Accounting Principles: Financial Statement Analysis of Vinhomes

This report analyzes the financial statement of Vinhomes and compares it with Novaland. It examines profitability, liquidity, efficiency, and solvency ratios. The report also discusses the importance of budgeting for business success.

ASSIGNMENT 02 FRONT SHEET
Qualification BTEC Level 4 HND Diploma in Business
Unit number and title Unit 5: Accounting Principles
Submission date Date received (1st Sub
Re-submission date Date received (2nd Su
Student Name Truong Ngoc Tram Anh Student ID
Class No. GBS1003B Assessor Name
Student declaration
I certify that the assignment submission is entirely my own work and I fully understand the consequences of p
I understand that making a false declaration is a form of malpractice.
Student Signature
Grading Grid
P3 P4 P5 P6 P7 M2 M3

ii
 Summative Feedbacks  Resubmission Feedbacks
Grade: Assessor Signature: Date:
Internal Verifier’s Comments:
Signature & Date:

2
Catalog
I. Introduction ................................................................................................................................................................. 2
II. Task 1 .........................................................................................................................................................................2
III. Task 2 ....................................................................................................................................................................... 4
IV. Task 3 ..................................................................................................................................................................... 12
Budget .......................................................................................................................................................................... 12
Conclusion .................................................................................................................................................................... 14
References .................................................................................................................................................................... 14
I. Introduction
For our contemporary society, the term "accounting" is crucial. It is the profession for both men
and women who initially have their sights set on top positions in business, management, the
government, and general industry. Every merchant, from the owner of a gas station to the
government of every country, needs accounting on a fundamental level. It's crucial to our
modern society, especially to the developing company. In this report, the financial statement of
Vinhomes will be analyzed. Besides, the final decision should choose investment for Vinhomes
or Novaland will be decided based on the comparison of economic state in 3 years, from 2019 to
2021 of both businesses.
II. Task 1
Date Description Debit Credit
a Dec 31 Insurance expense 3000
Prepaid insurance 3000
b Teaching supplies expense 6000
Teaching supplies 6000
c Depreciation expense - Equipment 10000
Accumulated depreciation-Equipment 10000
d Depreciation expense - Professional library 5000
Accumulated depreciation-Professional libary 5000
e Unearned training fees 5000
Earned training fees 5000
f Account receive able 4000
Tuition fees earned 4000
g Salaries expense 600
salries payable 600
h Rent expense 3000
Prepare rent 3000
Total 36600 36600

3
Debit Credit
Cash 34.000
Accounts receivable 4.000
Teaching supplies 2.000
Prepaid insurance 9.000
Prepaid rent 0
Professional library 35.000
Accumulated depreciation, professional library 15.000
Equipment 30.000
Accumulated depreciation, equipment 25.000
Accounts payable 27.000
Salaries payable 6.000
Unearned training fees 7.500
ABC, capital 95.000
ABC, withdrawals 50.200
Tuition fees earned 1.279000
Training fees earned 45.000
Depreciation expense, Professional library 5.000
Depreciation expense, Equipment 10.000
Salaries expense 50.600
Insurance expense 3.000
Rent expense 36.000
Teaching supplies expense 6.000
Advertising expense 60.000
Utilities expense 6.979
Total 281.779 281.779
Cash Debit Credit Prepaid Insurance Debit Credit
Unadj bal 34000 0 Unadj bal 12000
0 0 0 3000
0 0 0
34000 adj blal 9000
Equipment Debit Credit Prepaid rent Debit Credit
Unadj bal 80000 0 Unadj bal 3000 0
0 0 0 3000
0 0 0 0
adj blal 80000 adj blal 0
Accounts receivable Debit Credit
Accumulated depreciation-Professional
libary Debit Credit
Unadj bal 0 0 Unadj bal 0 10000
4000 0 0 5000
0 0 0 0
adj blal 4000 adj blal 15000
Teaching supples Debit Credit Tuition fees earnes Debit Credit
Unadj bal 8000 Unadj bal 0 123900

