GROUP ASSIGNMENT

PRINCIPLES OF ACCOUNTING
CLASS SE1417

VIETNAM PLASTIC
CORPORATION
GROUP MEMBERS
 Trần Gia Nguyên
 Nguyễn Lê Nhật Minh
 Lê Quốc Đạt
 Lê Tấn Tài
 Vũ Sơn Tùng
 Nguyễn Lâm Nhật Tiến
 Trần Thế Đông Anh

INTRODUCTION

VIETNAM PLASTIC CORPORATION:

 As the main unit focusing on
implementing and investing in key
projects of Vietnam's plastic industry
 Developing the industry to produce
raw materials for the plastic industry
  Development and production of high-tech plastic products
and export plastic products
 Developing the plastic industry waste and waste treatment
industry

REFERENCE
 2017. Financial report. [pdf] Available at: <LINK>.
 2018. Financial report. [pdf] Available at: <LINK>.
 2019. Financial report. [pdf] Available at: <LINK>.

1. GROSS PROFIT

 Definition
Profit margin is one of the commonly used profitability ratios to gauge the
degree to which a company or a business activity makes money.
It represents what percentage of sales has turned into profits.
Simply put, the percentage figure indicates how many cents of profit the
business has generated for each dollar of sale.

Profit Margin = Net Profits (or Income) / Net Sales (or Revenue)

= (Net Sales - Expenses) / Net Sales

= 1- (Expenses / Net Sales)

 Comparison

2. Profit margin = Net income/ Net sales

Year  2017 2018 2019
Net income 60271136061 39683336827 -1811025852

Net sales 213901269197 201848424785 122261583673

Profit margin 0.28 0.197 -0.015

 The Profit margin index has decreased over the years, showing that
the company's profits have also decreased.

GROSS MARGIN RATIO

 Definition
Gross margin ratio is a metric used to assess a company's financial health and
business model by revealing the amount of money left over from sales after
deducting the cost of goods sold. The gross profit margin is often expressed as a
percentage of sales and may be called the gross margin ratio.

 Comparison

1. Gross margin ratio= (Net sale - Cost of good sold)/ Net sale
Year 2017 2018 2019
Net sale 213,901,269,197 201,848,424,785 122,261,583,673

Cost of good sold 204,061,881,701 189,634,198,697 112,743,500,246

Gross margin ratio 0.046 0.061 0.078

RETURN ON ASSET

 Definition
Return on assets (ROA) is an indicator of how profitable a company is relative
to its total assets. ROA gives a manager, investor, or analyst an idea as to how
efficient a company's management is at using its assets to generate earnings.
Return on assets is displayed as a percentage.
ROA is useful in evaluating management, analyzing and forecasting profits, and
planning activities.
Return on assets (ROA), also called return on investment (ROI) is stated in ratio
form as income divided by assets invested.

 Comparison
 Return on assets = Net income / Total assets
Year  2017 2018 2019
Net income 60,271,136,061 39,683,336,827 -1,811,025,852

Total asset 455,049,563,636 392,002,228,994 395,090,137,079

ROA 0.132 0.101 -0.005

ACID-TEST RATIO

 Definition
The Acid-Test Ratio is a common ratio that is used to determine the liquidity of
a company. In other words, this ratio determines if the company has enough
liquid assets to pay current liabilities.
Quick assets Current assets−Inventory
Acid-test ratio = Current liabilities = Current liabi lities

 Comparison
Acid test Ratio = ( Current Assets - Inventory) / Current Liabilities
Year 2017 2018 2019
Current Asset 236,409,373,298 174,775,153,010 202,656,434,474
Current Liabilities 277,803,930,673 201,464,962,468 277,803,930,673
Inventory 50,631,384,769 58,492,223,519 59,736,629,881
Acid test Ratio 0.669 0.577 0.514

CURRENT RATIO

 Definition
The current ratio is a liquidity ratio that measures a company's ability to pay
short-term obligations or those due within one year.

Current assets
Current Ratio = Current liabilities
  Comparison
Current Ratio = Current Asset / Current Liabilities
Year 2017 2018 2019
Current Asset 236,409,373,298 174,775,153,010 202,656,434,474

Current Liabilities 277,803,930,673 201,464,962,468 277,803,930,673

Current Ratio 0.851 0.868 0.729

ACCOUNTS RECEIVABLE TURNOVER RATIO

 Definition

Accounts receivable turnover is an efficiency ratio or activity ratio that

measures how many times a business can turn its accounts receivable into cash
during a period.

This ratio shows how efficient a company is at collecting its credit sales from
customers. Some companies collect their receivables from customers in 90 days
while others take up to 6 months to collect from customers.
In some ways, the receivables turnover ratio can be viewed as a liquidity ratio
as well. Companies are more liquid the faster they can covert their receivables
into cash.

