The urgency of the topic
Today, our country is in an open and competitive economy, which is also a good opportunity for Vietnamese enterprises to develop internationally, in order to survive and develop in an open environment Fierce competition requires businesses to find a foothold in the trade One of the factors to determine that position is the business performance of the business
Analyzing business performance is very important and necessary for every business Through the analysis of business performance, it will help businesses assess their business situation, identify the causes and sources of problems arising, detect and exploit problems potential resources of the enterprise, at the same time take measures to overcome difficulties encountered by the enterprise From there, it is possible to propose appropriate business strategies for the next period to help businesses improve business performance
Based on the actual situation of the enterprise, Hoang Long Mechanics Technology Joint Stock Company, the total revenue of the Company increased by more than 10%, it was not as planned but the cost of goods sold also increased with the same number Therefore, I desire to learn more about business performance and find the right direction for the Company, I chose the topic "Solutions to improve business performance at Hoang Long Mechanics Technology Joint Stock Company” for my graduation thesis.
Overview
Solutions to improve business performance are very important and there have been many studies in this field such as: Analysis of business performance of Vietnam Airlines Petroleum Company, Topical analyze business performance of trading and service companies, Solutions to improve business performance according to the accounting value of small and medium-sized enterprises in Thai Binh province, and many research works other However, small and medium-sized enterprises in Hanoi are still limited in research projects and in particular, there is no specific research project on production and business performance of Hoang Long Mechanics Technology Joint Stock Company Therefore, I chose the topic
"Solutions to improve business performance at Hoang Long Mechanics Technology Joint Stock Company”
The thesis is based on the combined knowledge from subjects such as:
Business development management, Financial and accounting management, Management economics, Human resource management and talent to complete the thesis The topic also focuses on analyzing business performance of Hoang Long Mechanics Technology Joint Stock Company through 03 years from 2016 to 2018 based on financial statements, internal reports of enterprises and observing operational situation Actual production activities of the author Through the analysis of business performance, it will help businesses check and evaluate business results, detect potential capabilities as well as recognize the strengths and limitations of the joint-stock mechanical engineering company Hoang Long Mechanics Technology Joint Stock Company That is an important basis for the Company to make business decisions, prevent risks and improve business performance.
Research objectives
After the research, the author will achieve:
- The author have a system of theoretical, updated knowledge, and research methods for management
- Assess the status of Hoang Long Jsc Company On the basis of analyzing and evaluating the business results that Hoang Long Mechanical Engineering Joint Stock Company has achieved through the years 2016-2018, the author accurately investigates the business performance and the situation of the company capital using, asset using situation, solvency of the company, find out the limitations that exist in the company
- Proposing solutions and business orientation for the next period, helping to improve the remaining limitations and promoting the company's potentials, contributing to improving business performance.
Research subjects
The object of the study is the performance of production and business activities of Hoang Long Mechanics Technology Joint Stock Companyany, specifically as follows:
- Business results through revenue, cost and profit targets
- Capital use performance and profitability of capital
- Overview of financial situation through financial coefficie
Scopes of research
- Space: financial statements of Hoang Long Mechanics Technology Joint Stock Company
- Address: No 56, lane 177 Dinh Cong, Hoang Mai, Hanoi
Research method
Methods of collecting secondary documents for the period 2016-2018 include:
- Information on industries from prestigious State newspapers is a useful source, manualy summarizing business results and reports of enterprises
- Textbooks on specific topics with clear guidance on existing secondary data sources in the economic field
- Tertiary documents such as index tables and catalogs can also assist in identifying secondary data It is possible to access and search the complete catalogs of this data on the Internet Indexes and catalogs that have recently appeared online have direct links to downloadable data files, usually in tabular form
- Discussions, studies, erudite experts, librarians and instructors who are knowledgeable about the topic
Methods of primary data collection
The observation method is a method of controlling the recording of human events or behaviors.This method is often used in combination with other methods to cross-check data accuracy Data collection In general, primary and secondary data collection methods are common methods, which are used a lot in scientific research
Stemming from the content, object and task of analytical enterprises, moderate economic analysis uses the research methods of other science subjects such as statistics, accounting, finance, economic management, each method has advantages and disadvantages and specific conditions of application, being professional and technical, depending on the type of business and the nature of the enterprise economic phenomena, economic results, specific objects, sources of data, data and for the purpose of analysis to select appropriate methods [3]
Comparison is a commonly used method for assessing results, identifying locations and trends of fluctuations of analytical criteria To apply the method of comparison, it is necessary to ensure the conditions of comparison of the criteria:
+ Agree on the content, method of determination, time and unit of comparison criteria
+ Depending on the purpose of analysis to determine the comparative origin
Comparative origin can choose time base (planning period, previous period, same period of previous year) or spatial origin (compared with the whole, compared to other units with similar conditions, compared to the innermost parts) overall the period chosen as the comparison base is called the base period, and the period chosen for analysis is the analysis period The values of the norms calculated in each corresponding period are the values of the base period and the analysis period
In addition, in the analysis of economic activity, it is often necessary to compare sales with costs to determine business results or compare specific criteria with general indicators to determine its proportion in general criteria
Diagrams and graphs used in the analysis to reflect the fluctuations of economic indicators in different time periods or functionally interdependent relationships among Economic indicators When analyzing the situation or export performance, we must make a table to write the data into the selected column lines, actually we are applying the diagram form method, but this method It cannot be used alone; it is also combined with other methods such as comparison method, numerical difference method, density and rate This is also a commonly used method similar to the comparative method
In the system of economic - financial indicators of enterprises, there are many indicators related to each other by balanced relations Balance relationships in enterprises are of two types: general and specific The overall balance is a balanced relationship of general economic indicators
The index method is applied to calculate and analyze the fluctuations and the interrelated effects of economic indicators with one or more other factors
Indicator indicators are determined by the comparative relation of an economic indicator at different times, usually comparing the reporting period and the base period.
Contents of the thesis
Beside the list of references, the attached annexes, the structure of the thesis consists of 3 chapters:
- Chapter 1: Theoretical and overview of the business performance of the
- Chapter 2: Situation of business performance at Hoang Long Mechanics
- Chapter 3: Solutions to improve business performance at Hoang Long Mechanics Technology Joint Stock Company.
