159 Finance dissertation on financial statement analysis of Vietnamese steel firms Hoa Phat group, Nam Kim, Hoa Sen group and Pomina steel,Master''''s Thesis

Dissertation submitted in partial fulfillment of the UWE SSrfty Bristol England Requirement for the MSc in Finance FINANCE DISSERTATION ON FINANCIAL STATEMENT ANALYSIS OF VIETNAMESE STEEL FIRMS: HOA PHAT GROUP, NAM KIM, HOA SEN GROUP AND POMINA STEEL DUONG NGUYET ANH ID No: 18045437 Intake Supervisor: Dr Tran Tat Thanh September 2019 Contents 1.1 1.2 1.3 1.4 1.5 2.1 2.2 2.3 2.4 2.5 2.6 3.1 3.2 3.3 4.1 4.2 4.3 4.4 4.5 4.6 Chapter Introduction Research background Research subjects Research objectives Research method Structure of research Chapter Theoretical basis of financial statement analysis Definition of financial statements of the enterprise Objectives of financial statement analysis The meaning of financial statement analysis Source of information used for financial statement analysis Methods in analyzing financial statements The analysis criteria of the financial statements of the business 2.6.1 Overall assessment of the capital mobilizationsituationof theenterprise .8 2.6.2 Overall assessment of the level of financialindependenceof enterprises 2.6.3 General assessment of solvency 2.6.4 Overall assessment of profitability 10 Chapter Financial situation of listed firms in the steel industry in Vietnam 12 Overview of formation and development of Vietnam’s steel industry 12 Business operation characteristics of listed steel enterprises 13 Overview of the financial situation of listed steel enterprises 16 3.3.1 Scale of business capital 16 3.3.2 Property structure .17 3.3.3 Solvency 17 3.3.4 Profitability ratio 20 3.3.5 Equity structure of steelenterprises 21 Chapter Financial solutions for industry businesses steel listed in Vietnam 22 Socio-economic context, prospects and orientation of the steel industry 22 Development orientation and prospect of Vietnam's steel industry .23 Solutions to capital structure to improve profitability 24 Enterprises improve the efficiency of using financial leverage 25 Enterprises improve the quality of corporate governance 28 Effective cash flow management suitable for each group of businesses .29 REFERENCES 31 Chapter Introduction 1.1 Research background In a strong integration economy, businesses need to have financial decisions that are effective and consistent with the economic context in each stage For example, businesses need to allocate capital appropriately Reasonable capital structure to support enterprises to effectively use cash flows, while ensuring the speed of capital transfer or goods circulation and improving production capacity as well as competitiveness of enterprises Especially the steel industry, this is a heavy industry and also an input for many other industries such as construction, mechanical engineering, manufacturing industry, etc In general, Vietnamese steel industry since its establishment has affirmed its great role as an extremely important industry in Vietnam It also serves as an intermediary for other industries and paves the way for other industries to develop In recent years, the steel industry in Vietnam is still on the rise and development at a relatively fast pace compared to the world and the region However, steel companies still have limitations in financial management, typically inventory management and capital structure However, the market economy must ensure competitiveness, especially when the free trade agreements signed by Vietnam begin to take effect such as FTAs with steel powers like ACFTA with China, FTA Vietnam - Asia - Europe economic union including Russia Among these FTAs, steel is still classified as sensitive and protected with a high import tax rate But as committed to the WTO, the protection period will not exceed 10 years will soon bring steel enterprises to the market transparent competition Vietnamese steel enterprises still have small scale and production technology is only at an average level compared to the world Most businesses only participate at the end of the value chain while the steel production process consists of many stages Therefore, low added value leads to low revenue and profit Moreover, the level of capital management and capital use of most enterprises is still limited, resulting in an unreasonable, unscrupulous capital structure, containing many risks and low capital efficiency Therefore, ensuring the capital mobilized capital in a timely manner to meet the investment needs of the business and developing the target financial indicators suitable to each stage is the final important financial decision It is necessary for steel enterprises in the course of business operations Between capital structure and profitability of steel enterprises always have a close relationship with each other directly affecting the goal of maximizing the value that steel enterprises are aiming at Therefore, Vietnamese steel enterprises who want to sustain and develop in the future need to build a stable production pg capacity based on modern production technology, sufficient production scale and effective cost control Therefore, the author selected the topic “Financial statement analysis of Vietnamese steel firms: Hoa Phat Group, Nam Kim, Hoa Sen Group and Pomina Steel” for this research 1.2 Research subjects Within the scope of this study, the author focuses on analyzing financial statements of steel companies having leading market shares in Vietnam: - Hoa Phat Group Joint Stock Company - Hoa Sen Group Joint Stock Company - Pomina Steel Corporation - Nam Kim Steel Joint Stock Company The analysis of the four leading steel companies in