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MINISTRY OF FINANCE ACADEMY OF FINANCE ***** GRADUATION THESIS TOPIC: FINANCIAL SITUATION OF VIET LAM MECHANICAL AND ELECTRICAL JOINT STOCK COMPANY (VIET LAM M&E) Student : SAM NHAT KIM Class : CQ56/11.02CLC Major : Corporate Finance Student ID : 18CL73402010092 Instructor : Assoc Prof PhD Pham Thi Thanh Hoa Ha Noi – 2022 GRADUATION THESIS ACADEMY OF DECLARATION I hereby declare this thesis is made by myself, as a result of the threemonth internship at Viet Lam Joint-stock company It has not been submitted to any other organization or for an award Where other sources of information have been used, they have been acknowledged Author Sam Nhat Kim Student: Sam Nhat i Class:CQ.56/11.02CLC TABLE OF CONTENTS DECLARATION i TABLE OF CONTENTS ii LIST OF ABBREVIATIONS iv LIST OF TABLES v LIST OF CHARTS .vi ACKNOWLEDGEMENT INTRODUCTION CHAPTER 1: THEORETICAL BACKGROUND OF FINANCIAL SITUATION OF A COMPANY 1.1 Corporate finance and financial management 1.1.1 Corporate finance and financial decisions 1.1.2 Financial management 12 1.2 Financial situation of a company .16 1.2.1 Definition of financial situation of a company 16 1.2.2 Indicators assessing of financial situation of a company .17 1.3 Factors determining the financial situation of a company 30 1.3.1 Internal factors 30 1.3.2 External factors 32 CHAPTER 2: FINANCIAL SITUATION OF VIET LAM MECHANICAL AND ELECTRICAL JOINT-STOCK COMPANY 34 2.1 Overview of Viet Lam M&E 34 2.1.1 Establishment and Development of Viet Lam M&E .34 2.1.2 Business characteristics of Viet Lam M&E 35 2.1.3 General information on financial performance of Viet Lam M&E 40 2.2 The financial situation of Viet Lam M&E 42 2.2.1 Assets and assets structure of Viet Lam M&E 42 2.2.2 Sources of financial and capital structure 50 2.2.3 Revenue, Expenses and Income 57 2.2.4 Cash flow 63 2.2.5 Liquidity and Solvency 70 2.2.6 Asset utilization efficiency and profitability ratio 75 2.2.7 Profit distribution 85 2.3 Assessment of financial situation of Viet Lam 86 2.3.1 Achievements 86 2.3.2 Shortcomings and causes 86 CHAPTER 3: SOLUTIONS TO IMPROVING THE FINANCIAL SITUATION OF VIET LAM MECHANICAL AND ELECTRICAL JSC 89 3.1 Objectives and strategic development directions of Viet Lam .89 3.1.1 Socio – economic context 89 3.1.2 Objectives and strategic development directions of Viet Lam 89 3.2 Solutions to improving financial situation of Viet Lam 90 3.2.1 Assume responsibilities for allocating enough capital to business and production activities, along with creating suitable capital structure 90 3.2.2 Improve receivables management 91 3.2.3 Strengthen expense management, controlling input expenses 92 3.2.4 Improve liquidity 93 3.2.5 Strengthen inventory management 94 3.2.6 Other solutions .95 3.3 Conditions for implementing solutions 96 3.3.1 The State 96 3.3.2 Viet Lam Mechanical and Electrical JSC 96 CONCLUSION 97 REFERENCES 99 APPENDIX 100 GRADUATION THESIS ACADEMY OF LIST OF ABBREVIATIONS Abbreviated words Meanings CA Current assets CL Current liabilities COGS Cost of goods sold EBIT Earnings before interest and tax NCA Non-current asset NCI Non-current liabilities NI Net income NWC Net working capital OCF Operating cash flow PWC Permanent working capital TWC Temporary working capital Student: Sam Nhat iv Class:CQ.56/11.02CLC LIST OF TABLES Table 2.1: Overview of financial performance of Viet Lam from 2018 to 2020 41 Table 2.2: Assets and assets structure of Viet Lam M&E from 2018 to 202042 Table 2.3: Inventory structure of Viet Lam M&E from 2018 to 2020 47 Table 2.4: Sources of finance and capital structure of Viet Lam M&E from 2018 to 2020 50 Table 2.5: The net working capital of