THEORETICAL AND OVERVIEW OF THE BUSINESS
Definition and importance of business performance analysis
In the market economy, the issue that businesses are most concerned about is production performance Effective production and business can businesses survive and grow Under the ultimate goal, business performance is synonymous with profits, it is the difference between the results obtained and the costs spent to achieve that result High or low business performance depends on the level of organization of production and management of each enterprise From the different points of view, we can give the following general concept:
Business performance is an economic category concept that reflects the focus of economic development in depth, reflecting the level of human resource exploitation and costs in the production process to achieve the goal business set out It is an increasingly important measure of economic growth and a basic basis for assessing the implementation of economic goals of the enterprise in each period
Classifying business performance by different criteria has practical effects in management It is the basis for determining business performance indicators and levels, and at the same time proposing measures to improve the business performance of the enterprise
Business performance and socio-economic performance
This classification is based on the profits that business activities bring to the company such as profits, performance of using capital, assets for the company
Besides, the company also relies on the performance that the company brings to the society and economy such as promoting economic development, creating jobs for workers Particular business performance is the business performance gained from the business activities of each enterprise The common manifestation of particular business performance is the profit that each business achieves The socio-economic performance contributes through the results of serving production, life, economic restructuring, promoting production development and improving people's lives
There is a causal relationship and interaction between individual business performance and socio-economic performance National economic performance can only be achieved on the basis of effective operation of enterprises However, there may be businesses that do not guarantee performance (suffer losses) but the economy still gains performance However, the loss of a certain business is only acceptable at certain times due to objective reasons Enterprises must pay attention to socio-economic performance because it is the premise and conditions for effective business enterprises However, in order to achieve that, the State needs to have a policy to ensure a harmonious combination of the interests of society with the interests of businesses and individual workers This classification helps businesses assess their performance as well as help the authorities can support businesses to operate more effectively
Performance of part cost and total cost
The operation of any business is also associated with its environment and market Any business must rely on the market to solve key issues: what to do, how to do business, for whom and for what cost? Each supplier conducts his or her own business activities in specific conditions of resources, technical equipment, organization and labor management, business management They bring to the market their products and services at a specific cost and every business wants to consume their goods and services at the highest price However, when they sell their goods and services on the market, they can only sell at a market price, if their products are exactly the same in terms of quality
1.1.3 The require to improve business performance
Our economy is open for integration, thus creating opportunities and challenges for Vietnamese businesses To survive and develop, businesses must know how to take advantage of opportunities, overcome difficulties and challenges, gradually determine their position on trade And it is important for every business to constantly improve business performance for the following reasons:
Improving business performance is the way to ensure the survival and development of businesses as well as the whole society An enterprise wants to survive and grow, it must operate effectively but its business performance reflects the level of using resources (human resources, material resources, capital) to achieve the defined goals of the enterprise The ultimate goal of most businesses is profit When the business is profitable, the business can guarantee the re-investment process to expand production and also ensure the existence and development of the business Every business is a cell of society, so when the business grows, it also contributes to the development of society Therefore, improving business performance is the basis to ensure the existence and development of businesses as well as the whole society [1]
Improve business performance to create competitive advantage and expand market In a market economy, businesses must compete to survive and grow, which requires each business to give themselves an advantage to compete That advantage can be product quality, price, structure or product design For example, businesses can improve production technology, raise the level of using machinery and equipment to create products of high quality and reasonable prices to attract customers Since then, businesses can be proactive in competition and create favorable conditions for market expansion, contributing to improving business performance [2]
Improve business performance to ensure life for employees in the enterprise
For each employee, wages are a key part of their livelihood Therefore, striving to increase the income of employees in the business is always an important goal of every business Because businesses can use wages as a tool to improve business performance The higher and more stable income together with bonuses will create trust and enthusiasm for the whole enterprise, and the application of measures to handle labor violations by deducting Salary will contribute to improving the sense of responsibility for everyone.
Criterias to evaluation Business performance
Financial coefficients are considered to be the most typical signs of the financial situation of an enterprise in a given period Each different business at a different time will use different financial coefficients to clearly and concretely describe the financial situation of the enterprise Therefore, the analysis of financial coefficients is an important content in the process of corporate financial analysis
- Current solvency coefficient (current solvency ratio)
Short-term assets Short-term debt
This coefficient reflects the ability to convert assets into money to cover short-term debts Therefore, this ratio also shows the level of guarantee to pay short-term debts of the business
Normally, when this coefficient is low (less than 1), it shows that the ability of enterprises to pay short-term debts is weak and also a warning sign of potential financial difficulties that enterprises may encounter in debt payment This high coefficient indicates that the enterprise has a high ability to be ready to pay its due debts However, this ratio is not as high as possible, because this will reflect a large amount of current working assets and the fact that these assets are inactive, unprofitable and prove their effective use of assets business is not high
However, this factor is large or small, depending on the characteristics of the business For example, for commercial enterprises, mobile assets often account for a large proportion of total assets, so this coefficient is relatively high Therefore, when assessing the ability to pay short-term debts, it is necessary to base on the typical coefficients of the same enterprises
Quick solvency ratio is an indicator to evaluate stricter than solvency of the enterprise Here, inventories are excluded, because in current assets, inventories are considered to be of low liquidity
This coefficient is considered as a measure reflecting the solvency of the enterprise's short-term debts This is a target that is very interested by short-term creditors because through this criterion, creditors can assess at the time of analysis, whether or not the enterprise is able to immediately pay short-term debts However, in some cases, this indicator does not accurately reflect the solvency of the enterprise, especially businesses with receivables accounting for a large proportion of total working assets
Therefore, to better assess the solvency of the enterprise, it is also possible to use the instant solvency coefficient of the enterprise
- Coefficient of instant solvency Formula:
Money + Cash equivalent Short-term debt
In particular, cash includes: cash, deposits, money in transit Cash equivalents are short-term investments in securities, other short-term investments can easily be converted into cash within 3 months and without major risk
The ratio of instant solvency reflects the ability to pay short-term debts at any time, because in the source of debt cover the business is very flexible
- Loan interest payment ratio The interest payable is the cost of capital that the enterprise is obliged to pay on time to the creditor The source for paying interest is profit before interest and taxes The interest payment ratio reflects the relationship between profit before interest and tax and payable interest
Profit before tax and interest Loan interests payable in the period
The interest payment ratio reflects the amount of profit before interest and tax that the business can offset the amount of loan payable in the period to what extent If this coefficient is high, it shows that the business is effective, the profitability of the capital is high enough to ensure payment of loan interests on time
