FINANCIAL ACCOUNTING

WEEK 1 - CHAPTER 1: Accounting in Action

1.Accounting Activities and Users

a.Accounting consists of three activities
b.Who Uses Accounting Data

Internal Users External Users

● Financial Reports: để record lại ● Investor: Dựa vào FR để decide
những gì đã xảy ra trong quá khứ và xem có nên đầu tư vào công ty trong
hiện tại để publish tương lai hay không

● Mana Acc Reports: set target in the ● Creditors:

future (chỉ nội bộ, không publish ra
ngoài) → just use internal → only use FR
 2.The Building Blocks of Accounting

Ethics in Financial Reporting

Accounting Principles

⇒ Relevance and Faithful không thể mix cùng nhau. So nowadays, many people prefer
History cost principles
Assumptions
Forms of Business Ownership

→ FA chỉ focus vào Corporation. Vì chủ sở hữu dựa vào số cổ phần – và chỉ
chịu trách nhiệm cho số cổ phần mình đang có
3.The Accounting Equation

Assets • Resources a business owns

• Provide future services or benefits
• Cash, Supplies, Equipment, etc.

Liabilities • Claims against assets (debts and

obligations)
• Creditors (party to whom money is
owed)
• Accounts Payable, Notes Payable,
Salaries and Wages Payable, etc.

Owner’s Equity • Ownership claim on total assets

• Referred to as residual equity
• Investment by owners and revenues
(+)
• Drawings and expenses (-)
4.Analyzing Business Transactions
-Transactions are a business’s economic events recorded by accountants.
• May be external or internal
• Not all activities represent transactions
• Have a dual effect on the accounting equation
-Phân tích cái transaction nào nên rc, dựa trên tiêu chí: economic event - account này tăng
thì account khác phải giảm (để CT balance)
*Discuss product: chỉ bàn thôi not sure mua hay không → cannot rc
→ Tổng kết lại 2 cái mà không bằng thì sai ở đâu đó
5.The Four Financial Statements
WEEK 2 - CHAPTER 2: The Recording Process
 1.Accounts, Debits, and Credits

The Account
Debit

Credit

-The Four Financial Statements

-Debit and Credit Procedure
Double-entry system:
● Each transaction must affect two or more accounts to keep basic accounting
equation in balance
● Recording done by debiting at least one account and crediting at least one other
account
● DEBITS must equal CREDITS

-Summary of Debit / Credit Rules

2.The Journal

-The Journal:
● Book of original entry
● Transactions recorded in chronological order
● Contributions to the recording process:
+ Discloses the complete effects of a transaction
+ Provides a chronological record of transactions
+ Helps to prevent or locate errors because the debit and credit amounts can
be easily compared

-Journalizing: Entering transaction data in the journal.

3.The Ledger and Posting
4.Trial Balance
-Limitations of a Trial Balance:
Trial balance may balance even when:
1.A transaction is not journalized.
2.A correct journal entry is not posted.
3.A journal entry is posted twice.
4.Incorrect accounts are used in journalizing or posting.
5.Offsetting errors are made in recording the amount of a transaction.
 WEEK 3 - CHAPTER 3: Adjusting The Process

1.Accrual Basis of Accounting & Reasons for Adjusting

Entries

Fiscal and Calendar Years ● Monthly and quarterly time periods are called interim periods (giai đoạn tạm
thời)
● Most large companies must prepare both quarterly and annual financial
statements
● Fiscal Year = Accounting time period that is one year in length
Eg: Anh, Ấn Độ, Canada, Hong Kong, Nhật Bản: năm tài chính bắt đầu từ ngày 1
tháng 4 của một năm và kết thúc vào cuối ngày 31 tháng 3 năm kế tiếp.

