INTRODUCTION
General research background on the Confectionery manufacturing
In recent years, Vietnam has actively sought to enhance cooperation with both regional and global partners, leading to significant advancements across various sectors, including the economy, politics, and culture This progress has intensified competition among domestic enterprises, necessitating careful strategic planning as businesses navigate a challenging landscape where "strength wins, weakness loses." Analyzing financial performance and position serves as a crucial tool for managers and external stakeholders, enabling them to make informed and effective decisions in their economic and legal interactions with the business.
The Vietnamese confectionery industry is experiencing significant growth, with an annual revenue increase of approximately 15%, leading to total market sales estimated at 51 trillion VND, according to the Ministry of Industry and Trade By 2030, the industry aims to enhance its development through the modernization of production equipment, automation, and a strong focus on improving quality, food safety, and hygiene Additionally, there will be investments in establishing stable raw material sources to support the production of high-class confectionery products.
In addition to renowned confectionery brands like Hai Chau, Hai Ha BiBica, Kinh Do, Trang An, and Meiji, Huu Nghi Food stands out as one of the largest and most reputable confectionery manufacturers and traders in Vietnam and the surrounding region.
1.1.2 About Huu Nghi Food JSC
Source: website Huu Nghi Food
Huu Nghi Food JSC (HUUNGHI FOOD), formerly Huu Nghi Premium Confectionery Factory, was established and officially operated on December
Founded in 1997, Huu Nghi High-class Confectionery Factory transitioned to Huu Nghi High-class Confectionery JSC in 2006 after nine years of operation That same year, the company established a modern distribution system in Northern Vietnam, which expanded to 32 provinces and cities by 2007 In 2008, Huu Nghi extended its reach to the Central, Central Highlands, and Southern regions To align with market trends and broaden its product offerings, the company rebranded as Huu Nghi Food JSC in June 2009.
Huu Nghi Bakery officially launched its first system in Hanoi, marking a significant milestone in 2010 when the company upgraded its domestic distribution and established an export department By May 2015, Huu Nghi expanded its operations by creating a sales department focused on the MT and Horeca channels In 2017, Huu Nghi Food JSC began distributing sauces and condiments, showcasing its growth and diversification over 20 years in the food industry.
3 accompanying Huu Nghi, in April 2018, Vietnam Tobacco One Member
Company Limited successfully divested from Huu Nghi JSC From 2013 up to now, Huu Nghi‟s revenue and profit have continuously increased over the years
Huu Nghi Food JSC operates two branches and three factories located in Hanoi, Ha Nam, and Binh Duong, supported by a robust distribution network comprising hundreds of distributors and over 140,000 retail outlets nationwide The company offers a diverse range of confectionery products, including Tipo custard, Kexo, Bolero, Salsa, Arita, Suri, and Joli candies, as well as moon cakes, cakes, jams, and other processed foods To cater to customer preferences, Huu Nghi is expanding its dry cake product lines while also promoting its established fresh products, such as Lucky, Staff, Braha, and Sandwich Notably, in 2006, Huu Nghi's Staff cake became the first product in the salty cake segment, and after more than 20 years of evolution, Huu Nghi's fresh cakes continue to be a consumer favorite.
Huu Nghi has established itself as a prominent name in the Vietnamese confectionery industry, renowned for its quality products and commitment to traditional values As the leading manufacturer of mooncakes and Tet jam in Vietnam, Huu Nghi Food has successfully catered to major clients, including Samsung, Foxconn, Canon, Viettel, and Vietcombank.
Vision: To become the leading trademark in spreading typical values of each Vietnamese families to the region and the whole world h
Mission: To create products that connect family members and deliver familiar feelings to each customer and Vietnamese family
Huu Nghi Food's manufacturing facilities are certified for FSSC 22000, ISO 22000:2018, and Halal standards, ensuring high-quality production Additionally, our products have consistently received recognition as High-Quality Vietnamese Goods for several years.
Since its establishment, Huu Nghi Food has received numerous awards and merits from the Prime Minister, the Ministries, and the Government, such as:
The Emulation flag of the Ministry of Industry and Trade in 2016;
The Emulation flag of the Ministry of Industry and Trade in 2015;
The Emulation flag of the Government in 2014;
The Emulation flag of the Ministry of Industry and Trade in 2013;
Certificate of Merit awarded by the Minister of the Ministry of Industry and Trade in 2012;
The Emulation flag of the Ministry of Industry and Trade in 2011;
The Second-class Labor medal of the President in 2011;
The Third-class Labor medal of the President in 2001, 2003;
From 1999 to 2007, the Ministry of Trade implemented the Excellent Emulation Flag, which highlights the need for comprehensive financial analysis in businesses At Huu Nghi Food JSC, the analysis of financial performance primarily focuses on general indicators, overlooking a detailed examination of the company's strengths and weaknesses As a result, the financial information presented by the company lacks credibility This situation prompted the author to choose the topic "Financial Statements Analysis at Huu Nghi JSC" for their Master's thesis.
1.2 Research aims and research questions
This thesis analyzes Huu Nghi Food's financial performance from 2017 to 2021, focusing on profitability, liquidity, solvency, and asset management through financial statement analysis The research aims to evaluate the company's financial position over five years and identify any red flags that may require attention By utilizing the company's financial data and appropriate analytical tools, the study seeks to provide recommendations for enhancing Huu Nghi's financial performance, addressing past shortcomings, and improving future outcomes.
Research questions for the thesis are built as follows:
(1) How was Huu Nghi Food‟s financial situation in 2017-2021?
(2) What solutions may be proposed to improve the financial position and performance at Huu Nghi Food JSC in the future
1.3 Scope of research and methodology
+ About the content: Analyzing the financial position and performance using financial statements at Huu Nghi Food JSC and firm strategy in the future
+ About space and time: Research and analyze the financial position and performance at Huu Nghi Food join stock company from 2017- 2021 h
Research methodology encompasses the specific procedures and techniques employed to identify, select, process, and analyze information regarding a topic In a research paper, the methodology section is crucial for readers to critically assess the study's validity and reliability For this study, quantitative secondary data will be gathered from archival documents of Huu Nghi Food, with financial analysis conducted using mixed-method tools, including financial ratios and duPont analysis Additionally, primary qualitative data will be collected through interviews with staff to explore their perceptions of the company's performance Together, these mixed methods will provide insights into Huu Nghi's financial position and identify opportunities for recommendations.