Performance of using common assets:
This index reflects the enterprise's ability to generate after-tax profit for business activities, determined by the following formula:
Profit after tax Average assets
This indicator shows how much profit after tax an enterprise invested in 1 asset The higher this indicator proves the effective use of assets of the business, contributing to improving the investment ability of the business owner
Total net sales Average assets
This indicator shows how many rounds of an asset are rotating in a business period This higher indicator proves that the assets are moving quickly, contributing to increased sales and is a condition to improve profits for businesses If this indicator is low, meaning that the assets are moving slowly, there may be inventories and unfinished products, causing business turnover to decline However, this index depends on the characteristics of business lines and specific characteristics of each enterprise
- Asset depreciation rate compared to net sales The ability of an asset to generate net turnover is a basic economic indicator for estimating investment capital when an enterprise wants an expected net turnover, which is usually determined:
Asset ratio of assets to net sales =
This indicator indicates how many VND of investment assets an enterprise will earn in a net revenue High net sales for the period
- The depreciation rate of the property compared to the after-tax profit:
Reflecting the enterprise's ability to generate after-tax profit for its business activities, it is determined:
The ratio of depreciation of assets to profit after tax =
Average assets Profit after tax
This indicator shows how much property assets a company will gain after 1 dong of profit after tax The lower this index, the higher the performance of using assets, the more attractive investment
The number of rotation of inventory =
Cost of goods sold Average inventory
Inventory at the beginning of the period + Inventory at the end of the period
The number of turnover cycles of inventory shows how many times the investment capital for inventory has been rotated in the period, the higher this indicator, showing that the inventory is moving well It is a factor that contributes to increase sales and profits for businesses
In order to know how much capital a business wants to have a net revenue, it is necessary to base on the inventory inventory coefficient determined by the following formula:
Average inventory Total net sales
- Production capacity of fixed assets:
Production capacity of fixed assets =
This indicator shows how much revenue per 1 dong of fixed assets invested
This indicator shows the production capacity of fixed assets, the higher the target, the better the performance of fixed assets, which is a factor contributing to improving the performance of business activities
Average value of fixed assets in the period =
Value of fixed assets at the beginning of the period + Value of fixed assets at the end of the period
- Loss rate of fixed assets:
Loss ratio of fixed assets =
Average value of fixed assets
Factors affecting business performance
Normally, when mentioning factors affecting the business operations of an enterprise, it is classified factors affecting subjective and objective factors More specifically, subjective factors are those within the enterprise itself, and the enterprise can control or adjust it In contrast, objective factors are factors that cannot be regulated and controlled by the enterprise
Objective factors include political, legal, cultural, social, technological, technical, economic, natural conditions, infrastructure and economic relations factors, these are the factors Factors that businesses can not control and have a common impact on all businesses in the market The study of these factors is not aimed at controlling the enterprise's business, but it creates the best adaptability to the movement trend of the business
Factors in the political and legal environment have a strong impact on the formation and exploitation of business opportunities and the fulfillment of business objectives Political stability is an important premise for business activities, political changes can affect one group of enterprises in a beneficial way or inhibit the development of another enterprise The complete legal system and the rigor in law enforcement will create a healthy competitive environment for businesses, avoiding fraud, smuggling and mistakes in business In addition, the political and legal stability of a country allows businesses to predict the level of risk, the business environment and the impact of politics and law on businesses how Therefore, researching political and legal factors is an indispensable requirement when businesses enter the market
Economic factors can create favorable conditions for penetrating and expanding markets and industries, but limiting the development of other industries
Economic factors affecting purchasing power, changes in consumer demand or development trends of industries include: o Foreign trade activities: the open and close trend of the economy influences business development opportunities, competitive conditions, and the ability to use national advantages in technology and capital o Inflation and its ability to control inflation: affect income, accumulation, consumption, stimulate or restrict investment o Changes in economic structure: affecting the position, role and development trend of economic sectors leads to a change in the development direction of enterprises o Economic growth rate: showing the general development trend of the economy related to the ability to expand or narrow the size of business of each enterprise
The socio-cultural factors that have a great influence on customers as well as business activities of enterprises, are the factors that form the psychology and tastes of consumers This factor allows businesses to understand at different levels of the target audience so that they can choose the appropriate business methods
Technological factors affect technology innovation requirements in equipment capable of producing products of different quality, labor productivity and competitiveness, selection and technology provision
Factors of natural conditions such as climate and weather affect the production and business cycle in the region, or affect the goods storage and preservation activities For technical infrastructure, the conditions for production and business on the one hand create a basis for favorable business when exploiting the existing infrastructure of the economy, on the other hand, it can also cause limiting the ability to invest and develop special businesses with commercial enterprises in the process of transportation, storage and distribution
Customers who have the needs and solvency of goods and services that businesses do business Customers are an important factor determining the success or failure of businesses in the market economy Customers have very diverse and different needs depending on each age, gender, income level, and habits Each customer group has a unique feature that reflects their shopping process Therefore businesses must have policies to meet the needs of each customer group accordingly
Competitors include manufacturers, businesses that sell the same products of the business or trade interchangeable products Competitors have a great influence on businesses and businesses that are able to compete to be able to survive otherwise will be pushed out of the market Competition helps businesses to improve their operations to better serve customers, improve their dynamism, but they are always in a state of being pushed back
They are domestic and foreign production and business enterprises that supply goods to businesses and suppliers, which affect the business activities of enterprises not small, which is reflected in the performance of supply contracts and reliability, quality of goods, price, time, location as required
Factors of the potential of the business include: financial strength, human potential, intangible assets, management and management level, technological equipment, infrastructure, and soundness of business goals and control over the course of their goals
Expressed on the total capital (including equity, mobilized capital) mad businesses can mobilize into business, the ability to effectively manage the capital in business Financial strength is reflected in the ability to pay short-term, long-term debt, profitability ratios of businesses
Demonstrated in knowledge and experience capable of meeting high requirements of the business, successfully completing the assigned tasks, the staff of loyal businesses always focus on highly specialized businesses , good workers have the ability to unite and actively take advantage of and exploit business opportunities
As the factors that create the power of businesses in the market, the intangible potential manifests itself in the ability to influence the choice, acceptance and decision making of customers In the trade relationship, the intangible potential factor has created favorable conditions for the purchase, creating sources as well as competitiveness to attract customers and expand business markets The intangible potential of an enterprise can be its reputation in the market, its reputation, or its ability to communicate and reputation in social relationships
- Geographical location, facilities of the enterprise:
Allows businesses to attract the attention of customers, convenient for providing purchasing or performing reserve activities The enterprise's material and technical facilities represent the fixed assets that it mobilizes into its business, including factory offices, specialized equipment That shows the strength of the business, business scale as well as advantages in business.
