• What is the most

important bank in
Vietnam do you think?
• Who was the first
Governor of the State
Bank of Vietnam?
• Who is the present
Governor?
• When was the State Bank
of Vietnam established?

Quiz questions
Answers
• The State Bank of Vietnam (The Central Bank and local banks)
• Nguyen Luong Bang

• On 6 May 1951, president Hồ Chí Minh signed decree 15/SL on

establishment of National Bank of Vietnam.

• Credit funds
READING 1 THE BANKING SYSTEM IN THE ECONOMY

OTHER
THE CENTRAL COMMERCIAL
FINANCIAL
BANK BANKS
INSTITUTIONS
 THE FUNCTIONS OF THE CENTRAL BANK
ARE:
To serve as the government’s banker
THE ROLE
OF THE To act as the banker of the banking system
CENTRAL
BANK To regulate the monetary system for both
domestic and international policy goals
To issue the nation’s currency.
 What exactly does the central
bank do with each function?

What are three tools of the

THE ROLE OF monetary policy?
THE CENTRAL
BANK What is an expansionary
monetary policy?

What is a restrictive monetary

policy?
 As banker to
the collects and disburses government
government, income,
the central
bank:

manages the issues and redemption of

government debts,

Answers advises the government on all matters

pertaining to financial activities,

makes loans to the government.

 As holds and transfers banks’
banker
to the deposits,
nation’s
banks, supervises their operations,
the
central
Answers bank:
acts as a lender of last
resort,
provides technical and
advisory services.
 Three
tools of
monetary
Reserve
policy: requirement
Interest rates
Answers
(Discount rates)
Open market
operations
 Monetary policy is expansionary
when:
Reserve requirement is reduced

Answers
Discount rate is reduced

The central bank buys securities

from member banks
MONEY, BANKING AND
CENTRAL BANKING UNIT 6
 Monetary
policy is
restrictive
Reserve requirement
when: is increased
Discount rate is
Answers
increased
The central bank sells
securities
 Seven main functions of commercial banks:
1. Accepting deposits
2. Giving loans
THE ROLE OF 3. Overdraft
COMMERCIAL 4. Discounting of Bills of Exchange

BANKS 5. Investment of Funds

6. Agency Functions
7. Miscellaneous Functions
Seven main functions of commercial banks:
1. Nhận tiền gửi -
2. Cho vay
3. Dịch vụ thấu chi
4. Chiết khấu hóa đơn hối đoái
5. Đầu tư của Quỹ
6. Chức năng đại lý
7. Chức năng khác
 OTHER FINANCIAL INSTITUTIONS

Savings Personal Insurance

institutions trusts companies
UNIT 7 TAXATION
Who is he?
He wrote that: ““In this world
nothing can be said to be certain
except death and taxes”
 Different Functions of
types of taxes taxation

UNIT 7 Tax avoidance Tax evasion

TAXATION

Tax rates
 Personal income tax: a tax
imposed on incomes generated by
individuals.
DIFFERENT TYPES Corporate income tax: a tax
imposed on the profit of a business.
OF TAXES Capital gain tax: A tax imposed
on profits made by selling certain
assets including stocks, bonds, or
real estate.
 Property tax: A tax is assessed by a local
government and paid for by the owner of a
property. This tax is calculated based on the
property and land values.
Inheritance tax: A tax levied on
DIFFERENT individuals who inherit the estate of a
deceased person.
TYPES OF Sales tax: A consumption tax imposed by a
TAXES government on the sale of goods and
services. This can take the form of a value-
added tax (VAT), a goods and services tax
(GST), a state or provincial sales tax or an
excise tax
 • Customs duty: a tax levied mostly on
imports
• Excise tax: a tax imposed on some specific
goods and services
DIFFERENT • Value added tax (VAT): a consumption
tax placed on a product whenever value is
TYPES OF added at each stage of the supply chain,
from production to the point of sale.
TAXES
• Payroll tax: a tax calculated based on the
payrolls (national/ social insurance),
generating trust funds which are used for
medical and social security programs.
 The primary function of taxation is to raise
revenue for the state budget.