The research faces notable limitations due to constraints in data, particularly concerning the duration and sample size While the chosen methodology is deemed suitable for the topic, the author suggests that extending the study period further into the past could yield more accurate insights by identifying trends and the influence of historical events, ultimately aiding future decision-making Additionally, expanding the sample size to include a broader range of stakeholders beyond just the Company’s staff would provide a more comprehensive representation of the findings.
The thesis is composed of five chapters:
LITERATURE REVIEW
Preview of previous studies
Economic-financial management is crucial for assessing financial position and performance, with extensive research highlighting the significance of financial statement analysis in this context.
In her 2019 doctoral thesis at the Academy of Finance, Nguyen Thi Ngoc Lan focused on enhancing the analysis of financial situations in construction enterprises through financial statement analysis The study aims to improve the organization of financial analysis, refine analytical methods, and develop a comprehensive system of financial position and performance indicators, all designed to support effective management of financial health in construction businesses.
Master‟s thesis in economics by Nguyen Thi Trinh in 2019 on the topic:
“Completing the content of analyzing the financial statement at the Complete Materials and Equipment JSC”, the thesis has mentioned the following issues: h
This article examines the current landscape of content analysis and its significance in evaluating a company's financial statements for informed decision-making It aims to propose comprehensive solutions for future assessments of the company's financial position.
Nguyen Thi Quynh in 2019 with the topic of her master‟s thesis:
The article "Analysis of the Financial Statement of Bibica JSC" explores key theoretical aspects of financial position and performance evaluation through financial statement analysis It covers the financial system and analytical methods employed by Bibica JSC, including a comprehensive assessment of the company's financial status, financial structure, debt situation, and solvency Additionally, it analyzes the efficiency of production and business activities based on financial data The author also proposes various solutions and conditions aimed at enhancing the company's financial capacity.
The authors establish a theoretical foundation for analyzing financial position and performance, highlighting the significance of financial statement analysis in effective financial management Their research examines the current landscape of financial position and performance analysis, addressing the limitations faced by companies.
There is currently a lack of experimental research on financial statement analysis at Huu Nghi Food JSC for the period of 2017 to 2021 As highlighted in Chapter 1, the confectionery industry is recognized as a promising sector for growth in Vietnam Huu Nghi Food JSC has established itself as a well-known brand among consumers and has gradually secured its leading position in the Vietnamese confectionery market This study aims to analyze the company's financial situation to understand its performance and prospects better.
9 financial statement analysis so that propose recommendations for the company to improve its financial position and performance
The author emphasizes the importance of studying and analyzing financial statements at Huu Nghi Food JSC This thesis primarily focuses on financial statement analysis, drawing selectively from previous relevant research findings to enhance the study.
Theoretical preliminaries
Financial performance encompasses the extent to which a company achieves its financial goals and is crucial for effective financial risk management It involves assessing the monetary outcomes of a firm's policies and operations, reflecting its overall financial health over a specific timeframe Additionally, financial performance allows for comparisons between similar firms within the same industry or across different sectors.
Financial analysis refers to “the study of financial information about companies, projects, etc., to understand their costs, profits, cash flow, etc
Financial analysis involves transforming financial data into actionable insights for informed decision-making Essentially, it serves as a fundamental tool for assessing a company's market viability and its potential profitability.
A financial statement is an official document that comprehensively details a firm's financial information Its primary purpose is to convey essential insights into the financial status and performance of the organization.
DeMarzo, and Harford (2015, 54) briefly define financial statements as
“accounting reports issued by a firm quarterly or annually that present past information a snapshot of the firm‟s financial position”
Profitability is a term that is composed of two words: profit and ability
Profit refers to the earnings generated from trade or business after deducting the costs associated with producing and selling goods and services Meanwhile, ability denotes the capacity or skill to perform a task effectively.
Profitability refers to the capacity to generate returns from an investment, as defined by Tulsian (2014) It signifies the effectiveness of a business in generating profits, ultimately reflecting the company's overall success or failure.
According to James et al (2006), financial statement analysis is considered a three-legged stool The three-legged stool represents analysis objectives based on the following:
- Determining the economic characteristics of the industry in which a company participates and the relationship of those economic characteristics to the financial ratios
- Describing the strategies which a company pursues to distinguish itself from rivals as a basis for assessing the Company's competitive advantages, the sustainability of the Company's earnings, and risks
- Evaluating financial statements, including accounting concepts and methods, and the quality of the information they provide
Ciaran (2006) emphasized that financial statement analysis involves evaluating prepared financial reports alongside additional data to assess past, present, and future performance.
Financial analysis is essential for making informed investment, credit, and economic decisions, focusing on a company's performance, potential opportunities, and risks Analysts assess various factors, including liquidity and asset turnover for short-term debts, while long-term lenders prioritize cash flow predictions and profitability assessments Different stakeholders, such as managers and owners, have distinct objectives; managers aim to clarify financial structure and efficiency, whereas owners focus on profitability and increasing equity Ultimately, the goals of financial analysis are shaped by the economic interests of individuals and organizations, necessitating flexibility from analysts throughout the process.
Sources of information
Subramanyam (2009) identifies four key sources of financial information: the balance sheet, income statement, statement of cash flows, and notes to financial statements Each of these components provides essential insights into a company's financial health and performance, which will be explored in detail in the subsequent sections.
A balance sheet provides a snapshot of a company's assets, liabilities, and shareholders' equity as of a specific date, reflecting the fundamental accounting equation that illustrates the relationship between these elements.
Assets represent future economic benefits controlled by an entity as a result of past transactions, encompassing resources that can generate future cash flows, reduce cash outflows, or support operational activities According to the accounting equation, assets equal liabilities plus shareholders' equity, highlighting their role in a company's financial structure Examples of assets include accounts receivable, inventories, investment securities, and prepaid expenses, all of which contribute to a company's potential for generating value.
Liabilities are defined as the future sacrifices of economic benefits that arise from a company's current obligations to transfer assets or provide services due to past transactions or events They represent a company's duty to make payments—whether in cash, goods, or services—at predictable quantities and times Essentially, liabilities reflect the expectations of management regarding future resource sacrifices necessary to fulfill existing obligations.
Shareholders' equity represents the residual interest in a company's assets after all liabilities have been settled, indicating the owner's claim on the remaining property not needed to fulfill creditor obligations (Fernandez, 2002) Consequently, the valuation of both assets and liabilities on the balance sheet is crucial in determining the overall value of shareholders' equity.
