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5038 Assignment 2 - accounting

Accounting and Financial Practice (University of Greenwich)

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ASSIGNMENT 02 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 5: Accounting Principles

Submission date 25/08/2022 Date received (1st Submission)

Re-submission date Date received (2nd Submission)

Student Name Tran Ha Phuong Student ID GBH210599

Class No. GBH1102 Assessor Name Tran Thuy Tien

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 Signature
Phuong

Grading Grid

P3 P4 P5 P6 P7 M2 M3 M4 D2 D3

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 Summative Feedbacks  Resubmission Feedbacks

Grade: Assessor Signature: Date:

Internal Verifier’s Comments:

Signature & Date:

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Table of Contents
1. Introduction.................................................................................................................................2
2. Task 1..........................................................................................................................................2
3. Task 2..........................................................................................................................................4
4. Task 3..........................................................................................................................................6
4. Conlusion....................................................................................................................................8
5. References...................................................................................................................................8

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1. Introduction
I have received assignments that include providing accounting and consulting services to
businesses to find high growth potential clients and scalable business models. In
addition, I provide advice and direction on business budgeting with the goal of
understanding how budgeting can be used to allocate resources efficiently and aid in
control and decision-making. In this report, I will prepare basic financial statements that
comply with accounting principles, conventions and standards for small and
unincorporated commercial companies. Finally, use spreadsheets to create budgets for
planning, control, and decision-making.

2. Task 1
As an ABC accountant, I am in charge of analyzing raw data for ABC's unadjusted trial balances
as of December 31, 2020 summarized in the table below.

Adjusting entries

General Ledger

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Adjusted Trial Balance

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Financial Statements

3. Task 2
Note:
HNX: HaiHaCo
MCM: Moc Chau Milk

Liquidity is an important group of financial measures used to determine a debtor's ability to

repay debt in the short term without raising external capital (vietnambiz, 2020). In which,
researchers generally employ current ratio and fast ratio the most. First off, a company's capacity
to cover its short-term liabilities (debt due within a year) with short-term assets like cash,
accounts receivable, and inventory is determined by its current ratio. warehouse (vietnambiz,
2020). This index at Moc Chau Milk varies from 2.53 to 7.65 between 2017 and 2021, with an
upward trend. The index for HaiHaCo decreased from 2.55 to 1.27 during this time as well. In
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general, MCM outperforms HaiHaCo in terms of current ratio. Second, the Quick Ratio
measures how well a firm can pay its short-term debt commitments with its most liquid assets
(vietnambiz, 2020). In MCM, this index varies from 1.57 to 6.99, whereas HaiHaCo varies from
2.16 to 1.07.

Efficiency is the ability of performance indicators to assist small business owners and managers
in running their operations more effectively by evaluating how a company uses credit, inventory,
and assets. These financial ratios can demonstrate how quickly a business receives payment from
credit sales or how long it takes for inventory to turn over during a specific time frame.
Managers can use this data to assess the suitability of the company's loan conditions and the
efficiency of its purchasing initiatives. Inventory turnover, Asset Turnover, and Day's Sales in
Inventory are frequently used in it by academics.
First, inventory turnover is a financial indicator that may be used to examine a company's
revenues as well as how effectively it manages production, inventory, and distribution of its
products. This indicator varies in Moc Chau Milk from 6.43 to 10.21 between the years of 2017
and 2021 and generally rises. The Vinamilk index also changed over this time, going from 3.61
to 5.15. In general, MCM's inventory turnover is larger than HaiHaCo's.
Second, Asset Turnover is this financial indicator that shows the portion of assets tied to
inventory. In MCM, this index fluctuates from 1.51 to 2.46 in 5 years and drops the most in
2021, while HaiHaCo 1.29 - 0.76 tends to decrease year by year.
Finally, Inventory Day Sales is this financial metric that measures the average number of days a
company's receivables have not been paid, from the date of sale on credit to the date of
collection. For MCM, the index is in the range of 35.74 to 5.73 for 5 years and has a decreasing
trend year by year which is a bad sign, it is similar to HaiHaCo, this index tends to decrease in
the range of 101.23 to 83.98.

