Analyzing the efficiency of capital use at the parent company vietnam national petroleum group (petrolimex)

Analyze the actual effectiveness of capital use at the Parent company -Vietnam National Petroleum Group...482.2.1.Analyze the efficiency of using business capital...482.2.2.Analyze the a

THEORETICAL BASIS FOR ANALYZING EFFICIENCY

Theory of the efficiency of using capital at an enterprise

1.1.1 Definition and characteristics of capital

All enterprises must have enough capital to conduct their businesses. Capital is vital because it drives the establishment, operations and development of any business Depending on different perspectives and research fields, business capital can be defined in different ways.

According to the philosopher Karl Marx: “Enterprise capital is capital, the one that gives surplus value and is an input factor in the production process” Thus, it can be understood that capital is a means of production, which is spent on forming necessary elements for the production process, in order to make added value for an enterprise

According to the American economist Paul Samuelson, capital is the input factor for the production and business activities of an enterprise, or it can be seen that capital is the goods and materials produced to serve a business process of the firm Hence, based on his point of view, capital is assets of an enterprise that contribute to the profit.

According to David Begg, the author of the book "Economics", capital is divided into two types: financial capital (money and valuable papers of the business) and physical capital (stocking of goods, products, etc.) In consequence, David Begg has added a definition based on the view of the Economist Paul Samuelson

In general, it can be seen that, although placed under many different perspectives, basically according to economists, capital is not only an important input factor but it is also directly involved in the business process throughout the existence and development of an enterprise The value of capital depends heavily on objective factors such as micro and macroeconomics because the economy is constantly fluctuating, so regulation and effective use of capital is also one of the most important tasks that firms need to pay special attention to make use of the full advantages of the value that capital would bring.

+) Capital is not only expressed in money or in-kind values which are called fixed assets such as machinery, factories and equipment but also in tangible assets such as invention certificates, secret insight companies or loan costs.

+) Capital can be considered as a special commodity because it is able to be exchanged in financial markets.

+) Capital must be tied to one or more certain owners and cannot be used to invest without the permission of the owner and for profit-oriented enterprise, capital is used for business activities in order to make profits

+) Capital must be accumulated in a large enough amount to invest in business activities.

+) Capital is always mobilized and rotated to achieve the highest profits while minimizing expenses.

1.1.2 Classification and the role of business capital

1.1.1.1 Based on the circulating characteristic a) Fixed capital

Fixed capital is the monetary expression of fixed assets, it is a part of business capital, gradually rotates part of the production cycle, recovers part of its value after each operating cycle and completes a cycle when initial investment in fixed capital recovers completely If fixed capital could be used effectively, an enterprise can not only recover the initial amount but also enhance its production capacity.

Fixed assets based on the existence are divided into two types: tangible fixed assets and intangible fixed assets

+) Tangible fixed assets: They are assets with specific physical forms that take part in lots of production and business processes such as factories, machinery, equipment and transportation And based on the current regulations on the management of fixed assets (Article 3, Circular No. 45/2018/TT-BTC), an asset with a cost equal or greater than 30 million VND and the useful time from 1 years, will be recognized as a tangible fixed asset.

+) Intangible fixed assets: On the other hand, intangible fixed assets are assets that do not have a specific physical form but still show a certain value related to the business cycle of an enterprise such as goodwill, patents, brand, copyrights, trademarks, licenses and permits, corporate intellectual property.

Besides the existence, fixed assets can also be divided into 3 types according to the usage (used for production and business activities, used for welfare purposes, national defense, security and used for preservation and storage of the State's household), divided into 2 types according to economic tools (used inside and outside of production and business) and divided into 3 types according to the situation (in use, not yet used and not needed) In general, fixed assets in an enterprise participate in the production and business cycle as a labor tool to create surplus value, during the process, the initial cost will not change but it gradually converts into the value of the output product, the costs incurred in the conversion process will be compensated after the product is consumed. b) Working capital

Working capital is an important factor associated with the entire production process of an enterprise and is usually expressed in cash advances to create production liquid assets, circulating liquid assets and a part to pay wages to employees to ensure that the production and business process is smooth and not interrupted Unlike fixed capital where the value will gradually transfer into the value of output products, working capital transfers its entire value into output products after one operating cycle In one operating cycle, working capital changes its form of existence and transfers its value continuously A typical example is a manufacturing enterprise The cycle starts with monetary capital This amount will be used to form necessary current assets such as raw materials and fuel After the production process, raw materials become work-in-progress (WIP) and finished goods. When finished goods are sold in the market, the enterprise gets money back.

So, after an operating cycle, working capital returns to the monetary form.

Working capital can be defined as “initial investment in current assets to maintain the smooth operations of a company in a particular period" This is the gross definition of working capital Working capital is also known as the variance between current assets and current liabilities This is the net definition of working capital That means Net Working Capital (NWC) is equal to (Current Assets - Current Liabilities) This definition considers not only the current assets but also its liquidity to cover the short-term obligations of a company.

Working capital is an important factor in the process of production and business activities, so it requires a hard line on management and organization to always ensure the minimum amount of working capital to provide for production activities At the same time, it is also necessary to have flexible measures and policies to organize effective capital use, quickly adapt to fluctuations in the world economy, speed up the capital turnover in the period, shorten the business cycle in the production period, save capital cost, etc.

1.1.1.2 Based on the source of capital a) Owner’s equity

It is the capital of the owners and investors that contribute to joint venture and associations, through that capital the enterprise does not have to commit the payment In other words, equity is not a debt, it is completely owned and controlled by the enterprise and formed from many different sources.

Theory of analyzing the capital use efficiency at an enterprise

1.2.1 Definition and objectives of analyzing the capital use efficiency

Business capital is vital for the production process of all enterprises. But the most important thing is to use capital effectively and efficiently to ensure the final goals of financial management That means managers must deploy and make full use of all available resources to maximize profit as well as shareholders’ wealth.

The efficiency of capital use is an economic category that reflects the level of exploitation and use of capital in the production and business activities of an enterprise in order to maximize profit at a reasonable cost.Improving capital efficiency is the priority objective of every enterprise.

