ASSIGNMENT 02 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 5: Accounting Principles

Submission date 12/12/2023 Date received (1st Submission) 12/12/2023

Re-submission date 13/12/2023 Date received (2nd Submission) 13/12/2023

Student Name Nguyen Tan Dat Student ID BC00279

Class No. MA06201 Assessor Name Nguyen Van Thep

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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.
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CONTENTS
I. INTRODUCTION .......................................................................................................................................... 3
II. CONTENTS ..................................................................................................................................................... 3
1. Producing Financial Statements ................................................................................................... 3
2. Analysing and Interpreting Financial Statements ............................................................... 7
3. Budgets..................................................................................................................................................... 18
III. CONCLUSION .......................................................................................................................................... 21
IV. REFERENCES .......................................................................................................................................... 21

1
TABLES
Table 1. Differences in financial reporting for sole proprietorships and partnerships3
Table 2. ABC Unadjusted Trial Balance .................................................................................................. 4
Table 3. ABC Income statement .................................................................................................................. 5
Table 4. ABC Balance sheet ........................................................................................................................... 6
Table 5. Interest Coverage Ratio of DHG and Traphaco ................................................................. 7
Table 6. Inventory Turnover Ratio of DHG and Traphaco ............................................................ 8
Table 7. Accounts Receivable Turnover Ratio of DHG and Traphaco ..................................... 9
Table 8. Account Payable Turnover Ratio of DHG and Traphaco ............................................ 10
Table 9. Assets Turnover Ratio of DHG and Traphaco .................................................................. 10
Table 10. The current ratio of DHG and Traphaco.......................................................................... 11
Table 11. Quick Ratio of DHG and Traphaco ...................................................................................... 12
Table 12. Gross profit margin of DHG and Traphaco..................................................................... 13
Table 13. Operating profit margin of DHG and Traphaco ........................................................... 14
Table 14. Net profit margin of DHG and Traphaco ......................................................................... 14
Table 15. ROA of DHG and Traphaco ...................................................................................................... 15
Table 16. ROE of DHG and Traphaco ...................................................................................................... 16
Table 17. Number of Production Units and Sales Units of Company XYZ ........................... 18
Table 18. HAC company's interest payment method ..................................................................... 18
Table 19. Net income of company HAC.................................................................................................. 19
Table 20. HAC Company’s budget ............................................................................................................ 19
Table 21. Benifits and limitations of budget. .................................................................................... 20

FIGURES
Figure 1. Interest Coverage Ration of DHG and Traphaco ............................................................ 8
Figure 2. Inventory Turnover Ratio of DHG and Traphaco .......................................................... 9
Figure 3. Accounts Receivable Turnover Ratio of DHG and Traphaco ................................... 9
Figure 4. Account Payable Turnover Ratio of DHG and Traphaco .......................................... 10
Figure 5. Assets Turnover Ratio of DHG and Traphaco ................................................................ 11
Figure 6. The current ratio of DHG and Traphaco .......................................................................... 12
Figure 7. Quick Ratio of DHG and Traphaco....................................................................................... 13
Figure 8. Gross profit margin of DHG and Traphaco ..................................................................... 13
Figure 9. Operating profit margin of DHG and Traphaco ............................................................ 14
Figure 10. Net profit margin of DHG and Traphaco ....................................................................... 15
Figure 11. ROA of DHG and Traphaco .................................................................................................... 16
Figure 12. ROE of DHG and Traphaco .................................................................................................... 17

