- 1. . Corporate financial statements
- 2.How to prepare financial statements
- 3.Guide to Reading Financial Statements
1. . Corporate financial statements
What is a financial statement?
Financial statements provide information related to the financial performance of the business, such as: assets, equity debt, profit revenue, cash flow Reports are usually published periodically at the end of each quarter and at the end of the year. The financial statement is called"Financial Statement".
Financial statements include two types:
- Consolidated financial statements
- Consolidated financial statements
What does the Financial Statements include?
The ministry of financial statements submitted to state agencies includes:
– Tax settlement declarations
- Declaration of corporate income tax settlement
- Personal income tax settlement declaration
- Set of financial statements
- Balance Sheet
- Table of business results
- Currency flow table
Accompanying Appendix: Financial Statements
What should the content of the financial statements consist of?
The financial statements must provide specific information about:
- Liabilities and equity
- Revenue, other income, business expenses and other expenses
- Profit, loss and division of business results
- Taxes and payables
- Other assets related to the unit
- How the outflows, how to circulate on the currency flow report
In addition to this information, enterprises must also provide details of the necessary information in the "Financial Statements to explain more about the targets reflected in the financial statements to summarize the accounting policies applied to record economic activities arising such as:
- Applicable accounting regime
- Form of accounting Principles of Recognition,
- Method of counterfeiting, inventory accounting
- Method of depreciation of fixed assets
When is the financial statement period?
- Annual financial statements
Enterprises must make financial statements according to the annual accounting period which is the calendar year or the accounting period of the year is 12 full months after notifying the tax authority. In exceptional cases, the enterprise is allowed to change the end date of the annual accounting period to the preparation of financial statements for an accounting period of the first year or the final accounting period may be shorter or longer than 12 months but must not exceed 15 months.
- Mid-year financial statements
i Mid-year financial statements are each quarter of the fiscal year (excluding the fourth quarter)
- Other financial statements
Enterprises may set up financial statements according to other accounting periods (such as weeks, months, 6 months, 9 months.. ) as required by law, of the parent company or of the owner, 4 accounting units are divided, separated, consolidated, merged, converted form of ownership, dissolution, termination of operations, bankruptcy must make financial statements at the time of division, separation, consolidation, merger, transformation of ownership form, dissolution, termination of operations, bankruptcy
When is the deadline for submitting financial statements?
- No later than the 90th day, from the end of the calendar year or fiscal year.
For example, the deadline for submitting financial statements in 2019 will be March 30, 2020 at the latest. The time limit for submitting reports is also the time of payment of corporate income tax.
- The time limit for submission of tax finalization dossiers for enterprises splitting, splitting, merging or merging the form of dissolved ownership shall cease operation no later than the 45th day (forty-five), from the date of decision on the enterprise's separation of mergers and annexations to convert the form of dissolved ownership, termination of operations.
2.How to prepare financial statements
Steps to prepare financial statements
– Collection of documents arising in the fiscal year, check and compare documents gathered with periodicly declared tax reports submitted to tax authorities (right or wrong declaration contents, lack of invoices)
– Due to the major change in the account system between Circular 200/ 2014 / TT – BTC with decision 15 / 2006 / QD – BTC, there should be a balance conversion as guided in Article 126 of Circular 200 / 2014 / TT – BTC .
– Review the accounting pens for documents on a monthly basis as prescribed. In terms of revenue, note clearly distinguishing sales revenue, financial operating revenue, other income. In terms of cost, distinguish clearly and properly record in the items of capital price, item cost, management cost, financial operating expenses, other expenses.
– Classification of assets and classification of liabilities in accordance with regulations: Assets and liabilities on the balance sheet must be presented in the short and long term. Assets or liabilities with maturity periods of 12 months or less are classified as short-term. Assets and liabilities that are not classified as short-term are classified as long-term.
– The financial statements of the enterprise must present the contents of the basis for making and presenting the financial statements and specific accounting policies selected and applied to transactions and important events. Present the information as prescribed by accounting standards that have not been presented in other financial statements.
– Basis for making financial statements are previous financial statements (Balance Sheet Report on business results Cash flow statements, financial statements), general accounting books, detailed accounting books and other detailed accounting documents Guidance on recording indicators on financial statements
3.Guide to Reading Financial Statements
Understanding and analyzing financial statements not only makes it easy for you to manage your company, but also manages your personal finances accurately and specifically makes you a good investor at choosing stocks of really good companies.
– Financial statements consist of 3 types of most important reports: Business results report, Balance Sheet and Cash Flow Statement will help you visualize the overall financial picture of the business with the most important parameters.
a) Report on business results
How to view the financial statements in this section you first need to quickly determine whether the numbers are appropriate and accurate.
- DTT = DT – deductions – E-tax, export tax, …
- Gross profit = DTT- GVHB
- KQDD = Gross PRINTING + DTTC – financial costs – business management costs
This is a report that shows how much the company achieves sales and how much profit remains. In short, this report indicates that the business is or loses. This report can be done monthly, quarterly or annually.
