P3 Prepare financial statements from a given trial balance for sole traders, partnerships and notforprofit organisations, to meet accounting principles, conventions and standards P4 Calculate and present financial ratios from a set of final accounts. P5 Compare the performance of an organisation over time using financial ratios. P6 Prepare a cash budget from given data for an organisation using a spreadsheet. P7 Discuss the benefits and limitations of budgets and budgetary planning, and control for an organisation.
ASSIGNMENT FRONT SHEET Qualification BTEC Level HND Diploma in Business Unit number and title Unit 5: Accounting Principles (5038) Submission date December 5th 2023 Date Received 1st submission Re-submission Date Date Received 2nd submission Student Name Student ID Class Assessor name December 5th 2023 Student declaration I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism I understand that making a false declaration is a form of malpractice Student’s signature Grading grid P3 P4 P5 P6 P7 M2 M3 M4 D2 D3 ❒Summative Feedback: Grade: ❒Resubmission Feedback: Assessor Signature: Date: Internal Verifier’s Comments: Signature & Date: Table of Contents Task 1: Producing Financial Statements (P3) Task Analysing and Interpreting Financial Statements (P4) Introduction Conclusion (P5) Task 3: Budgets (P6) 10 Learn about the benefits and limitations of budgeting (P7) 12 References 13 Task 1: Producing Financial Statements (P3) Financial statements at the beginning of the period Income statement Revenue Tuition fees earned 123.900 Training fees earned 40.000 Total 163.900 Expense Depreciation expense, Professional library Depreciation expense, Equipment Salaries expense 50.000 Insurance expense Rent expense 33.000 Teaching supplies expense Advertising expense 6.000 Utilities expense 6.400 Total 95.400 RE 68.500 Equity begin 90.000 Owner investment Owner withdrawal (50.000) RE 68.500 Equity end 108.500 Balance Sheet Asset Liabilities Cash 34.000 Accounts payable Accounts receivable Salaries payable Teaching supplies 8.000 Unearned training fees Prepaid rent 3.000 Prepaid insurance 12.000 Professional library Accumulated depreciation, professional library 35.000 Equipment 80.000 Accumulated depreciation, equipment (15.000) (10.000) Equity Total Liabilities and 147.000 Equity Total Asset Transaction 1: December 15th 2022: ABC company owes its emlpoyees $7000 Accounts Salaries Payable Salaries Expense DR CR 7000 7000 Transaction 2: December 15th 2020: ABC agrees to provide training services Provides 30 days of service for a fee of $6000: 6000/30=$200 December 15th 2020 to December 31th 2020 is 17 days: 200*17=$3400 Accounts Unearned Training fees Account Payable DR CR 3400 3400 December 1st 2020 : ABC purchased equipment for $16,900 by cash Accounts Cash Equipment DR CR 16,900 16,900 26.000 12.500 108.500 147.000 Calculate depreciation expense: (16,900-7,000)/36= 275 Accounts Depreciation expense Accumulated depreciation DR 275 CR 275 Financial statements at the beginning of the period Icome statement Revenue Tuition fees earned 123.900 Training fees earned 43.400 Total 167.300 Expense Depreciation expense, Professional library Depreciation expense, Equipment 275 Salaries expense 57.000 Insurance expense Rent expense Teaching supplies expense 33.000 - Advertising expense 6.000 Utilities expense 6.400 Total 102.675 Profit 64.625 Equity begin 90.000 Owner investment Owner withdrawal (50.000) RE 64.625 Equity end 104.625 Balance Sheet Asset Liabilities Cash 17.100 Accounts payable Accounts receivable 3.400 Salaries payable Teaching supplies 8.000 Unearned training fees Prepaid rent 3.000 Prepaid insurance 12.000 Professional library Accumulated depreciation, professional library 35.000 Equipment Accumulated depreciation, equipment Total Assets (10.000) Equity 26.000 7000 12.500 104.625 96.900 (15.275) 150.125 Total Liabilities and Equity 150.125 Task Analysing and Interpreting Financial Statements (P4) Introduction FPT Digital Retail Joint Stock Company (FPT Retail) was established in 2012 in Vietnam, is a company under FPT Group, owns retail chains: FPT Shop, F.Studio By FPT and company The subsidiary is FPT Long Chau Pharmaceutical Joint Stock Company In 2012, Digital Retail Joint Stock Company was established, as one of 07 companies under FPT Joint Stock Company In 