MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECNOMICS HOCHIMINH CITY K - hi ng ep w n lo ad th NGUYEN THI THANH THAO u yj yi DEBR FINANCING – A CASE STUDY Ò AMATA POWER (BIEN HOA) LIMITED pl ua al n va n fu oi m ll MASTES’S THESIS In Banking Ology code: 60.31.12 at nh z z k jm ht vb Supervisor: Dr.TRUONG TAN THANH om l.c gm an Lu n va Ho Chi Minh City – 2010 re y te th h ng ACKNOWLEDGEMENT p ie The research is completed due to the contribution of many people First of n w all, I would like to express my deepest gratitude to my supervisor, Dr Truong Tan lo Thanh, for all he has done for me The thesis could not been finished without his ad y th great encouragements and kind helps Again, I would like to extend my sincere ju appreciation to him yi I would like to express my thanks to Dr Nguyen Minh Kieu for his valuable pl ua al advices He always took care, encouraged and supported us during our course I acknowledge all instructors at Faculty of Banking Finance and n n fu knowledge va Postgraduate Faculty, University of Economics of Ho Chi Minh for their valuable oi m ll My gratitude is extended to my classmates for their enthusiastic supports in conducting the research, especially Ms Nguyen Thi Kim Dung and Mr Duong a nh Binh Hung tz Finally, I sincerely thank my parents and my husband who have always tried z ht vb their best to help me overcome difficulties during the time of attending the course as well as preparing the thesis k jm om l.c gm an Lu n va y te re ac th h ng ABSTRACT p ie The economy has been developing more and more strongly, the competition n w among firms is fiercer and fiercer In order to run the firm’s business operation in lo ad the competitive market, capital is one of necessary elements to speed up the y th development It likes the blood of the firm There are three financing alternatives to yi ju set up the capital which are retained earnings, capital from shareholders and loans pl from credit institutions The choice of internal or external financing is an extremely ua al vital decision Some of firms like the internal financing (retained earnings, capital n from shareholders) due to avoiding the financial risks Some of firms prefer the n va external financing (loans from credit institutions) due to taking advantages of tax oi m ll fu shield and controlling management position However, too much debt can result in increasing dramatically capital costs due to financial distress in terms of increased bankruptcy and agency costs So, the careful consideration to the advantages and a nh disadvantages of each financing resource should be conducted to balance between tz returns and risks And financial analysis should be done in order to minimize z ht vb financial risks in case of debt financing k jm The purpose of this thesis is to evaluate the effectiveness of debt financing process of a defined firm, Amata Power (Bien Hoa) Limited The research is gm conducted by collecting and analyzing the empirical data in order to understand om l.c debt repayment ability as well as the impacts of debt on expenses and profits an Lu n va y te re ac th h ng TABLE OF CONTENTS p ie Acknowledgement Abstract n w Table of contents lo ad Abbreviation y th List of figures yi ju List of tables pl Chapter 1: Introduction ua al 1.1 Introduction n 1.2 Research problem 10 n va 1.3 Methodology 11 oi m ll fu 1.4 Significance and scope of the study 11 1.5 Structure of the study 12 Chapter 2: Theoretical background 14 a nh 2.1 Introduction 14 tz 2.1.1 The Miller and Modigliani theory 14 z ht vb 2.1.2 The trade-off theory 17 k jm 2.1.3 The pecking order theory (Myers, 1984) 18 2.2 An overview of debt financing 19 gm 2.3 Financial ability to repay debt 21 l.c 2.4 Financial risks of debt financing in a foreign currency 27 om 2.4.1 Interest rate risk 27 an Lu 2.4.2 Foreign exchange risk 27 2.5 Conclusion 28 ac 3.2.2 Activity 30 th 3.2.1 Liquidity 29 y te 3.2 Analysis of debt settlement ability 29 re 3.1 Introduction 29 n va Chapter 3: Research methodology 29 h ng 3.2.3 Debt management ratios 30 p ie 3.2.4 Earnings ratios 31 3.2.5 Profitability measurement ratios 31 n w 3.3 Analysis on financial risks of debt financing in a foreign currency 34 lo 3.3.1 Interest rate risk 34 ad 3.3.2 Foreign exchange risk 34 y th 3.4 Impacts of debt financing on profit 34 ju yi 3.5 Conclusion 35 pl Chapter 4: Introduction to Amata Power (Bien Hoa) Limited 