Viet Lam from 2018 to 2020 55 Table 2.6: Net working capital of companies in the same field with Viet Lam M&E from 2018 to 2020 56 Table 2.8: Total incomes and total expenses of Viet Lam from 2018 to 2020 59 Table 2.9: Expense structure to net revenue 60 Table 2.10: Cash flow situation of Viet Lam M&E from 2018 to 2020 63 Table 2.11: Sources and uses of capital of Viet Lam M&E from 2019 to 2020 65 Table 2.12: Cash conversion cycle of Viet Lam from 2019 to 2020 67 Table 2.13: Cash flow evaluation ratios 68 Table 2.14: The liquidity ratio of Viet Lam M&E from 2018 to 2020 70 Table 2.15: Liquidity ratios of companies in the same field with Viet Lam M&E in 2020 72 Table 2.16: Solvency ratio of Viet Lam M&E from 2018 to 2020 73 Table 2.17: Asset utilization efficiency ratios of Viet Lam M&E from 2018 to 2020 75 Table 2.18: Profitability ratios of Viet Lam from 2018 to 2020 79 Table 2.19: Profitability ratios of companies in the same field with Viet Lam in 2020 80 Table 2.20: Dupont system of Viet Lam from 2019 to 2020 83 Table 2.21: Changes in undistributed profit after tax from 2018 to 2020 85 LIST OF CHARTS Chart 1.1: Financing model of a company 20 Chart 2.1: Viet Lam’s organizational structure 36 Chart 2.2: Viet Lam’s accounting system 38 Chart 2.3: Viet Lam’s bidding process .39 Chart 2.6: The Dupont equation from 2019 to 2020 84 GRADUATION THESIS ACADEMY OF ACKNOWLEDGEMENT I would like to express my special thanks of gratitude to my instructor, Assoc Prof PhD Pham Thi Thanh Hoa who helped me in doing a lot of research as well as offering many conscientious advices to better my work Secondly, I would also like to thank my friends who helped me a lot in finalizing this project within the limited time frame and their continued support and encouragement Student: Sam Nhat Class:CQ.56/11.02CLC INTRODUCTION Rationale of the study As Vietnam is getting closer into economic integration and globalization, the demand for construction and engineering is increasing rapidly, especially for infrastructure construction Over the last two decades, the construction and engineering in Vietnam experienced fierce competitiveness as a result of the development of domestic companies, changes in the markets and the entry of FDI enterprises In order to survive, develop and improve reputation, companies need to, have sufficient sources of finance, operate efficiently and thoroughly understand their operating and financial situation Alternatively, it is crucial for any manager to assess the financial situation of the company Viet Lam Mechanical and Electrical JSC was founded in 2009, as a firm specialized in design consultancy, mechanical and electrical construction of industrial factories With the vision “We always ponder and desire that serving customer is our happiness to provide a small contribution into the valuable customer’s success”, the company itself has gained trust from clients and took part in more than 50 projects, generating 34,330 million VND of revenue in 2020 only and obtained the following outcomes: Regarding resource scale and structure, the company’s resource structure witnessed a slight increase, in which liabilities took the largest proportion in the total resource, the rise in owner’s equity was contributed by an increase in undistributed profit from the previous year Regarding asset scale and structure, the total assets experienced an increase, in which the proportion of current assets went down and non-current assets took the place as the major contribution in total assets In addition, cash and cash equivalent considerably declined while inventories gradually rose during the period
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