● Calendar Year = January 1 to December 31

Accrual- versus Cash- Accrual-Basis Accounting

Basis Accounting ● Transactions recorded in the periods in which the events occur
● Companies recognize revenues when they perform services (rather than
when they receive cash)
● Expenses are recognized when incurred (rather than when paid)
● In accordance with International Financial Reporting Standards (IFRS)

Cash-Basis Accounting
● Revenues recognized when cash is received
● Expenses recognized when cash is paid
● Cash-basis accounting is not in accordance with International Financial Reporting
Standards (IFRS)

Recognizing Revenues Revenue Recognition Principle

and Expenses Principles ● Recognize revenue in the accounting period in which the performance obligation
is satisfied. (Ghi nhận sau khi thực hiện xong dịch vụ mà không đợi đến khi nhận
tiền)

Expense Recognition Principle

● Companies recognize expenses in the period in which they make efforts
(consume assets or incur liabilities) to generate revenue. (Sử dụng chi phí trong
năm tài chính đó để ghi nhận doanh thu tạo ra. Chi phí sử dụng ghi nhận ngay
lập tức chứ không phải đợi đến lúc thanh toán tiền → expense matches with
revenue)
WRAP - UP
The Need for Adjusting Adjusting Entries
Entries ● Ensure that the revenue recognition and expense recognition principles are
followed.
● Necessary because the trial balance may not contain up-to-date and complete
data.
● Required every time a company prepares financial statements.
● Will include one income statement account and one statement of financial
position account. (bao gồm 1 báo cáo thu nhập + 1 báo cáo tài chính)
Types of Adjusting Entries
 2.Adjusting Entries for Deferrals
● Deferrals are expenses or revenues that are recognized later than the point when
cash was originally exchanged. There are two types: Prepaid expenses & Unearned
revenues (nhận tiền nhưng chưa cung cấp dịch vụ)

Prepaid Expenses ● Payments of expenses that are recorded as an asset to show the
service or benefit the company will receive in the future.

● Prepayments often occur in regard to:

*Trả tiền trước nhưng mà chưa xài. Qua thời gian mình xài thì asset sẽ giảm
xuống
Supplies

-purchased supplies costing ₺2,500 on October 5. → record asset & supplies

expenses.
-October 31 (₺1,000 of supplies are still on hand) → used ₺1,500
→ transaction: asset supplies credit - supplies expense debit

Insurance

Depreciation ● Các Buildings, equipment, and motor vehicles (được gọi là assets).
Depreciation tức là khấu hao (mỗi năm sử dụng thì asset sẽ bị giảm
giá trị → record lại giá trị đã sử dụng)

● Không record vào asset mà record và accumulated depreciation

(contra asset account - credit)
Unearned Revenues ● Receipt of cash that is recorded as a liability because the service has
not been performed.

*Là dịch vụ mình trả tiền trước rồi sau đó mới xài (mua vé máy bay thì mình
sẽ trả tiền rồi khi mình bay người ta mới record cái transaction đó)
 3.Adjusting Entries for Accruals
● Accruals are made to record, Revenues for services performed but not yet recorded
at the statement date. Expenses incurred but not yet paid or recorded at the
statement date (cung cấp dịch vụ nhưng chưa nhận được tiền / chưa record)

Accrued Revenues ● Revenues for services performed but not yet received in cash or recorded.
Accrued Expenses ● Expenses incurred but not yet paid in cash or recorded.

*dịch vụ diễn ra rồi nhưng chưa record/ chưa được trả tiền → liability increase & expense
increase

Accrued Interest
Accrued Salaries and Wages
 WRAP UP

4.Adjusted Trial Balance

● Prepared after adjusting entries are journalized and posted
● Proves equality of debit and credit balances
● Basis for the preparation of financial statements
 → WRAP-UP
BASIC ACCOUNTING
● Deferrals : companies record revenue when they receive cash
● Accruals : companies recognize revenues when they perform services (rather than
when they receive cash)
--> revenue recognition principle: companies recognize revenue when the
performance obligation is satisfied
--> expense recognition principle: Match expenses with revenues when the
company makes efforts to generate those revenues.

TYPES OF ADJUSTING ENTRIES

● Deferrals:
1. Prepaid expenses: (supplies, insurance, depreciation, advertising, rent) Expenses
paid in cash before they are used or consumed.

2. Unearned revenues: (Rent, magazine, subscriptions, customer deposits for future

service) Cash received before services are performed.

● Accruals:
1. Accrued revenues: (Account Receivable, Interest, rent) Revenues for services
performed but not yet received in cash or recorded.