37 ua al 4.1 An overview of Amata Power (Bien Hoa) Limited 37 n va 4.2 Financial performance 38 n 4.2.1 Capital structure 38 fu oi m ll 4.2.2 Business operation 39 4.2.3 Profitability measurement 41 a nh 4.2.4 Debt management policy 43 tz 4.3 Recent development and outlook 43 z Chapter 5: Analysis on debt financing of Amata Power (Bien Hoa) Ltd 45 ht vb 5.1 Introduction 45 k jm 5.2 An overview of debt financing of APBH 45 gm 5.2.1 Short-term borrowings 45 5.2.2 Long-term borrowings 45 l.c om 5.3 Analysis on debt settlement ability 48 Lu 5.3.1 Debt settlement ability 48 an 5.3.2 Debt control method 50 ac 5.4.2.1 Foreign exchange risk 57 th 5.4.2 Risks related to debt in a foreign currency 57 y te 5.4.1 Impact of debt on expenses 55 re 5.4 Analysis on debt impacts 55 n va 5.3.3 Method of cash flow management 52 (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© h ng 5.4.2.2 Interest rate risk 60 p ie 5.4.3 Impact of debt on profits 61 5.5 Conclusions 65 n w Chapter 6: Research conclusion 66 lo 6.1 Summary of study 66 ad 6.2 Implications and recommendations 67 y th 6.3 Future research and limitations 69 ju yi Bibliography 70 pl n ua al n va oi m ll fu tz a nh z ht vb k jm om l.c gm an Lu n va y te re ac th (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© h ng ABBREVIATION p ie n w APBH Amata Power (Bien Hoa) Limited AP Amata Power Limited lo Amata Viet Nam Joint Stock Company BP Banpu Public Company Limited BIDV Bank for Investment and Development of Vietnam ad Amata VN yi ju y th Earnings before interest and tax Kreditanstalt fur Wiederaufbau n KfW Deutsche Investitions - Und Entwicklungsgesellschaft MBH ua al EBIT pl DEG Return on assets ROE Return on equity ROIC Return on invested capital ROS Return on sales TIE ratio Times-Interest-Earned ratio VCB Bank for Foreign Trade of Vietnam (Vietcombank) n va ROA oi m ll fu tz a nh z ht vb k jm om l.c gm an Lu n va y te re ac th (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© h ng 5.5 CONCLUSIONS p ie The above analyses show that APBH has good debt repayment ability during borrowing process The credit-worthiness is reflected through three elements as n w following: lo • Liquidity of APBH from 2002 to 2009 maintained a good level with the high ad ratios APBH can fulfill its short-term liabilities and overcome difficulties in the y th ju uncertain conditions of business environment which affects profitability of firm yi • The firm has controlled debt efficiently Debt ratios reduced quickly during pl the period of 2002 – 2009 ua al • Business activity of firm is more and more profitable due to the efficiency of n n over years va using assets and equity Fixed assets turnover and total assets turnover moved fast fu followings: oi m ll Debt impacts the firm’s financial performance through three aspects as a nh • Debt creates the interest expenses which makes the reduction in profit tz Although using debt financing has a advantage of tax savings, APBH was in the z ht vb time of four tax-exemption-years and four 50%-tax-reduction years during the period of 2002-2009 So, APBH did not gain many advantages of tax savings due to k jm financial leverage gm • Debt in a foreign currency causes the financial risks as following: l.c o In comparison with the interest rate of two big state-owned banks in Lu overseas banks and two parent companies in Thailand om Vietnam, APBH does not have to face interest rate risk when borrowing from two an o The table 5.11 shows that the foreign exchange rate risk is not clear n va although the exchange rate between USD and VND in two last years changed so • The outcomes of the above analyses indicate that the return on equity ac 65 th increases, when the financial leverage decreases y te re much (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© h ng CHAPTER p ie RESEARCH CONCLUSION n w lo This chapter will draw conclusions from the data analysis, present ad recommendations as well as the limitation of the study The first section y th summarizes the conclusion of the research The second section presents the ju yi implication of the study and some recommendations The last section ends with the pl limitation of the study ua al n 6.1 SUMMARY OF STUDY va n Electricity industry plays a key role in the country It is less affected by oi m ll fu turmoil of economy like other industries, because its supply ability has not still met