-----------------------------------------------------***-----------------------------------------------------
BUSINESS ADMINISTRATION DEPARTMENT
PRINCIPLES OF
ACCOUNTING
(ACC101)
GROUP ASSIGNMENT
Thieu Nien Tien Phong Plastic Joint Stock Company
Lecturer: Giang Thị Minh Thảo
Class: MC1604 - Group 6
------------------------***------------------------
1. Describe the company’s business operations
1.1 Current market strategy:
Currently, in the North alone, NTP is holding about 70-80% of the market share of pipes and
fittings plastic parts. On a national scale, NTP's products account for about 30% of total
consumer demand. Under the pressure of maintaining market share as well as revenue growth
while ensuring benefits to shareholders, NTP's plans need to be very careful in execution.
NTP's Board of Directors has set a goal to compete with other competitors in domestic markets
domestic and foreign, mainly by building and developing effective distribution channels,at the
same time applying information technology in the management and control of the system
distribution channels to optimize business efficiency, timely supply products to customers.
Regarding the value chain, NTP actively participates in closed value chain models from the
"raw" stage materials – production – distribution” to ensure the brand reputation of the
company and bring benefits best for customers and shareholders.
1.2 Competitive advantage:
a) Production and distribution capacity
• Production of plastic pipes and spare parts: Currently, the company owns 06 factories across
the country with a total workshop area of nearly 450,000 m2 and nearly 1,900 employees, with
a total annual output of about 112,000 tons of products. . Specifically:
Northern Central Southward
Factory 04 factories with a 01 factory with a total 01 factory with total
total area of about area of about 62,000 area about
350,000 m2 m2 37,000 m2
Year output 80,000 tons of 15,000 tons of 17,000 tons of
products products products
Total employees 1,400 people 125 people 347 people
Besides, NTP also has a nationwide consumption network including 09 distribution centers,
about 400 agents and 15,000 sales points nationwide.
• Real estate: With about 20ha of land in the old factory area at No. 2 An Da, Ngo Quyen
District, City. Hai Phong, NTP are implementing projects of commercial complexes, offices for
rent and high-class apartments.
b) Partnerships:
c) Financial resources
• Low cost of capital:
With a background as an equitized state-owned enterprise, NTP is given relatively favorable
incentives: capital sources with low interest rates and high credit lines with short-term interest
rates on average only about 6% with short-term loans and 9% with long-term loans.
• Stable cash flow:
The clearest proof for this point is the fact that NTP has been listed on HNX since 2006
Up to now, NTP has never offered shares to new investors or existing shareholders and only
Currently increasing charter capital from profit after tax. Another point worth noting is that
NTP is still continuous pay regular dividends to shareholders
d) Competitive advantage
• Brand: owning a huge distribution network and a market share of 70-80% in the region
Northern, Tien Phong Plastic Youth brand has become an affirmation of quality for plastic
pipes and fittings.
• Research and development: NTP has always been a pioneer in investment, research and
application using new products with top quality in the region.
✓ In 2004: NTP was the first company to produce standard PP-R heat-resistant pipes
DIN8077-2008-09 and DIN8078-2008-09
✓ 2016: The company put into operation the DN2000 HDPE pipe production line
and HDPE/PP pipes with 2 layers of corrugated iron up to DN800 according to European
technology with a total amount of 150 billion VND investment. This is 1 of 8 lines that can
produce HDPE pipes diameter as large as 2,000 mm is available in the world, NTP is the first
enterprise from Vietnam and Asia to invest in this chain.
✓ In 2017 – 2018: NTP continues to spend more than 100 billion VND to invest in machinery
and equipment for PVC pipe production lines; HDPE and PP-R pipes; PVC pipe fittings
production and PP-R; laboratory equipment and product quality control; chain investment
MVPC pipes DN110 – DN355; PP-R pipe production line DN20 – DN63; cord production line
for single-walled corrugated pipes for electrical cable conduit 500kg/h; production line
double-walled corrugated pipe for drainage 1,000kg/h; equipped with 250T, 350T and injection
molding machines 650T; grain dryer, PP-R spare parts packing machine; tube weld inspection
ultrasonic machine HDPE;…
2. The overall financial statements
● Consolidated financial statements
The consolidated financial statements of Tien Phong Plastic Joint Stock Company includes 7
main parts.
1. Company Information (page 1): The basic information of the company to be reported
includes a digital business registration certificate, registered by the Department of Planning and
Investment in Hai Phong City. The Boards of Directors, Supervisory Board and Auditing
Company KPMG Viet Nam.
