AN INTRODUCTION TO DINH DAT SHOES COMPANY LIMITED
General information of the company
- Trading name: Dinh Dat Shoes Company Limited
- Abbreviations: DINH DAT SHOES CO ,LTD
- Type of the company: Limited liability
- Address: Land plot No 1227, Map number: 05, Nhan Trai Village, Dai Ha
Commune, Kien Thuy District, Haiphong City, Vietnam.
- Legal representative: Dinh Van Khiem
(Beside, Dinh Van Khiem also representing businesses: o Toan Dat Packaging Company o Phuc Dat Shoes Company Limited o Dinh Dat Company Limited)
- Date of formation: July 14 th , 2016 (Activated 5 years)
- Managed by: Hai Phong City Tax Department
- Type of operation: Limited liability company with 02 forms
Formation and development of the company
In terms of the significance of the geographical conditions of Haiphong, this is a harbor city where is a center of commerce, industry, and epidemics of the
Picture 1.1 Company gate whole country with the main international trade gateway to the sea of North Vietnam and outstandingly the propensity of the young population is boosting The period of 2000 was entering the explosive development of the shoe manufacturing industry in Haiphong In 2003, Phuc Dat Shoes Company Limited was born in An Duong district, Haiphong Hence, processed commodities have played a critical role in the country's production, commerce, and economic growth, facilitating alleviating poverty, creating jobs, and helping to keep the political and economic constancy for the nation
Outsourcing significantly contributes to macroeconomic stability by generating millions of jobs and fostering a stable socioeconomic environment Despite years of development, the government continues to offer financial incentives for outsourcing while reforming administrative processes to optimize the business production environment In response to the surging demand for production, Dinh Dat Company Limited has decided to expand its operations in Kien Thuy district, Hai Phong, after 13 years of growth.
Dinh Dat Company Limited operates on over 20,000 m² of land, featuring three factories equipped with six footwear production lines The Financial Department reports an impressive monthly production average of 600,000 pairs of shoes, which are exported to various countries, including China, Taiwan, Singapore, Indonesia, the USA, UK, and Belgium Notably, the company has established strong relationships with loyal clients in the US and Belgium, who often present unique requirements that demand meticulous attention to detail.
With regard to prestige and quality as a guideline, DINH DAT SHOES
CO., LTD, a fully Vietnamese-owned company, has successfully acquired footwear production technology from Huaying Shoes Company Limited, a leading global exporter in the footwear industry This partnership with Chinese experts has established a strong foundation for mass shoe production, particularly for outsourced products associated with the Sketchers brand.
Organizational structure of the company
Figure 1.4 Organizational structure of Dinh Dat Company Limited
Source: The company’s Administrative office
Under Clause 3, Article 79 of the 2014 Enterprise Law, the Chairman of the Board is responsible for developing the program and activity plan for the Members' Council This includes gathering opinions and overseeing the execution of the Council's resolutions Once a consensus is achieved, the Chairman will sign the resolutions on behalf of the Council.
The CEO holds the top executive position in a company, overseeing all departments, including Production, Finance, and Administration This role entails full legal responsibility for the company's production and business activities Each department is led by a managing director who is accountable for its operations and plays a crucial role in maintaining a cohesive company culture to ensure efficient business operations.
1.3.2 Functions of departments a Production Department
The region is focused on producing and exporting products based on a structured production plan coordinated by the administrative department This process is crucial to the company's operations, involving various functions across three factories The first floor of the main factory is dedicated to production activities, while the entire second floor serves as a warehouse for raw materials, finished products, and packaging The workforce consists of nearly 1,500 employees, including over 30 foreign workers.
Purchasing Department: In charge of buying and selling input materials mainly imported from China.
Quality Management (QC): Confirm sample order, closely monitor the quality of each product, and take full duty for checking goods with clients.
Finance Department: Collate payments from suppliers and supervise costs incurred in the factory.
Technical Department: Sew new samples and cope with technical problems arising in the production process.
Professional Department: Keep in touch with clients, confirm and provide documents related to the production process, administer all matters from import to export.
Product Development Department: Test raw material samples according to clients' requests
Administration Department: Recruit workers, calculate wages, handle issues of employee rights, environment, security, fire prevention, and logistics.
The Factory Management Department oversees and coordinates the production process at every stage, including the material cutting team, the shoe toe sewing team, the warehouses, and the product finishing team Meanwhile, the Financial Department manages the financial aspects of the production, ensuring efficient resource allocation and budgeting.
