INDIVIDUAL ASSIGNMENT CHAPTER 3 PART 1

Question 1: Based on the balance sheet of Company X at the end of 20x4 and 20x5, answer the
following questions: Note that: Use the table 2 and 3 to solve question 1.
1. Fill the missing numbers in the table 1
2. How much does the cash of company X increase in 20x5?
Net change in cash flows = Cash, ending- Cash, beginning
= 180 – 98 =82
3. How much is the retained earnings at the end of 20x5?
Retained earnings 20x5 = Beginning RE + Net income – Dividend
= 987 + 433 – 218 =1202

TABLE 1: FINANCIAL STATEMENT OF COMPANY X

BALANCE SHEET AS 31/12/20X4 AND 31/12/20X5
(in millions VND)
ASSET 20X4 20X5
CURRENT ASSETS
Cash and cash equivalent 98 180
Account receivables 608 678
Inventory 1367 1456
Other current asset 44 56
Total current asset 2117 2370
LONG-LIVED ASSETS
Fixed asset 1678 1897
Accumulated depreciation 950 1090
Fixed asset, net value 728 807
Investment land 45 98
Other investment 205 205
TOTAL ASSET 3095 3480
LIABILIITES
CURRENT LIABILITIES
Account payables 234 148
Wage payables 98 47
Short-term debt 432 590
Other payables 140 191
Total current liabilities 904 976
Long-term debt 422 520
TOTAL LIABILITIES 1326 1496
SHAREHOLDER'S EQUITY
Common stock, par value 421 421
Capital in excess of par-value 361 361
Retain earnings 987 1202
TOTAL SHAREHOLDER'S EQUITY 1769 1984
TOTAL LIABILITIES & SHARE HOLDER'S EQUITY 3095 3480
Question 2: Fill the missing numbers in the table 2 shown Income Statement of Company X in 20x4
and 20x5

TABLE 2: INCOME STATEMENT OF COMPANY X in 20X4

AND 20X5
(in millions VND)
20X4 20X5
Revenue 3,657 5089
Cost of Goods Sold 2550 3456
Gross profit 1,107 1,633
Selling expense 214 456
Admisnistrative expense 335 423
Depreciation 120 140
EBIT 438 614
Interest expense 34 98
Earnings before taxes 404 516
Tax 97 83
Net income 307 433
Dividend 128 218
Retained earninings 179 215

Question 3 : Based on the table 3 ( The Cash Flow Statement of Company X at the end of 20x4 and
20x5), answer the following questions:
1. Filling the missing numbers in table 3
2. What is cash flow from operating, investing and financing activities of company X in 20x5?
Net cash flow from operating activities = 433 +140 -70 -89 -12 -86 -51 +51 =316
Net cash flow from investing activies = -219 -53 = -272
Net cash flow from financing activites = Net change in cash flows - Net cash flow from operating
activities - Net cash flow from investing activies = 82 - 316 -(-272) =38
3. Which methods does the company use to inform the statement of cash flow?
Ans: The company uses the indirect method to inform the statement of cash flow.
4. Can you analyze the cash flow of company X in 20x5? (Hint: Does company make enough cash for
its operation and meet all obiligations to paid for creditors and shareholder)

In Table 3, we see that the cash flow from operating activities of company X in 20x5 was 316
million VND. Interestingly, the company spent 272 million VND – more than 86% of its entire
operating cash flow – on new fixed assets and market securities. This leaves only 44 million VND
in operating cash flow to partially cover the dividend payment of 218 million VND. The remainder
of Company X's dividends are paid by short-term and long-term borrowing. Therefore, it can be
seen that the firm’s ability to maintain its current dividend seems to depend on its ability to
continue to borrow funds. We may, therefore, be witnessing a signal that the firm will be
encountering difficulty in maintaining its current dividend into the future. In summary, in 20x5,
the net change in cash flow was still greater than 0 (VND 82 million), the company still had enough
cash to fulfill obligations to creditors and shareholder.
Note that: use the table 2 to solve the problem.

TABLE 3: STATEMENT OF CASH FLOWS

COMPANY X IN 20X5 (in millions VND)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 433
Depreciaion 140
Increase account receivalbes -70
Increase inventory -89
Increase other assets -12
Decrease account payables -86
Decrease wage payables -51
Increase other payables 51
Net cash flow from operating activities 316
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase fixed assets -219
Purchase market securities -53
Net cash flow from investing activies -272
CASH FLOWS FROM FINACING ACTIVIES
Borrow short-term debt 158
Addition to long-term debt 98
Dividend paid -218
Net cash flow from financing activites 38
Net change in cash flows 82
Cash, beginning 98
Cash, ending 180

Question 4: Discuss with your good friend in the group about above questions:
Requirements:
- Submitting the individual assignment before 19:00 on the day before the lecture
- Submitting all assignments is based on the assignment and group through the Elearning.