Analyzing the financial situation at quang trung industrial group co , ltd for the period of 2017 2019

Objective of the Study The topic focuses on analyzing the financial situation of the company to see the financial situation at the company, thereby offering solutions and proposals with

OVERVIEW OF THE RESEARCH PROJECT

1.Origin Of the study

In the current market economy, constantly innovating and increasinglyfierce competition among businesses, so sustainable development andprofitable business are a practical target for any business sector Come on

To achieve that, the enterprise must regularly conduct financial analysis toclearly see the current state of financial activity, business performance ofthe enterprise as well as fully identify the cause and level of imageimpact The influence of factors to help managers come up with effectivesolutions and accurate decisions to improve the business and productionefficiency of enterprises

Recognizing the importance of analyzing the financial situation ofbusinesses, I chose the graduation thesis topic: ―Analyzing the financialsituation at Quang Trung Industrial Group Co., Ltd for the period of2017- 2019 ‖

2 Objective of the Study

The topic focuses on analyzing the financial situation of the company to see the financial situation at the company, thereby offering solutions and proposals with the following specific objectives:

- Overall assessment of the financial situation

- Analyzing financial structure and capital guarantee situation for businessactivities

- Analyzing the situation and solvency of the company

- Analyzing business efficiency

- Analysis of financial ratios through the financial statements of the

company

- Analyzing the efficiency of capital use, profitability of capital sources

3 Scope of the Study

The scope of study is the financial situation of the enterprise through financial statements including balance sheet, income statement, cash flow statements andfinancial statement footnotes for the period of 2017-2019

4 Research Methodology of the study

- Data collection method: collect data through company reports and documents

- Data processing method: the basic reason is mainly followed by specific analysis of actual data through reports and documents of enterprises

- Using analytical methods: comparison method, ratio method, Dupont method

to analyze data, synthesize variables over years

5 Structure of the study

The graduation thesis consists of 3 chapters:

Chapter 1: Literature review

Chapter 2: Financial statement analysis at Quang Trung Industry Group Joint Stock Company in the period of 2017-2019

Chapter 3: Solutions to improve the financial situations of Quang Trung

Industry Group Joint Stock Company

Chapter 1: Literature review

1.1 Overview of financial statements

1.1.1 Definition of financial statements

According to the Institute of Certified Public Accountants (AICPA) :―The financial statements are prepared for the periodic review or report onthe operation of the enterprise, the investment situation in the businessand the results achieved in the reporting period The financial reportingsystem reflects the combination of recorded events, accounting principlesand assessments that are primarily applicable to the recording of events.‖.According to the Vietnamese accounting system, Financial statements aretypes of accounting reports that generally and comprehensively reflect thesituation of assets, capital sources, the situation and results of productionand business activities of enterprises in a certain period As such, financialstatements not only provide information primarily to entities outside thebusiness such as investors, tax authorities, banks and other financialinstitutions, but also provide information providing information tocorporate executives, helping them assess and analyze the financialsituation as well as business results of enterprises

Within the scope of the thesis, the author uses the definition of financialstatements as follows: ―Financial statements are a system of statementsmade according to the current accounting standards and regime reflectingthe most general information about the financial statements Maineconomic and financial news of the unit Accordingly, the financialstatements contain the most comprehensive information on the situation

of assets, equity and liabilities as well as the financial situation, businessresults in the period of the enterprise ‖

1.1.2 Functions of financial statements

The system of financial statements of enterprises is made for thefollowing purposes:

- Summarizing and presenting in a general and comprehensive manner thesituation of assets, capital sources, debts, situation and results of businessoperations of enterprises in an accounting period.

- Providing key economic and financial information for assessing thesituation and performance of the enterprise, assessing the financial status of theenterprise in the past operating period and future forecasts

Financial statements are important in the field of economic management,attracting the attention of many objects inside and outside the enterprise.Each subject cares about the financial statements on a different level, butgenerally aims to get the information needed to make decisions that areappropriate to their goals

- For business managers, the financial statements provide generalinformation about the situation of assets, sources of asset formation as well as thesituation and results of business after an operation period, on which Managementwill analyze, evaluate and propose timely management solutions and decisionssuitable for the future development of the enterprise

- With relevant state agencies such as finance, auditing bank, tax

Financial statements are important documents in checking, supervising,guiding and advising enterprises to implement policies, economic andfinancial regimes of enterprises

- For investors, lenders financial statements help them identify theirfinancial capacity, the situation of the use of assets, capital, profitability, efficiency

of production and business activities , level of risk for them to consider, chooseand make an appropriate decision

- With suppliers, financial statements help them identify solvency,payment methods, from which they decide to sell goods to businesses again, orneed to apply payment methods for the reasonable