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I. INTRODUCTION
In this report, author have recently joined the firm as a Graduate Trainee attached to their
SME Units, offering accountancy and financial services to businesses that typically have a
turnover ranging from 10 billion VND to 100 billion VND.
There will be three sections to this report: Creating Financial Statements with theoretical
notes on the distinctions between partnerships, sole proprietorships, and not-for-profit
organizations is job 1 in Part 1. The income statement, trial balance tables, and AVF balance
sheets will all be adjusted by the author concurrently, and they will all be analyzed
afterwards. Task 2: Analyzing and Interpreting Financial Statements is the second part. In
this section, the author will provide a broad overview of the firm and a summary of the
recently presented assets. In addition, the author will evaluate the company's financials and
make comparisons with those of other businesses in the same sector. Lastly, task 3 budgets
compute loan payments, determine net income, create the cash budget, and highlight the
advantages and restrictions of budgeting with regard to the organization's overall production
and business operations as well as the case study.
II. CONTENTS
1. Producing Financial Statements
Table 1. Differences in financial reporting for sole proprietorships and partnerships
Sole Trader Partnership Not-for Profit
A type of business oganization, A business form in which two A not-for profit
in which only one person is the or more persons agree to organization is a legal
owner as well as operator of carry on business and share entity, which operates
the business is known as Sole profits & losses mutually is for serving the society
Proprietorship. known as Partnership. as a whole.
Known as sole trader or sole Individually known as Trustees, committees or
proprietor. partners and collectively governing bodies.
known as firm.
Proprietor is solely responsible Shared in agreed ratio Funds from donation,
for the profits & losses. subscription,
government grant and
so on.
Business secrets are not open Business secrets are open to
to any person except the each and every partner.
proprietor.

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 Scope for raising capital is Scope for raising capital is
limited. comparatively high.
(Surbhi S, 2015)
One person owns and operates ABC as a business. This company lacks a separate legal
identity, and its owner is solely responsible for the obligations and liabilities of the company.
There is only one owner of ABC, who goes by the name of the owner. The individual in charge
of all ABC company activities is the owner. Since ABC lacks a distinct legal personality, it is
not acknowledged as a distinct legal entity. As such, ABC is not entitled to own property, enter
into contracts, or be involved in legal procedures. The liabilities and debts of ABC are entirely
the responsibility of its owners. This implies that the owner could have to utilize personal
assets to cover ABC's debts if the company is unable to pay them.
Table 2. ABC Unadjusted Trial Balance
ABC INSTITUTION
DECEMBER 31ST
UNADJUSTED TRIAL BALANCE
Debit Credit
Cash $ 34,000
Accounts receivable -
Teaching supplies $ 8,000
Prepaid insurance $ 12,000
Prepaid rent $ 3,000
Professional library $ 35,000
Accumulated depreciation, professional library $ 10,000
Equipment $ 80,000
Accumulated depreciation, equipment $ 15,000
Accounts payable $ 26,000
Salaries payable -
Unearned training fees $ 12,500
Abc, capital $ 90,000
Abc, withdrawals $ 50,000
Tuition fees earned $ 123,900
Training fees earned $ 40,000
Depreciation expense, professional library -

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 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 $ 317,400 $ 317,400

(Source: Financial report provided by ABC Company)

According to Unadjusted trial balance of ABC organization on December 31, 2020,
This table compiles a record of all transactions conducted throughout the company's
duration, encompassing assets, liabilities, as well as revenue and expenses incurred within
the specified timeframe. The balance between Credit and Debit consistently amounts to
$317,400.
Table 3. ABC Income statement
ABC INSTITUTION
DECEMBER 31ST
INCOME STATEMENT
Revenues
Tuition fees earned $ 123,900
Training fees earned $ 40,000
Total Revenues $ 163,900
Expenses
Salaries expense $ 50,000
Rent expense $ 33,000
Advertising expense $ 6,000
Utilities expense $ 6,400