2013, FPT Shop officially reached the milestone of 100 stores In 2014, FPT Shop reached the milestone of 200 stores in 63 provinces and cities Become a direct importer of genuine iPhone After that, in 2015 FPT Shop achieved the fastest growth compared to other affiliated companies of FPT Joint Stock Company with revenue increasing by 50% compared to 2014, pre-tax profit increased by 338.7% With that success, FPT has had strong development (FPT Retail, 2023) Raw data Net Sale Revenue Gross profit Operating profit Net profit Average assets Shareholders' Equity Current Assets Current Liabilities Inventory Cost Of Goods Sold Average Accounts Receivable Net Credit Purchases Average Accounts Payable Depreciation Total Liabilities Total Interest Payments Profitability 2021 22.494.961.408.082 3.151.513.261.599,00 546.195.520.349 443.898.346.428 10.786.068.729.507 1.679.274.238.761 10.221.931.678.747 9.106.707.790.746 4.930.359.332.607 19.343.448.146.483 2022 30.165.800.756.670 4.703.177.379.257 473.967.863.770 398.074.197.408 10.523.796.935.046 2.049.335.540.169 9.326.797.408.285 8.474.374.694.877 6.483.827.665.529 25.462.623.377.413 1.985.364.755.551 16.239.806.504.638 2.335.742.934.745 585.528.444.388 9.106.794.490.746 132.229.176.761 538.346.191.905 23.909.155.044.491 2.307.356.375.016 887.338.884.656 8.474.461.394.877 231.527.904.809 2021 14,01% 2,43% 1,97% 4,12% 26,43% Gross Profit Margin Operating Profit Margin Net Profit Margin Return On Assets Return On Equity 2022 15,59% 1,57% 1,32% 3,78% 19,42% FPT Retail's Gross Profit Margin increased by about 1.58% compared to 2021 This is a good point for the business However, Operating Profit Margin in 2022 will decrease by about 0.86% Net Profit Margin also decreased by 0.65% Return On Assets also decreased by 0.33% and Return On Equity decreased by 7.01% compared to 2021 These numbers are not down much, but all three items are down, showing that the company is having problems in its business operations In summary, FPT Retail's ability to generate profits in 2022 has been negatively affected Liquidity Ratio 2021 1,12 0,58 Current Ratio Quick Ratio 2022 1,10 0,34 The current ratio decreased by 0.02 compared to 2021 and the quick ratio also decreased slightly by about 0.25 This is not good for the company because it is having difficulty raising capital to pay short-term debts In summary of 2022, FPT Retail has lower debt repayment ability than 2021 Efficiency Ratios 2021 3,92 11,33 6,95 2,09 93,03 Inventory Turnover Ratio Accounts Receivable Turnover Ratio Accounts Payable Turnover Ratio Assets Turnover Ratio Day's Sales in Invenroty 2022 3,93 56,03 10,36 2,87 92,94 Inventory Turnover Ratio in 2022 increased slightly by about 0.38 but not significantly and Day's Sales Inventory did not change much so this is stable for FPT Retail Accounts Receivable Turnover Ratio increased by 394% and Accounts Payable Turnover Ratio increased by 49% in 2022, which shows that the business's ability to collect receivables effectively and that the company can also repay debt and manage cash flow well Assets Turnover Ratio in 2022 also increased by about 37% compared to 2021, proving that the company's use of assets in production and business activities is effective and good for the company Solvency Ratios 2021 4,13 0,11 Interest Coverage Ratio Solvency Ratio 2022 2,05 0,15 FPT Retail's 2022 Interest Coverage Ratio decreases by 2.08 compared to 2021 Solvency Ratio in 2022 also decreases by 0.04 compared to 2021 However, the decrease is not much so it does not have too much negative impact on FPT Retail Conclusion (P5) FPT Retail's financial situation is generally stable Regarding Profitability, there is a decrease but not significantly Liquidity Ratio is also somewhat reduced Efficiency Ratios has increased somewhat Finally, the Solvency Ratio decreases The reason for the decline in financial revenue is due to increased costs The reason for this decline is that FPT Retail in 2022 will face disadvantages such as supply chain disruption during the launch of new Apple products, and the purchasing power of information technology and communications products will decrease sharply due to influence of macro factors Financing costs are rising due to rising interest rates and capital market concerns However, net revenue grew 34% compared to 2021 Despite this, FPT