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Completing the work of preparing and analyzing the balance sheet at Van Long Company Limited - 14


Table 3.3 Analysis table of fluctuations and capital structure



Target


Beginning of year number


Year-end number

Difference between end of year and beginning of year (±)

Proportion

Amount

%

DN

CN

1

2

3

4

5

6

7

A-LIABILITIES

20,795,179,512

14,634,234,573

(6,160,944,939)

(29.63)

57.87

48.98

I. Short-term debt

18.055.627.112

13,642,364,493

( 4,413,262,619)

(24.44)

50.24

45.66

II. Long-term debt

2,739,552,400

991.870.080

(1,747,682,320)

(63.79)

7.62

3.32

B. OWNER'S EQUITY

15,140,436,750

15.246.208.140

105,771,390

0.7

42.13

51.02

I. Owner's equity

15,140,436,750

15.246.208.140

105,771,390

0.7

42.13

51.02

II. Funding sources and funds

other

-

-

-

-

-

-

TOTAL SOURCE

CAPITAL

35,935,616,259

29,880,442,713

( 6,055,173,546 )

(16.85)

100

100

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Completing the work of preparing and analyzing the balance sheet at Van Long Company Limited - 14


Capital structure analysis aims to assess the company's financial self-financing ability as well as the level of autonomy, initiative in business or the difficulties that the company has to face.

Through the calculated data, we see that the total capital of Van Long Company Limited at the end of the year compared to the beginning of the year decreased by 6,055,173,546 VND, corresponding to a decrease of 16.85%. This proves that in 2012, the company narrowed its business capital. To evaluate more accurately, we analyze each indicator in the Total Capital.

At the end of 2011, the company's "Debt payable" index was 20,795,179,512 VND, accounting for 57.87% of total capital. By the end of 2012, this index decreased to 14,634,234,573 VND, a decrease of 6,160,944,939 VND, corresponding to a decrease of 29.63%, and the proportion of payables also decreased to 8.89% from 57.87% to 48.98%. The reason is that both Short-term Debt and Long-term Debt decreased, in which the "Short-term Debt" index decreased by 4,413,262,619 VND, corresponding to a decrease of 24.44%. The "Long-term Debt" index decreased by 1,747,682,320 VND, corresponding to a decrease of 63.79%. The decreasing amount of debt shows that the company has been implementing good credit discipline and also shows that the company's financial dependence has decreased. The decrease in short-term debt and long-term debt is due to Borrowing and


Short-term debt decreased by 2,865,047,430 VND, Long-term loans and debts also decreased by 1,747,682,320 VND, which proves that in 2012 the company used less borrowed capital, became more financially independent and at the same time enhanced the reputation of the business, in the current economic recession, this is appropriate. In addition, payables to sellers decreased by 934,726,731 VND, equivalent to 35.9%. "Taxes and amounts payable to the state" decreased by 852,783,742 VND, equivalent to 68.98%. "Other short-term payables and receivables" also decreased by 249,074,348 VND, but the proportion increased by 2.91% compared to the beginning of the year. This figure shows that the company has implemented a policy of paying off debts and does not want to have too much debt. “Welfare reward fund” decreased by 53,606,496 VND. This index decreased because in 2012 the company rewarded officers and workers with good achievements and completed tasks assigned by superiors. This shows that the company's management paid attention to the rights and lives of workers to encourage them to focus on production and business. However, the undistributed profit after tax as of December 31, 2012 was 105,771,393 VND and the company has not yet distributed the profit after tax to create a source for the reward fund.

The year-end equity was 15,246,208,140 VND, accounting for 51.02% of the total capital, an increase of 105,771,390 VND, equivalent to 0.7%. The increase in equity was mainly due to after-tax profit, which proves that the company is operating effectively and profitably. Thus, we see that Liabilities decreased and Equity increased, which shows that the company's financial situation is tending to be better. On the other hand, the proportion of Equity increased from 42.13% to 51.2%, proving that the company's financial strength has strengthened, the company is more proactive in capital sources, relying less on loans.

In reality, the stability of the production and business process and the safety of payment, the principle of financial balance requires: Long-term assets must be financed by long-term capital and only a part of short-term assets must be financed by short-term capital. Therefore, the Company's financing situation is considered stable when a part of the Company's short-term assets


financed by long-term capital or the Company has used part of long-term capital to finance short-term assets.