enough demand yet Although the firms in the industry have to operate with a nh maximum capacity, Electricity of Vietnam has still bought from outside firms The tz tariff of the firms in industry is fixed in the agreement with Electricity of Vietnam, z so there is not any competition between the electricity firms However, the ht vb electricity firms have to incur the changes in tariff of input data Risks are the k jm materials shortage, the damages of engine gm APBH is a joint-venture company which operates in the power market in Vietnam APBH monopolizes the electricity supply in Amata industrial park with om l.c the tariff considered by Electricity Regulation Authority of Vietnam and approved by Dong Nai People’s Committee The particular risks of APBH in business activity Lu an are the changes in EVN tariff, fuel prices, foreign exchange rate, and the number of APBH is a typical case study in terms of debt financing due to the initial ac 66 th annual installments are the huge burden to the company However, during eleven y te owners (USD4,428,571) is 2.46 times Under the rather high debt ratio, the semi- re ratio of total long-term borrowings (USD10,900,000) and total equity from the n va running hours (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© h ng years APBH not only paid off over a half of loan and interest but also accumulate p ie profits to expand business operation As of 31 December 2009, APBH has repaid USD8,842,112 The balance is USD2,057,888 will be paid within four periods from n w 2010 to June, 2011 Total of accrual interest was paid with the amount of lo USD4,537,282 The findings in chapter reflect APBH has managed debt ad efficiently y th In accordance with the traditional Dupont system, the return on equity is ju yi improved when the firm becomes more profitable, efficient and leverage However, pl the findings in chapter indicate that return on equity of APBH increases overtime ua al due to: n • Increase in net profit margin va n • Increase in total asset turnover ratio fu oi m ll • Decrease in financial leverage multiplier The outcome is consistent with the extended Dupont system because the a nh extended model shows that high financial leverage does not always increase ROE tz The higher financial leverage may offset the benefits of higher leverage due to z higher interest expense rate ht vb k jm 6.2 IMPLICATIONS AND RECOMMENDATIONS gm According to the analysis on debt financing of APBH and findings in chapter 5, to use debt efficiently, the firms should understand thoroughly their own financial l.c om ability, prepare a definite disbursement plan as well as have a debt repayment policy Lu in detail The results in chapter also shows that APBH has managed liquidity an comprehensively because the firm has set up and applied sound and prudent ac th deposit with term of three months Because the interest rate of fixed deposit with y te be better if the firm invests the idle cash in other business operations instead of re liquidity demands well, APBH uses idle cash in banks rather conservatively It will n va liquidity policies Although APBH has monitored, measured and controlled the term of three months is not high 67 (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© h ng Another factor affecting debt repayment ability is inventory management p ie Product of APBH is the power, producing or buying and selling the power occur at the same point of time So APBH does not have to tie up money due to storing n w goods in process, and finished goods Inventories of the firm are mainly raw lo materials (fuel oil, diesel oil, lubricant, chemical, …) and spare parts for ad maintenance APBH always concentrates on the raw materials, controls them rather y th tightly and maintains them at low level, but still insures that the low stock keeping ju yi is not affected the production schedules However, the figures in the reports during pl eight years indicate that the spare parts are stored too much in the long time So ua al APBH should decrease the level of spare parts on hand by considering the balance n va of the costs of spare parts with the benefits of spare parts, namely estimating exactly n the true costs of carrying spare parts such as direct costs of storage, insurance, taxes fu oi m ll and the cost of money tied up in spare parts Otherwise, keeping spare parts too much in the long time leads many