unit 5 accounting principles 5038producing financial statements

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ASSIGNMENT 2 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in BusinessUnit number and title Unit 5: Accounting Principles (5038)

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Summative Feedbacks:

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Resubmission Feedbacks:

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Internal Verifier’s Comments:

Signature & Date:

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Task 1: Producing Financial Statements ...5

Task 2: Analyzing and Interpreting Financial Statements. ...10

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Task 1: Producing Financial StatementsAdjustments:

15/12/2020, ABC owes its employees unpaid wages for the two weeks: 10 days @ $70010 day = $7000

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On December 1st, 2020, ABC purchased equipment for $16,900, by cash.

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-Advertising expense 6.000 6.000

Income Statement: For the Month Ended December 31, 2020

Depreciation expense, Professional libraryDepreciation expense, Equipment ^{$ 275}

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Task 2: Analyzing and Interpreting Financial Statements.1. Introduction.

IDICO Corporation (Industrial Construction Corporation) is a joint stock company operating in the field of industrial construction andinfrastructure investment. (VietstockFinance vn , 2002)

Field of activity: IDICO Corporation mainly operates in the field of industrial construction and infrastructure investment. The companyhas participated in the construction of many important projects such as bridges, highways, factories, seaports, industrial parks and otherinfrastructure projects (VietstockFinance vn , 2002)

Scale and influence: IDICO is one of the leading construction companies in Vietnam, with a scale of operations spanning across thecountry. The company contributes significantly to the country's economic and infrastructure development, contributing to improvingquality of life and attracting investment. (VietstockFinance vn , 2002)

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Typical projects: IDICO Corporation has participated in the construction of many important projects, including national highway projects,road and bridge projects, power plants, industrial parks and other infrastructure works. These are projects with great influence andimportant contributions to the country's economic and infrastructure development. (VietstockFinance vn , 2002)

Partners and customers: IDICO has established partnerships and cooperation with many companies, organizations and governments inVietnam and internationally. The company's customers include construction companies, industrial enterprises, governments andinvestment institutions. (VietstockFinance vn , 2002)

Development strategy: IDICO Corporation focuses on improving technical capacity, investing in advanced technology and developinghigh-quality staff. The company also aims to expand its scale of operations and expand its market into fields related to industrialconstruction and infrastructure. (VietstockFinance vn , 2002)

Sustainable commitment: IDICO is committed to implementing projects with high quality, ensuring safety and environmental protection.The company values maintaining long-term relationships with customers and partners, and adheres to business ethics and rules of fairness.(VietstockFinance vn , 2002)

2. Financial performance of the company.

Data information of IDICO

Gross profit 3059823402065 737434719600Operating profit 2560717684566 716668991312

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Net profit 2054691195297 578027279840Net sales revenue 7485389751718 4301236491241

Beginning assets 495132028862 726542767957Ending assets 1086919534730 495132028862Average Asset 791025781796 610837398410Beginning Shareholder's equity 3000000000000 3000000000000

Ending Shareholder's equity 3299999290000 3000000000000Average Shareholder's Equity 3149999645000 3000000000000

Beginning Inventory 549370891448 539706732282Ending Inventory 1094750884655 549370891448Average Inventory 822060888052 544538811865Net Credit Sales 7485389751718 4301236491241

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Beginning Accounts Receivable 450250688237 436725413093

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Net sales revenue 7485389751718 4301236491241

Gross profit margin:

IDICO's Gross profit margin difference between 2022 and 2021 is 0.24. Gross profit margin is an important indicator in financial analysis,measuring the ratio of gross profit a company earns from production and sales compared to revenue. The increase in Gross profit marginfrom 0.17 in 2021 to 0.41 in 2022 shows that IDICO has a higher gross profit level and can be due to many factors such as increasedselling prices, improved production efficiency or adjust costs. This shows that IDICO is likely to generate larger gross profits in 2022than in 2021.

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Operating profit margin:

IDICO's operating profit margin difference between 2022 and 2021 is 0.17. Operating profit margin is an important financial indicator,measuring the ratio of operating profit that a company earns from its main business activities compared to revenue. The increase inOperating profit margin from 0.17 in 2021 to 0.34 in 2022 shows that IDICO has improved profit performance from its main businessactivities. This can be explained by increased revenue from business activities, improved profit margins, reduced costs or more efficientfinancial management.