SITUATION OF BUSINESS PERFORMANCE AT HOANG
Overview of Hoang Long Mechanics Technology Joint Stock Company
2.1.1 History of establishment and development of Hoang Long Mechanics Technology Joint Stock Company Joint Stock Company
Hoang Long Mechanics Technology Joint Stock Company was established in 1998, with the main business of manufacturing high-tech steel structures to serve key national key construction and industry industries such as: yard aircraft, refineries, bridges and roads, electricity - telecommunications, industrial parks, supermarkets, high-rise towers with steel structures, from simple to complex; with standard and non-standard product lines, super weight weight In addition, to meet the diverse needs of the market, the company also launched products manufactured steel rebar, rolled steel, drawn, cut, to meet all requirements of customers Products of Hoang Long Mechanics Technology Joint Stock Company have been making a mark on the domestic market
The company has implemented works and projects such as:
- Supplying high-tech steel structure products for factories
- Supplying high-tech steel structure products to the airport
- Producing rebar products for wholesale and retail
- Consulting design of factory buildings:
The company came into operation with an initial capital of VND 5 billion and 32 employees There is a Party cell including 04 members, a grassroots trade union and a youth union The head office is located at 56/177 Dinh Cong, Hoang Mai, Hanoi, with an area of 118 m2 The facilities include 06 drawing tables, scientific and technical staff including 02 architects, 02 construction engineers, 02 economic engineers and 04 intermediate officials, the rest are technical workers and workers waiters
During the operation, the company has constantly expanded its scale and business production lines, technological innovation, in 2014 the company added additional industries such as real estate business; construction of civil, industrial, transport works, infrastructure of residential areas, commercial areas, tourist areas; consulting, bidding for designing and installing construction works As a result of the company's continuous efforts and efforts during its operation, these achievements are recognized, prestige and quality of products are constantly improved
2.1.2 Functions and duties of Hoang Long Mechanics Technology Joint Stock Company
The company operates mainly in the field of consulting and construction, with the following industries:
- Producing iron, steel and cast iron
- Producing industrial, agricultural and forestry machines
- Manufacture of machine tools and metal shaping machines
- Repair of machinery and equipment
- Installation of machinery and industrial equipment
- Construction of houses of all kinds
- Installation of the system water supply and drainage
2.1.3 Organizational structure of the company
The company's current number of employees is 55, of which 21 and bachelor degrees are 38% of the total number of employees and 34 are unskilled workers, accounting for 62%
Regarding organizational structure in the company, specifically as follows:
- Manager: The manager is also the person with the highest authority to direct and assign the duties of the heads of the departments and be responsible for all activities of his unit before the law The vice manager assists the manager in managing and operating of the company The deputy director can act on the director's behalf when there is a power of attorney
- Sales Department: in charge of marketing activities such as advertising, marketing products and goods of the company closer to customers, customer care,
Vice manager researching and planning the development strategy of the company in accordance with social development trends In addition, the sales department has an important responsibility in increasing product sales salaries, reaching out to retail customers as well as business customers
- Accounting Department: organize the accounting work of the unit in accordance with the current accounting regulations and regulations of the Ministry of Finance, monitor and record the situation of production and business activities of the unit, From there, propose to the Board of Directors the direction of overcoming difficulties and shortcomings, promoting and exploiting the potential capabilities to make the right decisions The accounting department also has the task of monitoring and reporting revenue situation - the cost to use to help maximize profits for the company
- Design Department: responsible for designing products including: designing workshops, houses or constructions for consulting; designing machines and equipment; component design and many other products
- Manufacturing department: is the production department directly managing and operating the production, operation and management of the factory's machinery and equipment, safety equipment system, fully arranged personnel force, carry out production standards.
