Solutions to improve the financial situation of thanh do joint stock company

STATUTORY DECLARATION I herewith formally declare that this is a study done by myself with the support of the instructor The figures, the results stated in the thesis are honest from the actual situat[.]

STATUTORY DECLARATION I herewith formally declare that this is a study done by myself with the support of the instructor The figures, the results stated in the thesis are honest from the actual situation of the internship unit I am fully responsible for this promise! Signature Trinh Khanh Linh ACKNOWLEDGEMENT In order to complete the thesis and finish the course, I would like to express my profound gratitude to the Academy of Finance for enabling me to have a good studying environment during my time at the school I would like to thank Dr Tran Thanh Thu assisted in the research process and directly guided the completion of this graduation thesis In addition, I express my warm thanks to all my colleagues at Thanh Do Joint Stock Company, specially accounting department who provided me with the facilities being required and conductive conditions for my report During the internship due to the limited theoretical and practical level, I cannot avoid the shortcomings, I am looking forward to receiving the teachers' suggestions to complete the thesis Signature Trinh Khanh Linh TABLE OF CONTENTS STATUTORY DECLARATION ACKNOWLEDGEMENT INTRODUCTION .1 CHAPTER : THE FUNDAMENTAL REASONING FOR THE EVALUATION OF FINANCIAL SITUATION OF THE ENTERPRISES .3 1.1 CORPORATE FINANCE AND CORPORATE FINANCE MANAGEMENT.3 1.1.1 Overview of Corporate Finance 1.1.2 Enterprise Financial Management .5 1.2 FINANCIAL SITUATION OF ENTERPRISES 1.2.1 Concept of corporate financial situation 1.2.2 Content and indicators reflect the financial situation of the enterprise 10 1.3 FACTORS AFFECTING THE FINANCIAL SITUATION OF ENTERPRISES 23 1.3.1 Objective factors .23 1.3.2 Subjective factors 23 CHAPTER : THE STATUS OF FINANCIAL SITUATION IN THANH DO JOINT STOCK COMPANY IN THE PAST TIME 25 2.1 OVERVIEW OF THANH DO JOINT STOCK COMPANY 25 2.1.1 The process of formation and development 25 2.1.2 Organize the management apparatus and business operations of the company 27 2.2 CURRENT SITUATION OF FINANCIAL SITUATION AT THANH DO JOINT STOCK COMPANY 32 2.2.1 The size and structure of the company's equity and liabilities 33 2.2.2 The size and structure of the company's assets 40 2.2.3 Business performance results 45 2.2.4 Cash flow situation 49 2.2.5 Debt situation and solvency 57 2.2.6 Asset's ultilization and profitability on using capital situation 62 2.2.7 The situation of profit distribution of the company 67 2.3 GENERAL ASSESSMENT ON THE FINANCIAL SITUATION OF THANH DO JOINT STOCK COMPANY 68 2.3.1 The results achieved 68 2.3.2 Limitations and reasons 70 CHAPTER : SOLUTIONS TO IMPROVE THE FINANCIAL SITUATION OF THANH DO JOINT STOCK COMPANY .73 3.1 SOCIAL ECONOMIC BACKGROUND AND DEVELOPMENT ORIENTATION OF THANH DONG JOINT STOCK COMPANY IN THE COMING TIME 73 3.1.1 Socio-economic context 73 3.1.2 Objectives and development orientation of Thanh Do Joint Stock Company 75 3.2 SOLUTIONS TO IMPROVE THE FINANCIAL SITUATION OF THANH DO JOINT STOCK COMPANY 78 3.2.1 Improve solvency and debt collection 78 3.2.2 Improve business cost management solutions 79 3.2.3 Find potential markets, diversify products and approach customers 80 3.2.4 Perform regularly, proactively and effectively the business financial analysis .81 3.3 CONDITIONS FOR IMPLEMENTING SOLUTIONS 81 3.3.1 Environmental conditions 81 3.3.2 Specific conditions for each solution 82 CONCLUDE 84 REFERENCES 85 LIST OF TABLES Figure 2.2.1: Capital structure of the Company in 2016-2019 33 Table 2.2.1: Capital structure of Thanh Do Joint Stock Company in 2016-2019 (Unit: million dong) .34 Table 2.2.1a: Difference in capital structure in 2016-2019 35 Table 2.2.1.2: Structure of capital sources by time of capital mobilization (Unit: million dong) .38 Table 2.2.2: Asset structure of Thanh Do Joint Stock Company in 2016-2019 (Unit: million dong) .41 Table 2.2.2a: Difference in assets structure in 2016-2019 42 Table 2.2.3.1:Business performance of the Company in the period of 2016-2019 (Unit: million dong) .45 Table 2.2.3.1a: Difference in business results of the Company in the period of 20162019 (Unit: million dong) 46 Table 2.2.3.2: Cost use level of the Company in 2016-2019 (Unit: million dong) .48 Table 2.2.4: Cash flow statement of the Company for the period of 2016-2019 (Unit: million dong) 49 Table 2.2.4a: Difference of cash flow statement of the Company during 2016-2019 .51 Table 2.2.5.1: Debt situation of Thanh Do Joint Stock Company in 2016-2019 (Unit: million dong) .58 Table 2.2.5.2: Liquidity ratios of Thanh Do Joint Stock Company in 2016-2019 60 Table 2.2.6.1: Indicator reflecting the capital's ultilization of Thanh Do in 2016-2019 .62 Table 2.2.6.2: Criteria reflecting profitability on using capital situation of Thanh Do in 2016-2019 65 Table 2.2.7: Profit distribution situation of Thanh Do in 2016-2018 67 INTRODUCTION Rationale of the thesis The process of globalization opens countries with opportunities to promote economic growth and social development Specifically, on November 12, 2018, the Resolution on ratifying the CPTPP Agreement was approved by the National