Net profit margin:

IDICO's Net profit margin difference between 2022 and 2021 is 0.14. Net profit margin is an important financial index, measuring thepercentage of net profit that a company earns from business activities after deducting all costs, including operating costs and financialcosts. government and taxes. The increase in Net profit margin from 0.13 in 2021 to 0.27 in 2022 shows that IDICO has improved its netprofit performance. This can be explained by increased net profit from core business activities, reduced costs or more efficient financialmanagement.

IDICO's ROA difference between 2022 and 2021 is 1.65. ROA is a financial ratio that measures a company's ability to generate profitsfrom its assets. The significant growth in ROA from 2021 to 2022 shows that IDICO has improved its financial performance. There are anumber of factors that can explain this growth, including increased net profit from core business activities, improved asset managementand increased capital investment. A high ROA shows that IDICO has used assets effectively and generated high profits from businessactivities.

ROE :

IDICO's Return on Equity (ROE) difference between 2022 and 2021 is 0.46. ROE is a financial ratio that measures a company's ability to

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generate returns for shareholders based on equity. ROE growth from 2021 to 2022 shows that IDICO has improved its financial

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performance and profitability for shareholders. There are a number of factors that can explain this growth, including increased net profitfrom the core business, improved capital management and improved asset performance. A high ROE shows that IDICO has leveraged itsequity to generate profits for shareholders.

4. Efficiency.

Data information of IDICO

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Average Inventory 822060888052 544538811865

Inventory Turnover Ratio:

IDICO's Inventory Turnover Ratio difference between 2022 and 2021 is 1.16. Inventory Turnover Ratio is a financial metric thatmeasures a company's sales frequency and inventory management. The growth in Inventory Turnover Ratio from 2021 to 2022 showsthat IDICO has improved its management performance and optimized its sales and inventory management processes. This difference mayindicate that IDICO has increased sales speed, reduced inventory time, and maximized operating profits. A high Inventory Turnover Ratioshows that the company has better inventory management and is capable of selling quickly.

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Accounts Receivable Turnover Ratio:

IDICO's Accounts Receivable Turnover Ratio difference between 2022 and 2021 is 4.73. Accounts Receivable Turnover Ratio is afinancial ratio that measures how often money is recovered from customers and how well a company is managing its receivable assets.The growth in Accounts Receivable Turnover Ratio from 2021 to 2022 shows that IDICO has improved its collection process andreceivable asset management. This difference shows that IDICO has collected money from customers more effectively, reducing theaverage time to collect receivables. This may indicate that the company has improved its debt collection policy, enhanced customermanagement, and optimized its collection process.

Accounts Payable Turnover Ratio:

IDICO's Accounts Payable Turnover Ratio difference between 2022 and 2021 is 8.9. Accounts Payable Turnover Ratio is a financialindicator that measures the frequency of a company's debt payments to suppliers or sellers. The growth in Accounts Payable TurnoverRatio from 2021 to 2022 shows that IDICO has improved its debt management performance and processed payments to suppliers quickly.This difference shows that IDICO has increased the speed of debt payment and financial management related to suppliers. This mayindicate that the company has improved its payment process, enhanced its financial management, and optimized its purchasing process.Assets Turnover Ratio:

IDICO's Assets Turnover Ratio difference between 2022 and 2021 is 2.42. Assets Turnover Ratio is a financial ratio that measures theability to use assets to generate revenue. The growth in Assets Turnover Ratio from 2021 to 2022 shows that IDICO has improved itsfinancial performance and ability to leverage assets to generate revenue. This difference shows that IDICO has increased its assetutilization rate and efficiency in generating revenue from its assets. This may indicate that the company has improved its productionprocesses, asset management, and optimized business operations.

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Day's Sales in Inventory:

The difference in Day's Sales in Inventory (DSI) between 2022 and 2021 for IDICO is: 2022 DSI - 2021 DSI = 90.29 - 56.27 = 34.02 .Day's Sales in Inventory (DSI) is a financial ratio used to measure the average time it takes a company to sell out its inventory. The lowerthe DSI value, the faster the company will sell out inventory and better manage inventory turnover. In this case, IDICO has an increase inDSI from 2021 to 2022. This shows that IDICO takes longer to sell out of inventory in 2022 compared to 2021. There can be manyreasons for this. These increases include unstable growth in sales or delays in inventory management. IDICO may need to considermeasures to improve management and optimize inventory turnover in the future.