The Administration Department plays a crucial role in supporting the director of the company's accounting system and overseeing its economic activities in compliance with state financial management regulations for limited liability companies It focuses on maintaining a balanced cash flow by closely monitoring revenue and expenditure, ensuring the seamless operation of production activities related to raw materials, services, and wages Additionally, the department manages receivables and payables through comprehensive daily reports prepared by chief accountants and staff.
The division responsible for assisting the CEO in organizational management plays a crucial role in assigning tasks, overseeing office operations, and monitoring staff performance It is essential to uphold employee rights through recruitment, salary increases, rewards, discipline, and labor protection initiatives Additionally, this division addresses conflicts to maintain order within the company, develops legal documents and regulations, fulfills leadership requirements, and handles unforeseen tasks as directed by superiors.
The main business activities
DINH DAT SHOES CO., LTD specializes in the manufacture and export of processed footwear, utilizing materials imported from China The company focuses on international trade, transforming these imported materials into finished products for export to foreign markets, with the manufacturing stage serving as the core of its processing operations.
Picture 1.5 The production lines are working in the factory
International outsourcing may be classified into three types based on where a project is in the manufacturing process:
The processing procedure involves the party placing the order sending materials and samples to the processor The processing party will then manage various tasks, including cutting, printing, and sewing the components.
Picture 1.6 The processing steps for a pair of shoes
The final stage of shoe production involves adding the sole to the completed toe, followed by a thorough quality assessment of each pair on the production line Once quality checks are complete, accessories like shoelaces, stamps, and wrapping paper are prepared The finished shoes are then carefully packaged and transported to the port for shipment.
Picture 1.7 Export shoe quality inspection team
Cut materials such as fabric, foam.
Sweing department take materials that have been cut and logos and motifs to sew into a complete toe
FINANCIAL MANAGEMENT AT DINH DAT SHOES COMPANY LIMITED
Planning and Cash Management
Output (pairs) Sales Output (pairs) Sales
Source: The Company’s Financial Department, 2020.
Table 2.2 Investment expenses and fundamental financial analysis
Source: The Company’s Financial Department, 2020.
Creating a cash flow plan is essential for effective financial and budgeting strategies, as it tracks the money generated and used in production and business activities This includes analyzing net cash flow from both investment and core operations by calculating revenue minus expenses Cash flow forecasting plays a crucial role in assessing a company's operational performance and financial stability (Yoo & Pae, 2013), and is categorized into two distinct types.
A positive cash inflow forecast from accounts receivable is essential for financial stability It relies on a strategic plan that includes the payment schedules of partners, effective debt reporting, and well-defined collection processes Establishing a clear collection period is crucial to ensure timely revenue generation.
- Forecasting cash outflows: payables to suppliers (materials, services), salary costs and other payables (taxes)
Effective cash flow planning is essential for proactively identifying potential issues before they arise By forecasting future cash flow, businesses can balance various factors, including bad debts and unforeseen risks, ensuring financial stability and informed decision-making.
Financial statements, Analysis and Reporting
(Issued under Circular No 133/2016 / TT-BTC dated August 26, 2016 of the Ministry of Finance)
As of 31 December 2020 (Applicable to businesses to meet continuous operation)
Taxpayer: Dinh Dat Shoes Company
Tax agent name (if any):
Financial statements have been audited Audit opinion:
Support retrieving last year data
Check to enter the note column
4 Provision for loss of financial investments (*) 0 0
6 Allowance for short-term doubtful debts (*) 0 0
VII Capital construction in process 0 0
3 Taxes and other obligations to the State Budget 43,501,021 61,923,930
7 Inter-company payables for working capital 0 0
10 Science and technology development fund 0 0
TOTAL LIABILITIES AND OWNER'S EQUITY
People tabulation Director: Dinh Van Khiem
Source: The Company’s Financial Department, 2020
2.1.1.1 Profit and loss statement (income statement).
Source: The Company’s Financial Department, 2020.
- Profit in 2019 is 407,695,719 VND, corresponding to a profit margin of 5.9% on revenue.
- Profit in 2020 is 353,094,838 VND, corresponding to a profit margin of 4.15% on revenue.
In 2020, sales rose to 85,152,458,326 VND, up from 69,234,673,230 VND in 2019; however, profits from production and business activities declined due to rising administrative costs and increased interest expenses from additional capital.
