Theoretical Basis of Financial Statement Analysis in Enterprises

Time scope: Financial statements system of Enlie Pharmaceutical Joint Stock Company from 2017 to 2019.

5. Research methods

Data collection method: collect data through reports and documents of enterprises such as Balance Sheet; Business performance report; Cash flow statement; Notes to financial statements and Annual Report from 2017 - 2019 of the Company. In addition, the author also uses textbooks, master's theses, magazines... related to the issue of financial statement analysis for reference and as a theoretical basis in the analysis process.

Data processing method: calculation based on data collected from financial statements to analyze, synthesize, compare and evaluate financial ratios to see the financial status of the Company, thereby helping individuals and organizations in need of information to better understand the Company's situation.

The author has used many different research methods such as: data collection, recording, observation, comparison, data analysis, synthesis method for research. The author would like to present an overview of each research method used in the thesis:

Document research method : To collect information and general theoretical system on the work of preparing and analyzing financial statements at the Company, the author conducts research on the provisions of accounting standards, accounting regimes, consults scientific research works, looks up relevant legal documents, to summarize experiences and draw lessons for application in accounting work at the Company. Then find new issues that scientific research works have not mentioned, select useful information for research use.

The author collects information through available information: Google page, financial statements, summary reports on the Company's website. In addition, the author

The author also exploited information from many different reputable sources including: General Statistics Office investigation and release, some websites of auditing organizations - auditors in Vietnam.

In addition, the author collects and synthesizes documents, accounting vouchers and accounting reports related to the preparation and analysis of financial statements at the Company. Some data used in the thesis include: Balance sheet, Balance sheet, Business performance report, Cash flow, Notes to financial statements, vouchers and other related documents. The results of the study of collected documents help the author systematize the theories on the preparation and analysis of financial statements and have a correct overview of the preparation and analysis of financial statements at the Company. From there, practical assessments and recommendations are drawn for the Company to refer to and apply.

Data synthesis and analysis methods :

The author uses basic data analysis methods such as: comparison method, elimination method, balancing method, Dupont method and some other methods. From the collected information, the author compares and contrasts the actual preparation and analysis of the Company's financial statements with the provisions in the accounting regime and current accounting standards to assess the current status of preparation and analysis of financial statements of Enlie Pharmaceutical Joint Stock Company. On that basis, the author evaluates and analyzes the current status of preparation and analysis of financial statements at Enlie Pharmaceutical Joint Stock Company, strengths, weaknesses, subjective and objective causes, from which the author proposes solutions to improve the preparation and analysis of financial statements of Enlie Pharmaceutical Joint Stock Company.

Secondary data sources:

Inside the Company: Documents introducing the Company such as its history, organizational structure, business lines, and audited financial statements of the Company.

Outside the Company: Research books, textbooks, master's theses on financial statement preparation and analysis, current Vietnamese accounting standards and regimes.

Data analysis tools

The author uses financial accounting indicators to prepare financial statements and financial indicators to calculate and analyze the financial situation of the enterprise.

Qualitative research method: this method describes and analyzes the financial statements of Enlie Pharmaceutical Joint Stock Company based on the collected information.

Processing and checking collected information: The thesis uses mathematical methods, systematization combined with basic theories of specialized science of Accounting - Auditing, especially methods and techniques serving the analysis of financial statements such as: comparison method, elimination method, balance relationship method, Dupont method.

6. New contributions of the thesis

For enterprises: The research results of the thesis can be applied to units of the same type as Enlie Pharmaceutical Joint Stock Company to self-evaluate the financial situation of the enterprise as well as overcome the shortcomings in financial work at their unit.

For investors: The results of financial statement analysis of Enlie Pharmaceutical Joint Stock Company will provide useful information for them to make investment, credit and similar decisions.

For Enlie Pharmaceutical Joint Stock Company: Based on the analysis results, the Company's managers can assess the Company's situation and make decisions.

right business decisions. From a practical perspective on the financial work of Enlie Pharmaceutical Joint Stock Company, the thesis has objective assessments and offers complete solutions.

For the author himself: Researching this thesis helps the author understand deeply and thoroughly the knowledge he has learned, thereby improving his level and understanding of the research problem.

7. Structure of the thesis

The structure of the thesis includes Introduction, 3 chapters and conclusion. Introduction: Introduction to the research thesis.

Chapter 1: Theoretical basis of financial statement analysis in enterprises. Chapter 2: Financial statement analysis of Enlie Pharmaceutical Joint Stock Company

Chapter 3: Some solutions to improve the financial capacity of Enlie Pharmaceutical Joint Stock Company.

Conclude.

CHAPTER 1: THEORETICAL BASIS OF FINANCIAL STATEMENT ANALYSIS IN ENTERPRISES

1.1. General overview of corporate finance and financial statement analysis

1.1.1. Some concepts

Financial statement analysis is the process of reviewing, checking, comparing, and contrasting financial data to provide users with information that can: assess financial potential, business efficiency, as well as estimate financial risks, and make future financial and business plans for the analyzed enterprise [11, p.10].