FUNCTIONS
The function of income taxes is to
OF redistribute wealth,
TAXATION
and encourages capital investment because
the Government permits various methods
of accelerated depreciation accounting.
 The function of customs duty
is to protect local producers
and to ensure employment
FUNCTIONS for local people.
OF
TAXATION The function of excise taxes is
to dissuade people from
consuming some special
goods and services
 THREE MAIN TYPES OF TAX RATES:

Regressive
TAX
RATES Proportional

Progressive Taxes
 A regressive tax:
a tax where lower-income entities pay a
higher fraction of their income in taxes
than do higher-income entities. (Regressive
taxes can also be thought of as taxes where
TAX RATES the marginal tax rate is less than the
average tax rate.)
Examples: excise tax, sales tax, property
tax, VAT
 A proportional tax (sometimes called a flat tax):
a tax where everyone, regardless of income,
pays the same fraction of income in taxes.
applies the same tax rate across low, middle, and
TAX RATES high-income taxpayers.
Examples: per capita taxes, gross receipts taxes,
and occupational taxes.
 A progressive tax:
a tax where lower-income entities pay a
lower fraction of their income in taxes than
do higher-income entities. (Progressive
TAX RATES taxes can also be thought of as taxes where
the marginal tax rate is higher than the
average tax rate.)
• Example: income taxes
 TAX AVOIDANCE
Individuals
 employees receive perks (non-pay
benefits) instead of taxable money
(loopholes in the tax law)
 investing a part of income in life
insurance policies, pension plans, or
other investments (tax shelters)
Donations to charities (tax
deductibles)
 Firms Bringing forward
capital expenditure
TAX
AVOIDAN
CE Setting up subsidiaries
in countries with low
tax rates (tax heavens)
 Individuals
• Freelancers undeclare their
incomes to the tax office
• People with part-time jobs
TAX undeclare their incomes from
AVASION their part-time jobs

Firms
• Making false declarations on the
company’s profits/ costs.
 ACCOUNTING PROCESS

UNIT 8
ACCOUNTI
NG AND ACCOUNTING BOOKS
FINANCIAL
STATEMENT
S BASIC ACCOUNTING
PROCEDURES – JOURNAL
ENTRIES
• The company’s established accounting procedures
• Accounting process – steps of doing accounting – what accountants
have to do
- Prepare / construct / build up financial statements
- Cost of sales/
- cost of goods sold
- LIFO = last in first out/ FIFO = first in first out
- Average weighted method
- Just-in-time
 COMPREHENSION QUESTIONS
1. How is accounting defined?
2. What is difference between book-
keeping and accounting?
3. In daily operations, which book are
READING 1 transactions of a business (economic
activities) firstly recorded in?
4. For what purpose is this book
maintained?
 COMPREHENSION QUESTIONS

5. What does “double entry bookkeeping”

mean? Single entry bookkeeping?

6. Which book forms part of double entry

READING 1 bookkeeping?

7. What are advantages of double entry

system?

8. What are accounts?

Definition of accounting
Accounting: the process of coordinated activities
 Identifying
 Measuring
 Recording
 Classifying the financial transactions and events
 Summarizing
 Analyzing
 Interpreting the information/ data of financial statements
 Communicating = disclosing accounting information to related parties.
• What are the accountants’ responsibilities in general?
= What do accountants have to do in general?
Accountants have to
Retail (n) vs. wholesales
Retail outlets, online shopping
Arise (v)
Expenses
Sales (n) – doanh thu
What are sources of data recorded in a journal?
From original documents such as: bills, receipts, invoices, bills of lading,
…….
Bookkeeping & Accounting
Bookkeeping: a process of detailed recording of all the financial
transactions of a business
Accounting: a process of using the bookkeeping records to prepare
financial statements at regular intervals. (quarterly or annually)
A journal is a book of original used in recording transactions for the
first time.
A ledger is a book which contains all accounts of a business.
An account provides information about a group of similar
transactions.
 On daily basis, transactions are
recorded in a journal based on source
documents (original documents)

Periodically, data in a journal are

Accounting transferred/ posted into a ledger.
process
At the end of the year, financial
statements are prepared based on
data in a ledger
 Definitions of terms

A Journal is the book of original which is used in

recording the transactions for the first time.