We look at the company's use of capital over the past year: Long-term capital = Long-term debt + Equity

= 991,870,080 + 15,246,208,140

= 16,238,078,220

Long-term assets = 13,056,798,066

Thus, Long-term Capital is greater than Long-term Assets.

The company has used the correct principle of capital use in business. Long-term capital is not only enough to finance long-term assets but also has surplus for short-term use. The financing situation for the company's production and business activities ensures the principle of financial balance and stability for production and business activities.

c, Analyze the financial situation of Van Long Company Limited through basic financial indicators

To have a more comprehensive assessment of the financial situation of Van Long Company Limited, we must not only stop at analyzing the fluctuations, structure of assets and capital sources, but also deeply analyze some new financial indicators to clearly demonstrate the financial capacity of the company.

Table 3.4: Analysis table of some basic financial indicators


Target

Calculation formula

Unit

calculate

Year

2011

Year

2012

Payment ratio

general

Total assets


Liabilities

Time

1.73

2.04

Ability to pay

short term debt

Current assets


Short-term debt

Time

1,201

1.23

Liquidity ratio

quick math

Cash & Cash Equivalents


Total current liabilities

Time

0.085

0.166


Comment


Through the calculated data in the table above we see:

The general payment ratio in 2012 was 2.04, higher than in 2011, which had a payment ratio of 1.73, but the increase was not significant. In both years, it was greater than 1, which showed that all external mobilizations were secured by assets, and this ratio was relatively high in 2012. For every VND borrowed, there were 2.04 VND of collateral. During the year, the company mobilized less capital from outside, causing the payable debt to decrease. In addition, total assets also decreased, but the rate of decrease in payable debt (29.63%) was faster than the rate of decrease in total assets (16.85%), so the general payment ratio increased.

The short-term debt payment ability in 2011 and 2012 is greater than 1 and tends to increase towards the end of the year. This will not be beneficial for the company because in reality, maintaining the short-term debt payment ability ratio at approximately one will be better because the company basically still ensures the short-term debt payment ability. Moreover, maintaining the short-term debt payment ability ratio less than 1 shows the efficiency of capital use of the enterprise. Not in all cases, the short-term debt payment ability greater than or equal to 1 is good because in that case, although the enterprise ensures the short-term debt payment ability, it has not used its capital well and has not occupied the capital of other units for its production and business. Therefore, in the coming year, the company should promote the trend of reducing this ratio and maintain it at a level lower than approximately one to achieve the highest benefit for the company's business activities.

If the general payment ratio helps suppliers consider whether to sell to the business on credit or not, the quick payment ratio can be said to be a measure of the ability to mobilize assets that can be converted immediately into cash to pay short-term debts, helping suppliers decide how much time to owe the business. This ratio in 2012 was 0.166, an increase of 0.081 times compared to 2011. The ratio of both years is less than 1, which may indicate that the company is having difficulty paying debts due and may be able to sell assets at unfavorable prices to pay debts due. To ensure the ability to quickly pay debts


Debts due for payment should be paid by the company, so it should pay attention to debt collection by using discount policies for customers who pay early to supplement the amount of money.

In summary, through the analysis, we see that the company is gradually improving its financial situation. The company is more proactive in terms of equity capital, reducing loans to enhance its reputation to attract investment, expanding its scale to bring profits to the company.

3.3.4 Opinion 4: Strengthen debt collection

In a market economy, selling on credit is inevitable. It helps businesses gain market share but also brings many risks in business. Therefore, to promote the positive aspects of selling on credit, businesses must grasp the capacity as well as the sense of responsibility to repay debts of customers.

Through the analysis of changes in asset structure, we see that although the receivables from customers in 2012 were lower than in 2011, they were still quite high, accounting for 13.97% of total assets. This shows that the company's debt collection method in the past year has improved, but there are still many outstanding debts, leading to capital stagnation. Although the company has done a good job of monitoring debt aging in the past year. At the same time, the company has also made provisions for bad debts for overdue debts. However, in the coming time, to strengthen debt collection, the company needs to take specific appropriate measures such as:

- Regularly and actively urge customers to collect debts

- To recover capital quickly and promptly to avoid capital appropriation, the company should apply flexible and reasonable payment policies. The company can give customers payment discounts when paying debts early. Payment discounts that customers receive can be in cash or in kind. If the discounts are in cash, the company can divide them into the following categories:

+ If customers pay early within one year, they will receive a monthly discount.