Overview of business performance in the period of 2016-2018
2.2.1 Overview of business performance in the period 2016-2018
Over the years, the company has invested in renovating modern equipment, investing in the application of science and technology in production and business, contributing to improving the business performance of the company To better understand the business situation of the company, we observe the following table:
Revenue from goods sold and service 67.585.275.300 77.049.993.860 86.474.447.413 9.464.718.560 12,28 9.424.453.553 10,90
Revenue before corporate income tax 6.213.366.998 7.254.505.456 8.329.522.214 1.041.138.458 14,35 1.075.016.758 12,91
Revenue after corporate income tax 4.970.693.598 5.803.604.365 6.663.617.771 832.910.766 14,35 860.013.406 12,91 ( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)
Through the data table we see:
Net Revenue of goods and services increased over the years Revenue in 2017 increased compared to 2016 was 9.464.718.560 VND, equivalent to 12,28% In 2018, the revenue still maintained an increase, reaching VND 86.474.447.413, an increase of 9.424.453.553 VND, equivalent to 10,90% compared to 2017 This shows that the business performance of the company is progressing with good development Achieving such results is thanks to the constant efforts of all employees in the company, especially the wise
Revenue from goods sold and service
Revenue before corporate income tax
Revenue after corporate income tax
2016 2017 2018 leadership of the company leaders that have led the company to overcome the difficulties of the economy market economy At the same time, the company also owns a young, knowledgeable, dynamic and creative labor force
In addition, the company is always proactive in understanding, capturing and promptly responding to customer needs, constantly improving the quality and design of its products to enhance its competitive position and attract more customers
Another sign that the company's business performance is growing rapidly is the profit before tax increased over the years Profit before tax in 2017 was 7.254.505.456 VND, an increase of 1.041.138.458 thousand VND compared to 2016, corresponding to an increase of 14,35% By 2018, profit before tax increased to VND 6.663.617.771, an increase of VND 860.013.406 compared to 2017, equivalent to 12,91%
Along with the development of the company is the increase of the company's contribution to the state budget revenue, the company's corporate income tax has increased continuously over 3 years In 2017, corporate income tax was VND 1.450.901.091, an increase of 14,35% compared to 2016 Enterprise income tax in 2018 was VND 1.665.904.443, an increase of 12,91% compared to 2017
Profit after tax of the company also increased rapidly over the years In 2017, it was VND 5.803.604.365, an increase of VND 832.910.766 compared to 2016 (up 14,35%), in
2018 profit after tax increased by VND 6.663.617.771 compared to 2017 (up 12,91%)
Through the overview of the company's business performance results in 2016, 2017 and 2018, we realize that the company is constantly trying to strive in production and business, focusing strongly on the market to improve profits The manifestation of an increasingly favorable business is the rapid increase in revenue and profit of the company
However, in the process of operating the company also encountered difficulties and obstacles that slowed down the growth of the company Therefore, the company must take full advantage of and maximize its strengths, gradually overcome difficulties to improve its competitive position and business performance
Revenue is the output of the business process Look at the data table below we see that:
Table 2: Revenue over 3 years from 2016 - 2018
1.Revenue from goods sold and service includes:
Total revenue 67.585.275.300 77.049.993.860 86.474.447.413 9.464.718.560 12,28 9,422,453,554 10.90 ( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)
Total revenue in 2017 reached VND 77.049.993.860 and increased to 9.464.718.560 VND in 2017, an increase of 12,28% compared to 2016 By 2018, the total revenue continued to grow, an increase of 9.424.453.553 VND (up about 10,90%) compared to 2017 Total revenue in 2018 reached 86.474.447.413 VND
The total revenue of the company consists of 3 main parts:
Revenue of goods and services include:
Processing revenueOthers revenueRevenue from financial activities
Revenue of goods and services:
- Revenue of goods and services are the main source of revenue for the company In
2016, this revenue reached VND 66.902.999.063 and increased to VND 76.349.974.575 in
2017, an increase of 12,37% compared to 2016 If we compare 2016 with 2018, we see a significant increase Regarding revenue, the increase after 02 years is 19.130.304.535 VND, equivalent to 23,26% In the current competitive market situation, to achieve these numbers after 02 years is not a simple task It is a whole process of striving and striving for continuous efforts of all employees and company leadership If we look in more detail, we will see that the main revenue of the company is the revenue from design, construction and processing consultancy activities These are the three main sources of revenue and greatly influence the company's total revenue
- Consultancy and design revenue in 2017 reached VND 5.908.672.972, an increase of 0,24% compared to 2016 The cause of this low increase is due to the demand for real estate and consultancy design Small and medium-sized auxiliary services in recent years are showing signs of slowing down Therefore, by 2018 design consultancy revenue only inched up to VND 6.063.813.761, equivalent to an increase of only 2,56% compared to
2017 In addition, due to the construction works of the company As a part of the state budget, the amount of work to be completed is often not finalized but only partially settled according to the province's capital construction fund allocated in each year Therefore, although the volume of design consultancy work was completed in 2017 and 2018, the revenue of design consultants in 2017 and 2018 increased insignificantly Therefore, the Company needs to focus on the quality of consultancy and design activities to increase its competitiveness and attract more customers, contributing to increase future revenue and expand its operation to other provinces
Processing revenueOthers revenueRevenue from financial activities
- The company's construction revenue is growing in an upward trend In 2017, the construction revenue reached VND 67.582.523.644, an increase of VND 8.977.372.790 compared to 2016, equivalent to 13,34% The main cause of this increase is in recent years, the development of apartment complexes and complexes of auxiliary works for large and super large urban areas is on the rise, with the participation of of famous contractors such as Vingroup, Sungroup, Aeon It is these large and super large projects that bring many opportunities for small contractors and subcontractors to participate These subcontractors are not eligible to participate in the whole project due to lack of capital and labor but if given the opportunity in the small categories, they will do a great job of their own Hoang Long Mechanics Technology Joint Stock Company is one such company During 03 years of the research, Hoang Long Mechanics Joint Stock Company has participated in projects such as Noi Bai-Lao Cai Expressway stops, Hanoi - Hai Phong , residential complexes
Timecity, Vinhome Long Bien, CocoBay Da Nang With these successful projects in
2018, the total revenue from the construction of the Company reached VND 76.078.536.453, an increase compared to 2017 of VND 8.796.012.809, equivalent to 11,56
% However, this increase is not yet a reflection of the strong growth of construction revenue due to a few works are in the pre-acceptance stage before revenue recognition
- Processing is a highly profitable business but this is a revenue type with unstable nature, requiring a lot of labor, facilities and a short time to complete, so the Company has not been completed yet attaching importance to expansion and development Processing turnover is mainly in the fields of painting, plating, welding, aesthetic finishing Materials are supplied by outsourcing partners and require very strict output However, revenue from outsourcing still increased slightly over 03 years In 2017, processing revenue reached VND 3.158.777.959, an increase of 455.626.482 VND compared to 2016, equivalent to 14,42% compared to 2016 The uptrend still maintained in 2018 with processing revenue reaching 3.890.953.429 VND, an increase of 732.175.470 VND, equivalent to 18,82%
This is a profitable business, but it is not easy to finish the product on time, in quantity and quality With only about 30 employees distributed mainly for the construction field, whenever the company receives a processing contract, the company leadership must consider a lot in allocating resources for each business area The recruitment of additional manpower is also a big problem when the processing contracts are not much and the value is small, the situation of oversupply will occur when the processing orders are completed
Analysis of business performance at Hoang Long Mechanics Technology
2.3.1 Analyze the performance of using labor
The company came into operation with 32 employees There is a Party cell including 04 members, a grassroots trade union organization and a youth union scientific and technical staff including 02 architects, 02 construction engineers, 02 economic