2. Accrued expenses: (accrued interest, accrued salaries and wages) Expenses

incurred but not yet paid in cash or recorded
WEEK 4 - CHAPTER 4: COMPLETING THE
ACCOUNTING CYCLE

1The Worksheet
• Multiple-column form used in preparing financial statements
• Not a permanent accounting record
• May be a computerized worksheet
• Prepared using a five step process
• Use of worksheet is optional
2.Closing Entries and Post Closing Trial Balance
● Temporary versus permanent accounts

● Closing entries formally recognize in the ledger the transfer of:

○ Net income (or net loss) to owner’s capital
○ Owner’s drawings to owner’s capital
● Produce a zero balance in each temporary account.
● Companies generally journalize and post closing entries only at end of the annual
accounting period.
Eg:
3.The Accounting Cycle
4.Correcting Entries
5.Classified Statement of Financial Position

Eg:
Intangible Assets

Property, Plant,
and Equipment
Long-Term
Investments

Current Assets
Owner’s Equity
Non-Current
Liabilities

Current Liabilities
WEEK 5 - CHAPTER 5: Accounting for
Merchandise Operations

1.Merchandising Operations and Inventory Systems

● Merchandising Companies : Buy and Sell Goods
→ The primary source of revenues is referred to as sales revenue or sales.
● Income Measurement:

→ Cost of goods sold is the total cost of merchandise sold during the period.
 ● Operating Cycles:
○ Service Company

○ Merchandising Company

→ Ordinarily is longer than that of a service company.

● Flow of Costs:

→ Companies use a perpetual or a periodic inventory system.

Cost of Goods sold = Beginning Inventory + Cost of Goods Purchased - Ending Inventory
(use this formula for both perpetual or a periodic inventory system)
○ Perpetual System
■ Maintain detailed records of cost of each inventory purchase and sale
■ Company determines cost of goods sold each time a sale occurs
■ Records continuously show inventory that should be on hand for every
item
→ update liên tục để biết được ending inventory tại từng thời điểm là
bao nhiêu
→ record vao inventory

*Advantages of the Perpetual System

-Traditionally used for merchandise with high unit values
-Shows quantity and cost of inventory that should be on hand at any time
-Provides better control over inventories than a periodic system

○ Periodic System
■ Do not keep detailed records of the goods on hand
■ Cost of goods sold determined by count at the end of the accounting
period.
■ Calculation of Cost of Goods Sold: Use the formula
→ không update thường xuyên, chỉ sử dụng vào cuối năm tài chính
→ Khong record vao Inventory ma record vao purchases account
→ khong record cost of goods sold (vi khi ban da biet roi)
→ không phải thực hiện adjustment entry
→ phải đóng inventory lại
2.Recording Purchases Perpetual System
● Made using cash or credit (on account)
● Normally record when goods are received from seller
● Purchase invoice (evidence to show that what kind of payment/ quantity/ the
amount of money / shipping policy & credit policy) should support each credit
purchase

Eg: purchase invoice

Recording
Purchases
Perpetual System

Freight Cost
Purchase Returns
and Allowances
(Purchasers may be
dissatisfied because
goods are damaged
or defective, of
inferior quality, or do
not meet
specifications.)
Purchase
Discounts
(Credit terms may
permit buyer to claim
a cash discount for
prompt payment)
3.Recording Sales Perpetual System
● Made using cash or credit (on account)
● Sales revenue, like service revenue, is recorded when performance obligation is
satisfied
● Performance obligation is satisfied when goods are transferred from seller to buyer
● Sales invoice should support each credit sale
→ Với TH FOB Shipping Point (người mua trả tiền) : Khi seller giao hàng cho trung
tâm vận chuyển -> được record ngày vào revenue
→ Với TH FOB Destination (người bán trả tiền) : Seller chỉ được record revenue khi
người mua thành công nhận hàng
Recording Sale
Perpetual System

Sales Returns and ● “Flip side” of purchase returns and allowances

Allowances ● Contra-revenue account to Sales Revenue (debit)
● Sales not reduced (debited) because:
○ Would obscure importance of sales returns and allowances as a percentage of
sales
○ Could distort comparisons
→ khi nhận return thì record vào “sale return allowances”
Sales Discounts ● Offered to customers to promote prompt payment of balance due
● Contra-revenue account (debit) to Sales Revenue
→ Làm giảm revenue của công ty
4.Apply The Steps in The Accounting Cycle to a
Merchandising Company.
● Adjusting Entries
○ Generally same as a service company
○ One additional adjustment to make records agree with actual inventory on
hand
○ Involves adjusting Inventory and Cost of Goods Sold
● Closing Entries
5.Income and Comprehensive Income Statements
● Shows several steps in determining net income
● Two steps relate to principal operating activities
● Distinguishes between operating and non-operating activities
6.Practice - PERIODIC SYSTEM
WEEK 6 - CHAPTER 6: Inventories