- With customers, financial statements help them have information aboutthe ability, production capacity and product consumption, reputation level

of the business, customer treatment policies so they have right decision

in the purchase of the business

- For shareholders, employees, they are interested in information about theability and policy to pay dividends, salaries, social insurance, and other issuesrelated to their interests shown on financial report

1.1.3 Categories of financial statements

1.1.3.1 Balance sheet

 Definition:

A balance sheet is a statement of the financial position of an enterprisestating assets, liabilities and equity at a given time In other words, thebalance sheet illustrates the net value of a business

The balance sheet may also contain details from previous years forcomparison purposes This data will help businesses track theirperformance and will identify ways that companies can build theirfinances and see where businesses need improvement In essence, thebalance sheet is a general balance sheet between assets and equity andliabilities

Balance sheet: Provides information about the situation of assets,liabilities, sources of assets formation of the enterprise at a given period,helping to assess the financial status of the business, such as fluctuations

in the size and structure of assets, sources of assets formation, solvency,profit distribution At the same time, it helps to evaluate the ability tomobilize capital into the production and business process of the enterprise

in the coming time

results Through this report, information users can assess businessperformance of the business Also know the scale of costs, revenues,income and results of business activities as well as the net profit beforeand after corporate income tax.

 Function

Income statement: Providing information on business results of theenterprise in the period, providing information on the fulfillment ofobligations to the State budget From the analysis of the data on theanalysis of business results, the enterprise can control potential changes infuture economic resources, assess the profitability of the business, or costeffectiveness of additional resources that businesses can implement

1.1.3.3 Cashflow statement

 Definition

A cash flow statement is one of four mandatory financial statements that

an enterprise must prepare to provide its users with information about theenterprise The statement of cash flows reflects issues related to the source

of cash in and out in the enterprise, the situation of short-term revenue andexpenditure of the enterprise Sources of cash in and out of businesses andamounts considered as cash are divided into three groups: cash flows frominvesting activities, cash flows from financial activities and cash flowsfrom operating activities

Cash flow statement: Provides information on financial fluctuations in theenterprise, helps to analyze the investment, financial and businessactivities of the enterprise, to assess the ability to generate money andcash equivalents in the future, as well as the use of these sources of moneyfor business activities, financial investment of enterprises

1.1.3.4 Notes

 Definition

Notes to the financial statements are also an annual financial report thatmust be prepared for an enterprise Notes to the financial statements arealso used to explain and add to the criteria that other financialstatements have not shown or explained complicated items.

reflecting the financial position that other financial statements cannot present

1.2 Overview of financial statements analysis

1.2.1 Definition of financial statements analysis

Financial statement analysis is the process of reviewing, checking,

comparing and comparing financial data in the past business period Through data on the analysis of financial statements will provide userswith information that can assess the potential, business performance

as well as future financial risks of the business

Analyze financial statements to provide useful information not only for corporate governance but also to provide economic - financial information mainly for non-business information users Therefore, analyzing financial statements does not only reflect the financial situation of the enterprise at a given time, but also provides information on the results of production and business activities of the enterprise in a given period

1.2.2 Role of financial statements analysis

Analyzing the financial statements of an enterprise is an extremelyimportant job in corporate governance It is not only meaningful to thebusiness itself, but also necessary for other management entities related to

the business Analyzing the financial statements of enterprises will helpcorporate governance overcome shortcomings, promote positive aspectsand predict the development of enterprises in the future On that basis,corporate governance has come up with effective solutions to select anddecide the optimal plan for production and business activities of theenterprise.

The role of financial statement analysis is to provide sufficientinformation to help business managers to see the vivid features on the

"financial picture" of the enterprise expressed through the followingaspects:

- Providing timely, complete and truthful financial information necessary for business owners and investors, lenders, customers, suppliers

- Provide information on the situation of capital use, ability to raisecapital, profitability and production and business efficiency of the business

- Provide information on the situation of liabilities, the ability to recoverreceivables, the solvency of payables as well as other factors affecting theproduction and business activities of enterprises

1.2.3 Process of financial statements analysis – EIC analysis

1.2.3.1 Economy analysis

Economic analysis is a process followed by experts to understandimportant economic factors affecting the operation of an organization,industry, region or any other specific population group, with Thepurpose of making wiser decisions for the future

In business, economic analysis allows incorporating factors from theeconomic environment such as inflation, interest rates, exchange ratesand GDP growth into the company's plans Each organization is anopen system that is impacted and influenced by the external context.This means that proper evaluation of economic variables will facilitate

the identification of opportunities and threats that may affect theperformance of the company.

