MINISTRY OF FINANCE ACADEMY OF FINANCE DE[PARTMENT OF CORPORATE FINANCE TRINH KHANH LINH GRADUATION THESIS Topic FINANCIAL SITUATION OF THANH DO JOINT STOCK COMPANY Major corporate finance Class C[.]
MINISTRY OF FINANCE ACADEMY OF FINANCE DE[PARTMENT OF CORPORATE FINANCE TRINH KHANH LINH GRADUATION THESIS Topic: FINANCIAL SITUATION OF THANH DO JOINT STOCK COMPANY Major: corporate finance Class : CQ54/11CL02 Code: 11 Supervisor: Ph.D Tran Thanh Thu Hanoi – 2020 Graduation Thesis i Supervisor: Ph.D Tran Thanh Thu DECLARATION I hereby declare that this is a study done by myself with the support of the supervisor The figures and the results stated in the thesis are honest from the actual situation of the internship company In case any information given in this thesis proves to be false or incorrect, I shall be responsible for consequences Signature of thesis’s author Trinh Khanh Linh Graduation Thesis ii Supervisor: Ph.D Tran Thanh Thu 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, who 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 limitation in theories and practical experiences, I cannot avoid the shortcomings, I am looking forward to receiving feedbacks, comments, and suggestions to complete the thesis Sincerely, Trinh Khanh Linh Graduation Thesis iii Supervisor: Ph.D Tran Thanh Thu TABLE OF CONTENTS DECLARATION I ACKNOWLEDGEMENT II TABLE OF CONTENTS III LIST OF FIGURE .VI LIST OF TABLES VII INTRODUCTION .1 CHAPTER I : OVERVIEW OF FINANCIAL SITUATION OF A COMPANY 1.1 CORPORATE FINANCE AND CORPORATE FINANCE MANAGEMENT 1.1.1 Corporate finance and financial decisions 1.1.2 Financial management 1.2 FINANCIAL SITUATION OF A COMPANY 10 1.1.1 Indicators for assessing financial situation of a company 10 1.3 DETERMINANTS OF FINANCIAL SITUATION OF A COMPANY .25 1.3.1 Objective factors 25 1.3.2 Subjective factors 25 CHAPTER II : THE S0054ATUS OF FINANCIAL SITUATION IN THANH DO JOINT STOCK COMPANY IN THE PAST TIME 27 2.1 OVERVIEW OF THANH DO JOINT STOCK COMPANY 27 2.1.1 Establishment and Development of Thanh Do JSC 27 2.1.2 Organizational structure of Thanh Do JSC 29 2.1.4 Advantages and Disadvantages of Business Activities of Thanh Do JSC 31 2.2 ASSEST AND ASSET STRUCTURE OF THANH DO JOINT STOCK COMPANY 31 2.2.1 Sources of capital and capital structure Graduation Thesis iv Supervisor: Ph.D Tran Thanh Thu 2.2.2 Operating performance 10 10 2.2.3 Cash flows situation 14 2.2.4 Liabilities situation and Liquidity 22 2.2.5 Asset's utilization and profitability on using capital situation 26 2.2.6 The situation of profit distribution of the company 33 2.3 GENERAL ASSESSMENT ON THE FINANCIAL SITUATION OF THANH DO JOINT STOCK COMPANY 34 2.3.1 The achievements 34 2.3.2 Limitations and reasons 34 CHAPTER III : SOLUTIONS TO IMPROVE THE FINANCIA SITUATION OF THANH DO JOINT STOCK COMPANY 37 3.1 SOCIAL ECONOMIC BACKGROUND AND DEVELOPMENT ORIENTATION OF THANH DO JOINT STOCK COMPANY IN THE COMING TIME 37 3.1.1 Socio-economic context 37 3.1.2 Objectives and development orientation of Thanh Do Joint Stock Company 42 3.2 SOLUTION TO IMPROVE THE FINANCIAL SITUATION Ò THANH DO JOINT STOCK COMPANY 45 3.2.1 Inhence inventory management and credit policy of Thanh Do JSC 45 3.2.2 Improve liquidity .45 3.2.3 Increase equity and reduce interest expenses 46 3.2.4 Improve business cost management solutions 46 3.2.5 Find potential