Total Expenses $ 95,400

Net Income $ 68,500
(Source: Financial report provided by ABC Company)
Table 2 is the Income Statement including two accounts, revenue and expenses, taken
from table 1.The ABC Company's business results report shows that its total revenue is
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 163,900 USD, with a profit of. The tuition cost collected is 123,900 USD, while the training
charge is $40,000. $95,400 was spent overall, and net Income, which is $68,500, is calculated
as total income less total costs. (Net Income = Total Revenues – Total Expense) we get the
result $68,500.
Table 4. ABC Balance sheet
ABC INSTITUTION
BALANCE SHEET
DECEMBER 31ST
Assets
Debit Credit
Cash $ 34,000
Accounts receivable -
Supplies $ 8,000
Prepaid insurance $ 12,000
Prepaid rent $ 3,000
Library $ 35,000
Equipments $ 80,000
Accumulated depreciation, professional library $ 10,000
Accumulated depreciation, equipment $ 15,000
Total assets $ 147,000
Liabilities
Accounts payable $ 26,000
Salaries payable -
Unearned training fees $ 12,500
Total Liabilities $ 38,500
Equity

ABC, capital $ 90,000

Net income $ 68,500
ABC, withdrawals $ 50,000
Total Equity $ 108,500
(Source: Financial report provided by ABC Company)

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Coming to the Balance sheet, we see that it includes 3 accounts: assets, liabilities and equity,
also taken data from table 1. The primary components of assets are cash, accounts receivable,
supplies, rent that has already been paid, a professional library, equipment, accumulated
depreciation, and equipment. After computation, we find that the ABC organization has
$147,000 in total assets.
With the Liabilities account, we see that it includes 3 items: Accounts payable, Salaries
payable and Unearned training fees. After calculating, the total debt is $38,500. Finally,
Equity includes ABC; capital, net income (calculated from table 2) and ABC; withdrawals. And
its total is $147,000. With formula Assets = Liabilities + Equity. Then we have the result that
assets are $147,000 equal to the sum of debt and equity of $147,000.
2. Analysing and Interpreting Financial Statements
 Introduction of Company
2/9 Pharmaceutical Factory, the original name of Hau Giang Pharmaceutical (DHG), is a well-
known Vietnamese pharmaceutical firm that was founded in Khanh Hoa province in 1974.
DHG Pharma has grown over the course of more than 40 years to rank among the most
prominent and reliable pharmaceutical brands in Vietnam. Eight pharmaceutical factories,
one functional food factory, and one vaccine plant are now operated by DHG Pharma. DHG
Pharma ensures user safety and quality by manufacturing its products in compliance with
GMP-WHO and other international standards. With more than 200 goods in several therapy
categories, including functional meals, vitamins, minerals, antibiotics, fever reducers,
respiratory and digestive medications, and pain relievers, DHG Pharma offers a broad range
of products. DHG Pharma always aims to provide customers with the greatest customer
service, affordable rates, and high-quality goods. The business has received several honors,
including:
Vietnam Report's ranking of the most famous brand in the country and VNR500's ranking of
the top 100 largest Vietnamese businesses Vietstock chose the most successful listed
company in Vietnam. DHG Pharma is dedicated to enhancing community well-being and
raising the standard of living for Vietnamese citizens.
 Solvency ratio
Table 5. Interest Coverage Ratio of DHG and Traphaco
DHG Traphaco
Index/Year Unit
2021 2022 2022-2021 % 2021 2022 2021-2022 %
Net Profit (EBIT) Million VND 876,081 1,112,171 236,090 26.948 336,143 369,542 33,399 3,529
Total Interest Payments Million VND 12,080 12,558 478 3.957 1,543 1,087 (456) (0.30)
Interest Coverage RaTio Times 72.52 88.56 16.04 22.116 217.85 339.97 122 4,991

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

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 400
339.97
350

300

250 217.85

200

150
88.56
100 72.52

50

0
2021 2022
DHG Traphaco

Figure 1. Interest Coverage Ration of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
The numbers demonstrate that DHG's pre-tax earnings and debt service expenses are
sufficient to repay the loan. The bank deficit in 2022 is more than that of 2021, when it was
only 72.52 times, due to debt repayment expenses of 88.56 times. Furthermore, Traphaco's
2021 and 2022 DHG is lower than that of other firms in the same industry.