Improving the efficiency of capital use not only ensures financial safety for businesses, limits risks, increases incomes for employees, expands production and business and increases profits, but also helps businesses increase prestige, improve the competitiveness and position of enterprises in the market It can be said that the efficiency of capital use is actually a measure of the level of use of human and financial resources of an enterprise, which is a fundamental issue associated with the existence and development of enterprises In the process of using capital, enterprises need to solve the following problems to achieve high efficiency:

First is ensuring the saving, which means that the enterprise's capital must be used rationally and for the right purposes, avoiding wasting capital or leaving it unprofitable.

Second is to promote investment deeply and expand the scale of production and business when necessary.

Third, enterprises must achieve the goals set out in the business plan, capital efficiency is the most important goal that enterprises need to achieve

In conclusion, the efficiency of using capital of the enterprise reflects the level of exploitation, use and management of the capital in production and business activities with the aim of generating maximum profit with the used capital The efficiency of capital is quantified through the system of indicators showing the relationship between outputs and inputs of production and business by monetary measure, the relationship between obtained results and costs.

Analysis of capital efficiency is a collection of methods that allow to evaluate the past and present performance of the enterprise as well as the future situation of the enterprise to help managers make effective management decisions, consistent with their goals

* Objectives of analyzing the efficiency of business capital use

In order to help managers who are interested in business operations to make the right decisions in business, analyzing the efficiency of capital use of the enterprise should achieve the following objectives:

- To evaluate the efficiency of capital use of enterprises accurately in different perspectives such as the efficiency of working capital, working capital turnover, receivable turnover, inventory turnover rate to satisfy the information for anyone who is interested in business activities such as investors, credit providers, business managers, tax authorities, employees

- Orienting the decisions of managers who are interested in the enterprise based on actual situations such as investment decisions, financing or profit dividend

- Become the basis for financial forecasts, helping analysts predict the financial potential of enterprises in the future.

- These methods as a tool to control the operation of enterprises on the basis of checking and evaluating the achieved results which would be compared to the planned targets, estimates or norms Hence, the enterprise can identify the strengths and weaknesses in business activities, helping businesses make the right decisions and solutions to ensure business efficiency This goal is especially important for business managers.

1.2.2 The method to analyze the efficiency of using capital in the firm

To conduct business performance analysis at enterprises, analysts often use a combination of specific technical methods in analysis such as:Evaluation method, Factor analysis method, Forecasting method… Each method has different effects and is used in different analysis content.

- Comparative method: This is the most commonly used method in analyzing the efficiency of working capital This method is used to evaluate the results, determine the position and general trend of fluctuations of each indicator in the shortest period of time in terms of efficiency in using working capital of the enterprise between different business periods.

+) Requirements: There must exist quantities or criteria that need to be compared and the quantities or criteria must ensure to be compared (it must ensure the unity of measurement units, consistency of economic content and unity of time).

+) Determining the comparative base: The comparative base can be the value of the analysis indicator of the plan period based on the norms, or the value of the analytical indicator of the previous period (previous years) or the average value of the competitor in the same industry.

+) Techniques: By absolute numbers or relative numbers

- Division methods : In analyzing the efficiency of working capital, people often use the method of division according to different perspectives:

+) According to the arising time: subdividing the process, results and business efficiency in the order of arising time.

+) According to the arising space: subdividing the process, results and effectiveness according to the arising location and the development of the research target.

- The comparative relationship method : The comparative relationship is an analytical method used to examine the economic relationship between economic events and phenomena to the efficiency of using business capital of the enterprises in order to consider the balance of the indicators that reflect the efficiency of using business capital in the operation process.

To analyze the efficiency of using business capital, people often use analytical methods: The Dupont method, The determining level of influence of each factor method; The factor analysis method.

- Dupont method: is a method used to analyze an aggregated financial indicator into detailed financial indicators that are interrelated in order to find the best way to affect the aggregated financial indicator

- Determine the level of influence factors method: To determine the influence of factors on the efficiency of using working capital of an enterprise, one of the following three methods can be used:

+) This method is used when the relationship between analytic indicators and their affecting factors can be expressed in product or quotient equations

Database

To conduct a financial analysis of enterprises, it is necessary to collect detailed documents of the analysis process Typically documents used for analysis include:

- Financial statement and management accounting report system:

Financial statements are used as the primary source of data when analyzing business finances According to the current accounting regime, the financial reporting system consists of 4 reports: balance sheet, income statement, cash flow statement and notes to financial statements Basically, the financial statements provide data for the analyst to take a general view of the financial health of the enterprise, the fundamental financial activities that have taken place in the past and forecast preliminary financial risks or opportunities in the near future

Management accounting reports provide important information for financial analysis Because they provide detailed and specific information for corporate governance, reports on the increase and decrease of fixed assets, the situation of investments, reports on details of income, expenses, inventory,receivables, payables, pricing mechanism of inputs, outputs, cost estimates and the implementation of cash estimates documents from accounting reports management accounting brings a general view of the financial picture.

The economic, technical and financial plan of an enterprise is like the railway of an enterprise, it orients the train - the business goes in the right direction, to the destination safely and effectively In financial analysis, the planning documents help the analyst to have a basis to compare and evaluate the implementation of the set goals and tasks in terms of progress, speed and efficiency And at the same time, these plans are also the basis for locating the measure of deviation or the arising of abnormal factors so that managers can make adjustment decisions timely.

Analytical documents are not only limited to financial statements, management accounting reports or planning systems, but also include non- accounting documents such as summary reports, inspection minutes, audit reports, which is giving specific reasons for the completion or non- fulfillment of the targets, strengths and weaknesses of them In addition, the reference to specialized journals, information on competitors, economic and financial policies and coordination with many information sources will also help to make the assessment more accurate and clearer.

Completeness measures the amount of information; relevance reflects the quality of information In order to ensure the systematicity of analytical information, it is compulsory to look up archives from the analytical data bank of each relevant unit and organization, so the organization of the data bank is essential To ensure the systematicity of analytical information, the search for archives from the analytical data bank of each relevant unit and organization is indispensable Hence, the organization of data banks is currently being carried out by units and organizations and is becoming more and more complete with the support of information technology.