2. The report of the board of directors (page 2): The company's board of directors has
reported the consolidated financial statements as at 31 December 2020. In this section, the
company's board of directors reports responsibly and honestly in accordance with Vietnamese
accounting standards. In this section, the company has informed that the report presents pages 5
to 46 of the consolidated financial position of the company and payment of liabilities.
3. The independent audit report (page 3-4): Audit report of NTP audited by KPMG. This is a
report that talks about the responsibilities and issues in the audit process of KPMG. With
honesty and compliance with Vietnamese auditing laws, the company audited the consolidated
financial statements on December 31, 2020 of Tien Phong Plastic Joint Stock Company.
4. Consolidated balance sheet (page 5-7): In this section, we report 3 main issues of the
company from January 1, 2020 to December 31, 2020, including: assets, liabilities and equity.
First is assets, short-term assets and long-term assets. Total assets as of January 1, 2020 are
4,552,319,672,238; December 31, 2020 is 3,895,418,861,335. So from here we can see that the
total assets of the company have decreased by 14.43%, because of the company's short-term
assets such as short-term financial investments, short-term accounts receivable,... compared to
the beginning of 2020. The next section is the sources of capital, liabilities and equity. Total
liabilities and equity are equal to the total assets during 2020.
5. Consolidated income statement (page 8-9): This is a table that collects the company's
revenue, profit and income data between 2019 and 2020. Sales revenue, gross profit, cost of
goods sold and tax profits, shares in 2 years 2019 and 2020 of Tien Phong plastic joint stock
company.
6. Consolidated cash flow statement (page 10-11): In this section, there are three cash flows:
cash flows from operations, cash flows from investments and cash flows from financial
activities. The company reported consolidated cash flows under the indirect form of two years
2019 and 2020. Besides, readers will know the fluctuations in expenses or receivables or
payments,...
7. Financial statement footnotes (page 12-46): According to Investopia, Footnotes to the
financial statements refer to additional information that helps explain how a company arrived at
its financial statement figures. In the footnotes to the financial statements includes:
Reporting unit (business activities) page 12-13
Basis for making reports (accounting period, monetary organization,...) page 14
Summary of major accounting policies (pages 14-20)
Additional information and details in the balance sheet, income statement and cash flow
statement. (pages 20-46).
● Auditor
Tien Phong Plastic Joint Stock Company was audited by KPMG Limited Liability Company
about consolidated balance sheet at 31 December 2020, consolidated income statement and
consolidated cash flow statement. According to KPMG.vn, KPMG is recognized by the
Ministry of Finance and VACPA as the leading auditing firm in Vietnam, leading in terms of
revenue, number of clients and number of qualified auditors.In the independent audit report,
this’s the unqualified audit opinion. In the opinion of the auditors, the consolidated financial
statements are truthful, all changes in accounting principles and accounting policies have been
fully reviewed, and the accounting standards of Vietnam have been complied with Tien Phong
Plastic Joint Stock Company.
Transparency and honesty show clarity in public statements of assets, sources of capital,
revenue or profit, etc. Transparency helps investors to access financial information of the
company and reduce uncertainty, economic fluctuations of that company. From public figures,
investors trust and make investment decisions in the company. If I’m an investor, I will believe
in the transparency and honesty of the information in the financial statements, because all
financial information and data have been complied with Vietnamese accounting standards, laws
and regulations.
● Principles
(i) Revenue (page 19)
The Tien Phong Plastic Joint Stock Company has principles for recording sales revenue.
Revenue is not recorded if there are material uncertainties regarding the recoverability of the
revenues or the possibility of sales returns. And sales revenue is recorded at net sales after
deducting discounts.
ii) Depreciation expense (page 16)
The Company uses the straight-line method over the estimated useful life of tangible fixed
assets and they give the useful life of certain equipment and assets such as buildings, machines,
vehicles or equipment.
iii) Prepaid expenses (page 17)
Tien Phong Plastic Joint Stock Company has three long-term prepaid expenses: Prepaid land
expenses, supplies, and other long-term prepaid expenses. For prepaid land costs, the
company has recognized and reported it on a straight-line basis over the lease term of 36 years.
For supplies, at cost of supplies used on a straight-line over a period of 2 to 3 years. Finally,
other long-term prepaid expenses include: renovation and periodic repairs, billboard rental,
these long-term prepaid expenses are recorded at cost and using the straight-line method.
straight for 2 to 3 years.
iv) Inventory costing methods (page 16)
For inventory, it is reflected at the lower cost and net realizable value now. The original price is
calculated using the heirloom average method. And for finished goods and work-in-progress,
costs including raw materials, online labor and manufacturing overhead are distributed. In this
section, the company makes a net value estimate based on the selling price of the inventory,
less estimated costs of completion and online selling costs.