Analysts assess a company's financial health and credit risk by examining the relationships within its balance sheet (Palepu and Healy, 2013) A higher level of current assets compared to current liabilities indicates that the company possesses adequate liquid resources to meet short-term obligations (Penman and Penman, 2007) Additionally, a low ratio of long-term debt to shareholders' equity suggests that the company likely has long-term assets available to repay its long-term debt at maturity or can secure new financing by using those assets as collateral (Dewatripont and Tirole, 1994).
The income statement is a key financial document that reveals a company's profitability over a specific period (Palepu and Healy, 2013) Analysts and investors often use the terms net income, earnings, and profit interchangeably when discussing the bottom line (Hillman and Keim, 2001) This statement primarily showcases the outcomes of operational decisions, including product mix, pricing strategies, and resource allocation Additionally, it details financial aspects related to investments, such as interest and dividend income, as well as financing activities, including interest expenses Other comprehensive income items, included in the shareholders' equity statement, represent profits and losses resulting from changes in market conditions.
14 the value of some assets and liabilities, which are not recorded in net income until those profits and losses are realized
The statement of cash flows is a crucial financial document that reports net cash flows from three primary business activities: operating, investing, and financing Its main purpose is to inform users about the sources and uses of cash, complementing the income statement by illustrating the differences between cash flows and accrual-based income This statement is instrumental in assessing how companies generate and utilize cash, providing insights into their financial strategies By connecting operating, investing, and financing activities, the cash flow statement ensures their smooth and efficient functioning Additionally, it aids in evaluating a company's historical ability to generate free cash flow and forecasting future free cash flow.
The statement of cash flows classifies cash flows as relating to three different activities: operating, investing, or financing
Selling goods and services is crucial for generating cash flow in a company Analyzing cash flow from operations over multiple years reveals which activities sustain operational capacity and highlights the degree to which companies depend on alternative cash resources (Broome, 2004).
Investing involves acquiring long-term assets such as property, plant, and equipment, which requires substantial ongoing cash outlay For companies to grow, they must secure additional long-lived productive assets (Palepu and Healy, 2013) A portion of the cash necessary for these investments is obtained through various funding sources.
15 those types of assets from the sale of assets Such cash flows are rarely enough to cover the cost of new purchasing, though
A company secures funding through short-term and long-term loans, as well as by issuing preferred and common stock This capital is utilized for loan repayments, dividend distributions, and repurchasing outstanding shares of both preferred and common stock.
Financial statements, including the balance sheet, income statement, and cash flow statement, provide crucial account information but lack explanations on how these figures are determined To address this, notes accompanying the financial statements offer vital insights into the accounting methods and principles employed by the company for measuring assets, liabilities, revenues, costs, profits, and losses These notes summarize key accounting principles and highlight significant financial estimates, such as fair values of investment securities, income taxes, and intangible assets.
Many companies enhance their financial statements with detailed narrative and quantitative analysis from management (Smith and Taffler, 2000) This management discussion and analysis offers valuable insights into management strategies and evaluations of the company's performance, while also providing a perspective on managers' expectations for the company's future.
Managers’ and independent auditor’s attestations h
Managers and independent auditors are responsible for affirming the quality and effectiveness of a company's internal control system, as well as the fairness of its financial statements and notes This attestation is crucial for accurately reporting the company's financial position, performance, and cash flows An independent audit enhances the credibility and reliability of the financial statements prepared by management, ensuring stakeholders can trust the reported information.
DATA AND METHODOLOGY
Research type
This research analyzes Huu Nghi Food's financial performance over the past five years, from 2017 to 2021, focusing on key areas such as profitability, liquidity, solvency, and asset management By utilizing financial ratios, common-size analysis, and both vertical and horizontal analysis, the study aims to assess the company's financial position and identify any red flags The findings will lead to recommendations for addressing any shortcomings in the company's financial performance Employing a mixed-methods approach, this thesis seeks to describe, interpret, and contextualize the financial data to provide a comprehensive understanding of Huu Nghi Food's financial health and future prospects.
This research aims to critically examine the financial performance of Huu Nghi Food in Vietnam from 2017 to 2021, employing a mixed-methods approach that effectively combines qualitative and quantitative techniques The rationale for this chosen methodology will be elaborated in the subsequent sections To maximize the effectiveness of this approach, the researcher utilizes various financial analysis tools to conduct a comprehensive financial assessment while also considering the perspectives and perceptions of stakeholders.
18 individuals who might influence or have a close encounter with the financial data of Huu Nghi Food.
Research methods
This sub-section aims to outline and justify the mixed methods employed in this research The primary quantitative method involves a content analysis of Huu Nghi Food's document archives and financial reports from 2017 to 2021, deemed essential for a thorough understanding of the company Subsequent chapters will present the findings of this analysis Furthermore, this quantitative approach is complemented by qualitative methods to effectively identify critical areas that necessitate in-depth insights and perspectives from key stakeholders.
In this research, semi-structured interviews were conducted with Huu Nghi Food staff who have significant involvement in the company's operations and performance Eight individuals were interviewed between May and June 2021, with six interviews taking place in person, one via phone, and one through email All interviewees were of Vietnamese origin, and the interviews were conducted in Vietnamese, subsequently transcribed and analyzed in English.
Justification of chosen methods
This research employs a mixed-methods approach, integrating quantitative analysis of financial data with qualitative semi-structured interviews This method is deemed suitable as it closely aligns with the research aims and questions, particularly focusing on the topic of financial health.
Statements analysis at Huu Nghi JSC ”, the focal objective of this thesis is to answer the two research questions:
(1) How was Huu Nghi Food‟s financial situation in 2017-2021?
(2) What solutions may be proposed to improve the financial position and performance at Huu Nghi Food JSC in the future?
To answer the first research question, the researcher considers a quantitative analysis of the Company‟s financial data over the period
This study aims to illuminate the financial history, current status, and future outlook of Huu Nghi Food by integrating quantitative analysis of financial data with qualitative insights A qualitative approach, utilizing semi-structured interviews with key individuals involved in the financial report preparation process, is essential to gain a deeper understanding of the Company's performance and potential The combination of these methodologies is expected to yield valuable conclusions and recommendations for enhancing Huu Nghi Food's financial performance.