Because the source of information is extremely diverse, if people want to ensure the correctness of the analysis results, before calculating the analytical criteria they need to check and compare clearly the original database based on the important aspects and contents.

The content of analyzing the capital use efficiency at an enterprise

1.4.1.1 Content of analyzing the efficiency of using business capital

Analyzing the efficiency of using capital helps managers see whether the efficiency of the working capital is high or low, increasing or decreasing, hence assessing whether the management and use of business capital of the enterprise is appropriate or not, is the enterprise managing and using business capital effectively?

*Analysis criteria: To analyze the efficiency of using business capital of the enterprise, we use the following criteria:

(1.1) B usiness capital efficiency (HSkd )= Total revenue and income

Average balance of working capital ( Skd )

HSkd = Short-term investment (Hd) * Working capital turnover (SVld)

(1.2) Hd= Average of short-term asset

(1.3) Working capital turnover (SVld ) ¿ Total revenue and income Average balance of short-term capital (Sld )

Using comparative methods and factor analysis methods to evaluate the efficiency of using capital:

Step 1: Determine HSkd in the base period and the next period.

Step 2: Determine clearly the one that has to be analyzed.

∆HS kd = HS kd1 - HS kd0

Step 3: Determine the effect of each factor on the efficiency of using capital.

- The effect of the short-term investment coefficient on the effectiveness of using business capital:

- The effect of working capital turnover on the effectiveness of using business capital

∆HS kd (SV ld ) = H d1 × (SV ld1 -SV ld0 ) Step 4: Analyze the characteristics of each factor

- Direction of impact: Investment coefficient (Hd) has a positive effect on the effectiveness of using business capital (HSkd)

+) Objective reasons: Business environment; Government policies

+) Subjective reasons: Investment policies; The level of organization, management and use of working capital…

- Evaluation methods: When the investment coefficient changes make the efficiency of working capital changes, whether the change is accurate with the characteristics of the business industry of the enterprise or not?

* Working capital turnover (SV ld )

- Direction of impact: Working capital turnover (SVld ) has a positive effect on the effectiveness of using business capital (HSkd)

- Cause factors: Basically, the influence of this factor is subjective because its increase or decrease depend on the capital mobilization policy as well as the capital needs of the enterprise

- Evaluation methods: When analyzing this factor, it is necessary to compare the change of working capital rate with the change of net turnover rate.

- Management solutions: In order to increase the speed of working capital, the basic measure is not to reduce the capital, because reducing capital means also reducing the size of the business, reducing the competitiveness of the business However what needs to be done is to use capital economically and effectively, shorten the time of working capital in each stage of the conversion process.

1.4.1.2 Content of analyzing the efficiency of using fixed capital

Analyzing the efficiency of fixed capital use to evaluate the effectiveness of using and managing fixed capital of the enterprise, thereby assessing the situation of using fixed capital of the enterprise.

When analyzing the efficiency of using fixed capital, we use the efficiency of using fixed capital ratio

- Efficiency of using fixed capital ratio:

(1.4) Efficiency fixed capital coefficient ¿ Net revenue

The means of fixed capital

(In which: net revenue is net revenue from sales of merchandises and services rendered)

This figure shows how much net revenue is generated for a dollar of fixed capital invested The higher this ratio, the higher the efficiency of using fixed capital.

Step 1: Determine HSCD in the base period and the next period.

Step 2: Determine clearly factors that have to be analyzed.

∆HS CD = HS CD1 - HS CD0

Step 3: Using the ceteris paribus method to determine the influence of factors

- The effect of net revenue on the effectiveness of using fixed capital

∆HS CD (Net revenue) = DTT Sc d 1 0 − H S CD0

- The effect of the average fixed capital on the effectiveness of using fixed capital:

∆HS CD (S CD ) = H S CD1 - DTT Sc d 1 0 Step 4: Analyze the characteristic of each factors

- Average fixed capital: In the condition of all other things being equal, the average fixed capital has a negative impact on the effectiveness of using fixed capital This component is affected by: fixed asset and investment policy, capital mobilization policy,…

- Net sale: In the condition of all other things being equal, the net sale has a positive impact on the effectiveness of using fixed capital This factor is influenced by the production policy of the enterprise such as quantity, quality, product types and the sales policy such as sales method, advertising, product market

1.4.1.3 Content of analyzing the working capital coefficient

Analyzing the working capital turnover rate will help the manager see whether it would be fast or slow or which factors affect the working capital turnover rate of the enterprise to make appropriate management decisions.

When analyzing the working capital turnover rate of enterprises, two criteria are used: the rotation of working capital turnover and the working capital turnover period

(1) Working Capital Turnover (SV ld )

(1.5 ) Wor king Capital Turnover (SV l d ) = Total revenue and income

The means of working capital (Sl d )

SVld shows the turnover of working capital during the period of the firm The larger the working capital turnover coefficient is, the faster the working capital turnover rate and in reverse.

(1.6 ) K ld = Days in the reporting period

SV l d = Average of working capital

Working capital turnover period shows how many days the working capital can be turnover on average The smaller the period of working capital turnover, the faster the working capital turnover rate and in reverse

*Analysis method: Using comparative method and factor analysis method to evaluate working capital turnover rate.

Step 1: Determine SVld and Kld in the base period and the next period.

Step 2: Determine clearly factors that have to be analyzed.

Step 3: Using the ceteris paribus method to determine the influence of factors

- The effect of the Average working capital

On SV ld is: ∆SV ld (S ld ) = LCT Sl d 1 0 - SV ld0

On K ld is: ∆K ld (S ld ) = Sl d d 0 1 - K ld0

- The effect of the actual rotation:

On SV ld is: ∆SV ld (Total net and revenue) = SV ld1 - LCT Sl d 1 0

On K ld is: ∆K ld (S ld ) = K ld1 - Sl d d 0 1

- Total effects of these factors.

∆ SV ld (S ld ) + ∆SVld (Total net and revenue) = ∆SVld

∆K ld (S ld ) + ∆Kld (Sld) = ∆Kld Step 4: Analyze the characteristics of each factor.