Organizations tend to implement business planning processes everyone or two years and often identify two or three possible economicscenarios for short and medium term terms They then assess how eachscenario will influence the company's decision and achieve its goals.Economic analysis is also carried out when evaluating specific projects

to consider economic and financial feasibility

Economic analysis helps business owners get a clear picture of thecurrent economic environment, as it relates to their company's ability

to thrive Economists, statisticians and mathematicians often performthis analysis on behalf of for-profit and not-for-profit businesses.These types of economic assessments include an in-depth assessment

of market strengths and weaknesses An economic analysis is notlimited to small or medium-sized businesses, it is also valuable tosmall companies In fact, small businesses may need to conducteconomic analysis more frequently than businesses with sufficientcapital and integrated resources to sustain the recession There areseveral types of economic evaluation methods that business ownerscan use to gain a holistic view of how their companies will bid in thefuture

1.2.3.2 Industry analysis

Industry analysis is done by business entities or, in particular, by anentrepreneur to identify factors affecting the industry in which theyhave or are thinking about investing

New entrants, the status of competitors, and both buyers and suppliershave a direct impact on the performance of an industry It is theconcept of industry analysis that provides business entities with theinformation they need to plan their business effectively

Remember, it is important to have a certain perspective on the workforces in the overall diagram of everything if you want to conduct acomprehensive strategic planning.

Industry analysis helps owners know about the various opportunitiesand threats facing businesses so they can take steps to combat themand gain a competitive advantage

Understanding the industry's surroundings and the factors affectingthem helps business executives predict future trends

1.2.3.3 Company analysis

Company analysis is a process that includes analysis of the company's financialsituation, products, services, and competitive strategy (the company's plan to deal with threats and environmental opportunities, external field given)

Company analysis takes place after the analyst understands the company's

external environment and includes answering questions about how the companywill respond to threats and opportunities posed by the external environment The intended response is the individual company's competitive strategy

Analysts should seek to determine whether the strategy is primarily defensive oroffensive in its nature and how the company intends to implement it

1.2.4 Financial statements analysis methods

1.2.4.1 Common-Size Analysis

Longitudinal analysis is a method of evaluating financial

information by presenting each item in the financial statements as a percentage of the principal amount over the same period A companycan use this analysis on its balance sheet or income statement

Common size amount = (Analysis amount / Base amount) x 100%

The base amount will vary depending on whether the company is completing analysis on its balance sheet or income statement If the company completes the analysis on the balance sheet, then the

principal amount will be the total assets or total liabilities and equity

(or shareholders) If income statements are used, the principal amount will be net sales.

1.2.4.2 Horizontal Analysis

Horizontal analysis (also called trend analysis) is a financial statementanalysis technique that shows changes in the number of correspondingfinancial statement items over a period of time It is a useful tool to assess the financial trends of a company

Reports for two or more phases are used in the horizontal analysis The earliest period is often used as the base period and the items on the report for all subsequent periods are compared with the entries on the base period report Changes are usually displayed both in money and in percentages

 Short-term solvency or liquidity ratios

The solvency of an enterprise reflects the financial capacity of an enterprise to meet the need to pay debts to individuals or organizationsrelated to the loan or debt of the enterprise Financial capacity exists inthe form of currency (cash, deposits ), accounts receivable from indebted individuals, assets that can be quickly converted into cash such as: goods, finished goods, consignment Debts of the enterprise may be short-term bank loans, debt due to goods originating from the sale and purchase of inputs or products that the enterprise must pay to the seller or the buyer before, taxes not yet paid to the State Bank,

unpaid amounts The solvency of the business only focuses on

paying the debt that the business needs to pay in the year Therefore, enterprises must use all assets under their management and use to pay due debts

- Current ratio

Current ratio is an index measuring the ability of businesses to meet term financial obligations In general, this index at 2-3 is considered good.The lower the index, the more difficult or insolvent a business is, but a toohigh current payment index is not always a good sign, because it showsthat the company's assets are tied up too much ―working assets‖ and thusthe efficiency in using assets of the enterprise is not effective

short Quick ratio

Quick ratio is a measure of higher liquidity Only highly liquid assets areincluded in the calculation Inventories and other short-term assets arespent because when they need money to pay off debt, their liquidity isvery low

- Cash ratio

Cash ratio shows how much cash and cash equivalents the companyhas to meet its short-term debt obligations This index usually rangesfrom 0.5 to 1 However, to determine whether the cash solvency ofthe business is high or low, it is necessary to consider the nature andbusiness conditions of the business But if this coefficient is toosmall, it is certain that enterprises will have difficulty in paying