The mixed-methods approach is advantageous as it integrates both qualitative and quantitative elements, enhancing scientific rigor in research, as highlighted by Dewasiri et al (2018) This balanced combination yields more scientifically justified results compared to non-mixed methods By employing financial analysis tools alongside semi-structured interviews, researchers can achieve a deeper understanding of financial phenomena.
20 figures by attributing dry and rough figures to the opinions and untold truths behind them
The third reason for selecting a mixed-method approach is to diversify the research methodology of this project The researcher asserts that relying solely on financial analysis or conducting interviews with eight individuals would be inadequate for developing a robust thesis Instead, combining both methods enhances the research, allowing the findings to be applicable for practical use and future studies.
Data collection and analysis
Data collection is essential for any research paper, including this thesis, which utilizes both primary and secondary sources (Hox and Boeije, 2005) Primary data is gathered directly by the researcher through interviews, providing unique insights but potentially resulting in raw and chaotic information In contrast, secondary data is synthesized from various sources such as books, documents, and online databases, allowing for better control over the information but often lacking specificity This thesis employs in-depth semi-structured interviews with Huu Nghi Food staff for primary data and analyzes the company's financial reports for secondary data, ensuring a comprehensive approach to research.
21 financial analysis tools The combination of both types of data collection in the thesis helps build a stronger foundation for research discussion and conclusions
The secondary data can be categorized into internal and external sources, providing researchers with a diverse range of information Internal sources include the company's documents and financial reports, which are essential for analyzing Huu Nghi Food In contrast, external sources encompass publicly available information about the firm, such as web pages, published articles, discussion forums, and industry analysis reports By integrating both internal and external data, the thesis enhances its reliability and credibility while minimizing biases Given that all eight interviewees are current employees, their perspectives may be biased; thus, incorporating external data is crucial for achieving a balanced and comprehensive financial analysis of the company.
Methodological limitations
This research utilized two primary methods: content analysis of company archival documents and financial reports, alongside semi-structured interviews with Huu Nghi Foodstaff who are significantly involved in the company’s operations While employing both methods can enrich the research, it may also lead to an excessive influx of information, potentially complicating the analysis and obscuring the research objectives.
After careful consideration, the research paper employs two chosen methods believed to enhance depth of interpretation and analysis through double dimensions of data sources and eight layers of independent perspectives obtained via semi-structured interviews The researcher acknowledges and remains open to potential criticisms regarding methodological limitations.
The research faced notable limitations regarding the interviews conducted The sample size was relatively small, comprising only eight participants, which raises concerns about the representativeness of the findings Additionally, the interviews were conducted solely in Vietnamese, introducing potential risks of mistranslation and misinterpretation, which could affect the clarity of the conveyed messages Nevertheless, the researcher made every effort to ensure accurate translation and effective theme identification in the interviewees' responses.
Data Sources and Interviewees’ Profiles
The research data for Huu Nghi Food was gathered from two primary sources: primary and secondary Primary data were collected through semi-structured interviews with internal staff who have direct interactions with the company's financial data Secondary data included both internal and external sources; internal data comprised financial reports and documents from Huu Nghi Food, while external data provided broader insights into the firm's operations and the overall business landscape.
Figure 1: Process of analyzing financial statements
Nghi Food collected via web pаges, published articles, discussion forums, and industry analysis reports
In May and June 2021, eight individuals of Vietnamese origin were interviewed, with six conducted in person, one via phone, and the last through email All interviews were carried out in Vietnamese and subsequently translated into English.
Data analytical framework
The analyzing financial statements are as per the following table:
Step 1: Define the goal of the analysis This is an important job that determines the quality of the analysis report and affects the satisfaction level of the users The determination of the analysis objective depends on the decision-making purposes of the users of the financial statements
Step 2: Then, the analyst will identify the contents to be analyzed to achieve those goals Suppose the analysis aims to evaluate the efficiency of working capital management and use In that case, it is necessary to analyze the turnover rate of short-term assets in general, the turnover rate of each essential short-term asset item (inventories), receivables from customers), net working capital, and the length of the business‟s operating cycle Determining
Step 1: Define the goal of the analysis
Determine the content to analyze
Develop and communicate conclusions/re commendation s
24 the right content to analyze (not redundant, not lacking) will provide helpful information for users to make reasonable decisions
Step 3: Analysts get the data needed to answer specific questions An essential part of this step is understanding the Company's business, financial performance, and financial situation (including trends over time and compared with competitors) Additionally, information about the economy and industry is essential to understand the environment in which the firm operates Analysts often adopt a top-down approach whereby they understand macroeconomics, such as the economic and inflation prospects, and identify the company's opportunities in the expected macroeconomic environment
Step 4: When the data has been processed, the next step is interpreting the output The answer to a specific financial analysis question is seldom the numerical answer alone; the answer to analytical questions is based on analyzing results and using these results to support conclusions or recommendations The answers to the specific analytical questions can achieve the analysis's underlying purpose However, a conclusion or recommendation is required To support making the decision, the research will cite information such as target value, relative performance, expected future performance given to the Company's strategy, management quality, and other important information
Step 5:Communicating conclusions or recommendations appropriately is the next step in the analysis An appropriate format would change by the analysis task, by firms, and/or by the audience
Step 6: The process does not end with the report If a capital investment is made or a credit rating is assigned, a periodic review is required to determine whether the original conclusions and recommendations are still valid Follow-up may involve repeating all the above steps in the process periodically h
RESULTS AND FINDINGS
Content Analysis
In addition to the qualitative insights into the Company's background outlined in section 1.1, this section will provide a comprehensive analysis of the Company, utilizing its audited financial reports for a deeper understanding.
Between 2017 and 2021, the Company's financial data was sourced from its website and analyzed using various financial analysis tools to evaluate profitability, liquidity, solvency, and asset management Techniques such as financial ratios, common-size analysis, and vertical and horizontal analysis were employed to assess the Company's financial health and identify any potential red flags All financial reports utilized in this research were thoroughly audited, ensuring the reliability of the analysis.