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Quick Ratio :

IDICO's Quick Ratio difference between 2022 and 2021 is 1.07. Quick Ratio, also known as Acid-Test Ratio, is a financial ratio thatmeasures a company's ability to meet its short-term financial obligations using assets that are quickly convertible to cash or cashequivalents. . The growth in Quick Ratio from 2021 to 2022 shows that IDICO has improved its ability to pay short-term financialobligations and strengthen its liquidity. This difference shows that IDICO has increased the value of its convertible assets or reduced itsshort-term financial obligations, or both. This may indicate that the company has strengthened financial management, improved liquidityand created stability in its ability to pay financial obligations.

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6. Solvency.

Data information of IDICO

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Solvency Ratio:

IDICO's Solvency Ratio difference between 2022 and 2021 is 0.13. Solvency Ratio is a financial ratio that measures a company's abilityto meet its long-term financial obligations using its long-term assets. The growth in Solvency Ratio from 2021 to 2022 shows that IDICOhas improved its ability to pay long-term financial obligations and strengthen its financial sustainability. This difference shows thatIDICO has increased the value of its long-term assets or decreased its long-term financial obligations, or both. This may indicate that thecompany has improved financial management, increased equity and created stability in its ability to pay long-term financial obligations.Interest Coverage Ratio:

The difference in interest coverage ratio between 2022 and 2021 of IDICO is: Interest Coverage Ratio in 2022 - Interest Coverage Ratioin 2021 = 14.66 - 0.44 = 14.22. Interest Coverage Ratio is a financial ratio used to measure a company's ability to pay interest on debt. Itmeasures the ratio between operating profit (or pre-tax profit) and interest expense. In this case, IDICO has a significant increase in itsinterest coverage ratio from 2021 to 2022. This shows that IDICO has improved its ability to pay interest and potentially increase itsoperating profit (or bottom line). before tax) compared to interest expense in 2022 compared to 2021. This increase may reflect asignificant improvement in the company's financial situation and IDICO's ability to manage debt.

Debt - to - Equity Ratio:

IDICO's Debt-to-Equity Ratio difference between 2022 and 2021 is -0.42. Debt-to-Equity Ratio is a financial ratio that measures the ratiobetween a company's debt and equity. The change in Debt-to-Equity Ratio from 2021 to 2022 shows that IDICO has had a change in itsfinancial structure and level of use of different capital sources. This negative difference shows that IDICO has reduced the ratio of debt toequity, possibly through reducing debt levels or increasing equity. This may indicate that the company has improved its financial balance,reduced financial risk and increased sustainability.

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Debt - to - Capital Ratio:

IDICO's Debt-to-Capital Ratio difference between 2022 and 2021 is 0.05. Debt-to-Capital Ratio is a financial ratio that measures the ratiobetween a company's total debt and total capital. The change in Debt-to-Capital Ratio from 2021 to 2022 shows that IDICO has had achange in its financial structure and level of use of different capital sources. This difference shows that IDICO has increased the ratio ofdebt to total capital, possibly through increasing debt levels or reducing equity. This may indicate that the company is using a largeportion of debt to finance business operations.

7. Conclusion.

IDICO company has had some improvements in its financial situation from 2021 to 2022. The company's Current Ratio and QuickRatio have increased, showing that its ability to pay short-term financial obligations has improved. Solvency Ratio has also increased,indicating improved ability to pay long-term financial obligations and financial sustainability. However, the company needs to payattention to metrics such as Debt-to-Equity Ratio and Debt-to-Capital Ratio, as the ratio of debt to equity and total capital has increased in2022. This may can create financial risks and affect the company's financial balance. The general assessment is that IDICO has madesome improvements in solvency and financial sustainability, but still needs to pay attention and carefully manage issues related to debtstructure and capital use.

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Task 3: Budgets.

BUSINESS PLAN FOR NEXT YEAR

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecBeginning

borrowing 120.000 110.000 100.000 90.000 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000

payment 10.000 10.000 10.000 10.000 10.000 10.000 10.000 10.000 10.000 10.000 10.000 10.000Ending

borrowing 110.000 100.000 90.000 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000

Beginning cash

balance 140,000 177,567 234,020 271,680 315,667 359,700 422,620 479,307 548,600 624,220 712,447 813,280Revenue (income

cash flow)

59,500 85,000 59,500 68,000 68,000 93,500 85,000 102,000 110,500 127,500 144,500 144,500Total cash

available =(29 +30)

199,500 262,567 293,520 339,680 383,667 453,200 507,620 581,307 659,100 751,720 856,947 957,780

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