In fact, only a few businesses have cash reserves and cashequivalents that are sufficient to cover all short-term debts, so thecash ratio is usually quite low, only greater than or equal to 1 If anenterprise holds enough cash and cash equivalents to pay off itsshort-term debts, it proves that it has not effectively taken advantage

of this highly liquid asset

 Long-term solvency or financial leverage ratios

Long-term solvency is the ability of a company to meet its debt and financial obligations Long-term solvency is necessary to maintain business operations as

it demonstrates the ability of the company to continue operations in the near future

Long-term solvency is directly related to the ability of an individual or business

to pay their long-term debt, including any related interest To be considered as along-term solvency, the value of the assets of a company or an individual must

be greater than their total liabilities

- Debt to assets ratio:

The debt to assets ratio is a leverage ratio that measures the total amount of assets financed by creditors instead of investors In other words, it shows

the percentage of assets financed by borrowing compared to the percentage

of resources financed by investors

Basically, it illustrates how a company has grown and acquired its assets overtime Companies can create investor interests to obtain capital, make profits toobtain their own assets or receive debt Obviously, the first two are preferred

in most cases

This is an important measurement because it shows how the company has taken advantage of by considering how much the company's resources are owned by shareholders in the form of equity and creditors in the form of debt Both investors and creditors use this number to make decisions about the

company Investors use this ratio not only to assess whether the company has enough money to meet current debt obligations and to evaluate whether the company can pay back their investment

This low ratio proves that the autonomy of enterprises is high However, this low index also implies that enterprises have not taken advantage of capital mobilization channel by debt, which means they have not declared well

financial leverage

This ratio is often rated high or low in correlation with good industry

practice and industry peers

- Debt to equity ratio

The ratio of total debt to equity is an indicator that reflects the financial size ofthe company It tells us about the ratio of the two basic sources of capital (debtand equity) that businesses use to pay for their operations These two sources

of capital have unique characteristics and the relationship between them iswidely used to assess the financial situation of an enterprise

The ratio of total debt to equity is also highly dependent on the industry in which the company operates For example, when manufacturing industries require a lot

of capital, the ratio of debt to equity tends to be higher, while in service

companies, the ratio of debt to equity is often lower The ratio of total debt to equity gives investors an overview of the financial strength, financial structure of the business, and how it can pay for its operations Typically, if this coefficient is greater than 1, it means that the assets of the business are financed

primarily by debt, whereas the assets of the business are mainly financed by equity In principle, the smaller this coefficient is, meaning that liabilities

account for a small proportion of total assets or total capital, less financial difficulties for businesses The greater this ratio, the greater is the possibility ofdifficulty in paying debts or bankruptcy of the business In fact, if the liabilitiesaccount for too much compared to the equity, it means that the borrower is borrowing more than the existing capital, so the business may be at risk of debtrepayment, especially if The enterprises face more and more difficulties when interest rates on banks increase Creditors or banks also often consider and carefully evaluate the debt ratio (and some other financial indicators) to decide whether to lend or not

- Equity multiplier

The debt to equity ratio measures the financial size of an enterprise, indicating what percentage of its debt to the business is Corporate debt includes both short-term and long-term debt The total capital of the enterprise includes its debts and equity - shareholder's equity (including ordinary shares, preferred shares, interest payables and net debt) Debt and equity are two basic sources of capital to finance a company's operations These two sources of capital have unique characteristics and the relationship between them is widely used to assess a company's financial situation

Debt to equity ratio gives investors an overview of financial strength, financialstructure and how the company can pay for its operations Typically, if this coefficient is greater than 1, it means that the assets of the firm are financed primarily by debt, whereas the assets of the business are primarily financed byequity In principle, the smaller this coefficient is, meaning that liabilities

account for a small proportion of total assets or total capital, less financial

difficulties for businesses The larger the ratio, the greater the difficulty in

paying debts or bankruptcy of the business

In fact, if the liability is too large for the equity to mean the company borrowsmore than it already has, the company may be at risk of repaying the debt,especially the more encounter more difficulties when interest rates on banks rise.Creditors or banks also often consider and carefully evaluate debt ratios (andsome other financial ratios) to decide whether to lend to businesses or not.However, the use of debt also has an advantage, that is, interest expenses will bededucted from corporate income tax Therefore, businesses must weigh thefinancial risks and advantages of debt to ensure a reasonable ratio

- Times Interest Earned

Coefficient of interest payment of an enterprise is a coefficient that indicates

an enterprise's ability to pay interests on unpaid debts The interest payment ratio measures the number of times the company can pay its current interest on its existing income In other words, this indicator measures the level of safety

at which a company pays interest in a given period The ability of the company

to pay to meet its interest payment obligations is an aspect of the company's debt payment

The lower the company's ability to pay interest, the higher the debt cost ofthe company When the company's interest rate is 1.5 or lower, its ability tomeet interest expenses can be a big problem