In order to assess, analyze, and evaluate the business's potential for profitability in relation to
actual sales, balance sheets, and other factors like operational expenses and shareholders' equity
during a specific time period, managers employ profitability ratios (sapp, 2022). Gross Profit
Rate, Net Profit Margin, Return on Assets, and Return on Equity are the four sorts of indicators
that make up the profitability ratio. To begin with, Gross Profit Rate is This indicator calculates

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the gross profit margin realized from sales. Net sales are calculated as revenue less sales profit,
discounts, and allowances, less selling expenditures (vietvuevent, 2021). Second, the percentage
of revenue derived from sales is gauged by the metric known as net profit margin. In general, the
better the ROS ratio (vietvuevent, 2021). Between 2017 and 2021, MCM's index ranges from
6.53 to 10.9, whereas VNM's ranges from 17.45 to 20.14, or nearly twice as much as MCM.
Next is return on assets, which is a metric for return on investment. ROA is used to assess a
management team's effectiveness in generating income from its assets (vietvuevent, 2021).
While the index ranges from 20.9 to 32.1 for VNM, it ranges from 15.14 to 20.20 for MCM.
Compared to VNM, MCM has a lower index. Last but not least, return on equity is an index that
calculates the earnings per dollar of equity (vietvuevent, 2021). The range of this index for MCM
is 14.68 to 30.81, whereas the range for VNM is 29.66 to 43.5, making VNM's index greater than
MCM's.

The solvency ratio, also known as the debt solvency ratio, examines and assesses whether or not
a company is able to pay its long-term debts. Banks frequently utilize solvency ratios to evaluate
lending and credit activity (sentayho, 2022). Debt/Equity Ratio, Debt/Capital Ratio, and
Solvency are frequently used metrics by researchers. First off, the Debt/Equity Ratio is a
financial indicator that evaluates a company's capacity to use and manage debt (vietnambiz,
2019). The long-term debt index cannot be calculated at Moc Chau Milk since it is not made
available online, while HaiHaco ranges from 7.47 to 12.23. Second, by dividing a company's
total interest liabilities, the debt/capital ratio, a gauge of financial leverage, is determined. This
indication is not publicly accessible online for MCM, while HaiHaCo ranges from 20.45 to
32.79.

When comparing the share prices of publicly listed firms to other financial metrics like profits
and dividend ratios, market prospect ratios are employed. wherein researchers frequently use the
P/E ratio and earnings per share. The first definition of earnings per share is the profit that
investors receive from one share after taxes. The index ranges just from 2.6 to 3.77 in Moc Chau
Milk whereas it ranges from 5.83 to 4.77 in HaiHaCo. Second, the P/E Ratio shows how much
you're willing to spend on every dollar in stock earnings. MCM only contains this index from 0
to 19.15, however HaiHaCo has it from 21.54 to 32.80. This MCM index is just half as high as
HaiHaCo.

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4. Task 3

A budget is a plan for spending your money that is based on estimates of what the author
need and what author earn. A budget is a plan for spending that is important in the
management of an organization. Budgeting is a way to keep your business on track and
avoid overspending. Forecasting is a process of drawing a map of the future. Businesses
will develop a plan to achieve the desired results. Budgeting is a key part of running a
successful business. By regularly reviewing and adjusting their budgets, businesses can
ensure that their operations continue to run smoothly. Budgets are also used to guide and
evaluate management Performance indicators (Goode & Malik, 2011). According to Jae
et al., (2011), a budget is a financial plan to control future activities. There are many
benefits to budgeting, including having a better understanding of how your money is
being spent. It helps to make a clear and detailed plan .Companies know exactly what
they need to do now and in the future, which helps them get on track. Businesses that
stray from their intended targets can use their resources more effectively, providing a
more general view of the performance of businesses. Budgeting has many of the same
benefits as planning. A clear, detailed plan helps companies know exactly what they need
to do now and in the future, which in turn will help them stay on track. Business
intelligence can help companies find and use the best resources, providing a broad view
of how businesses are performing. In addition to the impact of the budget, there are
negative aspects of the budget. Traditional budgeting methods are considered to be too
time-consuming. What follows is a list of five items. Budgets constrain a company's
ability to overhaul its business model as it relies on historical accounting methods and
management practices. Traditional budgeting is ineffective because it does not have a
strategic focus or a goal of creating value. Traditional budgeting methods have the
potential to hinder rather than help knowledge sharing across departments, which can
ultimately lead to business failure. This policy encourages managers to pursue good luck
and an unprofessional attitude towards budget costing. This will be supported flexibility
therefore affects the ability to innovate (Hope and Frase,1997). Finally, the success of
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budget control depends on the coordinated effort of several departments. Departmental

success affects other departments' performance. A budget officer would be a valuable
asset to any business in addressing the coordination of challenges. Not every business
can afford to hire one, though. Lack of performance results from a lack of cooperation
between several divisions. Conflicting demands from different departments can lead to
budget disagreements. This can cause tension and conflict between different parts of the
organization. Every department head is self-centered and doesn't think about the
company's goals. Both departments try to allocate the highest budget, but this leads to
competition between them. The budget control mechanism relies on the cooperation of
top management. Management must be satisfied with the success of the system and must
ensure that system support. The system is not reliable. Without the support of senior
management at any time, it is very difficult to succeed in this position.