1.Classifying and Determining Inventory

● Classifying Inventory

● Determining Inventory Quantities

○ Physical Inventory taken for two reasons:
○ Taking a Physical Inventory

○ Determining Ownership of Goods

○ Goods in Transit

○ Goods in Transit (Hàng ký gửi)

(Phải xác định original company hay agent company - đại lý đứng ra thay mặt
công ty để bán hàng hóa và sẽ được hưởng commission)
 2.Inventory Methods and Financial Effects
● Inventory Methods

Specific chi phí thực tế của các mặt hàng đã

Identification mua và phát hành được xác định theo
ngày mua. Assume những hàng hóa
bán ra trước và những hàng hóa tồn
kho và dựa vào đó để tính COGS
→ Hiếm cty sd pp này tại tốn tgian

First-In, First- Cái nào mua trước thì sẽ bán trước -

Out (FIFO) cái nào mua sau bán sau
→ Lạm phát, và income FIFO luôn cao
hơn Ava-Cost

→ The use of FIFO would result in the

highest net income since the earlier
lower costs are matched with
revenues.

→ The use of FIFO would result in

inventories approximating current
cost in the balance sheet, since the
more recent units are assumed to be
on hand.

Last In - First → LIFO inventory costing method

Out (LIFO) would result in the lowest amount of
income tax expense

→ LIFO inventory costing method

would result in the best matching of
costs of goods sold and sales

–> inventory costing method would

result in the lowest ending inventory
 value

→ lowest gross profit

Average-Cost Tính giá trị TB trên những chi phí TB

trong 1 đơn vị sản phẩm là bao nhiêu
và dựa vào đó để tính giá trị inv

→ Ava inventory costing method would

result in the least volatile net income
from year to year

→ Cogs của FIFO luôn rẻ hơn Ava → net income của FIFO luôn cao hơn Ava
3.Effects of Inventory Errors

● Formula for cost of goods sold

● Effects of inventory errors on current year’s income statement

● Effects of ending inventory errors on balance sheet

4.Statement Presentation and Analysis
→ RETAIL INV METHOD

WEEK 7 - CHAPTER 9: Accounting for

Receivable
1.Recognition of Accounts Receivable
2.Accounts Receivable
*Bất cứ những khoản nào mình xóa rồi thì nó đã được thực hiện dự phòng trước đó
● Nếu đến ngày due date mà khoản xóa nợ > khoản dự phòng: Thực hiên dự
phòng mới
● Nếu đến ngày due date mà khoản xóa nợ < khoản dự phòng: Sd phần dư đó
cho khoản dự phòng tháng tiếp
3.Notes Receivable
 WEEK 10 - CHAPTER 10: Plant Assets, Natural
Resources and Intangible Assets

1.Plant Asset Expenditures

-Plant assets are resources that have
● physical substance (a definite size and shape)
● are used in the operations of a business
● are not intended for sale to customers
● are expected to be of use to the company for one year
→ Referred to as property, plant, and equipment; plant and equipment; and fixed assets.

-Cost of Plant Assets

Cost of Plant Assets = All expenditures necessary to acquire an asset + cost to make it
ready for use (tax…)

Land ● Dr. Land Expense : all cost incurred in making the land ready for
● Costs typically include:
○ cash purchase price
○ attorney’s fees
○ commissions for agent (cò đất)
○ taxes and other liens on land assumed by purchasers.
 → make the land fully belong to an individual

Land Improvements ● Dr. Depreciation for land improvements - not the land (miếng đất không thể thực
hiện khấu hao - chỉ có land improvement mới được)
● Cost includes all expenditures necessary to make the improvements ready for their
intended use: driveways, parking lots, fences, landscaping, and underground
sprinklers
● Limited useful lives

Buildings -Có 2 TH: do cty tự mua / do cty tự xây dựng

● Purchase cost
○ Cost of building: Purchase price, closing costs (attorney’s fees, title
insurance, etc.) and real estate broker’s commission - Remodeling and
replacing or repairing the roof, floors, electrical wiring, and plumbing

