I hereby declare that this graduation thesis is my own research, and it was composed by myself. The data and results used in this thesis accurately come from the actual situation of the internship company. I also certify that this thesis has not been submitted to any other organization thus it is the only published version submitted to the thesis’s reviewers. I hereby declare that this graduation thesis is my own research, and it was composed by myself. The data and results used in this thesis accurately come from the actual situation of the internship company. I also certify that this thesis has not been submitted to any other organization thus it is the only published version submitted to the thesis’s reviewers. I hereby declare that this graduation thesis is my own research, and it was composed by myself. The data and results used in this thesis accurately come from the actual situation of the internship company. I also certify that this thesis has not been submitted to any other organization thus it is the only published version submitted to the thesis’s reviewers. I hereby declare that this graduation thesis is my own research, and it was composed by myself. The data and results used in this thesis accurately come from the actual situation of the internship company. I also certify that this thesis has not been submitted to any other organization thus it is the only published version submitted to the thesis’s reviewers.
MINISTRY OF FINANCE ACADEMY OF FINANCE NGUYEN THI PHUONG THAO CQ54/11.13 GRADUATION THESIS TOPIC: WORKING CAPITAL MANNAGEMENT AT DONG PHONG AUTO LIMITED COMPANY Major : Corporate Finance Code : 11 Supervisor : Dr Tran Thanh Thu Ha Noi – 2020 Graduation thesis Academy Of Finance DECLARATION I hereby declare that this graduation thesis is my own research, and it was composed by myself The data and results used in this thesis accurately come from the actual situation of the internship company I also certify that this thesis has not been submitted to any other organization thus it is the only published version submitted to the thesis’s reviewers Signature of Author Nguyen Thi Phuong Thao Student: Nguyen Thi Phuong Thao CQ54/11.13 Graduation thesis Academy Of Finance ACKNOWLEDGEMENT Although I tried my best, my limited level of background knowledge and time does not allow my thesis to be perfect Sincerely, I want to receive valuable comments from my advisors and the company’s personnel so that it will be successfully completed I would like to express my great gratitude to all of my teachers, my colleagues, my family and Academy of Finance who all make way for my thesis Firstly, I want to pay my respect to my supervisor, PhD Tran Thanh Thu, a lecturer of Academy of Finance Without her considerate instructions and immeasurably valuable advice, I am not able to finish my graduation thesis Secondly, I wish to show my gratitude to all my teachers at Academy of Finance, who have provide me with worthy lessons throughout years of study Moreover, I want to give thank to the personnel of the Department of Finance at Dong Phong Auto Ltd for their valuable support during the internship period It would be impossible for me to finish this work without their help Last but not least, I would like to send my deep thank to my parents, my family who generously inspire me with great love and care so that I can complete this thesis Student: Nguyen Thi Phuong Thao CQ54/11.13 Graduation thesis Academy Of Finance Table of Contents DECLARATION .i ACKNOWLEDGEMENT .ii LIST OF ACRONYMS v LIST OF TABLES vi LIST OF CHARTS vii PREFACE CHAPTER 10 OVERVIEW OF WORKING CAPITAL AND WORKING CAPITAL MANAGEMENT 10 1.1 1.1.1 Overview of Working Capital and working capital financing .10 Definition and characteristics of working capital .10 1.3.2 Objective factors 31 Business cycle : Business cycle means the alternate expansion and contraction in general business activity The business cycle can be quick or slow depends on the section the firm takes part in There is a ratio called sector average ratios used to compare with the ratio of the firm to evaluate the level of efficient working capital management 31 CHAPTER .33 WORKING CAPITAL MANAGEMENT of DONG PHONG AUTO LIMITED COMPANY 33 2.1 Overview of Dong Phong Auto Limited Company: 33 2.1.1 The establishment and history of Dong Phong Auto LTD 33 2.2.4 Cash management .56 2.2.4 Accounts Receivable management 59 2.2.5 Efficiency and Effectiveness of Working Capital management .64 Table 2.13: Indicators to evaluate working capital management of Dong Phong LTD 64 2.3 Assessment of working capital management of Dong Phong Auto LTD 65 2.3.1 The achievements 65 2.3.2 The short-comings and reasons .65 CHAPTER .67 SOLUTION TO IMPROVE WORKING CAPITAL MANAGEMENT OF DONG PHONG AUTO LIMITED COMPANY .67 Student: Nguyen Thi Phuong Thao CQ54/11.13 Graduation thesis 3.1 Academy Of Finance Economic context and targeted development of Dong Phong Auto LTD 67 3.1.1 Economic context of Vietnam in 2019 67 3.1.2 Objectives and targeted development of Dong Phong Auto LTD 68 3.2 Solutions to improve Dong Phong Auto LTD’s working capital management 69 3.2.1 Solution for inventories management: .69 3.2.2 Enhancing the receivables and payables management 70 3.2.3 Solution for cash and cash equivalent management .72 3.3 Conditions to implement solutions: 73 3.3.1 For the Government .73 3.3.2 For the Dong Phong Auto Limited Company .74 CONCLUSION 75 Student: Nguyen Thi Phuong Thao CQ54/11.13 Graduation thesis Academy Of Finance LIST OF ACRONYMS Student: Nguyen Thi Phuong Thao CQ54/11.13 Graduation thesis Academy Of Finance LIST OF TABLES Student: Nguyen Thi Phuong Thao CQ54/11.13 Graduation thesis Academy Of Finance LIST OF CHARTS Student: Nguyen Thi Phuong Thao CQ54/11.13 Graduation thesis Academy Of Finance PREFACE Introduction Capital is considered one of the most important elements of any company Business capital is the certain amount of monetary capital in line with the size and condition of business activities Business capital is important because every enterprise must have the basic elements such as assets, technology, and labor force to carry out businesses A financial manager is responsible for short-term and long-term financial decisions Much of this material is devoted to long-term financial decisions such as capital budgeting and the choice of capital structure Short-term financial decisions generally involve in short-lived assets and liabilities, and usually they are easily reversed In a sense, short-term decisions are easier than long-term decisions—but they are not less important A firm can identify extremely valuable capital investment opportunities, find the precise optimal debt ratio, follow the perfect dividend policy, and no one other than the founder is the one who bothers to raise the cash to pay this year’s bills Hence the need for short-term planning Short-term, or current, assets and liabilities are collectively known as working capital Being aware of the importance of working capital in operations of a company, together with a desire of remommending solutions to improve working capital management of Dong Phong Auto LTD., I decided to choose the topic “Working capital management – A case study of Dong Phong Auto LTD.” for my graduation thesis The objectives of the study The thesis has main objectives, including: To generalize the theory of working capital and working capital management; Student: Nguyen Thi Phuong Thao CQ54/11.13 Graduation thesis Academy Of Finance To examine the situation of working capital management of Dong Phong Auto LTD; indicating the achievements and drawbacks of WC management of Dong Phong Auto LTD; To propose some solutions to improve working capital management of Dong Phong Auto LTD The scope of the study Subject of the study: Working Capital management of a company Space: The study was conducted at Dong Phong Auto LTD Time period: From 2017 to 2019 Data & Methodology Data: Both primary data and secondary data were used in this study Primary data were collected during the internship at Finance Department of Dong Phong Auto LTD Secondary data were extracted from financial statements and other official sources of information Methodology: Research method: Based on collected data, start processing and analyze according to the purpose and requirements of the topic Comparison method: Based on processed data to make comparisons between years, thereby assessing the achieved and unsatisfactory results At the same time, comparison with peer firms to make conclusions The structure of thesis Besides the Contents, Introductions, Conclusion and References, the thesis includes main chapters as follows: Chapter 1: Overview of working capital and working capital management Chapter 2: Working capital management of Dong Phong Auto LTD Chapter 3: Solutions to improve working capital management of Dong Phong Auto LTD Student: Nguyen Thi Phuong Thao CQ54/11.13