Table 1: Statement of Huu Nghi Food Financial Position
Current Assets 513.259.786.918 553.555.702.788 608.972.823.547 904.736.039.643 812.527.295.969 906.266.587.213 Long-term Assets 193.348.384.867 331.830.521.148 462.244.749.006 522.310.778.348 957.658.993.691 1.070.448.971.676
Table 2: Statement of Profit and Loss Currency: VND
Table 3: Statement of Cash Flows
Net cash flows from operating activities 101.959.960.459 (147.772.640.847) (29.283.746.536) 37.823.464.294 41.293.499.577 135.253.793.489
Net cash flows from investing activities (10.403.932.096) (243.327.159.202) (158.218.345.558) (283.752.358.489) (223.850.855.643) (233.357.646.304)
Net cash flows from financing activities (48.298.807.569) 126.861.050.191 200.977.709.616 247.263.681.426 213.117.467.294 97.866.859.910
Ending Cash Balance and Cash Equivalents 271.267.305.137 7.028.966.160 20.479.771.672 21.786.999.656 52.343.205.211 52.122.110.519 h
Common-size analysis, also known as vertical analysis, examines the proportion of financial statement items relative to their totals over different financial periods This analysis reveals significant fluctuations in the proportions of financial data items across the years studied Consequently, further investigation through horizontal analysis is essential for a comprehensive understanding of these trends.
Common-Size Statement of Financial Position
Common-Size Statement of Profit and Loss
Based on table 1, 2 and 3 and the comment-size statements above we can see that :
2017-2019, Current asset is the higher proportion of Total assets ( about 57-63%) but in 2020-2021 the long-term asset is the higher proportion (54%)
In 2017, the company's total assets amounted to VND 885.39 billion, with current assets representing 63% at VND 553.56 billion and long-term assets at 37% totaling VND 331.83 billion By 2021, total assets significantly increased to VND 1.98 trillion, where current assets decreased to 46% at VND 906.27 billion, while long-term assets rose to 54%, totaling VND 1.07 trillion.
Liabilities and owner’s equity situation
Current liabilities are a large proportion of Total liabilities ( about 62% in 2017 and 2021, 44%)
In 2017 Long-term liabilities takes up 4% of total liabilities, this proportion increased strongly to 30% in 2018 and stable at about 29-34% in the next years
Owner‟s equity is stable proportion over 4 years 2018-2019, with fluctuation of about 23-27% In 2017 about 34% h
In general, over the past five years, the company„s structure has changed obviously, especially, since the proportion of assets has changed in the last two years
Statement of Profit and Loss
Over the past five years, the proportion of the cost of goods sold relative to total net revenue has been significant, peaking at 72.9% in 2021 Meanwhile, selling and administrative expenses (SG&A) have experienced fluctuations of approximately 2%.
The company's total revenue has shown a steady increase, rising from VND 1,396 billion in 2017 to VND 1,602 billion in 2021 However, profit after tax experienced a decline, falling from VND 62 billion to VND 52 billion, primarily due to a significant decrease in financial activity profit and a sharp rise in interest expenses, which escalated from VND 6 billion to VND 54 billion.
A financial ratio analysis proceeds to comprehensively evaluate a company‟s liquidity, operational asset management, solvency (or financial risk), and profitability Each of these financial ratio clusters is calculated and discussed below
Inventories and Short- term receivables)
Figure 2: Huu Nghi Food’s Liquidity financial ratios
Liquidity ratios are essential for evaluating a company's ability to meet its financial obligations and manage unexpected cash requirements For Huu Nghi Food, four key liquidity ratios have been analyzed: the cash ratio, which measures the company's cash and cash equivalents against its current liabilities; the quick ratio, calculated by subtracting inventories from current assets and then dividing by current liabilities; and the current ratio, determined by dividing current assets by current liabilities These ratios provide critical insights into the company's financial health and liquidity position.
The Cash ratio, as illustrated in Figure 1, has remained relatively low and fluctuated between 0.01 and 0.06 from 2017 to 2021, reflecting a rise in Cash and Cash equivalents from 7 billion VND to 52 billion VND against Current Liabilities increasing from 549 billion VND to 865 billion VND Despite a long-term upward trend in this ratio, the Company faces risks associated with inadequate cash payment capabilities, highlighting the need for improved equity Conversely, the quick ratio, which was 1.37 in 2019, indicates a strong quick solvency for the Company, particularly amid the complexities of the epidemic situation.
Cash Ratio Quick Ratio Quick Ratio (except: Inventories and short-term receivables) Current ratio h
33 receivables) is very low (0,13-0,29) and the quick ratio is much smaller than the current ratio, which shows that the current assets to payment of the
Company depend on the inventory and short-term receivables
According to data from Investing.com, Huu Nghị Food JSC maintains Quick and Current Ratios that align with industry averages, indicating that the company is not experiencing any liquidity issues.
Table 5: Extracts from Huu Nghi Food financial reports
The second cluster of financial ratios in this study focuses on the operational asset management of Huu Nghi Food, highlighting its significance for the Company's success Research indicates that effective management of operating assets and payables throughout the operating cycle is essential for thriving businesses The analyzed ratios reveal consistent trends in Huu Nghi Food's management of its operational assets.
Specifically, all three turnovers show a declining tendency from 2017 to
2021, whereby inventory turnover sharply increased from 8,7 to 12,8 in 2019, but in 2021 this ratio decreased to 7,7 Receivables turnover also decreased halved, and payables turnover almost dropped split with a sudden peak in
In 2021, despite a slight increase in inventory, uncollected sales and a significant rise in days payable led to a negative cash conversion cycle, also known as the financing period This cycle decreased from -73.9 days in 2017 to -243.5 days in 2021, indicating that the Company is misappropriating supplier capital for a longer duration than customers are misappropriating the Company's capital.
Generally, The Inventory turnover of the Company fluctuates from 8-12 times per year, the number of days of stock inventory increased is not too h
Over the past five years, the company has maintained an average inventory turnover of 35 days, significantly lower than the industry average of 77 days, indicating efficient sales and minimal stock accumulation However, the inventory days rose to 28.5 in 2019, highlighting potential backlogs Additionally, the days sales outstanding (DSO) increased from 63 to 129 days, far exceeding the industry standard of 18.9 days, suggesting a growing risk of capital misappropriation from customers To mitigate the risk of increasing bad debts, the company must implement effective receivables management strategies.
Figure 3: Huu Nghi Food’s Financial Risk Financial Ratios
The third cluster of financial ratios deals with the Company's solvency also called financial risk The two ratios selected for this assessment are debt-
Debt to equity ratio Return on equity h
The debt-to-equity ratio, determined by dividing total liabilities by shareholder’s equity, evaluates a company's capital structure and financial risk Conversely, return on equity (ROE) is calculated by dividing net income by average shareholder’s equity, measuring the net income generated for each dong invested in the company This ratio is especially significant for external investors.