● Construction costs
○ Contract price
○ Payments for architects’ fees
○ Building permits
○ Excavation costs

Equipment ● Costs includes:

○ Cash purchase price
○ Sales taxes
○ Freight charges
○ Insurance during transit paid by purchaser
○ Assembling, installing, and testing
-Expenditures During Useful Life

-revenue expenditures (chi phí ngắn hạn): phân bổ ngay lập tức trong năm tài chính
xảy ra.
● Ordinary Repairs are expenditures to maintain the operating efficiency and
productive life of the unit (CHỈ ĐỂ DUY TRÌ HOẠT ĐỘNG - KHÔNG LÀM
TĂNG NĂNG SUẤT)
→ Debit to Maintenance and Repairs Expense

-capital expenditures (chi phí dài hạn): phân bổ trong suốt useful life (IMPROVE HOẠT
ĐỘNG - LÀM TĂNG NĂNG SUẤT)
● Additions and Improvements are costs incurred to increase the operating
efficiency, productive capacity, or useful life of a plant asset.
→ rc vào plan asset

-Depreciation (khấu hao): Process of allocating to expense the cost of a plant asset over
its useful (service) life
● Includes: improvement , building, equipment
● not included: land
● 3 factors to determine depreciation: cost + useful life + residual value (gia tri con lai)

2.Depreciation Method
1.Straight-line method: chi phí khấu hao bằng nhau trong suốt useful life
2.Units-of-activity method: chi phí khấu hao được khấu hao thông qua sản lượng sx trong
năm đó
3.Declining-balance method: khấu hao cao nhất ở những năm đầu và giảm dần ở những
năm sau
(salvage value: giá trị thu hồi = residual cost)
Book value = Cost - Accumulated depreciation
Depreciation Rate = 100% / useful life in years
straight-line rate = 1/ useful life years
declining-balance rate is double the straight-line rate.

1.STRAIGHT-LINE METHOD

—-----------------------------------------------------------------------------------------------------------------------
2.UNITS-OF-ACTIVITY METHOD
3.DECLINING-BALANCE METHOD

3.Comparison of Depreciation Methods

→ Nếu muốn thu hút nhà đầu tư thì dùng pp straight-line vì khấu hao thấp → net income
cao
→ Nếu muốn giảm thuế thì dùng pp declining bal. vì khấu hao những năm đầu cao → net
income giảm → thuế thấp

4.Revising Periodic Depreciation

● Nếu kh có thay đổi thì cứ rc bình thường
● Nếu có sự thay đổi giữa 1 trong 3 components (cost of asset / useful life / residual
value) → lập tức đánh giá lại và rc lại depreciation cost
● Cách tính lại depreciation cost
○ Những gì đã tính rồi thì kh sửa nữa, vẫn duy trì như vậy
○ Tính lại cái mới dựa vào kqua đã làm → rc lại cái mới
○ determine new depreciable cost
○ divide by remaining useful life
5.Plant Asset Disposals
-Companies dispose of plant assets in three ways
1.Retirement: Equipment is scrapped or discarded (Nếu ngày vứt tài sản đó đi mà
đã thực hiện khấu hao rồi thì hđ này kh lỗ - nếu chưa khấu hao thì lỗ)
2.Sale: Equipment is sold to another party (số tiền bán > gtri sp thì lời - số tiền bán <
gtri sp thì lỗ)
3.Exchange: Equipment is traded for new equipment (kh học)
Retirement ● Decrease (debit) Accumulated Depreciation
● Decrease (credit) asset account

Sale
 —----------------------------------------------------------------------------------------------------------------

6.Determining Natural Resources and Intangible Assets

-Natural resources consist of standing timber and underground deposits of oil, gas, and
minerals
→ Companies generally use units-of-activity method
 WEEK 11 - CHAPTER 11: Current Liabilities
and Payroll Accounting

1.Current Liabilities and Payroll Accounting

● Current Liability: A debt that a company expects to pay within one year or the
operating cycle, whichever is longer

● Current liabilities include: notes payable, accounts payable, unearned revenues,

and accrued liabilities (taxes payable, salaries and wages payable, and interest
payable.)