obsolete spare parts; that is inefficient and costly a nh and the firm can not maximize profits tz Analyzing the financial risks in chapter indicates that foreign debt has z more benefits than local debt because its interest rate is rather stable However, ht vb foreign debt will be more options for APBH as well as other firms if the foreign k jm exchange risk can be managed In the recent years, a large difference between the gm foreign exchange rate stipulated by the State Bank of Vietnam and the market foreign exchange rate causes many difficulties for APBH in buying USD to repay l.c om the interest and principal to foreign creditors In order to avoid in a passive position Lu in buying foreign currency, the firm should find some big banks in Vietnam and has an a good business relationship with these banks When a foreign currency deficiency n va in the market occurs, these banks always reserve the definite amount of foreign 68 ac exchange policies One of the policies is foreign exchange rate stabilisation The th well as settling the other costs to foreign suppliers by creating more flexible foreign y te Besides, the government should support the firms in repaying foreign debt as re currency for their important customers (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© h ng difference between the foreign exchange rate stipulated by the State Bank of p ie Vietnam and the market foreign exchange rate should be as narrow as better n w 6.3 FUTURE RESEARCH AND LIMITATIONS lo Due to the limit of time as well as the difficulties in finding the financial data ad from electricity firms which operate from loan capital in a foreign currency, the y th study is only conducted at APBH Because it is just a case study, the result of the ju yi study can not be applied to other firms pl The study mainly conducted time-series analysis or comparing with its past ua al performance The results should be compared with the aggregate economy, its n n va industry or industries, its major or competitors within the industry oi m ll fu tz a nh z ht vb k jm om l.c gm an Lu n va y te re ac th 69 (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© h ng BIBLIOGRAPHY p ie Vietnamese n w Nguyen Minh Kieu (2008) Tai Chinh Doanh Nghiep Nha Xuat Ban Thong Ke lo Nguyen Thi Ngoc Trang and Nguyen Thi Lien Hoa (2007) Phan Tich Tai Chinh, ad Nha Xuat Ban Lao Dong Xa Hoi y th yi ju L.H.T (2007) “Kinh doanh bang tien cua nguoi khac.” Tap chi tai chinh no (515) pl 2007 : 25-27 ua al L.H.T (2007) “Cac chi so bao ve “suc khoe” tai chinh cua doanh nghiep.” Tap chi n tai chinh, no 12 (518) 2007: 26-29 va n Nguyen Van Tien (2008) “Phong ngua rui ro ty gia toan quoc te.” Tap fu 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Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© h ng Joseph Tham (2003) Estimating the cost of capital with debt financing in a foreign p ie currency Nguyen Minh Kieu (2001) Financial Management and Profitability of Small and n w Medium Enterprises lo ad Ninh Kieu (2010) “Monetary changes in pipeline.” Vietnam investment review no ju y th 961/March 15-21, 2010: yi Ninh Kieu (2010) “Dong devaluation may miss mark.” Vietnam investment review pl no 986/September 6-12, 2010: 14 ua al n Ninh Kieu (2010) “Vinashin investigation set unmask wrongdoings.” Vietnam n va investment review no 986/September 6-12, 2010: oi m ll fu Le Xuan Nghia (2010) “Devaluation not a knee-jerk action.” Vietnam investment review no 985/August 30-September 5, 2010: 15 a nh Nhu Ngoc (2010) “Vinashin still afloat.” Vietnam investment review no tz 988/September 20-26, 2010: z ht vb Ross, S.A., Westerfield, R W and Jaffe, J (2005) Corporate Finance, 7th edition, k jm Irwin and Mc Raw-Hill, Boston review no 985/August 30-September 5, 2010; 15 l.c gm Nguyen Thanh (2010) “Firms feel heat from FX changes.” Vietnam investment an Lu investment review no 961/March 15-21, 2010: 15 om Thanh Tung (2010) “Exchange rate change is squeezing enterprises.” Vietnam William G.Zikmund (1997) Business Research Method, 5th edition, The Dryden va n Press ac th 71 y te http://www.kpmg.com.sg/brochures/BPS_Brochure_Liquidity_Mgmt.pdf re http://www.businessfinance.com/debt-financing.htm (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ© (Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©(Luáºn.Văn).Debt.Financing.A.Case.Study.Of.Amata.Power.(Bien.Hoa).Limited Luáºn.Văn.Thạc.SÄ©