Accounting A Ledger is an accounting book which contains all

accounts of a company.
process
An account contains information about a group of
similar transactions.

Double entry bookkeeping means that each

transaction is recorded in at least 2 accounts
 A trial balance is a bookkeeping or accounting
report that lists the balances in each of an
organization's general ledger accounts.
What is a
The balance amounts are listed in a "Debit
trial balances" or "Credit balances” column
balance?
a trial balance was commonly prepared in
order to discover whether math errors and/or
some posting errors were made.
 Today, bookkeeping and accounting software has
eliminated those clerical errors.

However, the trial balance continues to be useful for

What is a auditors and accountants who wish to show
trial • 1) the general ledger account balances prior to their proposed

balance? adjustments,
• 2) their proposed adjustments,
• 3) all of the account balances after the proposed adjustments.

These final balances are known as the adjusted trial

balance, and these amounts will be used in the
organization's financial statements.
 • They are:
(1) balance sheets (statement of financial position)
FINANCIAL (2) income statements;
STATEMENTS (3) cash flow statements;
(4) statements of shareholders’ equity
FINANCIAL STATEMENTS

• Balance sheets provide information about financial position of a

business on a specific date (December 31st)
B/S lists assets, liabilities and shareholders’ equity
• income statements/ cashflow statements provide information about
financial operations of a business during a certain accounting period.
I/S lists revenue (sales); costs (expenses) and incomes (return: profit or
loss)
C/S lists inflows and outflows of cash during the period.
• Gross revenue (sales) – discounts/ sales return (deductions)
= Net sales
Net sales – costs of goods sold = Gross profit
Gross profit – (selling expenses + general and administration expenses)
= Net operation profit + other net income
= EBITDA = Earnings before interests, taxes, depreciations &
amortizations.
Net profit
VOCABULARY
EXERCISES
INTERNATIONAL TRADE
Advantages and disadvantages of international trade
The theory of absolute advantage and the theory of comparative
advantage
Comparative (relative) advantages of certain countries
Trade barriers: tariffs/ quotas/ subsidies/ embargo
Measurements of international trade: balance of trade/ current
account/ capital account/ balance of payments
VOCABULARY
• Trade (n + v)
• To trade in sth/ To trade with sbd
• Trading nations: exporting countries/ importing ones
• Foreign trade = international business
• Advantage
• Absolute advantages
• Comparative (relative) advantages
VOCABULARY
• Wealth = money
• Wealthy (adj) = rich
• Impose tax on sth = levy tax on sth = to tax sth
• Imposition
• Freight & insurance
• Subsidize (v) = the Government supports for the company so that it can sell
products or services cheaply. For example: bus services
• Subsidy – subsidies (n)
• Dumping = selling in a foreign country at prices below the cost of
production due to the G’s subsidies.
QUESTIONS
1. What are advantages of international trade to exporting countries?
2. How do governments encourage exports?
3. What are comparative advantages (factors for more efficient
production) of certain countries?
4. What are advantages and disadvantages of international trade to
importing countries?
5. Why do governments restrict imports? How can they do that?
6. What are the measurements of international trade of one country
with the others within a certain period of time?
 ANSWERS
1. Advantages of international trade to exporting countries:
 money accrues to the exporting countries
 increased production, leading to more employment for local people
 more market share for companies which can produce goods and
export them abroad
Thus, the economy tends to grow due to exporting. (exactly, higher
economic growth, more employment for local people, higher living
standard, etc.
 ANSWERS
2. How do governments encourage exports?
Gs encourage exports by:
- Providing marketing information
- Establishing trade missions
- Subsidizing exports
- Providing tax incentives: tax reduction or tax exemption
 ANSWERS
3. Comparative advantages:
 Climates, for example, in the USA, Canada – suitable for production
of wheat; in Thailand and Vietnam – suitable for production of rice,
fruit, and so on.
 Natural resources: coal, oil and other minerals
 Human resources: highly skilled or unskilled labor forces, etc.
 Geographical locations: like Singapore and Panama
 ANSWERS
4. Advantages of world trade to importing countries:
 the G raises revenue by imposing tariffs on imports
 consumers have more choice of goods to buy: either imports or
domestically produced goods (home-products)
 consumers can buy goods at lower prices due to more competition.
Disadvantages of world trade to importing nations:
 declined domestic production => reduced employment for local people