Revenue from goods sold and service
+ 9.424.453.553 Cost of sales + 73.111.698 Financial activities + 2.186.655
Fac to rs th at incr ea se p ro fit b ef o re ta x Fact or s tha t dec rease pr ofit be for e t ax engineers and 04 intermediate officials, the rest are technical workers and service staff The company currently has 55 people, of which university and bachelor degrees are 21 people
Figure 20: Labor structure in the Company
The company owns a young, knowledgeable, dynamic and creative labor force The company is located in the city, so the labor force is unstable, the costs are high, especially the wages of workers must be high compared to other localities For each worker, wages are a key part of their livelihood Therefore, striving to increase the income of employees in the business is always an important goal of every business Because businesses can use wages as a tool to improve business performance The higher and more stable income together with bonuses will create trust and enthusiasm for the whole enterprise, and the application of measures to handle labor violations by deducting Salary will contribute to improving the sense of responsibility for everyone Since then improving labor productivity in the enterprise, contributing to improving business performance
The company's administrative expense is quite high, including expenses such as managerial expenses and technical engineers General and administration expenses in 2017 were 1.181.837.272 VND, down 392.453.468 VND, equivalent to 33,25% compared to
2016 The main reason was due to the reduction in staff salaries However, talking about this reduction is not a good factor for the Company In early 2017, the Company lost 3 very good design engineers into the hands of large enterprises such as Viettel and VCTV
Workers always want to find a reputable, stable and good working place for their employees, realize that this is a lesson in managing human resources and talents In 2018, the Company recruited a team of new engineers and added more incentives in the Company's policy, avoiding the brain drain and unable to retain talents In addition, the Company needs to have a suitable remuneration for skilled engineers, so that the employees can be assured of their work and dedication
Number of employees in the company
University degreeHigh school level
Currently, the Company is well exploiting all existing equipment, ensuring high performance, running out of capacity and increasing labor productivity along with training and retraining of professional and technical knowledge for employees The company also makes good environmental sanitation, no noise, no dust and no heat, absolutely safe for workers' lives and health Solid, spacious and safe infrastructure keep up with the development of the company and create favorable and comfortable conditions for employees to work, contributing to improving labor performance
As a consultancy unit on Engineering engineering and construction of the company, many seminars on architectural works and construction works should be organized to expand the visibility, enhance understanding, and have the opportunity to exchange and study Giving mutual assistance to employees, especially scientific and technical officials, to be able to further improve the quality of design consultancy activities combined with the reputation and reputation of the company (professional reputation, quality the number of projects implemented by the company has won the confidence of the project owners, customers) to improve the competitiveness, dominate and expand the operating market
2.3.2 Analyze the performance of account receivable management
• Effective division of receivables management
The situation of liabilities reflects the relationship of appropriation in payment, when the source of compensation for reserve assets is insufficient, the enterprise goes to appropriate capital, whereas when the source of compensation for redundant assets, the enterprise is appropriated capital If the appropriated capital is bigger than the appropriated capital, the enterprise will occupy an additional part of the capital into the production and business process In contrast, businesses will be reduced capital
For the company, liabilities mainly arise in the short term When analyzing, it is necessary to identify appropriately appropriated and appropriated amounts (those that are still in the debt payment term, and have not yet been repaid) Enterprises need to urge the recovery of appropriated debts, especially debts that have expired, and at the same time, must actively settle debts due to respect the discipline of payment
In order to clearly assess the situation of liabilities, the receivables must be compared with the payables fluctuating over the years
Table 6: Analyze of debt situation over 03 years 2016 - 2018
Total short-term receivables 15.506.657.021 24.206.899.886 20.975.314.892 8.700.242.865 35,94 -3.231.584.994 -15,41 Total short-term payables 9.709.391.994 23.793.266.060 26.159.043.043 14.083.874.066 59,19 2.365.776.983 9,04 Net revenue 67.578.786.933 77.043.364.858 86.465.631.757 9.464.577.925 12,28 9.422.266.899 10,90
The ratio of receivables to payables
( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)
Through the analysis of the debt situation, we see that the proportion of accounts receivable compared to accounts payable tends to decline quite sharply, in 2017 decreased by 56,98% compared to 2016, in 2018 decreased by 26,88% compared to 2016 2017 shows that the amount of capital the company appropriated tends to increase This ratio over 3 years is 100% higher, showing that the amount of capital the company appropriates from other units is more than the amount of capital appropriated However, based only on the figures on the balance sheet, it cannot be accurately assessed, but it must be based on the nature, duration and causes of receivables, payables as well as measures that the company has been applying to recover and pay debts to be able to assess objectively and accurately
This indicator can be understood as the speed of converting receivables into money in a fiscal year
Because in 2017, receivables increased sharply, up 35,94% compared to 2017, this is the reason why the number of receivables receivable in 2017 decreased relatively (about 36,93%) compared to The year 2016 showed that in 2017 the Company did better in collecting debts Striving to resolve the situation in 2018, the Company settled many works with state partners so by 2018, the receivable turnover increased again, reaching 4,12 rounds (up 22,79 % compared to 2017) The higher turnover cycle proves that the number of days of conversion from receivable debts to cash is gradually improving, but to avoid capital stagnation, the company needs to find ways to recover debts and protect safety for its production capital
It reflects the time of a turnover cycle, that is, how long it takes to collect receivables Due to the lower turnover of receivables in 2017 compared to 2016, the number of days of a 2017 rotation also increased, from 82.61 days in 2016 to 113,11 days in 2017, an increase of 26,97% But in 2018, a receivable turnover only took 87,33 days, down 25,52% compared to 2017, demonstrating that in 2018 the company recovered the short-term debt quite well, so the short-term receivables from VND 24.206.899.886 at the end of 2017 to VND 20.975.314.892 at the end of 2017
2.3.3 Analyze the performance of solvency
Table 7: Analyze the performance of solvency over 03 years 2016 - 2018
( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)
Because the company mainly incurs short-term debts, there are few long-term liabilities, so it only analyzes the company's current solvency Short-term solvency analysis is an examination of whether the company's current assets are able to meet short-term liabilities
This coefficient is used to measure the enterprise's ability to pay short-term debts (such as debts and payables) with its short-term assets, such as cash, receivables, and inventories warehouse) The higher this coefficient is, the greater is the solvency of the enterprise Through the table below we can see that the Company's current solvency is not going well This coefficient decreases year by year Specifically, in 2017 reached 1.39 times, down 41,06% compared to 2016, the main cause of this decline due to the Company's short-term debt is increasing rapidly in 2017 due to the shortage of production capital business Bad performance continues until 2018 when the current ratio continues to decline to 1,32 times, decreasing by 5,47% compared to 2017 If it continues to be difficult in autonomy in production and business capital Maybe in the coming time, the Company will fall into the solvency decline
The quick ratio will show the company's true solvency and be calculated on movable assets that can be quickly converted into cash to meet the payment needs needed
Over 3 years, the quick ratio did not go well, even in 2018 decreased to 0,83 times, equivalent to 32,60% reduction compared to 2017 With a quick ratio of less than 1 Company will meet difficulties when your debts are due Obviously, the Company needs to seriously restructure the debt and assets ratio to create a strong financial system, especially in the near future
2.3.4 Analyze the performance of using assets
