGE ABOUT THE FINANCIAL ANALYSIS 2.1 Definition Financial analysis is the process of evaluating the finance performance of a firm to find out whether they have fulfilled their duties through a very specific period of time When looking at a specific company, the financial analyst will often focus on the income statement, balance sheet, and cash flow statement Past performance of one company needs to be analyzed very carefully in order to have an overall view and predict the future Financial analysis of all firms focus on identify and meant to satisfy the following objectives: Prediction of profitability and growth prospects Financial statement analysis helps in assessing and predicting the earning prospects and growth rates in earning which are used by investors while comparing investment alternatives and other users in judging earning potential of business enterprise Evaluation of current position The assets and liabilities possessed by firms can easily revealed facts about the position of them in the industry and also the market Evaluation of past performance Future performance can be estimated through past performance All the stake holders, especially investors or creditors, pay their best attention to sales, cost of good sold, operating expenses, net income, cash flows and many other figures Evaluation of the operational efficiency The analysis process can be used as a mean to assess the efficiency in the operation of the firm Simply one or some standards is set by the Board and then the comparisons between that part and the actual performance expressed in the financial statements will give out the difference and from that facts it is possible to figure out the level of efficiency of the company Possibility of bankruptcy and failure Financial statement analysis is an useful tool in studying the possibility of bankruptcy 10 ... Information used in the financial analysis: 15 2.4.2 Main content of the financial business analysis 20 CHAPTER 3: FINANCIAL ANALYSIS TO HAANJSC 33 3.1 Establishment and general description... technogical basis .36 3.2 Financial results: 39 3.2.1 The financial analysis of HaanJSC 39 3.2.2 The evaluation and problems for the financial result of HaanJSC .48 CHAPTER... become easier and more comfortable for the interpretation For financial analysis task, there will be a whole chapter for the figures of the company to be shown As the study is about the financial