4. Conlusion
In summary, the study above shows that accounting has an influence on how a company
performs. The income statement and balance sheet are generated in the first stage of the
analysis, looking at the financial impact of the accounting In task 2, the financial
statements of the HaiHaCo and Moc Chau Milk enterprise are analyzed and interpreted
and appraisal. Accountants can be found to be quite important in reviewing a company's
financial statements.

5. References
finance.vietstock.vn, 2022.HHC. [Online] Available at:
https://finance.vietstock.vn/HHC/tai-chinh.htm?tab=BCTT [Accessed 18/08/ 2022].
Goode, M. & Malik, A., 2011. Beyond Budgeting: The Way Forward?. Pakistan Journal
of Social Sciences, 21(2), pp. 207-214.
Hope, J. and Fraser, R. (2003). Who needs budgets? Harvard Business Review. 81(5), pp.
125- 126.
Sentayho (2022). ‘Solvency ratio là gì? Tỷ lệ/Hệ số khả năng thanh toán nợ là gì?’ Available at:
https://sentayho.com.vn/solvency-ratio-la-gi.html [ Accessed 23 Aug 2022]
Soriaforcongress (2021). ‘Chỉ số EPS là gì? Phân loại & cách tính EPS chuẩn nhất’ Available at:
https://soriaforcongress.com/eps-la-gi/ [ Accessed 23 Aug 2022]
Thu G (2018). ‘Chỉ số tài chính là gì?’ Available at: https://www.saga.vn/chi-so-tai-chinh-la-gi-
kem-cong-thuc-va-giai-thich~45135#:~:text=CH%E1%BB%88%20S%E1%BB%90%20HI
%E1%BB%86U%20SU%E1%BA%A4T%20(EFFICIENCY%20RATIO)&text=Ch%E1%BB
%89%20s%E1%BB%91%20t%C3%A0i%20ch%C3%ADnh%20n%C3%A0y%20cho%20th
%E1%BA%A5y%20m%E1%BB%A9c%20%C4%91%E1%BB%99%20hi%E1%BB%87u,b
%C3%A1n%20h%C3%A0ng%20c%E1%BB%A7a%20c%C3%B4ng%20ty. [ Accessed 22 Aug
2022]
Tran T (2020). ‘Chỉ số P/E là gì? Chỉ số P/E như thế nào là tốt?’ Available at:
https://govalue.vn/chi-so-pe/ [ Accessed 23 Aug 2022]
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Vietnambiz (2019). ‘Chỉ số thanh khoản (Liquidity Ratio) là gì? Ý nghĩa và các loại chỉ số thanh
khoản thường gặp’ Available at: https://vietnambiz.vn/chi-so-thanh-khoan-liquidity-ratio-la-gi-y-
nghia-va-cac-loai-chi-so-thanh-khoan-thuong-gap-20200610165951841.htm [ Accessed 22 Aug
2022]
Vietnambiz (2019). ‘Hệ số nợ trên vốn chủ sở hữu (Debt to equity ratio - hệ số D/E) là gì?’
Available at: https://vietnambiz.vn/he-so-no-tren-von-chu-so-huu-dept-to-equity-ratio-he-so-d-e-
la-gi-2019081919185477.htm [ Accessed 23 Aug 2022]
Vietnambiz (2019). ‘Tỉ lệ nợ trên vốn (Debt-to-Capital Ratio - D/C) là gì? Công thức tính’
Available at: https://vietnambiz.vn/ti-le-no-tren-von-debt-to-capital-ratio-d-c-la-gi-cong-thuc-
tinh-20191126173016729.htm#:~:text=T%E1%BB%89%20l%E1%BB%87%20n%E1%BB
%A3%20tr%C3%AAn%20v%E1%BB%91n%20trong%20ti%E1%BA%BFng%20Anh%20l
%C3%A0%20Debt,chia%20cho%20t%E1%BB%95ng%20s%E1%BB%91%20v%E1%BB
%91n. [ Accessed 23 Aug 2022]
Vietvuevent (2021). ‘PROFITABILITY RATIO LÀ GÌ’ Available at:
https://vietvuevent.vn/profitability-ratio-la-gi/ [ Accessed 22 Aug 2022]

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