2.3.Evaluating the company’s Financial Practices.
Based on the income statement in 2020, Dinh Dat Shoes Company Limited has developed a production model and increased sales The year
In 2020, the industry experienced a 2% growth compared to 2019, despite the challenges posed by the pandemic, highlighting its vulnerability Although production costs remained stable, management costs rose due to additional investments aimed at increasing working capital, leading to a decrease in profit margins The income statement for 2020 assessed the entire production plan, serving as a benchmark for developing the production and business strategy for 2021.
Evaluating the company’s Financial Practices
3.1 Strengths of the financial management process of the company.
The cash flow generated from processing shoes and sandals for export in USD remains stable and reputable, bolstered by strategic joint ventures with prominent international footwear brands like Sketchers, H&M, and Dr Scholl's.
3.2 Weakness of financial management process of the company.
The company's charter capital remains limited, and its operating capital often relies on customer payments This dependency is particularly significant as foreign partners adhere strictly to payment schedules, contingent upon the company delivering goods accurately and in full accordance with the terms of the signed orders.
When a company breaches a contract, it faces significant economic losses and a damaged reputation, complicating contract maintenance Consequently, in instances of financial shortfalls, such as production delays, the Financial Department must assess potential solutions, including the mobilization of short-term domestic loans.
EVALUATING STRENGTHS AND WEAKNESS OF THE FINANCIAL
3.1 Strengths of the financial management process of the company.
The cash flow generated from processing shoes and sandals for export in USD is both stable and reputable, bolstered by strategic joint ventures with prominent international footwear brands such as Sketchers, H&M, and Dr Scholl's.
3.2 Weakness of financial management process of the company.
The company's charter capital remains limited, and its operating capital often relies on customer payments This dependence is particularly evident as foreign partners adhere strictly to payment schedules, contingent upon the company delivering goods accurately and fully in accordance with the agreed-upon order specifications.
When a company breaches a contract, it faces significant financial losses and damage to its reputation, making contract maintenance challenging In situations where financial operations are hindered, such as production delays, the Financial Department should evaluate potential solutions, including securing short-term domestic loans.
THE PERSONAL OPINION AFTER THE INTERSHIP
During my one-month internship at DINH DAT SHOES CO., LTD, I eagerly sought to acquire new skills and knowledge that would lay the groundwork for my future career Accompanied by three fellow students, I navigated a mix of confusion, nervousness, and excitement as we were introduced to the company's various departments by the manager Everyone was welcoming and encouraged us to ask questions I was assigned to the Financial Department, where I learned about cash flow management and other essential topics A highlight of my experience was visiting the factory, where thousands of workers operated high-tech machinery in a fast-paced environment, adhering to strict regulations for shoe production As I acclimated to the workplace, I connected with departmental staff, gaining valuable practical knowledge and insights into their experiences Reflecting on the lessons learned and the memories created, I am grateful to Dinh Dat Shoes Company Limited for providing me with this invaluable opportunity and support throughout my internship.
Financial analysis plays a crucial role in corporate financial management as Vietnamese businesses evolve into autonomous entities, achieving self-sufficiency in their production and operations In today's dynamic economy, these companies face numerous challenges, including market volatility and intense competition from both domestic and international players.
Financial analysis is crucial for evaluating a company's financial position, enabling informed decision-making Additionally, the insights gained from financial analysis are valuable to various stakeholders, including government agencies, investors, and banks, as they navigate their own decision-making processes.
Dinh Dat Shoes Company Limited should prioritize financial analysis and management to improve its financial and business performance By effectively implementing the recommended solutions, the company can enhance its financial analysis activities, leading to better overall outcomes.
Due to limitations in qualifications and practical experience, as well as a scarcity of up-to-date information, the estimations in this area may lack realism and objectivity, with the proposed innovations not always being optimal Therefore, I invite feedback and contributions from lecturers, supervisors, specialized staff in the Company's Financial Department, and other interested parties to enhance the depth of this essay.
Haiphong Department of Planning and Investment 2018, Geographic location, Haiphong Department of Planning and Investment, viewed 19 September 2021,
National Assembly (2016) Law on Enterprises No 68/2014/QH13 November 26,
The Ministry of Finance (2014) Appendix 02 - according to Circular 200/2014/TT-
Vu Khue (2019), ‘Vietnam stands second in the world about exporting shoes’,
Electronic Magazine of Vietnam Economic Science Association, 1 January, pp.1, viewed 19 September 2021,
Yoo, C Y., & Pae, J (2013) Estimation and prediction tests of cash flow forecast accuracy Journal of Forecasting, 32(3), 215-225.