Table 8: Profitability analysis over 03 years 2016 - 2018
Profit before coporate income tax 6.213.366.998 7.254.505.456 8.329.522.214 1.041.138.458 14,35 1.075.016.758 12,91 Profit after coporate income tax 4.970.693.598 5.803.604.365 6.663.617.771 832.910.766 14,35 860.013.406 12,91 Total revenue 67.585.275.300 77.049.993.860 86.474.447.413 9.464.718.560 12,28 9.424.453.553 10,90 Total assets 19.544.169.943 33.852.440.756 36.388.264.698 14.308.270.813 42,27 2.535.823.942 6,97
Profit before tax / revenue ratio
Profit before tax / Total assets ratio (%) 31,79 21,43 22,89 - 10,36 - 48,35 1,46 6,38
Profit after tax / equity ratio (%) 49,92 57,20 65,14 7,28 12,73 7,94 12,19
( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)
For the ratio of profit before tax to revenue
In 2016 of 100 VND revenue, there was 9,19 VND profit before tax, 2017 of 100 VND revenue was 9,42 VND profit before tax (increased by 2,36% compared to 2016), and
2018 Of the VND 100 revenue, there was VND 9,63 profit before tax, an increase of 2,25% compared to 2017
It can be said that the ratio of profit to revenue of the Company is relatively low, which poses an urgent problem in managing cost of goods sold and management of enterprises
The ratio of profit before tax to total assets
Assess the situation of business performance of Hoang Long Mechanics
Through an overview of the Company's business performance, financial indicators of business results and through the performance analysis of the Company in the 2016-2018 period, we can see the situation operations and business performance of the Company, from which draws the achievements and limitations as follows:
In the past time, despite the difficulties and challenges from the domestic market and foreign competitors, the increase in the number of companies distributing the same items or doing business with the same services, but the Company Significant results are still achieved by offering reasonable business plans For three consecutive years, the Company has always been profitable The company has built trust with customers and gradually asserted a foothold in its business field In addition, the Company has grasped the advantages to obtain the desired business performance Specifically as below:
The company has a relatively stable customer system, has a long-term cooperation, business cooperation contracts come regularly throughout the year, almost in the business period, the Company does not meet the status of workers and equipment to wait for work
The company has a reputation for product quality With a long tradition of more than 20 years of operation, winning outstanding awards for sound system and pile driving technology, Hoang Long Mechanics Technology Joint Stock Company is always the destination of customers with love demanded, very demanding about product quality
The company has a wide production and processing space including 3 production facilities with a total ground area of 2483 m2, a system of machinery and equipment including more than 130 equipment which are well-equipped compared to requirements demand of mechanical engineering industry
Regarding solvency, through the financial ratios analyzed above, we can see that the situation and solvency of the company are quite good, enough assets to ensure payment for public debts The company mainly relies on short-term debts
Improving and upgrading the highly appreciated quality management system, with Safety certificates in the third group mechanical engineering industry, sending staff for training and being granted extended mechanical and expanded construction licenses , design engineering techniques, construction engineering techniques
Meeting the Company's development requirements both in width and depth, the Board of Directors and the professional departments build and complete the hierarchical regulations and professional management vertical and management regulations and performance evaluation
The company always fulfills its budget obligations to the State Amounts payable to the State budget shall be fully and always performed on time and in accordance with regulations, annually contributing to the State budget billions of dong of import and export tax, value added tax, corporate income tax , The Company is fully capable of further development, the Company's development not only contributes to the increase of the state budget but also contributes to creating jobs for workers in Hanoi and throughout the country love across the country
In recent years, the company has gathered a large number of scientific and technical staff, invested in renovating modern equipment for production and business, is a very active enterprise in the province Application of science and technology to the field of production and business Scientific and technical staff and managerial staff are strengthened in quantity and quality The staff has accumulated a wealth of experience and capabilities in the areas of transport design consultancy, irrigation, civil, industrial, operating and bidding
With the aim to be "Enterprise for workers", the life of the Company's staff is increasingly improved, the average salary of the next year is higher than the previous year
Continue with the Company's Board of Directors to launch the campaign of raising charitable funds to the disadvantaged areas, supporting poor families, policy households inside and outside the Company
Although the use of corporate capital in recent years has achieved certain results, but the business performance is not high, showing many limitations These limitations have a negative impact on the development of the business These restrictions include:
The quality of some products is not high, the progress is slow, some projects do not ensure delivery time, do not keep up with customer requirements, contributing to the company does not comply with the contract , increases the cost of contract violations, affecting the company's profits Passive in participating in competition, seeking to expand new markets, not performing well management solutions to lower production costs, partners are still mostly traditional customers, new contracts through referrals Import and export activities still rely heavily on intermediaries causing cost losses
Cost management is ineffective although the Company has built a system of standards, norms for materials use, consumption norms for each type of materials, procedures for allocation and use but in the past The process of implementing this system has some limitations, which are not suitable with the actual situation of enterprises, leading to unsuitable norms and norms, redundancy and redundancy
The management of receivables has not been paid due attention and has not been strictly implemented, bad debts and overdue debts still arise over the years Although the Company has categorized debtors and debt groups to monitor and urge, it has not yet found an optimal plan, leading to some cases that may require an economic plan to cause loss of time , effort of money That has led to a large amount of corporate capital in receivables
SOLUTIONS TO IMPROVE THE BUSINESS
Business direction and strategy of Hoang Long Mechanics Technology Joint
The market is becoming more and more open, and the competitors are appearing more and more, along with the increasingly difficult and demanding demands of customers 2019 is considered a challenging year but also many opportunities for businesses Facing these opportunities and challenges, the company plans to build the business and production directions in 2019 as follows:
- Consulting and design revenue will strive to increase by 8% compared to
- Construction revenue is over VND 80 billion, up 53% compared to 2016, due to the revenue of the infrastructure of CocoBay Da Nang project and the laboratory system of the Military Military Academy Naitional defense
- Processing revenue is expected to reach VND 4.1 billion, up 12% compared to the previous year, outsourcing activities will be paid much attention in 2019 because this is a business with a low investment cost but a profit pretty good
- Profit before tax is over 10 billion
- Profit after tax is over 8 billion
- Total equity of over 10 billion
- Expanding the market, area and scope of activities outside the province, enlisting to sign contracts or participate in bidding for projects of capital sources both inside and outside the State budget and thoroughly exploit the provinces and cities currently quickly changing infrastructure such as Hai Phong, Lang Son, Da Nang, Vung Tau and many other provinces
Regarding the request for renewal
- Capture quickly and promptly with the development of science and technology to avoid being left behind and backward compared to competitors
- Upgrading, repairing and well exploiting all existing equipment, ensuring high performance, running out of capacity and increasing labor productivity
Regarding improving the quality of resources and building corporate culture
- Training and fostering professional and technical knowledge for laborers
- Making good environmental sanitation, no noise, safety of life and health of workers
- Continue to uphold the spirit of activities that respect the law and contribute to the country's budget and development
- Products must ensure high quality, beautiful appearance, diverse designs, delivery time in accordance with the contract, ensure credibility and attract more and more customers.