Local producers face to more competition from foreign producers of the
same goods, they tend to lose their market share.
 ANSWERS
5. Governments’ restriction on imports
Most common sorts of trade barriers are:
 tariffs: taxes on imports which increase prices of imports, then
reducing demand on imports.
 quotas: quantity restrictions placed on goods or services
 subsidies: to make imports non-competitive (or to help exporting to a
foreign market cheaply.)
 embargoes: is done as a form of punishment or to force the country
undergo radical change internally as a result of a weakened economic
state.
 ANSWERS
Justifications for imposing trade barriers:
 to protect domestic employment
 to protect relatively young domestic industries
 to protect firms and industries that produce goods and services vital
to the social security and national defense
 to prevent the country from depending on imports
 to allow greater reliance on domestic production.
 ANSWERS
6. Measurements of international trade
 balance of trade:
 current account
 capital account
 financial account
 balance of payments
 BALANCE OF TRADE
 A country's trade balance equals the value of its exports minus its imports.
 Exports are goods or services made domestically and sold to a foreigner.
That includes a pair of jeans you mail to a friend overseas. It could also be
signage a corporate headquarter transfers to its foreign office. If the
foreigner pays for it, then it's an export.
 Imports are goods and services bought by a country's residents but made
in a foreign country. It includes souvenirs purchased by tourists traveling
abroad. Services provided while traveling, such as transportation, hotels,
and meals, are also imports. It doesn't matter whether the company that
makes the good or service is a domestic or foreign company. If it was
purchased or made in a foreign country, it's an import.
 CURRENT ACCOUNT
the current account includes:
• Trade: trade in visible goods & services
• net income: income received by the country’s residents minus income
paid to foreigners
• direct transfers of capital: remittances from workers to their home
country, a government's direct foreign aid, and foreign direct
investments
• asset income: increases or decreases in assets like bank deposits,
central bank and government reserves, securities, and real estate.
 CAPITAL ACCOUNT
• It measures financial transactions that don't currently affect a country's
income, production, or savings. Their value is based on what they are
expected to produce in the future. The Federal Reserve calls these
transactions non-produced, nonfinancial assets.
• Examples: international transfers of ownership such as:
- purchase of a foreign trademark by a U.S. company;
- a U.S. oil company’s acquisition of drilling rights to an overseas location;
- a foreign purchase of a U.S. copyright to a song, book, or film;
- International debt forgiveness;
- A cross-border insurance payment
 FINANCIAL ACCOUNT
• a measurement of increases or decreases in international ownership
of assets
• The assets include direct investments, securities like stocks and
bonds, and commodities like gold and hard currency.
 BALANCE OF PAYMENTS
• The balance of payments is the record of all international financial
transactions made by a country's residents and government.
• The balance of payments has three components. They are the
financial account, the capital account and the current account.
- Abandon /ə'bændən/:
Ex: to abandon a hope
to abandon one's wife and children
- Substitute ['sʌbstitju:t]: (substitute for somebody / something)
Ex: I am unable to attend their marriage, but I'll send my eldest son as a
substitute
- Dumping /'dʌmpiɳ/ selling in a foreign market at prices below the cost
of production
- Retaliate [ri'tælieit]
to retaliate upon someone
- Supersede [,su:pə'si:d]
FINANCIAL ANALYSIS
• What are 4 types of financial analysis?
• Who need FA?
• How is FA important to users?
Financial analysis
Questions for financial analysis:
- What purposes of financial analysis do analysts concern about?
- Who are analysts of financial analysis?
- What are aspects/ categories of financial analysis?
- What are objects of financial analysis?
- What are methods of financial analysis?
- What are sources of data for financial analysis?
- Who are analysts of financial analysis?
UNIT 9 FINANCIAL ANALYSIS
 DEFINITION
 PURPOSES OF FINANCIAL ANALYSIS
 SOURCES OF DATA NEEDED FOR FINANCIAL ANALYSIS
 CLASSIFICATION OF FINANCIAL RATIOS
• Analyse data/results/information Management requires
enthusiasm and intuition rather than merely an ability to
analyze data and invent strategies.
• analyse a problem/issue We need to look at what went wrong,
analyze the problem, and come up with a solution.
 QUESTIONS
Q1. What are the purposes of financial analysis?
Q2. What are sources of data/information needed for financial analysis?
Q3. What is a financial ratio? How are financial ratios classified?
 PURPOSES OF FINANCIAL ANALYSIS