Vietnamese market shares is expected to provide a comprehensive picture of this industry in Vietnam 1.3 Research objectives The objective of the overview study is to analyze the financial situation of enterprises in the steel industry in Vietnam At the same time, it also provides a picture of an overall assessment of the steel industry 1.4 Research method The research methods used in the research work are qualitative research methods and quantitative research methods The work uses a combination of methods such as interpretation, inductive, analysis, synthesis and comparison to describe statistics on the financial situation of steel enterprises 1.5 Structure of research The research methods used in the research work are qualitative research methods and quantitative research methods The work uses a combination of methods such as interpretation, inductive, analysis, synthesis and comparison to describe statistics on the financial situation of steel enterprises pg Chapter Theoretical basis of financial statement analysis 2.1 Definition of financial statements of the enterprise Financial statements are the most important product in the accounting process, they are the most comprehensive reports on the situation of assets, equity, liabilities, financial situation, business results of the enterprise Financial statements are formed from the need to provide general and useful information about the current situation of the enterprise, which is a means to connect the business with the interested objects The system of financial statements of an enterprise provides users with information about the economic and financial situation through the assessment, analysis and prediction of the financial situation and business performance of enterprise This is also a public report and used as the main data source when analyzing the financial statements of the business Financial statements are of great significance not only for agencies, units and individuals outside the enterprise but also for the direction and administration of business activities of the enterprise It not only shows the financial position of the enterprise at the time of reporting but also shows the performance achieved by the enterprise in that situation The information in the financial statements is an important basis for analyzing and detecting potential economic possibilities On that basis, it is possible to predict the situation of production and business activities, as well as the development trend of the business That is an important basis for making decisions for the management and administration of production and business activities of business administrators or decisions of investors, creditors, and future shareholders of the business Although there are differences in the financial reporting system applicable to different types of businesses, the content and form of financial statements generally include: - The balance sheet is a financial statement that generally reflects the situation of the assets of the enterprise according to the book value of assets and the sources of asset creation at the time of making financial statements Based on the balance sheet, readers can comment, assess the overall financial situation, business capacity as well as the ability of financial autonomy, the ability to pay debts of the business - Report on business results is a general financial report, reflecting the overall situation and business results in an accounting period of an enterprise, detailed according to business activities and guest activities This report provides users with information about revenues, expenses, profits arising from normal business activities or income, expenses, profits arising from other business activities of the enterprise in a certain business period From the analysis of the figures in the business results report, it helps the managers and the users to assess the potential changes in economic resources that pg enterprises can control in future It helps the business assess its profitability, or evaluate the effectiveness of the additional resources it can use - The cash flow report provides information on financial fluctuations in enterprises, helping to analyze investment, financial and business activities of enterprises The purpose is to assess the ability to generate cash and cash equivalents in the future, as well as the use of these funds for business activities, financial investments of the business - The notes to the financial statements provide more detailed information about the business situation and financial situation of the enterprise It helps to analyze some more specific indicators, reflecting the financial situation that other financial statements cannot present Thus, the financial reporting system is "the most vivid, the most complete picture" It provides all the useful accounting information, helping to analyze the financial situation of the business At the same time, it reflects the ability to operate all sources of capital in the business process of the enterprise in the future Based on the assessment and judgment, corporate governance can base on the results of the analysis of the financial statements of the enterprise to make decisions in business management The objective is to achieve the highest results in production and business activities of the business At the same time, this is the process of checking and controlling financial activities, ensuring that all production and business activities of enterprises achieve high results, in the right direction and in accordance with the law 2.2 Objectives of financial statement analysis All economic activities of the business are in the interplay