Financial statement analysis is the use of analytical tools and techniques to examine the relationship between indicators on the financial statements, thereby assessing the current financial situation as well as forecasting the future financial situation of the enterprise. [20, p.10]

Financial statement analysis is the process of dividing and classifying the system of indicators reflected on the financial statements in many different directions, using appropriate analysis methods to provide useful information to the analysis subject. [24, p10]

Financial statement analysis is the use of data on financial statements, combined with appropriate analysis methods to evaluate the financial status and business performance as well as to forecast the financial situation of an enterprise. [01, p.11]

From the above concepts, it can be seen that financial statement analysis is important, because although the information on the financial statement system represents a general "picture" of the financial situation of an enterprise, if only looking at each individual number on each report in that reporting system, it will be difficult to perceive.

comprehensive picture of that "picture". [05, Financial statement analysis aims to provide useful information not only for corporate governance but also to provide economic and financial information mainly for information users outside the enterprise. Therefore, financial statement analysis not only reflects the financial situation of the enterprise at a certain point in time, but also provides information on the results of the enterprise's production and business activities achieved in a certain period.

1.1.2. Meaning of financial statement analysis

Financial statement analysis is very important to evaluate the financial situation and business results of an enterprise in a certain period of operation. On that basis, it helps enterprise administrators make accurate decisions in the business process.

Therefore, regularly conducting financial analysis will help business managers and superior management agencies see more clearly the picture of the financial situation, fully and accurately determine the causes and the level of influence of factors on the financial situation of the enterprise. From there, there will be effective solutions to stabilize and strengthen the financial situation of the enterprise.

In the conditions of production and business according to the market mechanism, not only the company's administrators but also many other subjects are interested in the financial information of the enterprise such as: investors, banks and credit institutions, suppliers, customers, current and future shareholders, employees... Each subject uses information in different aspects of the financial picture, therefore requiring financial statement analysis to be conducted using many methods to meet the needs of interested subjects. [14, p.18]

1.1.3. Financial statement analysis database

Financial statements are the final product of the accounting system. Financial statements provide

information on the financial status, operating results and cash flow after each business period of the enterprise. Financial statements are presented according to accounting principles and standards to ensure the accuracy and reasonableness of the information provided. This is also the main source of data for analyzing the financial statements of enterprises. The system of financial statements of enterprises issued under Circular No. 200/2014/TT-BTC dated December 22, 2014 of the Ministry of Finance includes:

Balance Sheet (Form No. B01-DN)

Business Performance Report (Form No. B02 - DN) Cash Flow Statement (Form No. B03 - DN)

Financial Statement Explanation (Form No. B09-DN)

1.1.3.1. Balance Sheet (Form No. B01-DN)

The Balance Sheet is a comprehensive accounting financial statement that reflects the business capital situation of the unit in terms of both assets and current capital sources of the unit at a certain point in time. The specified time is the last day of a reporting period.

The essence of the Balance Sheet is the balance sheet between the assets and sources of assets of the enterprise at the end of the accounting period. The data on the Balance Sheet shows the total value of the enterprise's current assets according to the structure of assets, sources of capital, and the structure of sources of capital forming those assets. Based on the Balance Sheet, we can comment and evaluate the general financial situation of the enterprise. [14, p.67]

The balance sheet reflects the overall balance between the assets and capital of the enterprise according to the following equations:

Basic equation of the Balance Sheet:

ASSETS = LIABILITIES + OWNER'S EQUITY

TOTAL ASSETS = TOTAL CAPITAL

Economically: Asset data shows capital and structure of assets.

types of enterprises currently in existence at the reporting period. Therefore, readers can generally assess the production and business capacity and capital usage level of the unit. The capital source data shows the equity and loan capital sources that the unit is using during the business period, detailing the structure of each source, thereby reflecting the financial situation of the enterprise. [16, p.68]

This is a very important financial statement for all entities having ownership, economic and management relations with the enterprise because it reflects the general situation of assets and capital of the enterprise at the time of analysis in monetary form, considered as a snapshot of the financial position of the enterprise. Analyzing the balance sheet will give an overview of the increase and decrease, structure and efficiency of capital and asset use of the enterprise. The balance sheet of the enterprise consists of two main parts: Assets and Capital.

Table 1.1: Balance Sheet

On date…month…year….

Unit:…

ASSET

CAPITAL SOURCES
A. SHORT-TERM ASSETS	A. LIABILITIES
I. Cash and cash equivalents	I. Short-term debt
II. Short-term financial investments	II. Long-term debt
III. Short-term receivables
IV. Inventory
V. Other current assets
B. LONG-TERM ASSETS	B. OWNER'S EQUITY
I. Long-term receivables	I. Equity
II. Fixed assets	II. Other funding sources and funds
III. Investment real estate
IV. Long-term financial investments
V. Other long-term assets
TOTAL ASSETS	TOTAL CAPITAL

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Assets: Includes short-term assets and long-term assets. Assets reflect the potential that the enterprise has the right to manage and use in the long term to obtain

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