* Due to the change of the Average working capital

- Impact direction : In condition of all other things being equal, the average working capital (Sld) has a negative impact on the speed of working capital turn over (SVld) and positive impact on the days of working capital (Kld)

- Reasons : Basically, the influence of this factor is subjective, its increase and decrease based on the capital mobilization policy as well as the capital needs of the enterprise.

- Evaluate methods: It is necessary to compare the rate of change of working capital with the rate of change of net turnover.

- Management measures: In order to speed up the working capital turnover, instead of focusing on reduce capital which would lead to the decrease of business scale or the competitiveness, enterprises should focus on using capital economically and effectively, shortening the time of working capital in each stage of the conversion process

* Due to the change of total revenue and income in the period of the firm:

- Impact direction: In the condition of all other things being equal, the total net turnover has a positive impact on the speed of working capital turn over (SVld) and negative impact on the days of working capital (Kld)

- Reasons : Total net turnover is influenced by net sales, financial income and other income Meanwhile net revenue is influenced by the quantity of goods sold, the structure of goods sold and the price of goods.And it is also affected by external factors such as social average income,substitutability of products at the same type, season of product consumption, quality of product advertising… Thus, the influence of this factor is both subjective and objective

- Evaluate methods: Considering the correlation between the Average working capital (Sld) and the total net turnover

- Management measures: This factor shows that the measure to increase working capital turnover is to increase net turnover, especially sales of products, rise achievements in the consumption and provision of services to the outside After all, this is also a business goal if you want to increase market share and maximize profits.

Step 5: Determine the amount of working capital saved or wasted due to a change in working capital turnover.

1.4.1.4 Content of analyzing the inventory turnover ratio

ANALYZE THE ACTUAL SITUATION OF CAPITAL USE

Overview of the Parent company - Vietnam National Petroleum Group

2.1.1 Brief Introduction about the company

- Company name: Vietnam National Petroleum Group (Petrolimex) International transaction name: Vietnam National Petroleum Group (Petrolimex)

- The current Vietnam National Petroleum Group (Petrolimex) was established from the equitiation and restructure of Vietnam National Petroleum Corporation.

- Main operations: Petroleum trading, Transportation services, Liquified petroleum gas, Petrochemical products, Financial services, Construction and Commerce.

- Chairman of the management board: Mr Pham Van Thanh.

- Headquarters: No 1 Kham Thien St., Kham Thien Ward, Dong Da District, Hanoi, Vietnam

- Office: Floors 23-24, VCCI Tower, No 9 Dao Duy Anh St., Dong Da District, Hanoi

- Chartered capital: 12,938,780,810 thousand VND (By letter: Twelve thousand nine hundred and thirty eight billion, seven hundred and eighty million eight hundred and ten thousand dong)

2.1.2 The development process and organizational structure of the

Parent company - Vietnam National Petroleum Group a) The development process

- On 12 January of 1956: The Oil and Grease Corporation which was set up by Decree 09/BTN by The Minister of Commerce

- On 17 April 1995: Vietnam National Petroleum Group was established by Decision 828/QD-TTG of 31 May 2011 by the Prime Minister’s decision => continues its predominant role in domestic market

- On 28 July 2011: The initial public offering (IPO) auction was successfully completed by the Group at the Hanoi Stock Exchange.

- On 1 December 2011: Vietnam National Petroleum Corporation officially operated in the form of a Joint Stock Company with the name Vietnam National Petroleum Group.

- On 17 August 2012: The Group becomes a public Joint Stock Company as per document 2946/UBCK-PLQH by the State Securities Commission

- On 21 April 2017: The opening day of trading on HOSE with a reference price of 43,200 VND per share. b) Characteristic of organizational structure

1 Petrolimex subsidiary companies (wholly-owned by Petrolimex) 45

Petrolimex single-member company limited in domestic market 43

Petrolimex single-member company limited in Singapore 1

Petrolimex single-member company limited in Laos 1

2 Subsidiarry companies (wholly-owned by Petrolimex) 3

Petrolimex Construction and Trading Corporation (PGCC) 1

3 Corporations/companies directly owned by the Group with more than 50 per cent of the capital 4

4 Joint ventures and associates owned by the Group with more than 20% of charter capital 11

(Source: Calculated based on the Parent company's statements - Petrolimex

Petrolimex office 52 Corporations/ subsidiary companies

47 companies, corporation wholly-owned by Petroliex

5 corporations/companies directly owned by the Group with more than 50 per cent of the capital

HCM city representative officce c) Detailed of the structure

- Serving as the appropriate authority to oversee all Petrolimex operations on behalf of the General Meeting of Shareholders.

- The Supervisory Board is independent of the Board of Directors and the General Director in the exercise of its rights and obligations and it is required to provide reports to the Annual General Meeting of Shareholders.

- Examine the logic, legality, sincerity and degree of caution used in corporate management and administration, as well as the consistency, regularity and appropriateness of accounting, statistical and financial reporting.

- Evaluate the accuracy, reliability and completeness of the Group's Business Situation Report, its Annual Financial Report, its Six-Monthly Financial Report and its Report on Management Evaluation of the Board of Directors.

- Assessing the Group's internal control, internal audit, risk management and early warning systems for effectiveness and efficiency.

- Examining the Group's accounting records, books and other documentation, as well as its management and day-to-day operations.

* The department of finance and accounting

- Advise the Board of Directors on matters pertaining to the Company's finances while also strictly adhering to the rules on capital and asset management, fund allocation, accounting, statistics, audit regimes and other rules established by law and the Company's Charter; this includes being in charge of the accuracy of the Company's financial statements.

- Create an annual accounting and financial strategy in accordance with the Board of Directors' decision.

- As determined by the Board of Directors, manage capital and put it to the best use - As General Director, oversee the execution of the plan for inventory, pricing and asset management.

- Put the Company's financial plan into action in accordance with the State's Accounting and Statistics Ordinance.

- Scheduling, managing and monitoring the completion of accounting, statistics, accounting and the gathering and processing of internal accounting data.

- Financial information and reports on a quarterly, monthly and annual basis in compliance with the Company's Charter and any applicable legislation.

- Interactions with banks for the purpose of borrowing money to finance production and company investments d) Financial situation

+) Toward energy products that are clean, high-quality and environmentally friendly

+) Hold competitions and training sessions to raise staff skill levels

+) Being diligent and effective in preserving the brand.

