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Corporate Financial Analysis Through Financial Ratios And Recommendations For German Foods. Jsc’S Development

Corporate financial analysis through financial ratios and recommendations for German Foods. JSC’s development

ABSTRACT In the modern global economy, especially when there are a lot of organizations founded every day, corporate finance has become increasingly important, for all companies in general, and for GERMAN FOODS. JSC in particular. Therefore, the thesis with the topic “Corporate financial analysis through financial ratios and recommendations for German Foods. JSC’s development” will point out the importance of having a healthily and effectively financial performance in order to survive and compete with others. The main content is reflected in three chapters. The first chapter is about literature review which provides general knowledge about the global economy as well as Vietnamese economy and introduces the financial situation of GERMAN FOODS. JSC. In chapter 2, by taking a scenario in GERMAN FOODS. JSC, assessments of financial position through financial ratios analysis of GERMAN FOODS. JSC through 2011-2013 will be demonstrated through figures from balance sheets, income statements and charts built from those figures. And chapter 3 will provide some recommendations for GERMAN FOODS. JSC’s development basing on the general knowledge and assessments which have been achieved in chapter 1 and 2 of the study. In conclusion, the thesis has already been completed in comparison with proposed objectives and targets in the introduction. TABLE OF CONTENT   CHAPTER I:LITERATURE REVIEW 5 1.1 Corporate finance 5 1.1.1. Definition 5 1.1.2. Role of corporate finance 6 1.2 Corporate financial management 6 1.2.1. Definition 6 1.2.2. Role of corporate financial management 7 1.2.3. Factors influencing corporate financial management 8 1.2.3.1. Form of business organization 8 1.2.3.2. Financial regulations 9 1.2.3.3. Corporate solvency 10 1.2.3.4. Securities markets 10 1.2.3.5. Business lending 10 1.3. Corporate financial analysis 10 1.3.1. Definition 10 1.3.2.1. Financial statement analysis is useful to different parties to obtain the required information about the organization. 11 1.3.2.2. Knowing profitability, solvency of business and judging the growth of business 11 1.3.2.3. Making comparison and selection of appropriate policy as well as forecasting and preparing budgets 12 1.3.4. Methods of corporate financial analysis 13 1.3.4.1. Horizontal and vertical analysis 13 1.3.4.2. Ratios analysis 15 1.3.4.3. Dupont Analysis 21 CHAPTER 2: ASSESSMENTS OF FINANCIAL POSITION THROUGH FINANCIAL RATIOS ANALYSIS OF GERMAN FOODS. JSC THROUGH 2011-2013 23 2.1. Overview of GERMAN FOODS. JSC 23 2.1.1. Business history 23 2.1.2. Business structure 24 2.1.3. Business activities 25 2.1. Corporate financial analysis 26 2.2.1. Liquidity ratios 26 2.2.2. Leverage ratios 29 2.2.3. Efficiency ratios 30 2.2.4. Profitability ratios 33 2.2.5. Dupont analysis 34 2.2. Assessments 36 2.2.1. Cash management 36 2.2.2. Receivable management 37 2.2.3. Inventory management 39 CHAPTER 3: RECOMMENDATIONS FOR GERMAN FOODS. JSC’S DEVELOPMENT 41 3.1. Evaluation of business’s performance through financial analysis 41 3.1.1. Strengths 41 3.1.2. Weaknesses 42 3.2. Recommendations for GERMAN FOODS. JSC’s development 43 3.2.1. Quality as a key driver — Reducing mistakes 43 3.2.2. Investing in training. 44 3.2.3. Focusing on the customer 45 3.2.4. Exploring new markets or improving marketing. 45 3.2.5. Financial forecasting 46 CONCLUSION 47 REFERENCES 48 SUPERVISOR’S EVALUATION 49 REVIEWER’S EVALUATION 50