 Efficiency
Table 6. Inventory Turnover Ratio of DHG and Traphaco
DHG Traphaco
Inder/year Unit
2021 2022 2022-2021 2021 2022 2022-2021
Cost of Goods Sold Billion VND 2,082 2,418 336 1,011.00 1,055 44
Average Inventory Billion VND 950 1,162 212 369 432 63
Inventory Turnover Ratio Time 2.19 2.08 (0.11) 2.74 2.44 (0.30)
Day's Sale In Inventory Days 333 351 18 132 149 17

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

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 3.00 2.74
2.44
2.50
2.00
1.50 1.10 1.04
1.00
0.50
-
2021 2022

DHG Traphaco

Figure 2. Inventory Turnover Ratio of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
The quantity of inventory at the start and finish of the period is known as the inventory
turnover index. According to this indicator, DHG's inventory in 2022 will be less than it was
in 2021 in just a single year. It's probable that the corporation sold more in 2021 given the
reduced inventory turnover in 2022. Evidently, this business poses less of a danger. Traphaco,
a business in the same sector, has greater revenues in 2022 than it did in 2021 and a lower
inventory index in 2022.
Table 7. Accounts Receivable Turnover Ratio of DHG and Traphaco
DHG Traphaco
Inder/year Unit
2021 2022 2022-2021 2021 2022 2022-2021
Net Credit Sales Million VND 4,003,170 4,676,016 672,846 2,176,276 2,398,917 222,641
Average Accounts Receivable Million VND 492,489 520,019 27,530 181,333 188,997 7,664
Accounts Receivable Turnover Ratio Times 8.13 8.99 0.86 12 12.69 1

(Source: Financial statements of DHG and Traphaco)

14.00 12.69
12
12.00
8.99
10.00 8.13
8.00
6.00
4.00
2.00
-
2021 DHG Traphaco 2022

Figure 3. Accounts Receivable Turnover Ratio of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
By using the receivables turnover ratio and these factors, the firm is able to assess the
business efficiency of lending credit to clients and collecting debts in an unbiased manner.

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Short-term debt receivables of the business DHG's revenue and receivables are both lower
than Traphaco's. DHG has little capacity to recover debt. Businesses' poor debt status can
worsen in addition to their restricted ability to manage cash flow. It is challenging to
complete such deals when customers are unable to repay debt. If Traphaco, a business in the
same industry, has a larger turnover of receivables than DHG, it indicates that Traphaco has
a strong capacity to collect debts and receivables.

Table 8. Account Payable Turnover Ratio of DHG and Traphaco

DHG Traphaco
Inder/year Unit
2021 2022 2022-2021 2021 2022 2022-2021
Cost of Goods Sold Billion VND 2,082 2,418 336 1,011 1,055 782
Average Accounts Payable Billion VND 227 283 56 134 154 20
Accounts Payable Turnover Ratio Times 9.17 8.54 (0.63) 7.54 6.85 0.69

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

10.00 9.17
8.54
9.00
7.54
8.00 6.85
7.00
6.00
5.00
4.00
3.00
2.00
1.00
-
2021 2022
DHG Traphaco

Figure 4. Account Payable Turnover Ratio of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
The DHG company's accounts payable number system in 2022 is smaller than it was in 2021.
The company will have less cash on hand to fulfill orders and settle debts as a result of this
number system declining. brief. As we've seen, the greater the DHG payable turnover index,
the better the company's capacity to pay off debt; but, by 2022, the index will drop from 9.17
times to just 8.54 times, indicating that DHG 2022 will be able to do so. 2021 debt repayment
capacity is poor. Compared to DHG, Traphaco has a larger turnover of accounts payable,
indicating a lower potential risk to its solvency.