Therefore, it is only possible to analyze the financial statements of an enterprise to fully and deeply assess all economic activities in their actual state On that basis, summarize the level of accomplishment of the objectives, expressed by the system of economic and financial indicators of enterprises In business conditions under the market mechanism with the macro regulation of the state, enterprises are equal before the law in business Every business has a lot of people interested in their financial situation such as investors, lenders, suppliers, etc Each of these subjects is interested in the financial situation of the business on different angles But in general, businesses are interested in the ability to generate cash flow, profitability, solvency and maximum profit Therefore, analyzing the financial statements of an enterprise must achieve the following objectives: pg - The analysis of the financial statements must provide sufficient useful information for investors, creditors and other users so that they can make investment and credit decisions and similar decisions The information must be easily understood by those who have a relatively good level of business and economic activities who wish to research the information - Analyze financial statements to provide the most important information for business owners, investors, creditors and other users Because the cash flows of investors are related to the cash flows of the business, the analysis process must provide information to help them assess the amount, time and risk of expected net cash flows of enterprise - The analysis of the financial statements must also provide information about economic resources, equity, liabilities, results of processes, and situations that change the sources of capital and liabilities of the enterprise At the same time, it adds the obligation of enterprises to these resources and the impacts of economic operations, helping business owners accurately predict the future development process of enterprises Thereby, analyzing corporate financial statements is the process of checking and comparing data and comparing actual financial data of enterprises with the past for future direction From there, it is possible to fully assess the strengths and weaknesses in enterprise management and take authentic measures to enhance economic activities It is also an important basis for the prediction and forecast of business production development trends of enterprises 2.3 The meaning of financial statement analysis Financial activities have a direct relationship with production and business activities Therefore, all production and business activities affect the finances of the business On the contrary, good or bad financial situation has a motivating or constraining effect on the production and business process Hence, analyzing financial statements is important for the business owner and external entities related to the financial situation of the business For business executives: The financial research activities in an enterprise are called internal financial analysis, different from external financial analysis conducted by non-business analysts Therefore, with full information and understanding of the business, financial analysts in the business have many advantages to be able to best financial analysis Therefore, business managers must also pay attention to many different goals such as creating jobs for workers, improving the quality of products and services, lowering the lowest cost and protecting the environment The business can only achieve this goal when it earns profits and pg pays its debts Therefore, more than anyone else, business managers need to have enough information to implement financial balance, to assess the financial situation of the company to conduct financial balance, profitability, ability payment, repayment, financial risks of the business Besides orienting the decisions of the board of finance, investment decisions, funding, dividend income analysis For investors: Their concerns are primarily on their ability to payback, interest rates, solvency and risk That is why they need information about financial conditions, operations, business results and potentials of the business Investors are also interested in operating management activities These things create safety and efficiency for investors For lenders and suppliers for businesses: Their concern towards the ability to repay the business By analyzing the financial statements of businesses, they pay special attention to the amount of money and assets that can be converted into cash quickly, thereby comparing and knowing the instant solvency of the business For state agencies such as Tax, Finance and employees for enterprises: Through analysis of financial statements will show the financial status of the business On that basis, the exact amount of tax that the company must pay is calculated, the finance agency and the governing body will have more effective management measures Besides business owners, investors and workers, they have the same basic information needs as they are related to their rights and responsibilities, to their current and future customers From the above implications, we see that financial statement analysis is important for all administrators in a market economy that is closely related It is a useful tool used to determine economic value, evaluate strengths and financial weaknesses of enterprises On that basis, discovering objective and subjective causes helps each force administrator choose and make decisions that are appropriate to the goals they care about Therefore, analyzing financial statements is an