+) Increase competition through service excellence and product differentiation

+) Working toward becoming a global petroleum corporation

+) Make the decision to market Euro 5-standard Diesel (DO 0.001S-V) products.

+) Owner’s equity: 27,807,446 million VND (count to Quarter 4/2022)+) Chartered capital: 13,500 billion VND (75% owned by the State)

2.1.3 Operations of the Parent company - Vietnam National Petroleum Group a) Main role of the company

Petrolimex continues its predominant role in the domestic market as directed by the government with main business scope is to import, export and deal in petroleum, refining and petrochemical products, invest in other fields which Petrolimex is operating and other sectors allowed by law.

Besides petroleum products, oils, greases, petrochemical products , liquefied petroleum gas (LPG) and oil transport, Petrolimex invest in such fields as engineering, installation, mechanical and oil equipment, insurance, banking and other commercial and services activities in which several trademarks are classified as leading brands of Vietnam as PLC, PGC, VIPCO, VITACO, PJICO…

In order to support the nation's socio-economic development, national security and consumer needs, Petrolimex constantly works to ensure that there is an adequate and timely supply of various petroleum products In addition, Petrolimex is a leader in the provision of top-notch goods and in the application of new scientific technology to management of business, including the issuance of electronic invoices, cashless payment, or the system of facilities and materials that is secure and environmentally friendly.

Additionally, the Group places a high priority on developing presenting services at Petrolimex gas stations, maximizing the benefits of retail chain advantage, boosting company efficiency and selecting appropriate partners. b) Characteristics of the operation of the company in each sector

+) With a market share of 50%, Petrolimex dominates the petroleum trading market in Vietnam The petroleum system spans the entire nation with

43 member units directly dealing in gasoline and oil, 5,500 gas stations (including more than 2,700 stores owned by Petrolimex and more than 2,800 gas stations that are agents, general agents and franchisees throughout the nation) and a total gasoline storage volume of up to 2,215,550 m3.

+) Petrolimex has maintained production and sales at a steady rate of growth over the past five years by offering clean fuel sources that meet modern, high-class criteria, such as Euro 5-standard Diesel oil (DO 0.001S-V) and Ron 95 gasoline with Euro 4-standard (RON 95-IV).

+) The Group chooses and pioneers the supply of clean, high-quality energy products, including conventional energy and sustainable alternative energy, to the market through domestic and imported sources, such as E5 RON 92-II, Petrol RON 95-IV, Petrol RON 95-III, DO 0.001S-V,

+) One of the crucial commercial operations for ensuring the efficient flow of petroleum into Vietnam from overseas, from import hubs to ports to consumption agents all throughout the nation, is petroleum transportation.

+) The Vietnam National Petroleum Group owns two subsidiary companies that deal in petroleum transportation, Petrolimex Group Tanker (PGT), which operates in the water transportation industry and Petrolimex Transportation Service Corporation (PTC), which operates in the road transportation industry along with 570 km long petroleum pipeline system that connects all around of Vietnam.

+) The largest fleet of oil product tankers in Vietnam, comprising ocean, coastal and marine fleets as well as river barges, is operated by the five subsidiaries that make up the Petrolimex Tanker Company In order to ensure a smooth flow of petroleum from the terminal warehouse to the member units as well as retail systems across the country, the Petrolimex Tanker Corporation, which consists of 6 member companies, is one of the key units serving the petroleum business This helps the Group maintain its core activities.

+) Petrolimex Gas Corporation (PGC) is one of the most well-known names in the liquefied petroleum gas industry in Vietnam PGC operates in 63 provinces and cities across the country and provides services in a wide range of industries, including industrial production, agriculture, commerce, services and social consumption.

Analyze the actual effectiveness of capital use at the Parent company -

2.2.1 Analyze the efficiency of using business capital

The following analysis table illustrates how effectively business capital was used at the Parent company - Vietnam National Petroleum Group:

Table 2.2: Analyze the efficiency of using business capital

Total revenue and income million VND

1 Business capital efficiency ( Hskd) millio n VND

Average of short-term assets million VND 28,864,795 28,265,68

3 Working capital turnover (SVld) round 3.9020 3.0931 0.8090 26.15%

(Source: Calculated based on the Parent company's financial statements -

The Parent company's efficiency of using business capital in 2021 was 2.6652 times, while it was 2.1302 times in 2020, so the efficiency of using business capital in 2021 will increase by 0.5351 times, representing a 25.12% increase over 2020 This means that in 2021, each unit of capital invested in the company's production and business activities will generate 4.2188 VND of total income, but in 2021, on average, one unit of capital invested in production and business activities generates 2.6652 VND for the company, an increase of 0.5351 VND over the previous year The increase in working capital efficiency at the company was due to the influence of two factors: the short-term investment coefficient and working capital turnover, with the working capital turnover ratio having a greater impact on working capital efficiency than the short-term investment coefficient.

The chart below depicts the total assets of the Parent company - Vietnam Petroleum Corporation from 2019 to 2021:

Chart 2.2: Total asset of the company from 2019 to 2021

(Source: Calculated based on the Parent company's financial statements -

Petrolimex Group) +) Short-term Investment ratio

The short-term investment ratio in 2021 was 0.6830 times, a decrease of 0.0056 times with a 0.82% reduction rate compared to 0.6887 times in

2020 If all other factors remain constant, the short-term investment coefficient decreases by 0.0056, resulting in a 0.0175 decrease in working capital efficiency As can be seen, the short-term investment coefficient has a negative effect on working capital efficiency Because the company's investment policy tends to reduce the proportion of investment in short-term assets and increase the proportion of investment in long-term assets in 2021, the short-term investment coefficient decreased by 0.82%.

In particular, the company prioritized investment in inventory in 2021 for short-term assets (inventory at year's end compared to year's beginning increased by 3,269,604 million VND with an increase rate of 49.87%), while reducing the proportion of investment in other working capital like short-term customer receivables (down 20.42%) or cash and cash equivalents (down 54.62%) The item "Short-term receivables from customers" still makes up the majority of all short-term assets, even if there was a tendency for it to fall at 2021 (at the end of the year, it accounted for 95.76% and at the beginning, it accounted for 83.48%) To analyze these debts precisely for each product, the corporation must therefore combine with detailed documents.