Assembly and came into effect for Vietnam from January 14, 2019; On 12/02/2020, the free trade agreement between the European Union (EU) and Vietnam (EVFTA) was approved by the European Parliament (EP), the developments are in a good direction; In the context that Vietnam is increasingly deeply involved in the global market, we see great opportunities ahead, this is an opportunity and also a challenge for Vietnamese enterprises in the quest to gain a foothold in the international market The world economy is showing many complicated changes, leading to Vietnam's economy are also affected, the most influential part is to mention that businesses, in which small and medium enterprises are occupying a large percentage of the economy, and also the place to create a major job in Vietnam Therefore, the health of small and medium enterprises also greatly influence Vietnam's competitiveness in the international arena Therefore, businesses have to proactively maintain their financial situation, leveraging the potential and resources available to drive business operations To implement effective management of business operations, the organization of assessment and analysis of the financial situation of enterprises must often be held regularly This is important not only for the business but also by investors, creditors, employees interested in making important ideas and decisions The evaluation of the financial situation is the introduction of the current state of the business, determining the factors affecting the business situation to bring the legal timely, an overview to stabilize and improve the efficiency of business production and business From the implications of the evaluation of corporate finance, after the internship period at Thanh Do Joint stock company, with the guidance of her teacher DR Tran Thanh Thu and the help of officers in the Financial-accounting department of the company, i chose to study and perform the final thesis with the subject: "Evaluate the financial situation at Thanh Do Joint stock Company" Research objective Properly assess the situation of the company, analyze the financial situation and operational efficiency of the company for the last years; Find the strengths that need to be promoted, as well as the limitations and causes thereby  offering solutions to improve the efficiency of business operations of the company Research subject and scope Research object: The topic aimed to find out the true situation of the financial situation of enterprises through the Financial Statements of Thanh Do Joint Stock Company Scope of research:  - Space: content to assess the financial situation of Thanh Do Joint Stock Company - About time: in years from 2016-2019.  - About source of data: the data is collected from the accounting department and financial statements of Thanh Do Joint Stock Company Research Methodology The project uses the following methods:  - Methods of collecting data from the company's accounting department, data from financial statements and related books.  - Methods of listing, comparing and analyzing to see trends of indicators.  - The evaluation method introduces strengths and limitations to offer solutions to improve the financial situation of the company Structure of graduate thesis The thesis is divided into three main chapters: Chapter 1: The fundamental reasoning for the evaluation of the financial situation of the enterprise Chapter 2: The financial situation and efficiency of production and business activities of Thanh Do Joint stock company in years of 2016-2019 Chapter 3: Some solutions to improve business performance at Thanh Do Joint Stock company CHAPTER : THE FUNDAMENTAL REASONING FOR THE EVALUATION OF FINANCIAL SITUATION OF THE ENTERPRISES 1.1 CORPORATE FINANCE AND CORPORATE FINANCE MANAGEMENT 1.1.1 Overview of Corporate Finance 1.1.1.1 Definition - Enterprises: (according to the Enterprise Law) “Enterprise is an economic organization with its own name, assets, stable transaction office, and is allowed to register its business in accordance with the provisions of law for real purposes current business activities ” - Corporate finance is an important tool, describing the process of mobilizing, distributing and using capital sources to finance the investment in the assets of the enterprise to create profit for the company owner 1.1.1.2 Corporate Finance decisions Depending on the conditions, specific circumstances of business activities that the business owner make different decisions, usually enterprises interested in research decisions mainly decision on investment, decision on capital and decision to divide profit - Investment decisions: are decisions relating to the total value of assets and the value of each asset department (fixed assets and mobile assets) The major investment decisions of the business, including:  Decision on investment in working assets: Decision on inventory, decision on sales policy, decision on short-term financial investment  Decision on investment in fixed assets: Decision on purchasing fixed assets, deciding on project investment, deciding on long-term financial investment  Deciding on the structural relations between investment in current assets and investment in fixed assets: Decision on using business leverage, deciding breakeven point Investment decisions are considered