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INTRODUCTION

  • Rationale of the study

In 1986, a program of broad economic reforms known as the Doi Moi or “renovation” introduced new market rules and improved the business climate. By and large, the “Doi Moi” reforms brought about profound changes in the Vietnamese “social fabric.” In January 2007, Vietnam joined the World Trade Organization (WTO) following a long and tedious negotiation process which lasted over ten years. And most recently, on February 4 2016, Vietnam along with eleven countries: Australia, Canada, Japan, United States,… came to an agreement of signing Trans-Pacific Partnership (TPP), which writes the rules for global trade helping increase Made-in-America exports, grow the American economy, support well-paying American jobs, and strengthen the American middle class. New opportunities and challenges created by international economic integration have had significant impacts on the economy. Domestic businesses, therefore, must follow the global rules as well as set up strategic plans in order to find potential partners, cooperate and maximize the market value of the business. In order to survive and develop in the modern economy, each company has to show its positive financial performance through one useful tool, which is finance. Finance is the language of business. It is important to be circumspect in analyzing and choosing an ideal partner. And financial statements are useful tools for managers to have a look through other companies’ financial situations. Not only managers but also other different users could take advantage of financial statements for various purposes: to assess the business’s liquidity, profitability, solvency,… Therefore, corporate financial analysis will facilitate users with an overview about financial activities to determine factors impacting on the financial situation and suggest effective solutions to strengthen their financial position. German Foodstuff Processing Joint Stock Company founded in 2008 specializes in the production of German Foods and promotes the brand of sausage “Steffi” to a wide range of people all over the world. Due to the small business scale and highly competitive business environment, GERMAN FOODS. JSC still has to face difficult challenges to survive and compete with others. Through financial statement’s analysis, GERMAN FOODS. JSC could be able to find out strengths and weaknesses as well as opportunities and potential threats so that managers can build strategic plans to develop the value of the company, Because of the importance of the corporate financial analysis, the researcher has chosen “Corporate financial analysis through financial ratios and recommendations for German Foods. JSC’s development”

  • Aims of the study

The study primarily aims to study the financial position of GERMAN FOODS. JSC from 2011 to 2013 through financial statements such as balance sheets, income statements, notes to financial statements. Thus, it is easy to assess the company’s strengths and weaknesses based on financial ratios as well as identify potential opportunities and threats influencing the health of the company. Depending on these analysis, the thesis could also suggest recommendations to enhance position of GERMAN FOODS. JSC not only in Viet Nam but in global economy as well.

  • Scope of the study

The thesis mainly focuses on analyzing financial ratios and assessing financial position of GERMAN FOODS. JSC in accounting fiscal year 2011-2013.

  • Methodology
  • Data collection

In my study, analysis and assessments will be based on data from two sources The primary sources are materials and statistics from company’s database including annual financial statements, reports and data related to the company from the security market and magazine. The secondary sources are market data. The company’s financial situation is affected and dominated by the current events in the economic environment of the country as well as of the whole world.

  • Real observation

In this method, the researcher must go to the company, observe staff working as well as raising questions if having any problems or misunderstanding. This method will help the researcher to understand the company’s operational process, preparing process of financial statement basing on accounting documents such as VAT bills, delivery bills or invoices,…as well as identify factors affecting to the company’s activities in order to have clear and adequate analysis, true and fair assessments about the company.

  • Data analysis

Comparative analysis along with data summarization and analysis will be used to give out assessments basing on figures and financial statements of the company.  Comparative analysis is based on comparing data in the same items on financial statements among years, data summarization and analysis, on the other hand, is the calculation using to evaluate the practice of financial analysis based on financial statements.

  • Organization of the study

Except for the acknowledgement, table of contents, introduction, abstract, conclusion and references, this thesis is divided into three chapters as follow: Chapter 1: Literature review provides general knowledge about the global economy as well as Vietnamese economy and introduces the financial situation of GERMAN FOODS. JSC. Chapter 2: Assessments of financial position through financial ratios analysis of GERMAN FOODS. JSC through 2011-2013 will be demonstrated through figures from balance sheets, income statements and charts built from those figures. Chapter 3 will provide some recommendations for development of GERMAN FOODS. JSC basing on the general knowledge and assessments which have been achieved in chapter 1 and 2 of the study.

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