effective tool for business executives to achieve the best results and efficiency 2.4 Source of information used for financial statement analysis Financial statements: Financial statements are the most comprehensive reports on the situation of assets, equity and liabilities as well as the financial situation, business results, cash flow situation and profitability of the period enterprise Financial statements provide economic - financial information mainly for users of accounting information in evaluating, analyzing and estimating financial situation and business performance of enterprises Financial statements are used as the main data source when analyzing corporate finance In pg the financial reporting system, the Balance Sheet and the report on business results are an essential document in the enterprise information system Other sources of information: The existence, development and the recession process of enterprises depend on many factors There are internal and external factors; subjective and objective factors It depends on the criteria for classifying the influencing factors - Internal factors: Internal factors are factors of business organization such as management level, industries, products, goods, services of business enterprises, technological processes, labour capacity - External factors: External factors are objective factors such as socio-political regimes, economic and technological growth, financial and monetary policies, tax policies, etc In addition, it is not just limited to researching financial statements, but analysts need to gather all the information related to the financial situation of the business Examples are general information about economy, currency, tax and State payables, information about the economic sector of the enterprise, legal and economic information for the enterprise However, not all the information gathered is quantified, but there are documents that cannot be expressed in specific quantities It is only expressed through a description of the economic life of the business Therefore, in order to obtain the necessary information for the financial analysis process, the analyst must collect all relevant information relevant to the operation of the business The completeness represents a measure of the amount of information Suitability reflects the quality of information 2.5 Methods in analyzing financial statements In order to conduct an analysis of the financial statements of an enterprise, analysts often combine the use of various professional and technical methods such as comparison method, exclusion method, forecasting method, Dupont method, etc Each method has different effects and is used in each different content of analysis However, the comparative method is a widely used method, popular in economic analysis in general and financial statement in particular The purpose of the comparison is to clarify the differences or unique characteristics of the study object From there, it helps the interested subjects have a basis to make a decision of choice When using the comparative method, analysts need to pay attention to the following: + Comparable conditions of criteria: Research targets to be compared must ensure consistency in economic content, consistency in calculation methods, time and units of measurement pg enterprises have not escaped from the difficult period Many businesses have to downsize their operations even on the brink of insolvency These challenges require steel enterprises to re-evaluate their business operations and financial situation in order to have appropriate restructuring solutions to help businesses overcome the crisis and operate effectively 3.3 Overview of the financial situation of listed steel enterprises According to VSA statistics, as of 2015, our country has about 400 enterprises involved in steel production and steel industry However, in addition to 103 large-scale steel enterprises of VSA, the remaining enterprises are quite small - mostly private companies, steel rolling establishments of craft villages operating in the domestic sector industrial and steel business According to the criteria of business capital scale, enterprises in the sample can be divided into three groups: group of large-scale enterprises with an average total assets of over VND 5,000 billion (accounting for 27%); group of medium-sized enterprises with total assets from 1,000-5,000 billion VND (accounting for 40%); group of small businesses with average total assets below 1,000 billion VND (accounting for 33%) 3.3.1 Scale of business capital The size of business capital is an indicator reflecting the production capacity as well as financial capacity of enterprises This is one of the important factors that have a direct impact on the financial structure and business performance of businesses The business capital size of enterprises in the research sample tends to increase with an average annual growth rate of 8% during the period from 2010 to 2015 In the period of 2010-2011, enterprises achieved The growth of total assets next year compared to the previous year was very high The growth rate of total assets tended to decrease and decreased sharply in 2015 with the growth rate of the following year compared to the previous year of 2% The statistics show that enterprises have a growth rate of total assets next year compared to the previous year of 19% in 2011 and the following years decreased to 7% in 2012 and 9% in 2013 and sharply decreased to % in 2015 With the growth of 2011 mainly due to businesses taking advantage of favorable market conditions, preferential credit policies of the government to make expansion investment Most of the