the most important of corporate finance decisions because they create value for the business A right investment decision will contribute to increase the value of the business, thereby increasing the value of the property for the owner conversely a wrong investment decision will damage the value of the business resulting in property damage to the business owner - Capital mobilization decisions: These decisions are associated with decisions on what kind of capital sources to choose to provide for investment decisions Major capital mobilization decisions of enterprises include:  Decision on short-term capital mobilization: decision on short-term loan or use of commercial credit; decide whether to take a short term bank loan or use a company bill  Decision to mobilize long-term loans: decide to use long-term debt through long-term bank loans or corporate bond issues; decision to issue share capital (ordinary shares or preferred shares); decide the structural relationship between debt and equity (using financial leverage); decide to borrow to buy or rent property Capital raising decisions are a significant challenge for corporate financial managers In order to make the right capital mobilization decisions, financial managers must have a firm grasp of the advantages and disadvantages of using capital raising tools, accurately assessing the current situation and forecasting correct market movements - future prices before making a decision to raise capital - Decisions on profit distribution: These decisions are associated with the distribution of dividends or dividend policy of the business  Financial manager will have to choose between using after-tax profits to pay dividends to shareholders or keep to reinvest These decisions relate to how an enterprise should pursue a dividend policy and whether the dividend policy will affect the value of the business or the company's share price in the market  Besides, in addition to three major decisions above, there are many other decisions relating to the business activities of the company such as the decision on purchasing, merging, the decision to prevent financial risk in production and business activities… Based on implementation time, it can be divided into groups: short-term financial decisions and long-term financial decisions - Long-term financial decisions: These are strategic decisions that have longlasting effects on the survival and development of businesses Each of these decisions requires administrators to carefully consider, methodically and scientifically analyze to ensure to minimize the risks that may occur Under long-term financial decisions include decisions on long-term investment, decisions on long-term capital mobilization and decisions on profit distribution policies of enterprises - Short-term financial decisions: These are operational decisions, which not significantly affect the survival and development of the business, so it is also called tactical financial decisions Main short-term policies include: decisions on capital reserve in cash, decisions on receivable debts, decisions on implementation of payment discounts, decisions on reserve capital reserves, decisions on depreciation of fixed assets The reasonableness and correctness of these decisions affect certain risks and benefits for the enterprise as well as its owners In short, financial managers must make financial decisions to maximize business value With every financial decision, the manager must always face the conflict between risk and profit A wise financial decision is a decision that can maximize the value of the business, so that the financial decision must minimize risks and maximize profits for the owner This is very difficult for managers in the process of analyzing and making decisions to choose the appropriate financial decisions 1.1.2 Enterprise Financial Management 1.1.2.1 Definition Corporate financial governance is the choice, decision making, and organization of financial decision making to achieve the operational objectives of the enterprise Because the financial decisions of the business are associated with the creation, distribution and use of monetary funds in the course of the operation of the business, therefore, corporate finance management is also seen as the process of creating, distributing and using the Monetary Fund to meet the operational needs of the business 1.1.2.2 Contents of enterprise financial management - Tham gia đánh giá, lựa chọn định dự án đầu tư The construction and selection of investment projects are carried out by many departments in the enterprise From a financial perspective, the key consideration is the economic efficiency of the project, which is to consider and weigh the costs, the ... "Evaluate the financial situation at Thanh Do Joint stock Company" Research objective Properly assess the situation of the company, analyze the financial situation and operational efficiency of the company. .. Research object: The topic aimed to find out the true situation of the financial situation of enterprises through the Financial Statements of Thanh Do Joint Stock Company Scope of research:  -... and profitability on using capital situation 62 2.2.7 The situation of profit distribution of the company 67 2.3 GENERAL ASSESSMENT ON THE FINANCIAL SITUATION OF THANH DO JOINT STOCK COMPANY