The preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, Ltd

The preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, LtdThe preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, Ltd

i MINISTRY OF FINANCE ACADEMY OF FINANCE Student: Lương Thanh Tùng Class: CQ54/21CL.02 Topic: “The preparation and analysis of financial statements in DUYENHAI Trading and Manufacturer, Ltd” GRADUATION THESIS Major: Business Accounting Supervisor: MSc Nguyễn Bá Linh HÀ NỘI, Year 2020 Lương Thanh Tùng – CQ54/21CL.02 ii LETTER OF DECLARATION I hereby declare that this thesis the results of my own research and has never been published in any work of others During the process of making this thesis, I have seriously taken research ethics; all findings of this project are results of my own research and surveys; all references in this project are clearly cited according to regulations I bear full responsibility to the fidelity of the number and data and other contents of my work Hanoi,(day)… … (month)… … … (year) 20… Student (Signature and Full name) Lương Thanh Tùng – CQ54/21CL.02 iii ACKNOWLEDGEMENT Firstly, I am deeply indebted to my supervisor MSc Nguyen Ba Linh whose help, stimulating suggestions and encouragement helped me all the time of research for and writing of this thesis I also want to thank Duyehai Trading and Manufacturer, Ltd for giving me permission to commence this thesis in the first instance, to the necessary research work and to use departmental data I have furthermore to thank the Vice Director and Chief Accountant as well as all seniors at Duyenhai Trading and Manufacturer, Ltd who gave and confirmed this permission and encourage me to go ahead with my thesis Friends from Accounting Faculty also supported me in my thesis; I want to thank them for all their support, interest and valuable conversations 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 unuavoidable, so I wish to have more opportunities I also wish to receive more contribution and suggestions to make my thesis better Lương Thanh Tùng – CQ54/21CL.02 iv ABSTRACT In the modern economic, Viet Nam business organizations face not only opportunities but also great chanllenges In order to catch up with the progress and avoid being “eliminated”, all organizations are expected to always perfecting and developing their managing system, especially on the aspect of accounting, for having a good accounting system plays an important role in making decisions and policies If by any chance a certain item on the reports (including balance sheet, cash flow statement, income statement) was mispresented, any decisions based on that result may become unsuitable, which will lead to failure Therefore, my thesis with the topic “The preparation and analysis of financial statements in Duyenhai Trading and Manufacturer, Ltd” will point out the importance of financial statements, components of financial statements and analysis of financial statements The main content is reflected in three chapters The first chapter is about the general theory of financial statements preparation and analysis in enterprises In chapter 2, by taking a scenario in Duyenhai Trading and Manufacturer, Ltd, the thesis focuses on a real practice of preparing and analyzing their financial statements From that, chapter points out some of company’s strength and weaknesses and suggests some solutions to improve the preparation and analysis of company’s financial statements In conclusion, the thesis has already been complete in comparison wiith proposed objectives and targets in the introduction Lương Thanh Tùng – CQ54/21CL.02 v LIST OF DIAGRAMS No 2.1 2.2 Content of diagram Management mechanism in Duyenhai Trading and Manufacturer Company, Ltd Accounting system in Duyenhai Trading and Manufacturer Company, Ltd Pages 70 72 LIST OF TABLES No Content of table Pages 2.1 Main indicators reflects business results of the company 68 in 2019 2.2 Main indicators reflects financial position of the 69 company in 2019 2.3 Analysis of business results of the company in 2019 83 2.4 Overall assessment of company’s performance 85 2.5 Company’s financial structure 87 2.6 The asssets structure of the Company 89 2.7 Overview of company’s liquidity 91 2.8 Overall assessment of company’s debt ratio 93 Lương Thanh Tùng – CQ54/21CL.02 vi TABLE OF CONTENT PREFACE 01 CHAPTER GENERAL THEORY OF FINANCIAL STATEMENTS PREPARATION AND ANALYSIS IN ENTERPRISES 04 1.1 General overview of financial statements and financial statements analysis in enterprises 04 1.1.1.The basics of financial statements .04 1.1.1.1 Financial accounting information 04 1.1.1.2 Definition and objectives of financial reporting 06 1.1.1.3 Requirements of financial statements 07 1.1.2 Types of financial statements .08 1.1.2.1 Balance sheet 08 1.1.2.2 Cash flow statement 13 1.1.2.3 Income statement .17 1.1.2.4 Financial statement footnotes 20 1.1.3 The basics of financial statement analysis 22 1.2 Financial statements preparation in enterprises .24 1.2.1 Statememt of financial position (balance sheet) preparation 24 1.2.1.1 Basis for preparation of the Balance Sheet 24 1.2.1.2 Content and methods of setting up items in balance sheet of enterprises to meet