The ratio of 1.5 is generally considered to be a minimum acceptable rate for a company and, if lower, the borrower is likely to refuse to lend your company more money, because of the risk of breakage The company's debt at this time isvery high

Moreover, the interest rate paid below 1 indicates that the company did not generate enough revenue to meet the interest expenses If the ratio of a

company is less than 1, it may be necessary to spend some of its cash reserves

to meet demand or borrow more, and of course the ability to borrow more is very low Without more loans within 1 month, the company is in bankruptcy

 Asset management or turnover ratios

Total asset turnover ratio is used to assess the effectiveness of the company'sasset use Through this coefficient, the investor can know how many coins ofrevenue are generated for each asset

- Inventory turnover

Inventory turnover is one of the financial ratios to evaluate theperformance of an enterprise This ratio is calculated by dividing theturnover (or cost of goods sold) in a given period by the average of theinventory value in the same period Here, the average of inventory value

is equal to the average of the beginning and ending values

Ratios show how much inventory turns during the period to generate theamount of revenue recorded during that period A higher ratio may be asign that a business is operating effectively This index shows the ability

to manage inventory effectively A higher inventory turnover indexindicates that businesses sell faster and inventory is not stagnant in thebusiness This means that the business is less risky if seen in the financialstatements, the value of inventory items decreases over the years.However, this index is too high, which is not good because it means thatthe stockpile is not much, if the market demand increases suddenly, it isvery likely that the business will lose customers In addition, stockpiling

of raw materials for production is not enough to cause the line to stall So

inventory inventory needs to be large enough to ensure the level of

production meets customer needs

- Receivables turnover ratio:

Receivables turnover is one of the financial ratios to assess the

performance of an enterprise It shows how many receivables have to spin

in a given reporting period in order to achieve revenue during that period High receivables turnover ratio shows the ability to effectively collect receivables and debts from customers High receivables turnover ratio canalso be a sign that a business is operating mainly on cash

High receivables turnover ratio also shows that the company is cautious ingranting credit to customers A prudent credit policy can be beneficialbecause it helps the company somewhat prevent the risk of doubtful debts.However, if too cautious, the company could put potential customers inthe hands of competing companies with softer credit policies

The low receivable turnover ratio indicates that the company has a poor recovery process, bad credit policies or their customers are unable to pay Often a company with a low receivables turnover ratio should revise its credit policy to ensure a time to recover money However, if a company ishaving a low receivables turnover ratio, it can effectively revise its recall process, there may be a large cash flow in the financial statements from the recovery of old outstanding debts

- Total assets turnover

Total asset turnover ratio is used to assess the effectiveness of the company'sasset use, which is a measure of the value of turnover or turnover of thecompany compared to the value of the company's assets Through this

coefficient we can know for each copper asset how many coins are generated.The higher the total asset turnover, the more effective the company's assets areused in production and business activities However, in order to have an accurateconclusion about the effectiveness of a company's asset use, we need to comparethe company's asset turnover ratio with the industry's average asset turnoverratio This coefficient is the opposite of profit margin (profit margin - the ratio ofprofit to net revenue), meaning that the higher the coefficient of total assetsturnover, the smaller the profit margin and vice versa.

 Profitability ratios

Profitability ratios cover a company's operating ability, including its ability to make income and, therefore, cash flow Cash flow concerns the company's strength to obtain liability and equity financing

- Profit margin ratio ( Return on sales)

The profit margin ratio, also known as the operating performance ratio, estimates the company's ability to turn its sales into net income To

evaluate the profit margin, it must be compared to rivals and industry statistics It is calculated by dividing net income by net sales Creditors and investors use this ratio to measure how productively a company can convert sales into net income Investors want to make sure profits are high enough to share dividends while creditors want to make sure the company has enough profits to pay back its credits In other words,

outside users want to know that the company is controlling efficiently A deficient profit margin formula would show the expenses are too high, and the administration needs to budget and decrease costs

- Return on assets (ROA)

Return on assets is a financial indicator that measures how well acompany returns to its total assets In other words, this indicator showshow much money the company can earn from a single asset they control.Return on assets gives managers, investors or analysts an idea of how wellthe company manages its assets to generate income.

If ROA > 0, it means that the business is profitable The higher the ROA,the more effective the business is If ROA < 0 means the business isunprofitable

Return on assets is often used when comparing a company's performanceacross periods or when comparing two different companies of the samesize and industry Usually different industries have different ROA.Industries that are capital intensive and require a high value of fixed assets

to operate, generally have a lower ROA However, a company with largeassets may have a large ROA if its income is high enough

- Return on equity

The return on equity ratio or ROE is a profitability ratio that measures thefirm's ability to generate profits from its shareholder's investments Inother words, the return on equity ratio illustrates how much profit eachVND of ordinary stockholders' equity makes Unlike other return oninvestment ratios, ROE is a profitability ratio from the investor’s point ofview—not the company Investors want to see a high return on equityratio because the company is using its investors’ funds effectively Higherratios are almost always more beneficial than lower ratios, but have to berelated to other companies’ ratios in the industry Since every industry has

different levels of investors and income, ROE can’t be used to comparecompanies outside of their industries effectively.