businesses with strong growth in total assets are: Dana-Italy Steel Joint Stock Company with total asset growth of 102%, other companies such as Hoa Phat Group JSC, Group Joint Stock Company Tien Len Steel, Thai Nguyen Iron and Steel JSC, Bien Hoa Steel Joint Stock Company grew total assets by 20 50% In the period of 2012-2015 with the general trend of the global steel industry, Vietnam's steel industry did not stand outside the stormy and hard times Intense competition from cheap pg 16 imported goods together with oversupply is the industry's most difficult problem Steel manufacturers continue to witness a faster increase in demand and a utilization rate of less than 80% Especially, by 2013, most businesses have narrowed down or maintained their production scale in moderation but due to a number of steel plant investment projects being put into operation, the total assets in 2013 are still low increase compared to 2012 However, in 2015 Vietnam's economy has prospered, GDP growth reached the highest level in the last years While the world steel market continues to be quiet, volatile and shows no signs of recovery, Vietnam's steel market is still facing increasing competition pressure, especially when Chinese steel spills in Vietnam, sold cheaply That Vietnam steel enterprises are mainly small-scale, technological capacity, financial backward leading to limited competitiveness of products Therefore, all domestic steel enterprises have implemented solutions to save production costs, reduce costs and improve competitiveness, so the growth rate of total assets next year compared to the previous year fell sharply to % Although the average size of business capital in enterprises has increased, the sustainability is not high This is because businesses primarily exploit loans to meet growth targets, not internal capital The other reason is that during the period of strong growth of the steel industry, seizing the opportunity to earn high profits in the short term, businesses all massively invested in steel refining and rolling factories with outdated technology That unbalanced development may be the main reason making businesses face many difficulties and complicated issues when the economy falls into recession Many impatient investment projects in the past have been faced with a series of backward technology issues, poor efficiency, high financial costs, potential risks and dangers pass 3.3.2 Property structure The structure of assets reflects the level of investment in the assets of the enterprise, and shows the proportional relationship between each asset division and total assets Asset structure of the business depends mainly on the characteristics of the business line as well as the business strategy of each enterprise The investment structure of steel enterprises' assets is relatively stable and not too large The proportion of long-term assets investment in total assets tends to increase in the period from 2010-2013 from 34.3% to 54.1% of the increase in investment in long-term assets, most of which is the property 3.3.3 Solvency Solvency indicates the ability to pay the due debts of the business The higher the solvency of an enterprise, the more likely it is that the financial capacity of the company is better and the pg 17 more it is able to access to loans, the top concern of the business is its viability A business can exist only if it meets its critical payment obligations The solvency of steel enterprises is expressed through current solvency criteria, quick solvency and instant solvency Given the current solvency ratio, which reflects the ability to convert assets into cash to cover short-term debts, this coefficient also shows the level of assurance to pay short-term debts of the enterprise The quick ratio is a stricter assessment than current solvency ratio, which indicates the ability to pay short-term debts of businesses without urgent liquidation of inventory Particularly, the ratio of instant solvency is a particularly useful factor to assess the solvency of an enterprise in a period when the economy faces many difficulties when inventories cannot be consumed and many accounts are required Collection has difficulty recovering Solvency of listed steel enterprises is relatively stable With the average instant solvency of the listed steel enterprises in the sample, it is greater than 1, proving that the enterprises have used the capital in accordance with the principle of financial balance, there is a relative stability in the business activities of the business The quick solvency and instant solvency of businesses are very low due to the fact that the steel industry has a high proportion of inventory and receivable debt on total current assets The proportion of inventories and accounts receivable on average short-term total assets of enterprises in the research sample was approximately 80% in the period of 2010-2015 and the increasing trend was the main reason for the coefficient of quick solvency and instant solvency tend to decrease In the period 2010-2011, net sales increased rapidly due to the following reasons: thanks to the economic recovery and the government's stimulus measures in 2009, the value of construction industry output increased followed by an increase in consumption of steel and other steel products; the steel industry was very successful when the export reached a record level with 1.3 million tons of steel of all kinds, earning about US $ 1.3 billion, up 162.92% in volume and 174.18% in value; The total steel capacity increased due to a number of new projects being put into operation In the period of 2011-2012, net revenue decreased due to the Government's