From 2017 onwards, the debt-to-equity ratio has consistently exceeded 1, peaking at 3.25 in 2018, indicating an increased reliance on debt financing, which, according to Needles et al (2014), heightens financial risk In 2018, the company utilized working capital to purchase raw materials and invest in machinery for a processing plant in Bac Ninh, leading to an expected rise in liabilities Conversely, the return on equity has significantly declined, with the income generated per dong invested dropping from 16.9% in 2017 to 10.22% in 2021.
The recent decline in return on investment is a crucial signal for external investors, potentially indicating future financial difficulties for Huu Nghi Food Additionally, the company is leveraging debt to expand its operations, prioritizing loan mobilization to enhance profitability.
Semi–Structured Interviews
Semi-structured interviews were incorporated as a qualitative method to gain deeper insights that quantitative financial analysis alone could not provide The interview questions targeted senior executives with extensive experience in the Company, enabling them to share their understanding of the broader financial landscape and offer valuable perspectives on the Company's future.
Based on the quantitative analysis presented in prior sections, the following semi-structured interview questions were designed and asked of the interviewees:
Question 1: This question enquired the interviewees about cash management at Huu Nghi Food For those with a more financial background h
From 2017 to 2021, the company's current ratio exceeded 1, indicating sufficient short-term assets to cover liabilities; however, the quick ratio remained below 1 This discrepancy raises questions about potential inefficiencies in cash management and suggests that the company may face challenges in meeting its immediate financial obligations.
Question 2: Ratio analysis has shown a return on equity significantly declined while net income and equity drastically increased What could be the explanation for this?
Question 3: Interviewees were generally asked about their perception of the Company‟s operating efficiency, especially regarding inventory management According to the turnover ratios, the rate at which Huu Nghi Food has sold its inventory turnover, receivables turnover, and payables turnover has drastically decreased from 2017-2021 Is this a potential cause for concern about the Company‟s operating efficiency??
Question 4: While days sales uncollected remained relatively low in the range from 63 to 129 days, days inventory on hand increased slightly at 42 up to 47 days, and days payable relatively high at 179 to 419 days These indicate that there is potentially a problem in inventory management, which corresponds well with the other findings in the research where the backlog of inventory and increase in accounts receivables caused the sudden and significant fluctuations in cash flow yield Please could you comment?
Question 5: Trend analysis flagged rather significant fluctuations in
Accounts receivable in 2021 compared to the base year 2017 What could be the driver for this sudden fluctuation?
Question 6: In your opinion, what could the Company improve shortly regarding its financial performance? h
In May and June 2021, eight senior staff members from Huu Nghi Food, all of Vietnamese origin, were interviewed to gain insights into the company's operations and performance The interviews, conducted in Vietnamese, included six in-person meetings, one phone interview, and one conducted via email The participants held regional and divisional management positions, categorized by tenure of under five years and over five years, and represented a diverse range of specializations, including Finance, Accounting, Human Resources, Marketing, Sales, Logistics, and Operational Management This selection was deemed suitable for the research due to their significant involvement in financial performance management Notably, the sample did not include any directors or Board members of Huu Nghi Food, and the specific names and titles of the interviewees have been withheld for confidentiality.
Interviewee Management level at Huu
Nghi Food Division Work longevity Interview time
1 Regional Finance/Accounting Under 5 years
2 Divisional Finance/Accounting Under 5 years May 2021
3 Divisional Marketing/Sales Under 5 years May 2021
4 Divisional Logistics/OM Under 5 years May 2021
5 Divisional Finance/Accounting More than 5 years June 2021
6 Regional Marketing/Sales Under 5 years June 2021
7 Divisional Logistics/OM Under 5 years June 2021
8 Divisional HR More than 5 years June 2021 h
The discussion highlighted the necessity for a unified understanding of the research topic, particularly regarding financial analysis and expectations The findings revealed a predominant belief among interviewees about Huu Nghi Food's strong financial outlook, with several (Interviewees 1, 2, and 6) affirming the company's prosperity and promising future However, others (Interviewees 3, 4, 7, and 8) expressed cautious optimism, acknowledging the impact of Vietnam's rapidly evolving market, particularly the urgent need for digital transformation highlighted by Interviewee 3, who noted that the Covid-19 pandemic has accelerated awareness of this trend, making it an essential and ongoing adaptation in response to technological advancements and changing customer demands.
Reaching consensus on the financial analysis concepts and research aim was essential to establishing a level playing field across all eight interviews conducted separately
This section addresses the first interview question:
Question 1: Although, Current ratio is greater than 1 the remaining quick ratio is less than 1 from 2017-2021 What could be the reason for this and is this inefficient cash management?
All interviewees emphasized the importance of efficient cash management Upon reviewing their responses against the audited financial statements, a significant fluctuation in short-term receivables was observed, rising from 378 billion VND in 2017 to 600 billion VND in 2019.
In the confectionery industry, the quick ratio is significantly affected by fluctuations in inventory and increased bad debts, particularly during the challenging period of 2019-2020 amid the complexities of the COVID-19 pandemic This correlation highlights the impact of external factors on financial stability, as inventory levels rose from 104 billion to 159 billion, contributing to higher instances of bad debts.
This section addressed the second interview question:
Question 2: Ratio analysis has shown a return on equity significantly declined while net income and equity drastically increased What could be the explanation for this?
Interviewees expressed surprise regarding the decline in return on equity, particularly when presented with financial statements and calculations Interviewee 2 noted that the decrease in percentage return on equity likely stemmed from the increase in owner's capital observed from 2017 onward.
In 2021, revenue surged from 291 billion VND to 511 billion VND, reflecting a remarkable increase of 1.75 times, while net income rose from 49 billion VND to 52 billion VND, marking a growth of 1.06 times This change in ratios is attributed to the substantial growth of the revenue base, suggesting that the fluctuations are mathematically explainable and do not signal any cause for concern among external investors.
This section addresses the third interview question:
Question 3: According to the turnover ratios, the rate at which Huu Nghi Food has sold its inventory turnover, receivables turnover, and payables turnover has drastically decreased from 2017-2021 Is this a potential cause for concern about the Company’s operating efficiency? h
Opinions among interviewees regarding financial ratios for operating efficiency were mixed, with some endorsing turnover ratios for their accuracy and utility, while others dismissed them as largely theoretical and lacking substantial economic insight Interviewee 6 acknowledged the usefulness of these ratios but noted a minor concern about payment timing The decrease in inventory and payables turnover was attributed to a strategic decision to boost inventory levels, resulting in higher accounts payable However, the timing of payments was deemed acceptable for regular trade and did not pose a significant threat to Huu Nghi Food's overall business efficiency.