Notes Payable
(giấy hứa trả nợ) •Written promissory note
•Frequently issued to meet short-term financing needs
•Requires borrower to pay interest
•Issued for varying periods
Sales Taxes Payable ● KH mua thì Cty sẽ charge thuế VAT
(Thuế phải trả) ● Đến cuối năm Cty sẽ gom lại và trả cho đơn vị tax
Unearned Revenues ● Revenues received before the company delivers goods or provides services

Current Maturities of Long- ● Trong vòng 12 tháng kể từ ngày thực hiện báo cáo tài chính, có Long-Term
Term Debt Debt nào cần được thanh toán không. Nếu có thì liệt kê nó là Current
Liability chứ kh còn là Long-Term Liability nữa
 2.Reporting and Analyzing Current Liabilities

Reporting Uncertainty ● Provision - Potential liability that may become an actual liability in the
future. (dự phòng cái có khả năng xảy ra cao nhất – còn những cái kh có
khả năng xảy ra thì kh dự phòng)

● Three levels of probability:

○ Probable (khả năng xảy ra cao nhất)
○ Reasonably possible (khả năng xảy ra trung bình)
○ Remote (không có khả năng xảy ra)

● Reporting a Provision

Product Warranties ● Cấp bảo hành 100% nhưng dự phòng chỉ 5%

● Trong năm đó khi KH đem đến bảo hành thì ghi nhận chi phí sửa chữa của
kỳ đó, đến cuối năm tài chính thì trừ đi chi phí sửa chữa và cộng với dự
phòng estimated trước đó để lập dự phòng cho năm kế tiếp
 3.Analysis of Current Liabilities

4.Determining the Payroll

● Determining the payroll involves computing three amounts: (1) gross earnings, (2)
payroll deductions, and (3) net pay.

GROSS EARNINGS ● the total compensation earned by an employee. It consists of wages or

salaries, plus any bonuses and commissions
● Total wage = the hours worked * the hourly rate of pay

PAYROLL DEDUCTIONS ● Mandatory deductions are required by law and consist of FICA taxes
and income taxes

1.FICA TAX (consist of a Social Security tax and a Medicare tax) taxes are
designed to provide workers with supplemental retirement, employment
disability, and medical benefits.
● The FICA tax rate is 7.65% (6.2% Social Security tax up to $117,000
plus 1.45% Medicare tax)
 2.INCOME TAXES

NET PAY ● Net pay = gross earnings - payroll deductions

5.Recording the Payroll
WEEK 18 - CHAPTER 18: Financial Analysis:
The Big Picture
1.Basics of Financial Statement Analysis

A - Horizontal (chỉ ss trong cty)

● Horizontal analysis: also called trend analysis, is a technique for evaluating a series
of financial statement data over a period of time
● Purpose is to determine the increase or decrease.
● Commonly applied to the:
○ statement of financial position,
○ income statement, and
○ statement of retained earnings.
B - Vertical (ss được 2 cty)
● Vertical analysis: also called common-size analysis, is a technique that expresses
each financial statement item as a percent of a base amount
→ Convert hết components của income statement về % của net sales (100%)
→ Convert hết components của financial positions về % của total sales (100%)

● Vertical analysis is commonly applied to the:

○ statement of financial position and
○ income statement.
 C - Ratio
● Ratio analysis: expresses the relationship among selected items of financial
statement data.

● A single ratio by itself is not very meaningful.

● The discussion of ratios includes the following types of comparison:
○ Intracompany comparisons for two years of a company
○ Industry average comparisons trung bình các cty hoạt động
○ Intercompany comparisons so sánh với đối thủ

Liquidity Ratios ● Measure the short-term ability of the company to pay its maturing obligations and to
meet unexpected needs for cash.
● Short-term creditors: bankers and suppliers use this type
● Ratios include the current ratio, the acid-test ratio, accounts receivable turnover,
and inventory turnover.
1. CURRENT RATIO

-Current Ratio > 1: tài sản ngắn hạn của cty có thể dùng để trả nợ hết những món hàng
ngắn hạn của cty
-Current Ratio < 1: cty có vấn đề, vì tài sản ngắn hạn để trả nợ ngắn hạn không đủ mà cty
phải dùng đến tài sản dài hạn để trả cho các món nợ ngắn hạn