use of monetary tightening policy to curb inflation, cut public investment as real estate, the main source of consumption of steel industry fell into sedation Leading to a sharp decrease in steel consumption, making steel inventories at the highest level as of 2012 to be more than 800,000 thousand tons; Too much investment in construction projects of steel-making enterprises makes supply exceed demand; exchange rate changes In 2013, net sales of steel industry showed signs of slight increase despite difficulties, but in 2014 and 2015, the growth rate of net sales increased strongly due to the impact of steel prices gender and steel prices have pg 18 decreased, so steel prices in the industry decreased, steel enterprises increased discounts to agents contributing to stimulate steel consumption; The State has issued many policies such as ATIGA special preferential tax rates, tightened steel imports from China, reviewed antidumping taxes on stainless steels originating from China, Indonesia, Malaysia and Taiwan; increase public investment in infrastructure; Loan interest is under control Revenue increased rapidly but profit growth rate was very low and the difference between revenue and profit indicators showed that steel enterprises have tried to sell products but production costs It is still very large, affecting the profitability of businesses Big costs come from causes such as: - The production cost of steel enterprises is very large, but mainly the cost of raw materials and electricity due to the fact that enterprises use old technology and low labor productivity - Domestic enterprises often focus on steel rolling, so they must use imported billet and scrap steel from abroad But the high prices of raw materials and frequent fluctuations make businesses costly and inactive in production - Steel enterprises mainly use loans for production and business activities, so the profit is affected by interest When interest rates are low, businesses are quite active and when interest rates are high, profits are reduced - In addition, it is impossible not to mention the level of weak cost management, poor competitiveness, and not being proactive in output In the period of 2010-2013, profits dropped sharply due to difficulties in the steel industry Some companies have big losses such as: 2014-2015 period due to the government's many supportive policies, improved macroeconomic situation Hoa Phat Group Joint Stock Company (in 2012 accounted for 68.92%, in 2013 accounted for 99.36%, in 2014 accounted for 77.39%, in 2015 accounted for 79.92%), Hoa Sen Group Joint Stock Company (in 2012 accounted for 33.05%, in 2013 accounting for 15.66%, in 2014 accounted for 17.08%, in 2015 accounted for 15.57%) accounted for a large proportion even in the period of 2012-2013 small businesses suffered continuous losses, these companies still gained large profits Because these companies have strong financial resources, their competitiveness is high As for small companies, there are many financial difficulties, poor competitiveness, and great pressure to compete with domestic and foreign enterprises Typically, Tang Len Steel Group Joint Stock Company lost 154370 million dong in 2015; Vietnam Italy Steel Joint Stock Company in 2012 lost VND 24197 million, in 2013 lost VND 26458 million, in 2015 lost VND 45108 million, pg 19 3.3.4 Profitability ratio We see that the profitability of steel enterprises tends to decrease sharply in the research period Through the chart data above, the indicators ROS, ROA, BEP, ROE decreased sharply in the period of 2010-2013: only ROE decreased from 18.68% to -0.94%, ROA decreased from 7.39% to 0.13%, ROS decreased from 5.25% to 0.71%, BEP decreased from 1.05% to 3.15% In which, ROE decreased the fastest, while BEP index decreased the slowest Starting to increase again in the period of 2013 - 2015: ROE increased from -0.94% to 8.41%, ROA increased from 0.13 to 3.76%, ROS increased from 0.71% to 1.68%, BEP increased from 3.15% to 7.64% In which, ROE increased the fastest, ROS increased the slowest Thus, it can be seen that the performance of steel enterprises is unstable, highly dependent on external factors, unable to take initiative in output markets, outdated production technology, and poor management This makes it difficult for businesses to finance themselves Besides, low and declining profitability makes it difficult for businesses to access loans, making businesses more and more difficult Debt structure by time of debt usage The steel industry is a heavy industry, so the capital demand is high, but due to the limited financial potential, the use of debt to finance capital is essential and popular for businesses industry in the steel industry Such liabilities may be due to bank loans, commercial credit debts, or corporate debt instruments issued on domestic and foreign financial markets In the period 2010-2015, the size of liabilities tended to increase and is shown by the general data The above table shows that from the period 2010-2014, the scale of liabilities of enterprises in the sample increased rapidly from VND 1,750 billion to VND 2,900 billion, corresponding to an increase of 65.7% and year to year 2015 and showing signs of mitigation In terms of liabilities structure, it is possible to recognize that the ratio of short-term debt to total average debt of regular businesses is high, respectively from 75% to 80% in the period of 2010-2015, and at the same time The ratio of long-term debt maintained at 20-25% Regarding the fluctuation trend, although the proportion of short-term debt tended to decrease leading to long-term debt, the scale of long-term capital was too