the assumption of continuous operation (Form B01-DN) 25 1.2.2 Income statement preparation .26 1.2.2.1 Basis for preparation of income statement 26 1.2.2.2 Contents and methods of preparation of item in income statement (Form B02-DN) 26 1.2.3 Cash flow statement preparation 33 1.2.3.1 Basis for preparation of cash flow statement 33 Lương Thanh Tùng – CQ54/21CL.02 vii 1.2.3.2 Content and methods of preparation of items in cash flow statement (Form B03-DN) 34 1.2.4 Financial statement footnote preparation (BN 09-DN) .50 1.2.4.1 Basis for preparation of financial statement footnote 50 1.2.4.2 Content and methods of setting up items in financial statement footnote .50 1.3 Financial statement analysis in enterprises 52 1.3.1.Documents and methodology for financial statements analysis 52 1.3.1.1 Documents for analysis 52 1.3.1.2 Methods of analysis 53 1.3.2 Content of financial statements analysis .54 1.3.2.1 Business results's analysis 54 1.3.2.2 Balance sheet's key indicator analysis .57 CONCLUSION OF CHAPTER 63 CHAPTER PRACTICAL SITUATION OF FINANCIAL STATEMENTS PREPARATION AND ANALYSIS IN DUYENHAI TRADING AND MANUFACTURER, LTD .64 2.1.Overview of Duyenhai Trading and Manufacturer, Ltd 64 2.1.1.Foundation and development of the company .64 2.1.1.1 General information about the company 64 2.1.1.2 Foundation and development 65 2.1.2 Characteristics of business operation 65 2.1.2.1 Main business sector 65 2.1.2.2 Advantages in company's operation 67 2.1.2.3 Disadvantages in company's operation 67 2.1.2.4 Business results and financial position of the company in 2019 .68 2.1.2.5 Production and business plan in 2020 69 2.1.3 Characteristics of organising management mechanism of Duyenhai Trading and Manufacturer, Ltd 70 2.1.4 Characteristics of organizing accounting system 72 Lương Thanh Tùng – CQ54/21CL.02 viii 2.1.4.1 Organization of accounting apparatus .72 2.1.4.2 Accounting policies applied at the company 74 2.2 Practical situation of financial statement preparation and analysis at Duyenhai Trading and Manufacturer, Ltd 74 2.2.1 Practical situation of financial statement preparation 74 2.2.1.1 Accounts of general ledger at year end 2019 74 2.2.1.2 Statement of financial position at year end 2019 .78 2.2.1.3 Income statement at year end 2019 80 2.2.1.4 Cash flow statement at year end 2019 .81 2.2.1.5 Financial statement footnote at year end 2019 82 2.2.2 Practical situation of financial statements analysis .83 2.2.2.1 Business results's analysis at Duyenhai Trading and Manufacturer 83 2.2.2.2 Balance sheet’s key indicator analysis .85 2.3 Evaluattion of financial statement preparation and analysis at Duyenhai Trading and Manufacturer, Ltd 93 2.3.1 Achievements in financial statement preparation and analysis at Duyenhai Trading and Manufacturer, Ltd 94 2.3.2 Limitations in financial statement preparation and analysis at Duyenhai Trading and Manufacturer, Ltd 95 CONCLUSION OF CHAPTER 97 CHAPTER SOME SOLUTIONS TO IMPROVE THE PREPARATION AND ANALYSIS OF FINANCIAL STATEMENT AT DUYENHAI TRADING AND MANUFACTURER, LTD 98 3.1 Development orientation of the company 98 3.1.1 Socio-economic scenario 98 3.1.2 Targets and business orienttation of the company 98 3.2 Requirements for improving the preparation and analysis of financial statements 99 Lương Thanh Tùng – CQ54/21CL.02 ix 3.3 Some solutions to improve the preparation and analysis of financial statements 102 CONCLUSION OF CHAPTER 105 CONCLUSION 106 REFERENCES 108 Lương Thanh Tùng – CQ54/21CL.02 PREFACE The urgency of the study In the current situation, our country is in the process of economic development and integration according to the development of the world and the trend of the times Economic integration and development is an opportunity and also a great challenge for the country's economy in general and in particular domestic enterprises in particular This requires each enterprise to make efforts, maximize its advantages, as well as overcome the weaknesses that still exist in order to integrate with the world economy In the era where science and technology are advancing and upgrading by hour, a single decision can decide the fate of an entire business entity To be able to make a right decision, the leaders must have information about company’s current status presented clearly and faithfully, so that no items shall be mistaken Having a good accounting information system also allows director to manage the company’s operation so that if any problem arises, they can interfere and solve the problem in no time But the accounting information system is too complicated for users such as creditors, lendors, and employees… to understand, so a need for a compact but fully and clearly – presented occurred, and financial statements was made Financial statements are written records that convey the business activities and the financial performance of a company Financial statements are often audited by government agencies, accountants, firms, etc to ensure accuracy and for tax, financing, or investing purposes Investors and financial analysts rely on financial data to analyze the performance of a company and make predictions about its future direction of Lương Thanh Tùng – CQ54/21CL.02