3. Assess the performance of your chosen firm, using the Income
statement.
% change % over net % over net
2019-2020 sales in 2020 sales in 2019
Net revenue from goods -4.02%
Cost of good sold -6.84% 69.06% 71.15%
Selling expense -11.77% 12.97% 14.11%
General and Administrative expense 58.71% 4.81% 2.91%
Net income 9.33% 9.97% 8.75%
Analysis:
● Comment the percentage change 2019-2020
Net sales decrease by 4.02% from 2019-2020, indicating lower sales of goods and services and
worse corporate performance.
Cost of goods sold decreased by 6.84% shows that the company has been able to reduce its
costs by importing cheaper raw materials. However, it also shows that the company is selling
less than the previous year.
Selling expenses decreased by 11.77% from 2019-2020 showing that this is a positive sign for
the company as it has reduced costs for the company.
The company General and Administrative expense increased sharply by 58.71% from 2019-
2020, showing that General and Administrative expense increased very quickly compared to
2019. This is not good for businesses because while the company's net revenue is declining
compared to 2019, the company has to spend more on business management.
Although the company's revenue decreased, the company's Net income still increased by
11.39% because selling expenses decreased and cost of goods sold fell more sharply than
revenue.This is a good sign for the company.
● Using the note in financial statement
Revenue consists of two main items, which are sales revenue and financial income. In
particular, sales revenues include product sales and other revenue. Sales revenues are core
activities to bring revenue to the company, the cause is the increase of revenue from product
sales. In 2020, product sales decreased by 353,337,868,035 (vnd) compared to 2019.
Other revenue only accounts for a part of sales revenue and it is insignificant compared to sales
of products. However, from 2019-2020, other revenue increased by 210,834,234,495,
surpassing 2019. Revenue from financial income only brings a very small part of revenue.
Smaller than other revenue brings.
Cost of goods sold consists of two parts: cost of merchandise sold and other costs. In which,
the cost of merchandise sold is the company's main source of expenses. Other costs are only a
small part of the total Cost of goods sold. In 2020, COGS dropped sharply because the
company imported cheaper input materials. In addition, the decrease in Cost of goods sold was
also due to the impact of the Covid pandemic, so the company sold fewer goods, and the cost
of goods sold was also lower.
Selling expenses include Employees expenses, Sales discount, Depreciation expense, Shipping
costs, Advertising and marketing expenses, Other selling expenses.
In which, the largest discount cost. The sales discount cost of 2020 is less than that of 2019.
The reason is that input costs are low, supply is greater than demand. Businesses use the
strategy of increasing discounts as a measure to increase their competitiveness with other
businesses. In 2020, Sales discount decreased due to the current market situation with many
competitors and the influence of Covid 19. Other expenses account for a small part and have
slight fluctuations but not much impact.
General and Administrative expenses include: Employee expenses, Depreciation of fixed
assets, Allowance for doubtful accounts, Other general and administrative expenses. In which,
General and Administrative expenses in 2020 doubled compared to 2019. The majority (1/3) of
General and Administrative expense in 2020 is due to Allowance for doubtful accounts. This is
one of the reasons for the decrease in the company's revenue. The remaining expenses remain
unchanged and affect much.
● Comment the percentage change about the terms over net revenue
In 2020, Cost of goods sold accounted for 69.6% of net revenue. This shows that to get the
current net revenue, the company has to spend a lot on the cost of goods sold. Although the
cost of goods sold accounted for the majority of net revenue, it decreased compared to 2019.
This is a good sign because the company has imported cheaper input materials which helps the
company to increase revenue. The company is operating efficiently and is profitable.
In 2020, Selling expenses increased, accounting for 12.97% of net revenue. However, selling
expenses decreased by 1.14% compared to 2019. This is a good sign because the company is
saving on selling expenses and doing business effectively.
In 2020, General and Administrative expenses increased 4.81% in net revenue, 2.91% higher
than in 2019. This shows that the company's corporate management efficiency is getting worse.
This is a bad sign because increasing costs will reduce the company's revenue. As a result, the
company's profit will be less.
In 2020, Net income increase accounts for 9.97% of net revenue. Not only that, it also
increased higher than in 2019. This is a good sign because not only the company's net income
increased, bringing more profit, but it also increased higher than the previous year. Show that
the company is doing well.
● Overall comment
Year Gross Margin
2020 31%
2019 29%
The gross profit margin of Tien Phong Plastic Company in 2019 is 29% and in 2020 is 31%.