Regarding long-term assets, the firm's long-term assets at the last year were higher than they were at the beginning of the year since the company made investments to create new assets during the year Long-term unfinished assets increased by 17,767 million VND, or 254.57%, from the beginning of the year to the end of the year As a result, it was clear that the company will not only concentrate on expanding its production and business activities in breadth, such as increasing revenue and market share, but will also deploy investment in depth to boost the organization's internal business and production capacity, emphasizing the promotion of business quality.

While the company's working capital turnover increased in 2021 by0.0809 times, or by 26.15%, compared to 2020, the short-term investment ratio declined by 0.0056 times with a reduction rate of 0.82% It demonstrates that the company's investment strategy in 2021 to mitigate the financial harm brought on by the pandemic has sped up the turnover of both working capital and business capital As a result, when compared to 2020, the company's short-term investment coefficient was deemed pretty appropriate.

In 2021, the company's working capital turnover was 3.902 times, up 0.809 times and 26.15% from 3.0931 times in 2020 When other variables are held constant, the company's working capital turnover in 2021 compared to

2020 grew by 0.809 times, resulting in an improvement in working capital efficiency of 1.0842 times This was thought to be the primary factor impacting working capital efficiency.

The total revenue and income in 2021 compared to 2020 increased by 25,203,412 million VND with an increase of 28.83%, while the company's average working capital balance increased by 599,112 million VND with an increase rate of 2.12% but slower than total revenue and income, leading to an increase in working capital turnover of 0.809 times This demonstrates that, in comparison to 2020, the company has a relatively good working capital policy Additionally, it demonstrates that in 2021, there have been positive developments in the company's product sales and business operations that provide revenue and income, as well as the efficient use of working capital and strong circulation and savings In order to continue promoting effective capital allocation, the company must combine this information with specific documents, identify any potential sources of backlog in advance and quickly offer working capital management solutions that are in line with its objectives, business strategy and the state of the external business environment.

Conclusion: Because the company's investment and capital use strategy was comparatively acceptable and effective, working capital management level has changed positively and brought outstanding achievements, the company's efficiency in using working capital in 2021 increases compared to 2020 The author can suggest the following measures to maintain the increase in capital efficiency as well as to improve the factors that negatively affect the company's capital use efficiency in the upcoming periods based on the analysis and evaluation of each factor affecting the efficiency of using working capital above:

+) Improve and enhance the organization's investment plan, precisely estimate the size, focus and degree of investment and develop an appropriate strategy for each period.

+) Regularly reviewing all forms of working capital to identify those that are backed up, slow to move, or increasing unreasonably and taking action to free them up helps the business maintain a working capital growth rate that was always lower than or equal to the growth rate of total revenue, which in turn increases working capital turnover.

+) Keep up the measures to quicken inventory turnover; quicken the turnover of receivables: For short-term receivables, especially short-term receivables from customers, it's important to detail debts by object and conduct periodic debt assessments by subject in order to take timely and appropriate debt collection and handling measures as well as have credit policies applied to each appropriate entity.

+) Constantly monitor revenue related items: In order to identify the variables that have a significant impact on the rate of revenue growth, it was important to pay close attention to the quantity and sales price of each consumable item during the period By identifying the root causes, you can then take steps to encourage revenue growth in the coming periods.

2.2.2 Analyze the actual efficiency of using fixed capital

The following analysis table illustrates how effectively fixed capital was used at the Parent company - Vietnam National Petroleum Group:

Table 2.3: Analyze the efficiency of using fixed capital

1 Efficiency of using fixed capital

(Source: Calculated based on the Parent Company's financial statements -

According to the study table above, the Parent firm, Vietnam National Petroleum Group, uses fixed capital efficiently 261.296 times in 2020 and 343.314 times in 2021, an increase of 82.017 times over 2020 This means that by 2021, on average, one VND of fixed capital would participate in the Group's production and business process and the Group will receive an additional 82.017 VND in net revenue In 2020, the Group will receive 326.354 VND of net revenue for each unit of fixed capital involved in the Group's production and business process.

The chart below depicts the fixed capital of the Parent company -Vietnam Petroleum Corporation from 2019 to 2021:

Chart 2.3: Fixed capital of the company from 2019 to 2021

(Source: Calculated based on the Parent Company's financial statements -

Average fixed capital and net revenue from sales and service provision are the two aspects that have an impact on the company's improvement in fixed capital efficiency In particular, we have:

The average fixed capital in 2021 was 323,372 million VND, which was a decline of 2,983 million VND when compared to the capital in 2020, which was 326,354 million, or 0.91% The drop in average fixed capital has improved the company's use of fixed capital by 2.101 times, assuming all other variables stay the same Because the company was on schedule to cover financial losses brought on by the pandemic in 2021, it cut its fixed capital investment in management equipment, office equipment or building supplies.

In addition to fixed capital, net revenue from sales and service provision improved The company's revenue was 85,275,195 million VND in

2020, However it has increased significantly by 2021 to 111,017,857 millionVND, a gain of 25,742,662 million VND and a rise of 30.19% The significant rise in net sales contributed to a 79.6071 times increase in the efficiency of fixed capital usage, holding all other variables constant The company's net revenue from sales and service provision increased in 2021 as a result of the petroleum business's successful performance (revenue increased by 25,408,909 million VND, or 29.8%), as well as other goods and services activities' similarly encouraging growth (revenue increased by 33.814 million with an increase rate of 155.8%)

Additionally, even though net revenue increased by 30.19% to 25,742,662 million VND in 2020 despite average fixed capital falling by VND 2,983 million, this illustrates that the economic group was still capable of managing the company to carry out successful spearhead business operations and generate high revenue The impact of the global economic environment, the greater price of imported crude oil compared to before and the significant rise in consumer demand following the easing of the pandemic distance may all be objective causes for the company's revenue to continue growing stronger than in 2020.