4
0 6000 0 4000
0 0 0 127900
adj blal 2000 adj blal
Salaries expense Debit Credit Training fees earned Debit Credit
Unadj bal 50000 0 Unadj bal 0 40000
600 0 0 5000
0 0 0 0
adj blal 50600 adj blal 45000
Account payable Debit Credit
Depreciation expense - Professional
library Debit Credit
Unadj bal 0 26000 Unadj bal 0 0
0 0 5000 0
0 0 0 0
adj blal 26000 adj blal 5000
Salaries payable Debit Credit Depreciation expense - Equipment Debit Credit
Unadj bal 0 0 Unadj bal 0 0
0 600 10000 0
0 0 0 0
adj blal 600 adj blal 10000
Unearned training
fees Debit Credit Accumulated depreciation-Equipment Debit Credit
Unadj bal 0 12500 Unadj bal 0 15000
5000 0 0 10000
0 0 0 0
adj blal 7500 adj blal 25000
INsurance expense Debit Credit Teaching supplies expense Debit Credit
Unadj bal 0 0 Unadj bal 0 0
3000 0 6000 0
0 0 0 0
adj blal 3000 adj blal 6000
Rent expense Debit Credit
Unadj bal 33000 0
3000 0
0 0
adj blal 36000
III. Task 2

5
VinHomes financial statement analyse 2016-2020
1. Margin Ratios
Gross profit Margin: The value of a high profit margin
The value of a high profit margin is a sign that the business is having a profitable opportunity,
and the health of the business is very good.
Profit growth at the company has a sharp decline in 2020 but by 2021 it will increase sharply,
even more than 2019.
-> High profitability opportunity, strong financial potential, good profitability, cost control.
The index of operating profit margin is quite high
The average score of all three years is above 50% so it can be evaluated. This is a company with
good financial potential and not low level of risk.
Net profit margin
Profit after tax as a percentage of the company's revenue averaged over 43%, indicating a
positive financial position, financial health and profitability of the company, efficiency.

6
=> 2020 is the year most indexes decrease, but in 2021, there will be great developments,
showing the great potential of businesses in the context of the economy being set back due to
the covid pandemic.
2. Profitability Ratios
Return on assets
The relationship between profit and total existing assets of the enterprise through statistics shows
that the company has effectively used the total existing assets and has outstanding efficiency in
the latest year.
Return on equity
How effective is the company's sustainable use of capital over the past 3 years? Enterprises will
receive an average of 33% profit compared to 100% of investment capital, stronger
competitiveness than other enterprises in the same industry.
Return on investment capital
An index that increases over time with very high numbers shows that the company is making
good use of the investment and shows signs of the company's growth.
3. Liquidity Ratios

7
Current ratios
Current ratio of the company on average greater than 1 in 3 years means that the company has a
high current ratio i.e. its current assets are sufficient to pay off its short-term liabilities. .
Quick ratios
The quick ratio of the Company on average for all 3 years is less than 1, which means the current
ratio is high, which shows that the Company's current assets, excluding inventory, are not
enough to pay short-term debts. The company will need to consider the possibility of having to
sell inventory in order to have the cash flow to pay its debts as they come due.
4. Efficiency ratios
Inventory turnover ratios

8
The company's 3-year military inventory turnover ratio
is less than 0.8, but this ratio has increased over the years, meaning the business is more risky
than other companies. companies in the same industry.
Accounts receivable turnover ratios
The ratio increases gradually over the years but decreases slightly in 2021. It means that debts
and receivables have been effective despite showing signs of arrears. This means that the
business is in a positive financial position.
Accounts payable turnover ratios
The liquidity ratio measures the average number of times a company pays its debt during an
accounting period each year. This ratio is a measure of short-term solvency, the higher the ratio,
the better. That means the company is at a disadvantage.
Assets turnover ratios
The coefficient has increased significantly over the years, proving that the company effectively
uses assets in production and business activities.
Day's Sales in Inventory
The company's inventory sales time is decreasing year by year and it shows that the company is
doing quite well.
5. Solvency Ratios
Solvency ratio
A debt ratio greater than 20% is considered financially healthy. But in the last three years and
especially in recent years (41% in 2021), with the strong increase coefficient, it is difficult for
the company to control its responsibilities.