Many investors choose to calculate ROE to see the change in return Thathelps follow a company’s progress and ability to keep a positive earningstrend

1.2.5 Dupont Identity

A method of studying the continuous impact of factors affecting thefinancial situation of an enterprise This is a simple but highly effectivetool that allows analysts to get a general overview of the basics of thebusiness from which to make the right business decisions

According to this method, we must first consider the interaction betweenthe profitability of revenue and the efficiency of asset capital Next

consider the return on equity

Based on the above, businesses can apply some measures to increase ROE

- Increase sales, reduce costs, improve product quality Since then

increase the profits of the business

In summary, the analysis of financial statements using the Dupont modelwhich has great significance for corporate governance shows that it ispossible to fully and objectively assess the factors that affect theefficiency of production and business from there conduct improvement of

organizational management of the business.1.3 Factors affecting financialsituation of a company

1.3.1 Subjective factor

Objective factors are external factors that affect the analysis of corporatefinancial situation such as socio-political situation, economic growth rate,development of science and technology, monetary policy, tax policy, .Specifically:

- General information is information on political, economic, legal and economicsituations related to economic opportunities, investment opportunities,technological and technological opportunities, etc or the growth of the economyhas a strong impact on the business results of the business Information aboutmarket surveys, prospects for development in production, business and commercialservices greatly affects business strategies in each period

- Economic sector information is information that results of an enterprise'seconomic nature, such as characteristics of economic industry related to the entity

of the product, technical process to be conducted , the production structure has animpact on profitability, capital turnover, the pace of development of economiccycles

- Industry average indicator system: financial analysis will become morecomplete and meaningful if the existence of the industry average indicator systemexists The analyst can only say whether the financial ratios of the business are low

or high, good or bad when compared to the corresponding ratios of otherbusinesses with similar business characteristics and conditions Representativehere is the industry average Through comparison with the system of industryaverage indicators, financial managers will know the financial situation as well asbusiness performance of the business

1.3.2 Objective factor

In addition to the above mentioned objective factors that affect the analysis of the financial situation of the enterprise, the factors that also have significant

impact are subjective factors Subjective factors are internal factors that belong

to the business organization

- Information of the enterprise itself is information about the business strategy ofthe enterprise in each period, information about the business situation and results

of the enterprise, the situation of creation, distribution and use capital, situationand solvency, This information is expressed through explanations of managers,financial statements, management accounting reports, statistical reports andprofessional accounting

- Data used for financial analysis: Data used to analyze, evaluate and drawconclusions about the financial situation of the business is an extremely importantfactor The fact that enterprises provide accurate and truthful data helps to analyzethe financial situation objectively and properly Honest data helps in analyzing thefinancial situation objectively and properly Honest data will help the results to beaccurately identified, give accurate assessments of the capacity of the enterpriseitself, the position of the business compared to the industry in particular and in theeconomic market competition in general Sometimes in reality, in order to achieveeconomic goals such as borrowing from banks, applying for economic benefits orseeking financing for investment, enterprises have policies to falsify financial data

to meet require by the partner It is also a subjective factor affecting the analysis ofcorporate financial situation

- Qualifications of financial analysts: financial analysts are also a subjectivefactor affecting the analysis Whether or not the outcome of a business financialanalysis is accurate depends a great deal on the qualifications of financial

Chapter 2: : FINANCIAL STATEMENT ANALYSIS IN QUANG

TRUNG INDUSTRIAL JOINT STOCK COMPANY IN THE PERIOD

OF 2017-2019

2.1 Overview of Quang Trung Industry Joint Stock Company

2.1.1 Establishment and Development

Basic information about the company:

- Quang Trung Industrial Group Joint Stock Company

- Headquarters: 494 Doan Ket, Nguyen Hue Street, Ninh Phong Ward, Ninh Binh City, Ninh Binh Province

- Form of ownership: Joint stock company

fighter, reported achievements at the 2000 National Emulation Conference and was honoured to sit on the Presidium.