Table 9. Assets Turnover Ratio of DHG and Traphaco

DHG Traphaco
Inder/year Unit
2021 2022 2022-2021 2021 2022 2021-2022
Net Sales Billion VND 4,003 4,676 673 2,176 2,398 222
Average Total Assets Billion VND 4,532 4,891 359 1,678 1,762 84
Assets Turnover Ratio Times 0.88 0.96 0.07 1.30 1.36 0.06

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 (Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
1.60
1.36
1.40 1.3

1.20
0.96
1.00 0.88

0.80

0.60

0.40

0.20

-
2021 2022

DHG Traphaco

Figure 5. Assets Turnover Ratio of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
A business's ability to use its assets efficiently is gauged by its total asset turnover. In order
to calculate a return on asset investment, the total asset turnover ratio compares net sales
data with the average total assets of the company. DHG's net revenue to average total assets
for the previous two years may be used to calculate the total asset turnover ratio. In 2021,
this ratio was 0.8 times, and in 2022, it was 0.9 times, or 413 days and 382 days, respectively.
It is seen in DHG's statistics table and growth chart. The growth rate of DHG is moderate.
DHG is more affordable and growing faster than Traphaco, indicating that Traphaco makes
more active investments in manufacturing.

 Liquidity
Table 10. The current ratio of DHG and Traphaco
DHG Traphaco
Inder/year Unit
2021 2022 2022-2021 2021 2022 2021-2022
Current Assets Billion VND 3,727 4,218 491 1,093 1,226 132
Current Liabilities Billion VND 757 811 54 439 435 81
Current Ratio Times 4.92 5.20 0.28 2.49 2.82 (0.27)

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

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 6.00 4.92 5.2
5.00
4.00
2.82
2.49
3.00
2.00
1.00
-
2021 2022

DHG Traphaco

Figure 6. The current ratio of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
The fact that DHG's current ratio is greater in 2022 than it was in 2021 indicates that the firm
has excellent solvency. shows the amount of short-term assets available to pay short-term
liabilities of the business. Traphaco's liquidity is just half as excellent as this one, and it's
growing faster than in 2021. This demonstrates the company's solid solvency. However,
having a lot of cash does not translate into good profit efficiency either.
Table 11. Quick Ratio of DHG and Traphaco
DHG Traphaco
Inder/year Unit
2021 2022 2022-2021 2021 2022 2021-2022
Current Assets - Inventory Billion VND 2,654 2,967 313 711 745 34
Current Liabilities Billion VND 757 811 54 439 435 81
Quick Ratio Times 3.51 3.66 0.15 1.62 1.71 (0.30)

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

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 4.00
3.51 3.39
3.50
3.00
2.50
2.01
2.00 1.71

1.50
1.00
0.50
-
2021 2022

DHG Traphaco

Figure 7. Quick Ratio of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
Compared to Traphaco, DHG has a considerably higher quick ratio, which in 2022 is larger
than 1. This indicates that the ratio is 3.50 times greater than in 2021 and that DHG's short-
term assets can pay off short-term debt 3.50 times. This surpasses Traphaco in value.

 Profitability
Table 12. Gross profit margin of DHG and Traphaco
DHG Traphaco
Inder/year Unit
2021 2022 2022-2021 2021 2022 2022-2021
Gross Profit Billion VND 1,920 2,257 337 1,147 1,343 196
Net Sales Revenues Billion VND 4,003 4,676 673 2,160 2,398 238
Gross Profit Margin % 47.96 48.27 0.30 53.10 56.01 2.90

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

58.00 56.01
56.00
53.1
54.00
52.00
50.00 47.96 48.27
48.00
46.00
44.00
42.00
2021 2022

DHG Traphaco

Figure 8. Gross profit margin of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

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In comparison to DHG's gross profit in 2021 and 48.28% in 2022, the gross profit margin on
100 VND of net revenue is 47.98%. The gross profit margin generated by DHG Company's
activities has led to a rise in the company's ratio to 47.98% in 2021 and 48.28% in 2022.
Given the positive gross profit of the firm, it is imperative to intensify market monitoring and
establish a development and optimization strategy. The gross profit of DHG is comparable to
that of Traphaco, a business in the same sector. That indicates that DHG staff members
provide useful development techniques.
Table 13. Operating profit margin of DHG and Traphaco
DHG Traphaco
Inder/year Unit
2021 2022 2022-2021 2021 2022 2021-2022
Operating Profit Billion VND 884 1,112 228 331 366 35
Net Sales Revenues Billion VND 4,003 4,676 673 2,160 2,398 238
Operating Profit Margin % 22.08 23.78 1.70 15.32 15.26 (0.06)