Analyze the actual profitability of capital use at the Parent company -

2.3.1 Analyze the actual basic profitability of business capital

The following analysis table illustrates the profitability of business capital at the Parent company - Vietnam National Petroleum Group:

Table 2.7: Analyze the basic profitability of business capital

Items Unit Year 2021 Year 2020 Different

Average business capital millio n VND

Average short-term asset millio n VND

Total revenue and income millio n VND

Net working capital turnover (SVld) rounds 3.9020 3.0931 0.8090 26.15

% Return before interest and taxes ratio (Hhd) times 0.0187 0.0151 0.0036 23.97

(Source: Calculated based on the Parent company's financial statements -

General analysis: When compared to 2020, the basic earning power

(BEP) increased by 0.0177 times with the rate 55.11% to 0.0499 times in

2021 Without accounting for taxes or the effect of the interest factor, this ratio represents the company's basic profitability (or in other words it was using a financial leverage tool) Consequently, while a dollar of company capital provides an average profit before taxes and interest of 0.0321 VND in

2020, it will produce an average profit before taxes and interest of 0.0499 VND in 2021 The company had a higher basic profit coefficient than Petrol Transport Joint Stock Company VIPCO (VIP) with the BEP = 0.0296 times and a smaller basic profit coefficient than Vietnam Transportation Joint Stock Corporation (PVT) with the BEP = 0.0921times This indicates that the Parent company continue to have a higher profitability ratio than other companies in

+) Short-term investment ratio (Hd): Enterprises' short-term investment ratio in 2021 was 0.6830 times, down 0.0056 times from 0.6887 times in 2020 The basic profitability ratio has decreased somewhat by 0.0003 times as a result of the change in the short-term investment coefficient, assuming all other variables stay the same Because the group changed its investment strategy in 2021 to favor investing in long-term assets rather than short-term assets, the short-term investment ratio of the group decreased By the end of 2021, the proportion of the company's long-term assets increased by 7.2%, while the proportion of short-term assets increased by only 2.44%.

+) Net working capital turnover (SVld): In 2020, the company's working capital turnover was 3.0931 times and it was 3.9020 times in 2021, a rise of 0.809 times and a 26.15% increase over 2020 The basic profitability ratio has increased by 0.0083 times as a result of the change in working capital turnover ratio, all other variables remaining constant Although net turnover and average short-term assets both climbed in 2021, the company's working capital turnover ratio declined since the overall net turnover growth rate was substantially quicker than the average short-term asset growth rate.

+) Return before interest and taxes ratio: The company's operating profit ratio in 2021 was 0.0187 times, an increase of 0.0036 times with an increase of 23.97% compared to 2020 of 0.0151 times All other factors being held constant, an increase in operating profitability has resulted in an increase in basic profitability of 0.0096 times The increase in operating margin was due to the fact that profit before interest and taxes (EBIT) grew at a faster rate than total net turnover (The growth rate of EBIT and total net turnover in

2021 compared to 2020 was 59.7% and 28.83%, respectively)

Conclusion: Consequently, the basic return on working capital in 2021 will be 0.0177 times higher than in 2020, owing to an increase in the number of working capital turnover cycles and an increase in operating profitability. This demonstrates that the enterprise's efficiency in using business capital was poor and it has yet to attract market investment capital (especially in the last year, the world political situation has been unstable and the tension in domestic and regional petroleum prices has increased significantly.) Even so, the BEP ratio of the Parent company - Vietnam National Oil and Gas Group can still be considered better than other enterprises in the same industry, indicating that the company has sufficient conditions and financial strength to generate income After all, the company must also prepare a contingency plan for each situation in order to avoid being negatively impacted by tax policies and financial leverage.

2.3.2 Analyze the actual net profitability of business capital

The following analysis table illustrates the net profitability of business capital at the Parent company - Vietnam National Petroleum Group:

Table 2.8: Analyze the actual net profitability of business capital

VND 1,637,270 1,092,425 544,845 49.87 Average total asset (Skd) million VND 42,259,381 41,043,08

2 Efficiency of asset use ratio

(Source: Calculated based on the Parent company's financial statements -

General analysis: The company has a 2021 net profit coefficient of

0.0387 times, up 0.0121 times and 45.56% from 2020's 0.0266 times This means that in 2020, on average, for each unit of capital used in the production and business process, the company will earn 0.0266 VND of profit after taxes,but in 2021, on average, for every VND of capital used in the production and business process, the company will earn 0.0387 VND of profit after taxes, an increase of 0.0121 VND compared to 2020 After the pandemic era with much volatility, the company's net profit ratio has increased, reflecting the favorable adjustments in the business scenario.

The chart below shows the total asset of the Parent company - Vietnam Petroleum Corporation from 2019 to 2021

Chart 2.7: Total asset from 2019 to 2021

(Source: Calculated based on the Parent company's financial statements -

+) Efficiency of asset use ratio (Hts) increased from 2020 to 2021 The corporation uses its assets 2.1302 times in 2020, but 2.6652 times in 2021, an increase of 0.5351 times and a rise rate of 25.12% Thus, the average amount of assets used in the operation of the company in 2020 will bring 2.1302 VND in revenue and profits, but by 2021 The company generated 2.6652 VND in revenue and income, up 0.5351 VND from the prior year, on average using 1VND of assets in the production and business process By increasing asset utilization while holding all other variables fixed, the net return improved by0.0067 times Both objective and subjective factors contributed to the company's increased asset usage efficiency Regarding the subjective causes,the improvement in the company's asset management and organizational structure, despite several challenges brought on by changes in the business market, was what led to an increase in economics Although petroleum was a necessary commodity category, supply chain disruption occurs before financial and currency fluctuations, epidemics and natural disasters in terms of objective causes because of the mutual impact of supply and demand interactions also directly affect the group's commercial operations However, the business has rules in place to make the best use of its resources in order to boost profitability and preserve its industry-leading position.

