The primary purpose of the discussion in the following study deals with a vivid financial analysis to evaluate the financial position of the month of May for the chosen organization of LAM MINH TUAN LE 18574658. It has been identified that the entity have had several transaction in the month which have been recorded in the books of journal for the purpose of preparation of financial statements that includes the balance sheet and the income statement. Further, it has been observed that the LAM MINH TUAN LE 18574658 has been involved in operations such as sale and buy of the various stocks (Grant 2016). In order to analyze the financial performance for the month of May the income statement and the balance sheet has been prepared in the company. In addition to there is preparation of the trial balance which have been represented in the below table in the appendix.
The transaction record during the year are made by passing the journal entries for the month of May accompanying by ledger entries where the journal balances are transferred in order to find out the arithmetical accuracy and the credit and debit side balance(Barr 2018).
The next step after the ledger account comes the trial balance where all the balances of ledger are transferred to identify the errors in the process of bookkeeping that consists of errors of mission and commission (Bardach and Patashnik 2015). It can be identified while the preparation of the trial balance that sales in the credit column is shown as $9829. There are also the items such the direct expenses that consists of the motor vehicle expenses that amounts to $ 531and the cost of goods sold that amounts to $ 5,932.In the trial balance there is also the amount of owner capital equity amount to $ 200000 which makes the total amount trial balance to $566660 in both debit side and credit side. The match in both the sides represents that the bookkeeping process was accurate (Lau 2016).
In the preparation of the financial statement, the statement profit and loss or the income statement represents the amount of profit in the month of May that has been generated by the company from the business operation (Tjia 2018). The statement of profit and loss shows the profitability of the business from the sale of the products that they manufacture. The company of LAM MINH TUAN LE 18574658’s primary source of income is the the revenue that is earned from sale in the month of May in the present case. Another major source of income or the secondary income as identified are interest of the investment. For the month of May the total amount of sale is $ 9829 and the amount of interest $706.
The below pie chart represents the number of expenses incurred for the month of May in the year in terms of $ and percentage.
Figure 1: (Pie Chart Showing Expenses of the Company for the Month of May)
Source: (Created by Author)
The chart above shows the businesses operating expenses that took place in the month of May. As per the report it can be seen that the major part of the operating expenses amounts to $ 4545. The rest is the rent amount that a fixed expenses of the organization that incurs irrespective of the production of the business on a regular basis. There has been an amount of $ 2042 which is another major expenses that is the interest amount of the loan. In the balance sheet it can be seen that the amount of interest which is due to the loan amount by the business (Ibn-Homaid and Tijani 2015). There are also items like the motor vehicle expenses amounting to$ 531 and the depreciation with an amount of $ 306 found in the profit and loss statement. A loss of $ 2,822 has also been pointed out due to increased interest amount in the financial statements of LAM MINH TUAN LE 18574658. The increase in the operating expenses may be the probable reason for the downfall.
The company’s balance sheet that represents the financial position of the business for the month of May consists of the various recorded assets and the liabilities recorded for the month of May (Visser and Tolhurst 2017). In the following graph below represents a description of all the current assets of the company for the month of May:
Figure 2: (Chart Showing Current Assets of the Company for the Month of May)
Source: (Created by Author)
The chart as shown above consists of the vivid description of the company’s items of current asset as shown in the balance sheet that comprises of office supplies, prepaid rent, prepaid advertisement, inventories, and interest (Edwards 2014). The total of the amounts current assets of the company in the month of May amounts to $22727.27 that consists of the prepaid rent and advertisement for business for the month of May. Additionally, the balance sheet also has the amount of inventory amounted to $12468.10 as shown in the chart, which is the closing stock for the month of May of the company. There is also the fixed assets that consists of the motor vehicles and office furniture making the total asset side amounting to $ 546,344.85 along with the amount of $200000 that represents the company’s equity.
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