– In the report of business results, we need to pay attention to some of the following points:
Revenue account tracks all sales when sales are made and is accepted for payment Revenue= Product price * Number of sales
The Sales Revenue account only reflects the revenue of the volume of products, goods and services already recorded during the reporting period, regardless of whether the money has been collected or not collected. Usually, provincial enterprises tax VAT under the method of deduction, Revenue for products subject to VAT is the selling price without VAT. For example, if the company sells 1000 sets of clothes each worth VND100,000 without VAT, the revenue will be VND 100,000,000. Recording revenue on a regular and accurate basis is especially important to know where the business stands. Typically, in order to build a successful company, the growth level needs to be 20% per year or more.
- Cost of goods sold
The cost of goods sold represents all the direct costs of creating a product or service for sale. For the service provider, it is also known as the cost of sales. Commodity capital prices include: Employee salary, Raw Materials, Supplier Cost, Production Cost, Wholesale Price of Goods
For example, the cost to sew a set of clothes is 70,000 VND, you can sell 1000 sets, the price of the goods will be 70,000,000 VND.
– For a commercial company, the cost of goods sold is the total cost required for the goods to be present at the warehouse (including purchase price from supplier, shipping, insurance . ). For example, X Computer Company imports the computer from the supplier for 10 million. Shipping cost is 500,000 VND, the cost of goods sold is 10.5 million VND
– In order for the business to be profitable, you must find a way to reduce the cost of goods sold but still ensure the quality of products.
For example, you can find cheaper materials, Outsource services. Processing for partners with lower costs or using new techniques to increase operational efficiency. A lot of companies fail because the owner doesn't care about the cost of production. As a result, the revenue is large, but the business is not profitable.
- Gross profit
Gross profit = Revenue – Cost of goods sold
To track high or low corporate gross profit, people use the gross profit rule as a percentage.
Gross margin = ( Gross profit / Revenue ) – 100 %
For example, the company's profit margin of 25% means that for every 100,000 dong the company earns is 25,000. This indicator shows how much each dollar of revenue generates. Gross margin is a very useful indicator when comparing businesses in the same industry. A business with a higher rate of return proves that it is more profitable and controls costs more efficiently than its competitors. To build a successful company, you must ensure a higher share of gross margin than the general level in your industry.
- Fixed costs
Fixed costs are expenses that remain unchanged when output levels change, including sales and marketing costs, fixed wages, office rent, telecommunications charges, transportation fees, research and development, and depreciation of fixed assets.
Often, businesses try to cut costs, from censoring each expenditure and constantly reminding employees to save costs. In the end, however, cost control efficiency still fell short of the expectations of the business and employees said the director was still "stingy". Especially for small businesses, it's often awkward to control costs and cut costs and create a sense of savings in employees. Leading to businesses taking longer to deal with unintended costs, the gap between leaders and employees is getting farther and farther away.
To control costs effectively, businesses need to set cost norms i.e. norms for expenses according to specific standards. On the basis of analyzing the data first and collecting actual cost information, the business needs to budget for the company's fixed expenses and track the expenses regularly to ensure that it does not exceed the budget.
- Net profit
This is the money you actually earn after deducting all expenses, including taxes. This is the profit used to reinvest the business and pay dividends.
Net profit = Revenue – Cost of goods sold – Fixed cost – Tax
The goal of a successful business is to achieve net profit growth of at least 25% per year.
b) Balance sheet
In the balance sheet section, you first need to pay attention to account 131 and account 331.
Determine whether the customer's debts and the supplier's payables are matched.
+ If account 131, 331 decreased over the same period then the rating is good.
+ Account 131 must not account for a high proportion of assets
+ Account 331 must not account for a high proportion of equity
Your balance sheet tells you whether your business is healthy or weak. It tells you about the relationship between the amount of assets the company currently has and the amount owed to the company.
The difference between the amount of assets and the company's debt is equity. Equity is the source of capital contributed by investors to the company.
Equity = Assets – Liabilities
In our balance sheet, we need to focus on the following four factors:
- Accounts payable:
The amount of money the customer owes to the business due to the purchase of goods or services. If your company copies a product or service without collecting money immediately, you will have "accounts to be collected" or " Public It. This is a headache for many business owners and you have to make sure to regularly monitor these accounts.
Inventory includes materials, finished products (unfinished products) and finished products that have not been sold. Example: Clothing, Tile, TELEVISION, Refrigerator have been manufactured complete but not yet sold. The products stored in storage are like money on a bookshelm, so they must be closely monitored, especially for manufacturing and retail businesses.
Payables track how much the business owes suppliers or unpaid electricity, water, and tax bills
- Long-term debt:
Long-term debt to keep track of financial lease debts or other debts with repayment terms of more than 1 year. For example, bank debt is a long-term corporate debt that you should be concerned about. Bank debt is not necessarily a bad thing. It will help you expand your business quickly. However, it also carries risks when debts exceed your solvencency. To ensure a reasonable bank loan ratio, the monthly bank interest payment does not exceed 20% of fixed costs and total bank debt < 3 lần lợi nhuận ròng hàng năm công ty .
c) Cash flow report
– Cash flow statements record the inflow and outflow of the business through 511131 accounts, and 111. Tell me how much money the company actually has and how much money it spends over a certain period of time.
In the Business Results Report, revenue and profit are recorded as soon as the sale is not received, and the tax and depreciation are recorded as expenses, although not immediately paid. So to know exactly how much money the business actually receives, you need to read the cash flow report.
– Although the company makes a good profit, if the customer owes a lot or the company has to spend a large amount of money to maintain machinery and equipment, it is still really dangerous.