Solutions to improve the business operation of Hoang Long Mechanics
After analyzing the business performance of Hoang Long Mechanics Technology Joint Stock Company, we realize that the business situation of the company is developing not really well, accompanied by a number of limitations Therefore, in order to improve the business performance of the unit, it is necessary to carry out positive, effective and appropriate solutions to the situation at the unit After analyzing in detail each indicator, the author presents some specific solutions as follows:
The quality of construction works confirms the value and ability of the company In a time when there is so much competition and challenge, the best way for a business to survive is to bring the best quality product possible
Firstly, the design engineers of the company and the company must fulfill their responsibilities in the design project as well as in structural calculations and construction cost estimates
Secondly, during the construction process, it is required to strictly control and avoid errors which affect the quality of the project and the time of contract performance
Thirdly, the Company has to constantly renovate its designs, constantly improve product quality, apply scientific and technical advances to its production, thus increasing its competitiveness
Fourth, continue to maintain strengths in traditional businesses and expand to other business areas Traditional areas of the company are consultancy, design and construction
The field of consultancy is a field that does not need much capital investment but gains high profits, the level of competition is also increasing Processing revenue and other revenue groups are still open, not yet paid attention
The inadequate control of expenses has significantly affected the process of increasing profits The cost control in the Company has many holes and losses
Firstly, the Company needs to make a revenue and expenditure plan at the beginning of each financial year and review the results at the end of the year to draw experience
Secondly, the Company needs to be more proactive in importing raw materials and materials, using raw materials at the works to avoid escapes, which increases the cost of goods sold
Thirdly, to set cost norms for each department, each business time, it is necessary to have restrictive measures and sanctions imposed on the departments so that the implementation of cost control is optimal
Fourthly, strict control of inventories by predicting and thoroughly understanding the market of raw materials and fuels, to choose the most appropriate time to choose the import and export of raw materials and materials, especially those times points needing large reserves and large price fluctuations Arranging the warehouse on the yards in a reasonable way, in case of lack of a warehouse, the rental cost must be increased Establish a strict warehousing and ex-warehousing process with full certification of the relevant departments, collusion collusion to withdraw core assets There should be other strict sanctions for the times in warehouse management Streamlining supplies that are no longer eligible for production and take liquidation measures if necessary
3.2.3 Solutions to exploitation the capital
In the case that enterprises mainly operate by capital mobilized from the outside, to minimize the cost of capital usage The company should be flexible in finding sources of funding with appropriate interest rates by choosing an effective capital raising plan Loans in the Company account for a high proportion, every year the Company has to pay interest expenses are not small, high loans lead to imbalances and loss of initiative in capital
Firstly, mobilize and use resources appropriately for the company's investment projects, enhance the flow of capital flows, increase capital performance, and limit capital stagnation Make the most of equity, combined with credit and other sources, recover idle capital to reinvest
Secondly, continue to contribute capital, invest and promote cooperation and liaison activities with other potential companies in order to increase investment performance and actively support activities to increase revenue and cost control
Thirdly, strict control of accounts receivable The higher the Company's receivables means that the company is being appropriated capital, the stronger the recovery of receivables, the faster the company can recover the capital and circulate back process of importing raw materials into production The company needs to filter from the beginning with all customers entering into contracts, take measures to restrain with customers with bad debt history, need to take into account the worst case need to spend again from this customer list It is necessary to separate debt groups and debt ages so that accountants can have grounds to collect debts in each separate case During the process before and after construction, it is necessary to closely follow the activities of the partner company for timely handling
Fourthly, the Company has not taken full advantage of available resources, leading to idle time from the time of workers, machines, factories creating continuous jobs, taking into account the necessity of having Non-profit process, avoiding idle labor
Increasing activities of leasing machinery, avoiding state of machinery and equipment so as not to take advantage of the depreciation period Increasing warehousing activities, avoiding empty warehouses and wasting land assets
3.2.4 Solutions to improve marketing performance
Introducing the company's image to customers is extremely necessary, especially in the era of digital technology and fierce competition today
Marketing in the Company has not yet focused on exploitation
Firstly, effective marketing activities will help speed up the consumption of products, improve business performance such as: advertising on newspapers, radio, television, distributing leaflets, advertising banners, projects Design, write articles about the company and its design products in specialized magazines
Secondly, the Company can also apply promotion measures, after-sales service, appropriate preferential policies, display and introduce products at specialized mechanical engineering fairs
Third, the company can get acquainted with other businesses, contributing to improving the reputation
3.2.5 Solutions to improve the quality of human resources and retain talents
The quality of human resources in the business is the key to success Moreover, the Company suffered the most serious brain drain in the field of consulting labor design, and the situation of losing talent to finance competitors and large corporations