markets, diversify products and approach customers 48 3.2.6 Perform regularly, proactively and effectively the business financial analysis 48 Graduation Thesis v Supervisor: Ph.D Tran Thanh Thu 3.3 CONDITIONS FOR IMPLEMENTING SOLUTIONS 49 3.3.1 Business environment 49 3.3.2 For the company 49 CONCLUSION 51 REFERENCES 52 Graduation Thesis vi Supervisor: Ph.D Tran Thanh Thu LIST OF FIGURE Figure 1.1: Financing models of a company 22 Figure 2.1: Chart of organization structure of Thanh Do JSC .38 Figure 2.2 Capital structure of Thanh Do Joint Stock company in 2016-2019 .3 Figure 2.3: Financing models of Thanh Do JSC 2017-2019 10 Graduation Thesis vii Supervisor: Ph.D Tran Thanh Thu LIST OF TABLES Table 2.1 Ownership structure of Thanh Do JSC 37 Table 2.1: Asset structure of Thanh Do Joint Stock Company in 2016-2019 (Unit: million dong) .41 Table 2.2: Difference in assets structure Thanh Do Joint Stock Company in 2016-2019 42 Table 2.3: Capital structure of Thanh Do Joint Stock Company in 2016-2019 (Unit: million dong) .5 Table 2.4: Difference in capital structure in 2016-2019 .6 Table 2.6:Operating performance of Thanh Do JSC 2016-2019 (Unit: million dong) .10 Table 2.7: Difference in operating performance of Thanh Do JSC 2016-2019 (Unit: million dong) .11 Table 2.8: Cost use level of the Company in 2016-2019 (Unit: million dong) 13 Table 2.9: Cash flows statement of the Thanh Do JSC 2016-2019 (Unit: million dong) 14 Table 2.10: Difference of cash flow statement of Thanh Do JSC 2016-2019 16 Table 2.11: The ability to create cash from cash outflows of Thanh Do JSC 2016-2019 19 Table 2.12: Liabilities situation and liquidity of Thanh Do JSC 2016-2019 (Unit: million dong) .23 Table 2.13: Liquidity ratios of Thanh Do Joint Stock Company in 2016-2019 24 Table 2.14: Indicator reflecting the capital's ultilization of Thanh Do JSC 2016-201927 Table 2.15: Profitability ratios of Thanh Do JSC 2016-2019 .30 Table 2.16: Profit distribution of Thanh Do JSC 2016-2019 .33 Table 3.1: Growth rate of per capita income in ASEAN region 38 Table 3.2: Retail growth vs GDP .39 Graduation Thesis viii Supervisor: Ph.D Tran Thanh Thu Table 3.3: Retail growth rate 39 Table 3.4:Forecasting the impact of the Covid-19 epidemic on Vietnam's economy in 2020 under scenarios (updated on 9/4/2020) 41 Table 3.5: Swot analysis model of Thanh Do JSC .42 Graduation Thesis Supervisor: Ph.D Tran Thanh Thu 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) In the context that Vietnam is getting deeply involved in the global market, 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 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 influences 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, assessment and analysis of the financial situation of enterprises must often be held regularly This is important not only for the business but also for investors, creditors, employees interested in decisions making 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 profitability as well as firm value Arising from the role of financial situation in corporate finance, after the internship period at Thanh Do Joint Stock Company, with the guidance of my supervisor, PhD Tran Thanh Thu and the help of the Accounting department of Thanh Do JSC, I chose to examine: "Financial situation of Thanh Do Joint Stock Company" in my graduation thesis