9
Interest Coverage Ratio
The higher the company's ability to pay interest, the greater its ability to pay interest, not to
mention it also tends to increase continuously.
Debt-to-Equity Ratio
A ratio greater than 1 means that the business's assets are financed primarily by debt and it
means that the business is more likely to have trouble paying off debt or go bankrupt.
Debt-to-Equity Ratio
This coefficient is greater than 1, indicating that the enterprise knows how to use financial
leverage and capture capital from external partners, so the company's ability to develop and
expand its scale is easier and faster.
Comparison between Vinhomes and Novaland
Return on assets
Vinhomes: effective use of assets so it is profitable
Novalands: ineffectively used
Return on equity
Vinhomes: profitable
Novalands: there is a continuous decrease -> inefficient use

10
Current ratio
Vinhome: current assets are not enough to cover all short-term debts
Novaland: able to pay but may still face difficulties Novaland: not enough to pay short-term
debts
=> Vinhomes is better than Novaland, better able to pay debts.

11
Inventory turnover ratios
Vinhome: Fast inventory turnover -> Increased revenue
Novaland: Overall efficient inventory sales
Accounts receivable turnover ratios
Vinhome: Goods revenue -> Financial status Positives
Novaland: Unable to maintain the stability of revenues
Accounts payable turnover ratio
Vinhome: Inefficient liquidity of loans
Novaland: The business is not efficient
Assets turnover ratio
Increase by 0.3%: Effective use of company assets
Decreased ratio -> efficient investment of assets in business
Day's Sale in Inventory
Inventory is settled quickly -> Trading company Effective sales
Days decrease year by year -> Efficiently handling inventory
=> In general, Vinhomes' business activities are more efficient than Novaland's, which is
clearly reflected in the ability to pay and use public assets. company.

12
=> Novaland is slightly better than Vinhomes in terms of liquidity for long-term loans and
more efficient investment and production activities
==> Vinhomes is a better choice for investors when owning four ratios that have better and
more positive signals than Novaland. Although Novaland's indexes are slightly worse, it is not
too negative, so if investors want challenges and difficulties, "hit quickly, win quickly", they
can consider pouring capital.
IV. Task 3
Budget

13
Some business owners start off with a swell of hope and excitement, but they soon discover that
they are unable to develop an effective action plan in the absence of a well-thought-out budget.
It's simple to become mired in day-to-day issues while running a business and lose sight of the
greater picture. Successful companies schedule time for budget creation and management,
company planning and review, as well as ongoing financial and operational performance
monitoring.
The process of creating a budget identifies the capital that is now accessible, estimates the costs,
and projects future revenues. Businesses may compare performance to spending on the budget
and make sure that funds are accessible for projects that promote corporate growth and
development. It helps the business owner to focus on cash flow, cost savings, revenue growth,
and return on investment.
All business success is based on having a budget. It supports both planning and monetary
management for the company. Planning is useless without control over money, and without
planning, there are no company goals to pursue (Banks, 2018).
Creating a budget involves:
 Govern the company's finances
 Make sure the company can afford its present obligations
 Enabling the company to achieve its goals and make sound financial decisions
 Make sure there is money available for future developments for the company.
Never undervalue the advantages of budgeting while managing a business:
 Budgeting anticipates income, prepares expenses, and limits spending that is not anticipated.
 Budgeting makes sure that funds are allocated to initiatives that advance the company's
strategic goals.
 Everyone is better able to comprehend the company's priorities when the budget is clearly
articulated.
 The process of developing a budget offers possibilities for employee involvement, which
encourages them to share the organization's goal.
Although budgeting has many benefits, it also has some drawbacks (Borad, 2022).

14
Conclusion
Through this report, we also know Vinhomes is a better choice to invest. Besides, we also know
how to make a balance sheet as well as understand the importance of budget.
References
Banks, K., 2018. The importance of budgeting in business: WLF Accounting & Advisory.
WLF Accounting & Advisory |. Available at: https://wlf.com.au/importance-budgeting-
business/ [Accessed September 9, 2022].
Borad, S.B., 2022. Limitations of budgeting. eFinanceManagement. Available at:
https://efinancemanagement.com/budgeting/limitations-of-budgeting [Accessed September 9,
2022].
Anon, The importance of accounting in our modern society. The Importance Of Accounting In
Our Modern Society | 123 Help Me. Available at: https://www.123helpme.com/essay/The-
Importance-Of-Accounting-In-Our-Modern-90819 [Accessed September 9, 2022].
Anon, Homepage | Vinhomes. Available at: https://vinhomes.vn/en [Accessed September 8,
2022].
Anon, Request rejected. Available at: https://www.novaland.com.vn/en-US/annual-report-2
[Accessed September 9, 2022].