Accounts Receivable Turnover = Net sales / Average Accounts Receivable

Year 2017 2018 2019
Net sales(Total Revenue) 213,901,269,197 201,848,424,785 122,261,583,673
Average Accounts Receivable 80,226,628,458 63,351,802,886 37,154,389,255
Accounts Receivable Turnover 2.666 3.186 3.291

INVENTORY TURNOVER

 Definition
Inventory turnover is a ratio showing how many times a company has sold and
replaced inventory during a given period. Calculating inventory turnover can
help businesses make better decisions on pricing, manufacturing, marketing and
purchasing new inventory.
A low turnover implies weak sales and possibly excess inventory, also known
as overstocking. It may indicate a problem with the goods being offered for sale
or be a result of too little marketing. The longer an item is held, the higher its
holding cost will be.
A high ratio implies either strong sales or insufficient inventory. Sometimes a
low inventory turnover rate is a good thing, such as when prices are expected to
rise (inventory pre-positioned to meet fast-rising demand) or when shortages are
anticipated.

 Comparison
Inventory Turnover = COGS / Average Inventory
Year 2017 2018 2019
COGS 204,061,881,701 189,634,198,697 112,743,500,246
Average Inventory 53,065,889,376 54,561,804,144 59,114,426,700
Inventory Turnover 3.8454 3.4756 1.9072

TOTAL ASSETS TURNOVER

 Definition
The total asset turnover ratio compares the sales of a company to its asset base.
The asset turnover ratio can be used as an indicator of the efficiency with which
a company is using its assets to generate revenue.

 Comparison
Total Assets Turnover = Net sales / Average Total Asset
Year 2017 2018 2019
Net sales 213,901,269,197 201,848,424,785 122,261,583,673
Average Total Asset 449,593,965,235 423,526,896,315 393,547,183,037
Total Assets Turnover 0.476 0.477 0.311

DAY’S SALES UNCOLLECTED

  Definition
Days' sales uncollected is a liquidity ratio that is used to estimate the number of
days before receivables will be collected. This information is used by creditors
and lenders to determine the short-term liquidity of a company. It can also be
used by management to estimate the effectiveness of its credit and collection
activities.

 Comparision

Day's sale uncollected = (Account Receivable / Net sales) *365

Year 2017 2018 2019
Account Receivable 87,735,077,298 38,968,528,475 35,340,250,036

Net sales 213,901,269,197 201,848,424,785 122,261,583,673

Day's sale
uncollected 150 70 106

DAY’S SALES OF INVENTORY

1. Definition
Days' sales in inventory indicates the average time required for a company to
convert its inventory into sales.
This is important for creditors and investors for three main reasons: It measures
value, liquidity and cash flow. Both investors and creditors want to know how
much the company's inventory is worth. And the number of days the company
converts inventory into sales.
2. Comparision
Day's sales in inventory = (Ending inventory / cost of good sold )* 365
Year 2017 2018 2019
Ending inventory 50,631,384,769 58,492,223,519 59,736,629,881

Cost of good sold 204,061,881,701 189,634,198,697 112,743,500,246

Day's sales inventory 91 113 193

TOTAL DEBT RATIO

  Definition
Debt Ratio is a financial ratio that indicates the percentage of a company's
assets that are provided via debt.

 Comparision
Total Debt Ratio = Total liabilities / Total Asset
Year 2017 2018 2019
Total liabilities 326,661,128,831 231,284,772,969 229,091,569,303
Total asset 455,049,563,636 392,004,228,994 395,090,137,079
Total debt ratio 0.7179 0.5900 0.5798

Solutions

According to my team's analysis, the company is having problems with the indexes
because the ratios are all decreasing and uneven, but the group feels that the index
reflects the ability to operate, so it needs to be improved. will help the company to be
more stable, I think the business can implement the following strategy to improve the
ratio:
- The first is inventory turnover:
+ Surveying customer needs, pushing out new product lines, meeting needs,
competing with other companies to be able to sell more products.
Increase demand for inventory through targeted, well-designed, and cost-effective
marketing campaigns.
+ Review pricing strategy and analyze what will lead to an increase in sales.
+ Regularly review purchase prices with suppliers and ask for discounts
when requesting a quote or placing an order.
+ Define inventory groups in a way that will help your business so you can
better analyze, understand, and react to inventory that theoretically behaves similarly.
=> Thus, inventory will also decrease, turnover will increase.
- Second, is the receivables turnover:
+ First of all, it is important to understand that the efficiency of receivables
operations is not only the responsibility of the accounting-finance department in the
company, but also the coordination of activities among other departments such as
sales, sales department, customer service department, and even the board of directors.
+ The second is to evaluate and find ways to improve processes related to
receivables efficiency.
+ The third is to set up indicators to measure the performance of receivables.
- Finally, working capital turnover:
 + Accurately determine the company's working capital needs.
+ Actively exploit and use business capital in general and working capital in
particular in a reasonable and flexible manner.
+ Strengthening the management of receivables, minimizing the amount of
capital being misappropriated.
+ There are measures to effectively use capital in temporarily idle cash.
+ Manage inventory, reduce storage costs.
+ Well organized sales to accelerate working capital turnover.
+ Take measures to prevent possible risks.