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

23.78
25.00 22.08

20.00
15.32 15.26
15.00

10.00

5.00

-
2021 2022

DHG Traphaco

Figure 9. Operating profit margin of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
Compared to DHG's operational profit in 2021 and 2022 of 23.78 VND and 22.10 VND, net
revenue accounted for 22.10 VND of the operating profit margin of 100 VND. Additionally,
Trapha Company Profit Company operations—which include labor, equipment, inventories,
and raw material costs—always play a significant influence in development, even more so
than in the same industry.

Table 14. Net profit margin of DHG and Traphaco

DHG Traphaco
Index/Year Unit
2021 2022 2022-2021 2021 2022 2022-2021
Net Profit Billion VND 776 988 212 264 293 29
Net Sales Revenues Billion VND 4,003 4,676 673 2,160 2,398 238
Net Profit Margin % 19.39 21.13 1.74 12.22 12.22 (0)

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

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 25.00
21.13
19.39
20.00

15.00 12.22 12.22

10.00

5.00

-
2021 2022

DHG Traphaco

Figure 10. Net profit margin of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
The capacity of a firm to make money from its activities is known as its net profit margin.
Compared to net profit in 2021 and 2022, 100% net revenue will bring 19.39% and 21.14%,
respectively. and twice as much as Traphaco, a similar firm. DHG's net revenue grows in 2022
over 2021, indicating a more efficient year for the company's operations. In comparison to
Traphaco, DHG's net profit margin is significantly larger in 2021 and 2022.

Table 15. ROA of DHG and Traphaco

DHG Traphaco
Index/year Unit
2021 2022 2022-2021 2021 2022 2022-2021
Net Profit Billion VND 776 988 212 264 293 29
Average Asset Billion VND 4,532 4,891 359 1,678 1,762 84
Return on Assets % 17.12 20.20 3.08 15.73 16.63 0.90

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

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 25.00
20.2
20.00 17.12 16.63
15.73
15.00

10.00

5.00

-
2021 2022
DHG Traphaco

Figure 11. ROA of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
DHG's ROA ratio increased dramatically in just two years, from 17.12% in 2021 to 20.20% in
2022. This indicates that revenue in 2022 will rise greatly over that of 2021. But the business
Traphaco is in the same industry as DHG, although its percentage is smaller. This
demonstrates that Traphaco outperforms DHG in cash profit. Long-term stability and high
return on assets (ROA) for DHG indicates that the company has made prudent, efficient, and
effective use of its resources.
Table 16. ROE of DHG and Traphaco
DHG Traphaco
Index/year Unit
2021 2022 2022-2021 2021 2022 2022-2021
Net Profit Billion VND 776 988 212 264 293 29
Shareholder's Equity Billion VND 3,681 4,041 360 1,219 1,324 105
Return on Equity % 21.08 24.45 3.37 21.66 22.13 0

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)

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 25.00
24.45

24.00

23.00
22.13
22.00 21.66
21.08
21.00

20.00

19.00
2021 2022

DHG Traphaco

Figure 12. ROE of DHG and Traphaco

(Source: Financial statements for 2021 and 2022 of DHG and Traphaco)
For the company's shareholders, the ratio of net profit to equity, or ROE ratio, is equally
crucial. The ROE ratios for DHG Company in 2021 and 2022 are 21.08% and 24.45%,
respectively. In comparison to DHG, Traphaco Company's ratio is greater in 2021 but lower
in 2022. It is evident that DHG made good use of shareholder funds in 2021 to support the
smooth operation of the business.