This shows that in 2019 the company earned VND 29 when compared to their gross profit from
their COGS and in 2020 the company earned VND 31 when compared to their gross profit
from their cost of goods sold. . Also from 2019 to 2020, the company's Gross Profit Margin is
growing by 2% showing that the company is profitable based on their revenue and COGS. The
company is selling its inventory to achieve a higher profit.
Through analyzing data and finding out information, we can see that the business activities of
Tien Phong Plastic Company are still doing well. The company's net income in 2020 improved
and increased by 1.22% compared to 2019.
The main reason for the company's increase in net income in 2020 is the company's reduction
in expenses. Despite the decrease in net sales, the company's net income still increased due to
the decrease in selling expenses and the sharp decrease in COGS compared to sales.
4. Assess the financial situation of your chosen firm, using the Balance
sheet
Full year profit is more than 470 billion VND, 11% higher than the plan
Accordingly, in the fourth quarter of 2019, Tien Phong Plastic recorded a revenue of more than
VND 1,382 billion, an increase of VND 68 billion, equivalent to an increase of 5.18% over the
same period in 2018; however, pre-tax profit slightly decreased over the same period, reaching
125.33 billion dong and profit after tax reaching 107.89 billion dong, down 1.57% over the
same period.
In the whole year of 2019, NTP achieved nearly VND 4,789 billion in revenue, up 5.6%
compared to 2018; profit before and after tax reached 471.2 billion dong and more than 409
billion dong, respectively, increasing by over 23% compared to the previous year.
Thus, compared with the whole year plan of Tien Phong Plastic set out at the previous Annual
General Meeting of Shareholders with revenue of VND 5,000 billion, profit before tax of VND
425 billion, the Company completed 95.78% of the business target last year. revenue and
exceeded 10.87% of profit target.
By the end of 2019, NTP's total assets were nearly 4,547 billion dong, down 329 billion dong,
equivalent to a decrease of 6.75% compared to the beginning of the year, of which cash and
cash equivalents were more than 307 billion dong, 3.7 times higher than that of the beginning
of the year. times compared to the beginning of the year; while short-term receivables
decreased by 38.2%. Inventories continued to be large, with more than VND 1,075 billion, up
6.65%.
Liabilities decreased significantly by 24.58%, with more than 1,979 billion dong, of which
short-term loans and financial leases were nearly 1,363 billion dong, down 27.65%; loans and
long-term finance lease debt was nearly 131 billion dong, down 44.5%.
Accordingly, Tien Phong Plastic plans to issue more than 19.63 million shares to existing
shareholders at the rate of 20%, respectively, shareholders owning 10 shares will receive 2
additional shares issued from equity. owned.
The total value of issuance at par value is approximately 196.33 billion VND. The issued
capital is from the development investment fund on the audited 2019 financial statements of the
Company. It is expected that after the issuance, Tien Phong Plastic will increase its charter
capital to nearly 1,178 billion dong.
Issuing time in 2020 and after the SSC approves the report on the issue of shares from the
Company's equity.
In 2019, Tien Phong Plastic recorded a revenue of VND 4,760 billion, an increase of 5.3%
compared to the previous year; profit after tax reached 409 billion dong, up 23.4%. By the end
of 2019, undistributed profit after tax reached VND 623 billion, in addition, the Company had
more than VND 962 billion in development investment funds.
In 2020, the Company plans to produce 104,000 tons, up 9%; expected revenue of VND 5,100
billion, up 8% and profit before tax of VND 470 billion, up 3% compared to 2019. Dividend is
expected at 20% in cash.
At the end of the first quarter of 2020, NTP achieved 960 billion dong in net revenue, down
4%, but COGS also decreased, so gross profit was still more than 310 billion dong, equivalent
to the same period. Gross profit margin improved from 31% to 32.3%. Profit after tax is 75.6
billion dong, up 5.6% thanks to the increase in financial revenue in the period to 6.57 billion
dong (only 73 million dong in the same period).
In 2020, the enterprise recorded a revenue of VND 4,629.7 billion, profit after tax of VND
447.2 billion, down 2.7% and 9.3% respectively compared to the performance in 2019. Thus, in
2020, the enterprise completed 111.4% of the pre-tax profit plan.
It is known that in 2020, the enterprise plans to achieve total revenue of 5,100 billion VND and
pre-tax profit of 470 billion VND.
As of December 31, 2020, NTP's total assets decreased by 14.4% compared to the beginning of
the year to VND 3,895.4 billion. In which, assets are mainly fixed assets reaching VND 1,584.3
billion, accounting for 40.7% of total assets; short-term receivables were VND813.4 billion,
accounting for 20.9% of total assets; inventory is 644.1 billion dong, accounting for 16.5% of
total assets.