Report unit: Dinh Dat Shoes Company Limited Form No B09 – DNN
Address: Land plot No 1227, Map number: 05
(Issued under Circular No 133/2016 / TT-BTC August 26, 2016 of the Ministry of Finance)
Dai Ha Commune, Kien Thuy District, Haiphong
1 Form of ownership: Private Enterprise Limited
3 Business activities: Processing export footwear
4 Normal operating cycle of the Company: within 12 months
5 Operating characteristics in the reporting year do not have impact on the financial statements
6 Statement on the ability to compare information on financial statements: Compare
II ACCOUNTING PERIOD AND ACCOUNTING CURRENCY
1 Accounting period: The accounting period is from 01 January and 31 December.
2 Accounting currency: The accounting currency is Vietnam Dong (VND).
III THE ACCOUNTING STANDARDS AND SYSTEM APPLIED
Financial statements are prepared and presented in accordance with the accounting standards and small and medium enterprise accounting regime
- Exchange rates applied in accounting According to the actual exchange rate at the bank that regularly transacts:
- Principles of converting financial statements made in foreign currencies into VND
Cash and cash equivalents encompass both physical currency held in cash and demand deposits, which are funds readily accessible for withdrawal Additionally, cash equivalents refer to short-term financial investments that can be converted into cash within three months, ensuring high liquidity and minimal risk.
- Accounting principles for financial investments
- Accounting principles for accounts receivable
- Principles of inventory recognition At basic prices, calculated on a weighted average basis, Accounted for according to regular declarations
The principles of recognition and methods for calculating depreciation of fixed assets, including those acquired through financial leases and investment properties, are essential for accurate financial reporting Depreciation is commonly calculated using the straight-line method, which aligns with regulations governing the management, utilization, and depreciation of fixed assets This approach ensures consistency and compliance in financial statements, reflecting the true value of assets over time.
- Principles of recognition and capitalization of borrowing costs
- Principles of recognition of equity recognized at contributed capital Profit after tax recognized : profit - corporate income tax and retrospective adjustments
- Principles and methods of revenue recognition fully comply with the conditions when receiving revenue, financial revenue according to the bank's interest notice,
- Principles of cost accounting Matching the revenue, fully recognize the administrative expenses and selling expenses.
V ADDITIONAL INFORMATION ON THE ITEMS OF (Financial Report)
01 Cash and cash equivalents Ending balance Beginning balance
02 Financial investments Ending balance Beginning balance a) Trading securities
- Other securities b) Held-to-maturity investments
- Other investments held-to-maturity c) Provision for loss of financial investments
- Provisions for devaluation of trading securities
- Provision for investment loss in other units
03 Receivables Ending balance Beginning balance a Receivables from customers
In which: Receivables from related parties b Prepayments to suppliers 74,635,776 12,985,036
In which: Prepayment of related parties c Other receivables
Other receivables d Deficit assets for treatment
Other assets e Bad debt (Total value of receivables and loans that are overdue or not yet overdue but are unlikely to be recovered)
04 Inventories Ending balance Beginning balance
Value of stagnant, poor, lost quality inventory that cannot be sold:
Value of inventory used as mortgage, pledge to secure payables
Causes and solutions for stagnant, poor, and poor quality inventory
Reasons for making additional or reversing provision for devaluation of inventory
* Explanation of data and other explanations (if any)
05 Increase, decrease fixed assets (details of each type of asset according to the management requirements of the business)
Items Beginning balance Increase in period Decrease in period Ending balance
Cost Accumulated amortization Net book value
Cost Accumulated amortization Net book value
- The residual value at the end of the period of fixed assets used as mortgages or pledges to secure loans
- Cost of fixed assets at the end of the year has been fully depreciated but still in use
- Original cost of fixed assets at the end of the year awaiting liquidation
- For finance lease fixed assets
- Explanation of data and other explanations
06 Increase, decrease Investment real estate (details of each type of property at the request of the enterprise's management)
A Investment real estate for rent
Cost Accumulated amortization Net book value
B Investment real estate holding waiting for price increase
Cost Accumulated depreciation of investment property for lease/fixed assets converted to investment real estate keep waiting for price increase Loss due to devaluation Net book value
- The residual value at the end of the period of the investment property used for mortgage, pledge to secure the loan
- The original cost of investment property at the end of the year has been fully depreciated but still rented or held for price increase
- Explanation of data and other explanations
07 Construction-in-progress Ending balance Beginning balance
- Major repair of fixed assets
08 Prepaid expenses Ending balance Beginning balance of the enterprise's management)
- Other receivable from the State 561,249,972 1,586,970,864
09 Payable (Depending on the management requirements of the enterprise, it is possible short and long-term detailed explanations) Ending balance Beginning balance a) Trade payables 463,198,439 512,511,520
In which: Payable to related parties b Advances from customers 180,552,768 2,122,840,956
In which: Receive money from related parties in advance c) Other payables (Details according to management requirements) 12,602,552,199 8,231,171,731
+ Surplus assets awaiting for resolution
+ Other payables 820,781,599 15,840,000 d) Unpaid overdue debt
10 Taxes and other receivable from the State Ending balance Beginning balance
- Land & housing tax, land rental charges
- Fees, legal fees and other expense.