This section addresses the fourth interview question:
Question 4: While days sales uncollected remained relatively low in the range from 63 to 129 days, days inventory on hand increased slightly at 42 up to 47 days, and days payable relatively high at 179 to 419 days These indicate that there is potentially a problem in inventory management, which corresponds well with the other findings in the research where the backlog of inventory and increase in accounts receivables caused the sudden and significant fluctuations in cash flow Please could you comment?
A significant concern highlighted in the interviews is the abrupt rise in inventory purchases, which has caused an increase in both accounts payable and accounts receivable This surge has triggered various issues identified through financial ratio analysis, particularly emphasized by professionals in Finance, Accounting, and Logistics/Operational Management Interviewees from these fields strongly underscored the implications of these fluctuations.
The recent peak in days inventory on hand is primarily attributed to a strategic decision to increase inventory purchases at the end of the year.
Benchmarking
Benchmarking is defined as a way of measuring a firm‟s strategies and performance against “best-in-class” firms, both inside and outside the industry” (V.Freytag and Hollensen 2001, 22)
In today's competitive landscape, benchmarking serves as an essential tool for companies to effectively position themselves in the marketplace As the global economy evolves rapidly, industries like automotive utilize benchmarking to identify leading companies and determine best practices.
To enhance organizational competitiveness, a lot of companies have used benchmarking as a business model (Fawcett, Allred, Magnan, and Ogden 2009; Kenny and Meaton 2007)
The author conducted a comparative analysis of key performance metrics between Huu Nghi Food and BiBica, utilizing standardized balance sheets and income statements derived from the internal reports of these benchmarking companies This approach enhances the visibility of the comparisons made in the thesis.
51 decided to use less text and present results in visual illustrations included in figures
Through the two graphs above, we can see that there is a big difference between the ROA and ROE of Huu Nghi Food and BibiCa
Huu Nghi Food's ROE is much higher than BiBiCa from 2019 through
2021 The gap with an enormous difference in 2021 is 8% According to
Investing.com data, the industry ROE is 26.72% Although the ROE of Huu
Nghi Food may have modest industry ratios, but it demonstrates a positive outlook when compared to competitors like Bibica This growth potential is likely to enhance trust among customers and shareholders alike, reflecting the company's upward trajectory.
In terms of Return on Assets (ROA), BiBica outperformed Huu Nghi Food significantly in 2019 and 2020, achieving profitability that was 2-3 times greater per dong of assets However, in 2021, this trend shifted, with Huu Nghi Food reversing the index in its favor.
Nghi Food is 2.79%, and Bibica is 1.3% Compared to the industry ROA of
11.41%, we see that it is not a proud number, but the profitability of Huu
Nghi Food is stable and tends to increase
Major Findings of the Study
The study's significant findings are derived from the achievements and limitations analysis of Huu Nghi Food, which is given below
About the liquidity of short-term assets
In 2017, the current ratio was approximately 1.01, increasing to 1.05 in 2021, with 2019 marking a peak at 1.54 This trend indicates that the company has effectively maintained a strong financial position Additionally, the Cash Conversion Cycle improved significantly from -73.9 in 2017 to -243.5 in 2021, demonstrating the company's effective capital recovery policies and its commitment to minimizing capital misappropriation.
Despite a slight increase in inventory, uncollected sales and a sharp rise in days payable have led to a negative cash conversion cycle, known as the financing period, which decreased from -73.9 days in 2017 to -243.5 days in 2021 This indicates that the Company is holding onto supplier capital for a longer duration than it takes to collect from customers Furthermore, the short-term debt ratios remain above 1, demonstrating the Company's ability to maintain solvency in the short term.
The Company has a higher structure of current assets than long-term assets, showing that the Company‟s current solvency is more secure
Between 2017 and 2019, the profit margin and asset turnover experienced a gradual decline, decreasing from 23.83% to 22.94%, despite a slight peak in 2019 This trend indicates a diminishing proportion of income generated relative to revenue and total assets.
54 decreased since 2017 However, on the front, Huu Nghi Food‟s performance was still considered at its best around 2017-2019, with impressive performance and financial figures published on the market during Covid-19
Besides the advantages, the Company still has the following disadvantages:
About the liquidity of short-term assets
The analysis indicates an improvement in the current ratio, enhancing the business's capacity to meet its debts However, this progress is only a preliminary recovery and not yet stable, highlighting the need for long-term solutions to strengthen the liquidity of short-term assets and mitigate the risk of insufficient cash for payments.
The company's profitability indicators have shown instability over the past five years, with return on assets (ROA) declining from 3.53% to 3.03% and return on equity (ROE) decreasing from 16.91% to 10.22% In 2021, the profit margin of revenue was notably low at just 3.03%.
2017 it was only 3,53% times This shows that the efficiency of asset use, poor equity, and poor cost management lead to low profits
Huu Nghi Food's operating asset ratios indicate a declining trend from 2017 to 2021 Notably, inventory turnover rose sharply from 8.7 to 12.8 in 2019, but fell to 7.7 by 2021 Additionally, receivables turnover decreased significantly, while payables turnover showed a similar downward trajectory.
55 declined halved with a sudden peak in 2021 These indicate that there is potentially a problem in inventory management
The capital structure heavily relies on short-term debt, which constitutes a significant portion of total capital, indicating a potential risk in future payment capabilities due to only marginal short-term solvency.
Huu Nghi Food's net income rose from 49 billion VND in 2017 to 52 billion VND in 2021, while the owner's capital significantly increased from 301 billion VND to 536 trillion VND during the same period.
Despite the substantial increase in both net income and shareholder equity, the percentage return on equity has notably declined This trend highlights inefficiencies in income generation and a failure to maximize the potential of invested capital, which may result in financial challenges in the near future.
4.4.2.2 The cause of the limitations:
Many Vietnamese enterprises today, influenced by their managers' perspectives, fail to recognize the significance of financial statement analysis This lack of awareness leads to insufficient organization and personnel allocation for analytical tasks As a result, financial statement analysis is neither conducted regularly nor systematically, undermining the overall financial health of these companies.