Q1. What are the purposes of financial analysis?

Different groups of analysts need to analyze financial data, together
with other information for different purposes. For example, the
management of the company want to evaluate performance of
employees, departments; the efficiency of operations; credit policies,
etc. The investors want to evaluate the potential investments, whereas
creditors need financial analysis to identify the company’s credit rating
and credit-worthiness.
 SOURCES OF DATA/INFORMATION

Q2. What are sources of data/information needed for financial

analysis?
- The primary sources of data include:
+ financial data provided by the company in forms of the
company’s annual reports, financial statements, and
footnotes.
+ market data, which can be found in the financial press or
The secondary sources of data include:
+ economic data, which can be found from the government
or private sources such as GDP, GNP, CPI, scientific findings,
etc.
+ events
 THE CLASSIFICATION OF FINANCIAL RATIOS
Q3. How are financial ratios classified?
 By construction, financial ratios are classified into:
* coverage ratio
* return ratio
* turnover ratio
* component percentage
 According to their characteristics, financial ratios are classified into:
* liquidity ratio
* profitability ratio
* activity ratio
* financial leverage ratio
* shareholder ratio
* return on investment
 DEFINITIONS OF FINANCIAL RATIOS

 A coverage ratio is a measure of a company’s ability to satisfy

particular obligations (debts).
 A return ratio is a measure of the net benefit, relative to the
resources expended.
 A turnover ratio is a measure of the gross benefit, relative to the
resources expended.
 A component percentage is the ratio of a component of an item to
the item.
 DEFINITIONS OF FINANCIAL RATIOS

 A liquidity ratio provides information on a company’s ability to meet

its short-term, immediate obligations
 A profitability ratio provides information on the amount of income
from each dollar of sales.
 An activity ratio (efficiency ratio) relates information on a
company’s ability to manage its resources (that is, its assets)
efficiently.
 DEFINITIONS OF FINANCIAL RATIOS

 A financial leverage ratio provides information on the degree of a

company’s fixed financing obligations (long-term debts) and its
ability to satisfy these financing obligations: gearing/ income gearing.
 A shareholder ratio describes the company’s financial condition in
terms of amounts per share of stock.
 A return on investment ratio provides information on the amount of
profit, relative to the assets employed (used) to produce that profit.
 SUMMARY

Four important areas of a company’s business including liquidity, capital

structure, activities and efficiency, and profitability are commonly analyzed
by applying ratios. Firstly, for measurement of liquidity, two ratios – the
current ratio and quick ratio are normally used. Secondly, the gearing of the
company and income gearing are important ratios for evaluating the
company’s capital structure. Thirdly, average collection period on debts and
inventory turnover ratios are applied to assess the company’s efficiency.
Finally, the profit margin, return on capital employed and return on owner’s
equity are ratios used to indicate the company’s profitability.