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3. Budgets
Table 17. Number of Production Units and Sales Units of Company XYZ

Production Units Sales Units

Jan 400 350
Feb 450 500
Mar 500 350
Apr 350 400
May 400 400
Jun 500 550
Jul 500 500
Aug 600 600
Sep 700 650
Oct 750 750
Nov 800 850
Dec 850 850

(Source: Financial report provided by XYZ Company)

Based on the provided data table, it is evident that sales of items were lower than production
in January, March, and September. Since the organization is now experiencing a scenario
where supply is more than demand and sales are below production, this quantity will be
carried over to the following month in order to continue selling. May, July, August, and
October are balanced months in terms of supply and demand since there is an equal amount
of product production and sales. The quantity produced is smaller than the quantity sold in
February, April, June, and November since the preceding month's leftover inventory needs to
be refilled and kept on the market.
Table 18. HAC company's interest payment method
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Beginning Debt 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000
Interest 700 642 583 525 467 408 350 292 233 175 117 58
Principal repayment 10,000 10,000 10,000 10,000 10,000 10,000 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 50,000 40,000 30,000 20,000 10,000 0

(Source: The author, 2023)

Company XYZ has a new loan of $120,000 with a 7% interest rate and a $10,000 monthly
principle payment, as shown in the data table. Thus, the corporation must pay 700 interest
in January, and so on, until just 58 are due in December. The corporation would eventually
pay off its debt since it began making monthly interest payments.
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 Table 19. Net income of company HAC
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Product 350 500 350 400 400 550 500 600 650 750 850 850
Revnue 59,500 85,000 59,500 68,000 68,000 93,500 85,000 102,000 110,500 127,500 144,500 144,500
COGS 17,500 25,000 17,500 20,000 20,000 27,500 25,000 30,000 32,500 37,500 42,500 42,500
Depreciation 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833
Sale expense 5,950 8,500 5,950 6,800 6,800 9,350 8,500 10,200 11,050 12,750 14,450 14,450
R&D expense 2,975 4,250 2,975 3,400 3,400 4,675 4,250 5,100 5,525 6,375 7,225 7,225
Interest 700 642 583 525 467 408 350 292 233 175 117 58
EBT 11,542 25,775 11,658 16,442 16,500 30,733 26,067 35,575 40,358 49,867 59,375 59,433
Tax expense 2,308 5,155 2,332 3,288 3,300 6,147 5,213 7,115 8,072 9,973 11,875 11,887
NI 9,233 20,620 9,327 13,153 13,200 24,587 20,853 28,460 32,287 39,893 47,500 47,547

(Source: The author, 2023)

It is evident from the firm XYZ's above report that its sales climbed from 59,500 to 144,500.
Revenue grew steadily from March to June and from August to December. Revenue declined
only in January, February, and July. As a result, compared to the first few months of the year,
company operations are more efficient and steady in the latter half of the year. Other factors
include the cost of products sold, which has an interest rate of fifty. 10% interest rate on the
sale of costs. The monthly coefficients for R&D costs, with an interest rate of 5%, are subject
to vary. The figures are computed by applying the aforementioned to Tax Expense, Total Cash
Outflow, and NI. In particular, interest is determined in the Interest payment method table of
firm XYZ, whereas depreciation is defined for a period of 12 months. Although there is often
an inconsistent growth and decline in this item over the course of the year, it is evident that
the last months of the year will show a stronger and more consistent increase than the first
months.
Table 20. HAC Company’s budget
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Beginning cash balance 140,000 160,067 191,520 211,680 235,667 259,700 295,120 326,807 366,100 409,220 459,947 518,280
Total Cash inflow 59,500 85,000 59,500 68,000 68,000 93,500 85,000 102,000 110,500 127,500 144,500 144,500
COGS 17,500 25,000 17,500 20,000 20,000 27,500 25,000 30,000 32,500 37,500 42,500 42,500
Sale expense 5,950 8,500 5,950 6,800 6,800 9,350 8,500 10,200 11,050 12,750 14,450 14,450
A&D expense 2,975 4,250 2,975 3,400 3,400 4,675 4,250 5,100 5,525 6,375 7,225 7,225
Principal repayment 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Interest 700 642 583 525 467 408 350 292 233 175 117 58
Tax expense 2,308 5,155 2,332 3,288 3,300 6,147 5,213 7,115 8,072 9,973 11,875 11,887
Total Cash outflow 39,433 53,547 39,340 44,013 43,967 58,080 53,313 62,707 67,380 76,773 86,167 86,120
Ending cash balance 160,067 191,520 211,680 235,667 259,700 295,120 326,807 366,100 409,220 459,947 518,280 576,660