+ If customers pay early within one month, they will receive a daily discount.

The discount that the company gives customers when paying early must be higher than the bank's interest rate at the same time. At the same time, this discount also ensures: The discount for customers paying within a year is greater than the interest rate for customers paying early within a month. When the company offers payment discounts with discount rates that are favorable to customers, it will affect the customer's payment. In the process of production and business activities, the company also has to borrow money and pay an interest rate. Moreover, the company cannot always mobilize capital. When the debt is recovered, the company will use this money for investment, production and business, saving on interest costs as well as improving the efficiency of capital use.

3.3.5. Opinion 5: Proposal to adjust depreciation of intangible fixed assets

Pursuant to Decision No. 206/2003/QD-BTC dated December 12, 2003 and Circular No. 203/2009 TT-BTC dated October 20, 2009 of the Minister of Finance:

From January 1, 2010 onwards, the Company is not allowed to depreciate intangible fixed assets such as land use rights (including limited-term land use rights and long-term land use rights).

And most recently, according to Section 1, Article 9 of Circular 45/2013 TT-BTC guiding the management, use and depreciation of fixed assets (replacing Circular 203/2009 TT-BTC dated October 20, 2009), intangible fixed assets are not depreciated. However, the company still depreciates land use rights, which significantly increases the depreciation expense of the enterprise, reducing pre-tax profit, which means reducing corporate income tax and reducing after-tax profit.

Specifically, in 2012, the company depreciated land use rights, causing the company's depreciation expense to increase by VND 31,352,700, pre-tax profit to decrease by VND 31,352,700, corporate income tax to decrease by VND 7,838,175, leading to a decrease in after-tax profit of VND 23,514,525.


Therefore, the company must take measures to readjust the depreciation costs of intangible fixed assets that have been deducted and not conduct depreciation in the following production and business periods to ensure compliance with State regulations.

3.3.6. Opinion 6: Applying accounting software in accounting workaccountant

Nowadays, information technology plays a very important role in the development of the country's economy in general as well as for Vietnamese enterprises in particular. The application of information technology to accounting work, specifically accounting software, has great significance in supporting accountants to ensure timely completion, accuracy of accounting information and reduce the volume of many types of enterprises.

Currently on the market there are accounting software for businesses that are easy to use and reasonably priced. Examples include: MISA, FAST Accounting, Adsoft, Green soft, Acc Pro, Bravo… For example:

Accounting software MISA SME.NET.2012.

MISA.SME.NET.2012 accounting software includes 13 subsystems, designed for small and medium enterprises with the aim of helping enterprises without having to invest much money, without having to understand much about information technology and accounting, to own and master the accounting software system, and manage their arising economic transactions. In particular, the software supports the creation of templates, issuance, printing, management and use of invoices according to Decree 51/2010/ND-CP (Table 3.5)

+ About features:

- Support printing invoices according to Decree 51/2010/ND-CP.

- Easy to use.

- Update the latest financial regimes.

+ About price: 9,950,000,000 VND.


Table 3.5 Working interface of MISA SME.NET 2012



STP Basic Accounting Software:

Is a packaged product line of Sao Tien Phong software company designed for small and medium enterprises with the goal of supporting small and medium enterprises to apply information technology, save and control the company's costs well. This software includes 17 subsystems, designed simply to help users access (Table 3.6)

+About features:

- Update the latest accounting and tax regimes: Decree No. 51-ND 51/2010/ND-CP on sales invoices and service provision; Circular No. 244/2009-TT-BTC on guidelines for amending and supplementing the enterprise accounting regime...

- Flexible handling, fast operation, simple and easy.

- Ability to interact easily with other applications such as HTKT 2.5.4 declaration support software...

+ About price:

- Software for trading, service and construction companies: 3,900,000 VND

- Software for manufacturing companies: 6,800,000 VND.

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