Second: Due to the qualifications of analysts, the company does not have a full-time officer in charge of financial statement analysis, and there is h
56 no financial analyst, but the assessment of the company‟s financial position is done by the chief accountant
The company lacks a systematic approach to analyze and evaluate its financial position and performance on both a quarterly and annual basis Additionally, it has not identified any limitations in its financial management practices.
There has not been a flexible combination between accounting, auditing, and analysis and evaluation
The legal document system often changes, there is no mandatory regulation on analyzing the financial position and performance of enterprises;
Our country has no statistics on the industry average financial indicator system;
The absence of standardized regulations regarding analytical content and criteria presents challenges for companies in selecting appropriate analytical benchmarks and target determination formulas.
CONCLUSIONS AND RECOMMENDATIONS
Conclusion
After the process of information research, data collection, data processing, and data analysis on financial statements, I have accomplished three goals:
Firstly, by the method of studying documents, I have systematized the theory of analyzing the financial position and performance of enterprises in enterprises
Through analytical methods, I have assessed the financial statements of Huu Nghi Food JSC, including the balance sheet, income statement, cash flow statement, and accompanying notes This evaluation reveals both the company's financial achievements and existing limitations.
Third, from the assessment of the current situation, some solutions are proposed to overcome the limitations and improve the financial position and performance of the Company
However, due to limited knowledge and too short a time, it is difficult for my report to avoid errors, subjective assessments, and impractical solutions
In conclusion, leveraging my foundational understanding of financial analysis, I endeavored to identify solutions through thorough research and assessment However, limitations in research capacity and time constraints have resulted in certain shortcomings within my thesis I welcome constructive feedback and guidance from educators and peers to enhance the quality of my work.
Recommendations
To overcome the limitations of financial structure and improve its financial position and performance, the coming time, Huu Nghi Food JSC needs to restructure according to the following contents:
Firstly, building a financial restructuring model suitable to the characteristics of the Company Specifically:
Current assets predominantly consist of receivables, which represent a significant portion of the company's financials As a confectionery producer, the company also maintains a substantial inventory, contributing to a high overall value of current assets Analysis indicates that receivables have consistently remained at elevated levels over the years.
Long-term assets primarily consist of fixed assets, as businesses typically concentrate on acquiring tangible fixed assets to support their production and operational activities over time.
- Data analysis shows that all of these current liabilities are primarily invested in current assets, such as inventory investments and customer appropriation
Huu Nghi Food Joint Stock must reduce unnecessary expenses and limit loans for unsuitable projects while enhancing revenue through increased product consumption The company should engage directly with creditors to explore options such as converting debt into equity, selling debt to other creditors, rescheduling payment terms, and negotiating additional contract terms to minimize interest payments, thereby preventing insolvency as loan contracts approach maturity.
Huu Nghi Food JSC is currently undergoing a business expansion, necessitating a reassessment of its operational scale Despite maximizing internal capital, the company finds it insufficient to meet its growth demands Consequently, Huu Nghi Food JSC must seek external funding sources, including loans from commercial banks, bond issuance, and trade credit from suppliers.
Secondly, debt restructuring towards increasing long-term debt ensures the safety and stability of the Company‟s funding
Excessive debt utilization in investments has led to subpar performance at Huu Nghi Food JSC recently Consequently, it is essential to implement debt restructuring that aligns with the specific needs and realities of the confectionery sector.
Huu Nghi Food JSC, facing challenges in meeting its debt obligations while remaining operational, should implement strategies to enhance its solvency Key measures include negotiating with creditors to lower interest rates, freezing debts, and rescheduling payments, which can alleviate financial pressure and allow the company to concentrate on improving its business performance To effectively execute this plan, the company needs a solid business recovery strategy and a well-structured debt repayment plan to gain the trust of its creditors.
Huu Nghi Food JSC faces financial risks due to its reliance on short-term debt for long-term asset investments To enhance its financial stability, the company should consider restructuring its debt by negotiating adjustments to the maturity dates This approach will align debt repayment with the asset utilization period, mitigating capital source imbalances and improving overall financial health and performance.
5.2.2.2 Strengthen the management capacity of the finance and accounting staff
To establish an effective management and control system within the company, it is essential to create a strategic plan and assign specific responsibilities to relevant personnel The Board of Members and the Director must focus on directing and evaluating governance control activities, continuously enhancing the system to strengthen financial capacity.
To ensure the highest quality for operators, management information systems must be developed and utilized in tandem Executives must actively engage with and leverage these systems, which encompass various components including personnel, software, hardware, facilities, and operational principles.
To ensure a robust management system, it is essential to maintain synchronized data collection, processing, and provision This requires a strong focus on training, advocacy, and the enforcement of strict regulations regarding management information systems.
Improve the organization and personnel to analyze the financial position and performance
The company's financial position analysis is solely conducted by the accounting department, which introduces a degree of subjectivity in evaluating financial performance To enhance objectivity and accuracy, it is essential to involve qualified professionals who can provide independent insights and participate in the analysis of the company's financial status.
Analyzing enterprises' current financial position and performance is still almost exclusively in charge of the chief accountant This duality leads to the h
The analysis results and reports often lack objectivity due to reliance on accounting information, which may not reveal errors in the data, resulting in inaccurate outcomes To ensure more objective evaluations and comments, this responsibility should be entrusted to an independent and knowledgeable finance professional who understands the company's situation.
To enhance the professional qualifications of its officers and employees, the Company should implement regular training programs, establish a robust incentive and reward policy, and prioritize the material and spiritual well-being of its workforce.
5.2.2.3 Completing the process and applying information technology in analyzing the financial position and performance of the Company
Completing the Company‟s analyzing financial position and performance process
Huu Nghi Food JSC lacks a standardized process for analyzing its financial position and performance, which hinders efficiency and quality in management decision-making To enhance analysis effectiveness, reduce costs, and ensure high-quality information, the company should promptly create and implement comprehensive documentation outlining the financial analysis process This should include detailed steps for analysis, clear personnel assignments for each phase, and defined sources of analytical data for all relevant individuals or departments.
The existing accounting software at the Company fails to fulfill management's needs, particularly in managing fixed assets and calculating production and business expenses Additionally, the extraction of financial statements has not been updated in accordance with the latest decisions.
62 needs to request the accounting software supplier, a service technology company, to edit and update the software according to the new decision
5.2.2.4 Completing the analytical methods in the financial position and performance organization