(Source: The author, 2023)

Beginning cash balance, total cash inflow, and total cash outflow are displayed in this data
table. Ending cash balance: while several items rise or fall unevenly over the course of several
months, the overall picture is getting worse. For a full year, just the set Principal repayment
of $10,000 stays the same. The remaining amounts will match those in the firm XYZ's net
income table. This indicates that the firm can pay its debts on time, but it is unable to make
profitable investments because of its debt.
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 Table 21. Benifits and limitations of budget.
Benefits Limitations
Performance benchmarks for various time Budgets may become a means to an aim.
periods and sub-periods are provided by People think that their future allocations will
the budget. Regular standards can be used be lowered if they do not spend the allocated
to compare actual performance, allowing amount within the allotted period. Spending
for quick correction of any differences. in places where it isn't really necessary might
arise from this.
Participation in budgeting by managers at Budgets outline how much money is to be
different levels helps the company spent on certain things. Managers will
coordinate its operations and maximize its overspend in some areas and underspend in
resources. others if they are not given the freedom to
adjust the amount allotted for various goods
based on the circumstances.
The budgets are prepared with input from Budgetary funds must be shifted if events do
operating managers. Their motivation, job not transpire as anticipated since budgets are
happiness, and productivity all rise as a predicated on future projections. Therefore,
result. future uncertainties may have an impact on
how reliable budgets are.
Budgets give departments and individuals Managers must set aside overarching
a way to compare their performance to organizational goals in order to achieve
benchmarks and monitor any deviations budgetary goals while staying within the
from real performance. In order to prevent parameters of those goals.
deviations from happening again,
managers can take steps to overcome
them and identify the causes. This gives
organizational operations guidance under
carefully monitored circumstances.
By predicting the amount of money The capacity to innovate and expand and
needed, identifying the sources from develop can be hampered when funds are
which it will be raised, and outlining allocated to various operational budgets and
strategies, objectives, and policies, new financing and resources are created
budgets aid in the planning of financial without utilizing the budget's environmental
operations. This maximizes the usage of advantages.

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 cash and raises the company's
profitability.

(Hmhub, 2023)
III. CONCLUSION
To sum up, the information has been organized by the author into three primary sections:
Task 1 involves creating financial statements, Task 2 involves analyzing and interpreting
financial statements, and Task 3 involves creating budgets. There are numerous mistakes and
incompleteness because of the insufficient knowledge and expertise. I hope additional
writers will make reference to and add to this.
IV. REFERENCES
1. Surbhi S (2015). Difference Between Sole Proprietorship and Partnership (with
Comparison Chart) - Key Differences. [online]
Available from: https://keydifferences.com/difference-between-sole-proprietorship-and-
partnership.html
[accessed 12 December 2023].
2. Dhgpharma.com.vn. (2015). DHG Pharmaceutical Joint Stock Company - DHG PHARMA.
[online]

Available from: https://www.dhgpharma.com.vn/en/

[accessed 12 December 2023].

3. Template (2023). Traphaco. [online]

Available from: https://traphaco.com.vn/

[accessed 12 December 2023].

4. Hmhub. (2023). Advantages & Disadvantages of Budgeting [online].

Available from: https://hmhub.in/advantages-disadvantages-of-budgeting/
[accessed 11 December 2023]

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