In 2002, the company was awarded the First Class Labor Medal In 2005, it wasawarded the Third Class Independence Medal In 2011, General DirectorNguyen Tang Cuong was awarded the Ho Chi Minh Prize for science andtechnology by the State President and was credited with designing andmanufacturing a 1,200-ton crane for Son La hydroelectric power plant, finishingthe projects 2 years earlier than predicted, benefiting the State more than tens

of trillion Besides, the Group was also awarded many certificates of merit bythe central and local ministries: The Ministry of Finance's certificate ofexcellence for tax payment achievement; Certificate of Merit from the Ministry

of Public Security for achievements in preserving social order and security;Merit of the Ministry of Science for contributing to promoting scientificdevelopment of Vietnam; Certificate of Merit from the Ministry of Industry andTrade for achievements in contributing to the development of industry and tradeand hundreds of product quality gold medals at domestic and international fairs

In particular, the lifting equipment products of the unit were voted by theMinistries as one of 6 items included in the national essential product program

of Vietnam In 2016, the company was voted by quality standards organizations

to evaluate lifting equipment products up to national quality standards

With 30 years of experiences in the mechanical engineering field, QuangTrungIndustrial Group has 1,800 employees, including 300 people at theundergraduate level, postgraduate level, with more than 200 mechanicalengineers and 500 high-skilled workers and unskilled workers (productionworkers are trained directly from the mechanic and material engineeringworkers' schools)

From a small mechanical enterprise, the company has risen to the top ofVietnam in the field of manufacturing lifting equipment It has breakthroughs inthe design, manufacture and construction of steel bridges and suspension bridges

in Vietnam.With the current strong scientific, technical and financial potential,Quang Trung Group is a very reputable enterprise with the banking system andpartners.

2.1.2 Functions and areas of activity

The company is producing the following items:

- Manufacturing lifting equipment, lowering equipment

- Installing machinery and industrial equipment

- Casting of iron and steel; Producing iron, steel and cast iron; Producing other metal products

- Casting of non-ferrous metals

- Transporting goods by road, Passenger transport by inland waterways, Coastal and ocean freight

- Other construction and specialized activities

- Support services related to advertising and tour organization

- Hotel, restaurants, food and beverage

- Other recreational activities

- Building ships and floating structures: repairing and building new boats, river and sea ferries, eliminating old ships

- Other specialized wholesale: Trading in marine gas equipment, supplying goods and materials for ships

- Other business support services: Import and export of cast steel products, copper, aluminium, cast iron and other raw materials

- Loading goods

2.1.3 Organizational chart

Chart 1: Organizational chart of QuangTrung Industry Joint Stock Company

General

Manager

TechnicalDepartment

MarketingDepartmentAccounting Department

ResearchandDevelopmentDepartment

Human Resource Department

Sales Department

- General manager: The person with the highest authority of the Company.Managing all production and business activities of the Company, being therepresentative of all employees, the legal representative of the law firm, and at

the same time, the chief accountant is responsible for production and business activities.

- Accounting Department: Be responsible for all financial revenues andexpenditures of the Company, ensure full costs for activities of salaries, bonuses,purchase of machinery, materials, and make a receipt for all expenses incurred

as well as accurate data about export and import according to the Company'sregulations

- Technical Department is a unit of the Company's management apparatus,which is responsible for making recommendations to the Director forimplementing the Company's guidance on supervision of the direct units Belongsto: science and technology, construction techniques, product quality ofconstruction works, innovation initiatives, construction equipment management

- Research and Development Department aim to research in order to improvenew products and engage market demands as well as complete developmentcompany’s strategies

- Marketing Department has overall responsibility for advancing revenue, rising market share and contributing to company extension and profitability

- The critical functions of Human Resources Department include labour lawagreement, recruiting, staff training and development, payroll, record-keeping andemployee associations

- The function of Sales Department is to engage in a variety of activities to promote the customer purchase of a product or the client engagement of service

2.1.4 Business orientation of Quang Trung Industry Joint Stock Company toward 2030

Orientation in the coming time when entering the international economic

integration requires 3 mandatory requirements:

- Firstly, for the management team and personnel to adapt and compete with better competitors

- Second, products and goods must be competitive in quality, price, after-sale service

- Third, developing high technology to create a breakthrough in international competition

The vision for the next 10 years of the company is to make selecting andrecruiting personnel the number one task in parallel with finding, buying andtransferring advanced, high-tech technologies, always cultivating and developintellectual staff

2.2 Financial statement analysis at Quang Trung Industry Group

Joint Stock Company in the period of 2017-2019

2.2.1 Balance sheet analysis

2.2.1.1 Analyze the fluctuation of assets

Table 1- Fluctuation situation of assets in the period 2016-2018 Asset

3 Investments in other companies

Total Assets 408473911830

7 4409636033435 4694604727670 324896915128 7.95% 284968694235 6.46%( Source: Author, based on balance sheet of financial statement at QuangTrung company)

- Short-term assets:

+ Period of 2017-2018:

The value of short-term assets in the period of 2017-2018 increased significantly

by 29.42%, from VND 1,128,111,772,125 to 1,459,973,032,643 Thejustification for the significant increase in current assets is the increase in allcash and cash equivalents, accounts receivables, inventories, and other currentassets Cash and cash equivalents continued to increase from VND38,491,000,784 to VND 41,032,712,365, equivalent to an increase of 6.6%compared to 2017 due to customers paying the contract to the company's bankaccount and the company transfers cash to a bank account for payment tocustomers In 2018, the company implemented a commercial credit policy thatallowed customers to pay the contract more slowly and receive a discount if theprepayment made the accounts receivable increased VND 39,478,922,026,which is equivalent to a slight increase of 6.37% Besides, crude production andbusiness costs from ongoing projects and the company purchasing additionalraw materials for production are also the reason for the sharp increase ininventories with an increase of VND 279,127,677,343, which is equivalent to anincrease of 60.12% Other short-term assets increased sharply by 189.94%because in 2017 the company was refunded so the VAT was pushed to 2018 sodeductible VAT increased Other current assets increased sharply in 2017 due tothe company's short-term investments (in particular, investments in short-termstocks), which led to an increase in other short-term assets But in the followingyears, the company did not continue investing in stocks, so other short-termassets decreased significantly (about 72.45%) In 2018, the company also saw aslight decrease of prepayments for sellers, short-term internal receivables, short-term prepayments, and assets at 3.5%, 79.66%, 100%, and 72.45%, respectively,but this decrease was not significant compared to the sharp increase ininventories, and the result was short-term assets The company's short-termassets still increased by 29.42% compared to 2017

+ Period of 2018-2019:

In 2019, the value of short-term assets of the company was VND1,590,487,255,074, an increase of VND 130,514,222,431 compared to 2018,equivalent to the rise of 8.94% The sharp decline of other short-term assetsfrom VND 16,353,077,258 to VND 2,520,595,473, equal to a decrease of84.59% due to the impact of the deductible VAT item sharply reduced by

86.34% In 2019, Inventory went up from VND 743,382,609,502 to VND964,725,301,428, went up significantly by 29.78% compared to 2018 meaningthat the company is pushing to buy raw materials Although other short-termassets and short-term receivables decreased, 2019 also witnessed a significantincrease of customer receivables from VND 492,647,140,630 to VND581,205,361,425, equivalent to an increase of 17.98%, this is a result of thecompany's relaxation of its commercial credit policy to attract customers, buildlong-term relationships with potential partners Besides, short-term internalreceivables also increased significantly by 59.63% from VND 1,023,621,425 toVND 1,634,012,536 On the other hand, prepayment to supplier decreasedsharply by VND 168,234,062,198, equivalent to a reduction of 85.46% Thanks

to the increase in cash and cash equivalents, the increase in inventory made upfor the decline short-term receivables and other short-term assets, which madethe company's short-term assets slightly increased by 6.46% compared to 2018

- Long-term assets:

Looking at the table, it is clear to be seen that long-term assets decreased slightlyfrom 2017 to 2018 with a rate of 0.24% from VND 2,956,627,346,182 to VND2,949,663,000,792; but in 2019, long-term assets ingligible increase 5.24% toVND 3,104,117,472,596 The company boosted investment in fixed assets andespecially machinery and equipment used for construction works along with asharp increase of capital construction in progress The company's fixed assetsare mainly houses, architectural objects, means of transportation, machinery andequipment for the constructions In 2018, the company invested

strongly in a 5-hectare embryo plant project, increasing the value of capitalconstruction in progress from VND 726,996,614,483 to VND 1,134,916,821,819equivalent to an considerable increase of 56.11% In 2019, the cost ofconstruction in progress increased by VND 257,148,601,806, equivalent to22.66% compared to 2018 because the company boosted investment to completethese two projects: a 5-hectare embryo factory project and 5 star hotel project.However, the company's tangible fixed assets decreased by 5.72% compared to

2018 from VND 1,794,591,885,422 to VND 1,691,897,755,420

If analyzed vertically, the structure of assets and capital of the business haschanged slightly in 2017-2018 and hardly changed in 2018-2019 The absolutenumber with a significant increase in both capital and assets, the structure ofassets and equity fluctuate in a positive direction, so the structure of the business

is reasonable

2.2.1.2 Analyze the fluctuation of liabilities and equity

Equity

A.Liabilities 795776822191 1001328374390 1090025858873 205551552199 25.83% 88697484483 8.86%

I Current 488091190472 702206215992 798339742729 214115025520 43.87% 96133526737 13.69%liabities

1 Short- 405865704994 558570943681 763340865958 152705238687 37.62% 204769922277 36.66%term

advances