→ so với năm trước: giảm

→ so với TB ngành & competitors: cao hơn

2. ACID TEST RATIO

-Dùng để tính coi tài sản ngắn hạn nào có thể chuyển thành tiền mặt nhanh nhất để trả
cho khoản nợ ngắn hạn (cash, short-term investment, AR)
-Tài sản kh có khả năng chuyển đổi nhanh (prepaid expenses, inventory)
-Chỉ số càng cao càng tốt

3. ACCOUNTS RECEIVABLE TURNOVER

 -Số đầu kỳ 2020 = số cuối kỳ 2019
-Số cuối kỳ 2020 = số 2020
-Chỉ số càng cao càng tốt

-A popular variant of the accounts receivable turnover is to convert it to an average

collection period in terms of days: nếu kéo dài tgian thu nợ thì ảnh hưởng đến tài chính
của mình

4. INVENTORY TURNOVER

-Tạo nhiều vòng quay càng tốt

Profitability Ratios ● Measure the income or operating success of a company for a given period of time.
● Income affects the company’s ability to obtain debt and equity financing, their
liquidity position, and their ability to grow.
● Ratios include: the profit margin, asset turnover, return on assets, return on
ordinary shareholders’ equity, earnings per share, price-earnings ratio, and payout
ratio.

1. PROFIT MARGIN
-Profit margin is a measure of the percentage of each dollar of sales that results in net
income.
-Chỉ số càng cao càng tốt

2. ASSET TURNOVER

-Asset turnover: measures how efficiently a company uses its assets to generate sales.
-Chỉ số càng cao càng tốt

3.RETURN ON ASSETS

-Return on assets: Bao nhiêu net income đc tạo ra từ 1 đồng đầu tư vào asset
-Chỉ số càng cao càng tốt
4. RETURN ON COMMON STOCKHOLDERS’ EQUITY

● With common stocks (chỉ quan tâm đến cổ phiếu phổ thông)

-This ratio shows how many dollars of net income the company earned for each dollar
invested by the owners

● With preferred stocks

5. EARNINGS PER SHARE (EPS)

-Earnings per share (EPS) is a measure of the net income earned on each share of
common stock
6. PRICE-EARNINGS RATIO (PE)
-The price-earnings (P-E) ratio: to measure the ratio of the market price of each share of
common stock to the earnings per share.
-The price-earnings (P-E) ratio reflects investors’ assessments of a company’s future
earnings
-Nếu > 1: giá thị trường lớn hơn giá trị nội tại → thì bán
-Nếu < 1: giá thị trường lớn bé giá trị nội tại → thì mua vào

7. PAYOUT RATIO
-Chia tiền cho các cổ đông dựa trên số tiền kiếm được

-Chỉ số càng cao thì số tiền chia (cổ tức) càng cao dựa trên lợi nhuận kiếm được

-Nhà đầu tư ngắn hạn chỉ quan tâm tới ratio cao: muốn thu lại tiền ngay
-Nhà đầu tư dài hạn sẽ invest vô (mặc dù chỉ số thấp) nhưng cty sẽ lấy số tiền đó để tái
 đầu tư và gia tăng tài sản của investors

Solvency Ratios ● Solvency ratios measure the ability of a company to survive over a long period of
time.
● Included:
○ Debt to Assets
○ Times Interest Earned

1. DEBT TO ASSETS RATIO

-The debt to assets ratio measures the percentage of the total assets that creditors
provide

-càng cao thì thể hiện cty sử dụng nợ tài sản để đầu tư vào hoạt động kinh doanh
-chỉ số càng cao thì càng rủi ro → nợ nhiều

1. TIMES INTEREST EARNED

-Số lợi nhuận tạo ra có thể trả bao nhiêu lần chi phí lãi

-càng cao càng tốt (vì nghĩa là cty tạo ra nhiều lợi nhuận → dư khả năng để trả lãi)
2.Sustainable income
● Sustainable income is the most likely level of income to be obtained by a company in
the future. It differs from actual net income by the amount of unusual revenues,
expenses, gains, and losses included in the current year’s income.

● Information on unusual items such as gains or losses on discontinued items and

components of other comprehensive income are disclosed.

● These unusual items are reported net of income taxes.

A - Discontinued Operation
● Disposal of a significant component of a business.
● Report the income (loss) from discontinued operations in two parts:
○ income (loss) from operations (net of tax) and
○ gain (loss) on disposal (net of tax).
● Discontinued Operations are reported after “Income from continuing operations.”

B - Discontinued Operation