11 Loans Ending balance In period Beginning balance
Increase Decrease a) Short-term loans 0
In which: Borrowing from related parties b) Long-term loans 7,210,428,
In which: Borrowing from related parties c) Financing lease principals
In which: Finance lease debt from related parties
12 Provisions for payables Ending balance Beginning balance
- Provision for warranty for products, goods
- Provision for warranty for construction works
Retained earnings and other funds
- Other disclosures and explanations of equity (causes of fluctuations and other information)
In the non-financial statement, it is essential to detail outsourced assets, including their quantity, type, and other relevant information regarding major outsourced assets Additionally, the enterprise must provide a comprehensive explanation of assets received for custody, specifying the quantity, type, specifications, and quality of each asset at the end of the reporting period.
- Materials and goods to be kept, processed, entrusted
This article discusses various financial elements, including goods received for sale, consignment, pledges, and mortgages It highlights the importance of detailing foreign currencies in inventory, including the quantity of each original currency type Additionally, it addresses the implications of bad debt write-offs and the need for transparency regarding fines and receivables related to late payment interest from overdue debts that are not recognized as revenue Furthermore, it emphasizes the necessity of providing additional information concerning items beyond what is presented in the Statement of Financial Status.
15 Notes on related parties (the list of related parties, transactions and other information about related parties have not been presented in the above contents)
16 In addition to the content mentioned above, enterprises are allowed to explain other information if necessary
VI ADDITIONAL INFORMATION ON THE ITEMS OF THE INCOME STATEMENT
1 Sales Current year Previous year a Revenue
The total revenue amounts to 85,152,458,326, with 69,234,673,230 attributed to related parties When recognizing revenue from property rentals, if the total amount is received in advance, the enterprise is required to provide additional explanations to highlight the differences between revenue recognition methods, specifically comparing the advance payment to the amortization method over the lease period.
Possibility of diminution in future profits and cash flows as Revenue has been recognized for the entire amount received in advance
2 Revenue deductions Current year Previous year
3 Cost of goods sold Current year Previous year
- Cost of finished goods sold
- Other cost of goods sold
- Other expenses included in the cost of goods
- Record of decrease in cost of goods sold
4 Financial income Current year Previous year
- Demand and term deposit interest 2,239,062 851,865
- Profit from the sale of financial investments
- Sales interest on deferred payment, payment discount
5 Financial expense Current year Previous year
- Payment discount, late payment interest
- Losses from selling financial investments
- Provisions for devaluation of trading securities and investment loss in another units
- Credits to reduce financial expenses
6 Business administrative expenses Current year Previous year a General and administration expenses 13,225,339,306 10,242,092,431 b Selling expenses incurred during the period 9,295,670,480 6,260,012,856 c Items to reduce business administration expenses
7 Other income Current year Previous year
- Interest on liquidation, disposal of fixed assets
- Interest from revaluation of fixed assets
8 Other expense Current year Previous year
- Proceeds on liquidation, disposal of fixed assets
- Loss from revaluation of fixed assets
9 Current corporate income tax Current year Previous year
VII Additional information for items presented in the Statement of Cash Flows
Amounts held by the enterprise but not used: Present the values and reasons for large amounts of cash