small, so the level of solvency and debt repayment pressure in short term is still high for businesses The ratio of short-term debt to total debt of listed steel enterprises in the sample shows that 60% of enterprises have a high proportion of short-term debt at over 90% 20% of enterprises have short-term debt ratio of 80-90% The remaining 20% of enterprises have short-term debt ratio below 80% Large enterprises such as Hoa Phat, Hoa Sen, Pomina maintain this ratio in the range of 80-85% of pg 20 total debt, but this proportion is still quite high Small businesses like Thu Duc Steel JSC and Bien Hoa JSC also have short-term debt to total debt ratio of 100% in some years The use of long-term debt to finance high-level projects and assets provides financial security for businesses, especially large-scale enterprises, to invest in fixed assets At a high level In contrast, the use of short-term debt to a large extent reflects the unstable financial potential, there is no strategy in the financing policy to attract stable capital sources for the purpose of sustainable growth On the other hand, it also increases risks for businesses, especially those using short-term debt to invest in forming long-term assets, violating the principle of financial balance, leading to the risk of insolvency math In addition, businesses may be exposed to disadvantages due to fluctuations in loan interest rates and inflation, causing the increase in capital use costs, which directly affects the efficiency of production and business activities 3.3.5 Equity structure of steel enterprises According to statistics, only 4/15 enterprises have large equity size (over 1,000 billion VND); Most enterprises have the equity size from VND 100 billion to VND 1,000 billion (accounting for about 66.7%); the rest are enterprises whose equity is less than VND 100 billion In addition, the size of equity is quite similar to the business size of the business Specifically, businesses with large-scale business capital often have higher equity size, typically the four leading businesses in the steel industry are Hoa Phat Group JSC, Pomina Steel JSC, Hoa Sen Group JSC and Thai Nguyen Iron and Steel Joint Stock Company pg 21 Chapter Financial solutions for industry businesses steel listed in Vietnam 4.1 Socio-economic context, prospects and orientation of the steel industry The world economy is showing signs of recovery in 2015 and 2016, but the world economic prospect still has many potential risks and is difficult to predict The US economy is showing signs of recovery with a number of positive signs such as employment, growth exceeding the 2% threshold but not sustainable India's economy has grown well, but is gradually entering the path of China's "factory" China's economy is slowing down its growth rate, Europe is in debt crisis Persistent worries are associated with slower growth in China According to the UN experts, although the US economic outlook is better, there is a good chance that the appreciation of the US dollar will cause losses to exporters in 2016 and the price of Chinese oil will reduce global investment in the field energy In 2016, emerging economies will have a slight improvement, may grow 3.5% and the situation will tend to get better, reaching an average growth of 4% in the period 2016 - 2020, before turning down to 3.6% in the period 2021 - 2025 Most recently, on 23/12/2016, the Organization for Economic Co-operation and Development (OECD) announced lowering its growth forecast World GDP in 2016 from the previous forecast of 3.6% to 3.3% and excluding some areas that may fall into deflation The industrial sector will be negatively affected by the strong dollar, trade will probably be greatly damaged by US goods becoming expensive on the world market Six years after the US economy began to recover, the first signs of a slowdown appeared, such as declining industrial production or profits businesses fall Besides, other global issues have also caused many negative impacts on the world economic situation It is climate change, conflicts broke out, increasing the defense costs of many countries The world's population aging problem is complicated in developed countries and the trend of uncontrolled population growth of many developing countries The problem of natural resources is exhausting The domestic economic context with the gross domestic product (GDP) in 2016 is estimated to increase by 6.21% compared to 2015 This year's growth rate, though lower than the increase of , 68% of 2015 and did not meet the 6.7% growth target set, but in the context of unfavorable world economy, falling global prices and trade, domestic difficulties due to weather, complicated marine environment, achieving such growth is a success, confirming the correctness, timeliness and effectiveness of the measures and solutions promulgated and drastically directed by the Government at all levels branches and localities jointly implement In the industry and construction sector, the industry increased by 7.06% over the previous year, of which the processing and manufacturing pg 22 ... and effective cost control Therefore, the author selected the topic ? ?Financial statement analysis of Vietnamese steel firms: Hoa Phat Group, Nam Kim, Hoa Sen Group and Pomina Steel? ?? for this research.. .Dissertation submitted in partial fulfillment of the UWE SSrfty Bristol England Requirement for the MSc in Finance FINANCE DISSERTATION ON FINANCIAL STATEMENT ANALYSIS OF VIETNAMESE STEEL FIRMS: ... basis of financial statement analysis Definition of financial statements of the enterprise Objectives of financial statement analysis The meaning of financial statement