Retail's financial situation in 2022 is stable This is good for business Task 3: Budgets (P6) Income Statement Budget Jan Feb Mar Apr May Jun Sale Unit 350 500 350 400 400 550 Revenue 59.500 85.000 59.500 68.000 68.000 93.500 COGS Depcreciation 17.500 25.000 17.500 20.000 20.000 27.500 20.833 5.950 20.833 8.500 20.833 5.950 20.833 6.800 20.833 6.800 20.833 9.350 Sale Expense R&D Expense Interest Expense 2.975 4.250 2.975 3.400 3.400 4.675 700,00 641,67 583,33 525,00 466,67 408,33 EBT 11.542 25.775 11.658 16.442 16.500 30.733 Tax Expense 2.308 5.155 2.332 3.288 3.300 6.147 Net Income 9.233 20.620 9.327 13.153 13.200 24.587 Jul Aug Sep Oct Nov Dec 500 600 650 750 850 850 85.000 102.000 110.500 127.500 144.500 144.500 25.000 30.000 32.500 37.500 42.500 42.500 20.833 8.500 20.833 10.200 20.833 11.050 20.833 12.750 20.833 14.450 20.833 14.450 4.250 5.100 5.525 6.375 7.225 7.225 350,00 291,67 233,33 175,00 116,67 58,33 26.067 35.575 40.358 49.867 59.375 59.433 5.213 7.115 8.072 9.973 11.875 11.887 20.853 28.460 32.287 39.893 47.500 47.547 10 Loan Payment Jan Feb Mar Apr May Jun Beginning Debt 120.000 110.000 100.000 90.000 80.000 70.000 Interest 700,00 641,67 583,33 525,00 466,67 408,33 Principal Payment 10.000 10.000 10.000 10.000 10.000 10.000 Ending Debt 110.000 100.000 90.000 80.000 70.000 60.000 Jul Aug Sep Oct Nov Dec 60.000 50.000 40.000 30.000 20.000 10.000 350,00 291,67 233,33 175,00 116,67 58,33 10.000 10.000 10.000 10.000 10.000 10.000 50.000 40.000 30.000 20.000 10.000 Cash Budget Jan Feb Mar Apr May Jun Beginning Cash 140.000 177.567 234.020 271.680 315.667 359.700 Total Cash inflow 59.500 85.000 59.500 68.000 68.000 93.500 Sale Expense 5.950 8.500 5.950 6.800 6.800 9.350 R&D Expense 2.975 4.250 2.975 3.400 3.400 4.675 Principal Payment 10.000 10.000 10.000 10.000 10.000 10.000 Interest 700,00 641,67 583,33 525,00 466,67 408,33 Tax Expense 2.308 5.155 2.332 3.288 3.300 6.147 Total Cash Outflow Ending Cash Balance 21.933 28.547 21.840 24.013 23.967 30.580 177.567 234.020 271.680 315.667 359.700 422.620 11 Jul Aug Sep Oct Nov Dec 422.620 479.307 548.600 624.220 712.447 813.280 85.000 102.000 110.500 127.500 144.500 144.500 8.500 10.200 11.050 12.750 14.450 14.450 4.250 5.100 5.525 6.375 7.225 7.225 10.000 10.000 10.000 10.000 10.000 10.000 350,00 291,67 233,33 175,00 116,67 58,33 5.213 7.115 8.072 9.973 11.875 11.887 28.313 32.707 34.880 39.273 43.667 43.620 479.307 548.600 624.220 712.447 813.280 914.160 Learn about the benefits and limitations of budgeting (P7) Benefit: Budgets are often used to establish planning and control of key accounts within an organization Budgeting also has benefits that can be mentioned such as helping to compile statistics on business income and expenditure accounts, budgeting helps organizations have a broader view of the total amount of money available, thereby helping to balance the budget using revenue and expenditure accounts and using them more effectively Using a budget list also helps predict future risks because making a project list reports in advance whether the business's performance will be good or not bad situations help managers prepare plans to handle bad situations that may occur Another benefit is helping businesses control spending, helping businesses analyze and supplement reasonable spending for different goals, thereby helping businesses control spending and avoid waste In addition, budgeting also helps businesses make better decisions (HM Hub, 2023) Limitation: Budgeting also has limitations in that it will lack flexibility in cases of unexpected changes from external factors such as changing market conditions and will cause loss of efficiency Budgeting is also based only on predictions, so budgets can be inaccurate compared to reality In addition, when budgets are set too high, it can also cause employees to become exhausted and tired The final limitation is that this is a job that requires a lot of time and effort to budget, while that resource could be used for more important things, so this is a time-consuming job (HM Hub, 2023) 12 References FPT Retail (2023) Giới thiệu, [ONLINE] Available from: https://frt.vn/gioi-thieu [Accessed 22 November 2023] HM Hub (2023) Advantages & Disadvantages of Budgeting, [ONLINE] Available from: https://hmhub.in/advantages-disadvantages-of-budgeting/ [Accessed December 2023] 13