+) Net revenue in 2021, it reached 112,631,550 million VND, an increase of 25,203,412 million VND with a 28.83% increase over 2020 revenue of 87,428,138 million VND Despite many difficulties prior to the fluctuations of the global economy in the energy industry, as well as challenges due to the COVID-19 pandemic, the company still achieved good growth (As of September 2022, domestic petroleum production had increased by 17.6% over the same period last year), along with the increase in oil price, assets and revenue also increased sharply, the average total assets in 2020 was 41,043,085 million VND, in 2021 was 42,259,381 million VND with a ratio rate increased 2.96% The petroleum market was disrupted by supply in the first half of 2021, resulting in a decrease in business performance, but Vietnam National Petroleum Group maintained its position as the industry's leading enterprise when sales volume increased The economy grew rapidly at the end of the year In addition to being the leader in the field of petroleum trading, the petrochemical industry continues to lead the domestic market, in which the asphalt industry was growing well due to the infrastructure investment policy in 2020-2025.

+) Return On Sales (ROS): The ratio in 2021 was 0.0145 times, an increase of 0.002 times and a 16.34% increase over the ratio in 2020 of0.0125 times Thus, in 2020, one VND of revenue earned 0.0125 VND of after-tax profit on average, but by 2021, one VND of income earned 0.0145 VND of after-tax profit, an increase of 0.002 VND Keeping all other variables constant, an increase in operating profit margin multiplies the net return on working capital by 0.0054 The company's operating profitability in

2021 increases compared to 2020, owing to a 25,203,412 million VND increase in revenue and income in 2021, thereby increasing profit after tax in

2021 to 544,845 million VND with an increase of 49.87% Profit after tax increased primarily due to increased gross profit; in 2021, it was 2,585,656 million VND, an increase of 1,335,742 million VND with a 106.87% increase compared to 2020, which was 1,249,923 million VND, potentially arise to an increase in gross profit from sales activities as the group expanded its business in its strong areas of petroleum and petrochemicals However, revenue from financial activities fell, though this had no negative impact on profit after corporate income tax Financial revenue was 2,066,048 million VND in 2020 and 1,516,349 million VND in 2021, a decrease of 549,699 million with a decrease rate of 26.61% Revenue from financial activities decreased because the company's dividend after tax will decrease (by 633,619 million VND with a rate of decrease of 45.02 percent) and profit on deferred payment will decrease (by 24,901 million VND with a rate of decrease of 42.9%) Due to a reduction in interest expenditure of 66,710 million VND at a rate of 22.95%, financial expenses reduced by 262,896 million VND, or 50.31%, while selling and administrative expenses grew by 218,960 million VND, or 12.07%.

Conclusion: Overall, the improvement in asset utilization effectiveness and net revenue has had a favorable effect on the net profitability of working capital, demonstrating that the company has adequate asset management and usage practices However, there are still some restrictions, like the growth of corporate management costs, CIT costs and other costs, which businesses must take into account while creating proper retraction plans One way to raise ROA was to improve asset efficiency In order to boost ROA, improving ROS was a key step This was helpful since it shows that the company was successful due to its positive assets.

Solutions: To significantly boost the net profitability of working capital throughout the following business period, PLX Group must:

+) Adopting a sensible investment strategy (choosing an investment emphasis, such as production (concentrating on investing in any form of goods); choosing the amount and level of investment for each type of investment.

+) The Group has to put a strong emphasis on cost management, employing cost reductions to streamline operations, particularly in regards to financial and administrative costs.

2.3.3 Analyze the actual profitability of owner’s equity

The following analysis table illustrates the profitability of owner’s equity at the Parent company - Vietnam National Petroleum Group:

Table 2.9: Analyze the profitability of owner’s equity

Profit after tax millio n VND 1,637,270 1,092,425 544,845 49.87

Average Owners’ equity millio n VND 20,662,161 19,769,74

3 Short-term investment ratio (Hd) Times 0.6830 0.6887 - 0.0056 -0.82

4.Net working capital turnover (SVld) Times 3.9020 3.0931 0.8090 26.15

Total revenue and income millio n VND

Average short-term asset millio n VND

(Source: Calculated based on the Parent company's financial statements -

General analysis: The Parent firm, PLX Group, has a net return on equity of 0.0553 times in 2020 and 0.0792 times in 2021, a rise of 0.0240 times and a 43.4% increase This indicates that in 2020, the company will receive 0.0553 VND of profit after tax on average for each unit of equity used in the production and business process, but in 2021, the company will receive0.0792 VND of profit after tax on average for every VND of equity used in the production and business process, demonstrating an increase in the company's capital efficiency over 2020 It can be shown that the enterprise's capital management program was successful because both average equity and profit after tax improved in 2021, which increased significantly We must carefully examine the impact of the key variables affecting the enterprise's ROE in order to determine the particular cause.

The chart below shows owner’s equity of the Parent company - Vietnam Petroleum Corporation from 2019 to 2021

Chart 2.8: Owner’s equity from 2019 to 2021

(Source: Calculated based on the Parent company's financial statements -

+) Self-financing ratio : In 2020, this ratio was 0.4626; in 2021, it was

0.5143, an increase of 0.0517 and an increase of 11.17% The rise in self- financing ratio decreased the net profitability of equity by 0.0048 times while holding all other variables constant The rise in equity and total assets was what caused the self-finance ratio to rise Equity increased by 2,978,588 million VND in 2021, representing a 15.54% rise and total assets climbed by1,625,709 million VND, representing a 3.92% gain Due to rising equity and total assets, the company's capital mobilization strategy for 2021 will continue the trend of raising group capital mobilization proportions while lowering group mobilization proportions from liabilities, increasing group capital mobilization proportions from equity and lowering group capital mobilization proportions from liabilities The group was still financially dependent on outside sources in 2020, but in 2021, this dependence tends to decline, demonstrating the group's effective utilization of financial leverage and achievement of outstanding accomplishments.

A general evaluation of the Parent Company - Vietnam National

When the Covid-19 epidemic continues to have a significant impact,

2021 can be seen as a year with numerous difficulties and challenges for the Parent Company - Vietnam National Petroleum Group The world economy was vulnerable to a wide range of intricate variations The fact that business operations of organizations continue to show positive developments demonstrates that these businesses are continually working to make up for economic losses brought on by a variety of factors:

- Efficiency of using capital : Due to the company's reasonably reasonable and successful investment and capital usage program, its efficiency in using business capital in 2021 grows compared to that of 2020. The degree of working capital management has improved, leading to outstanding successes When the number of working capital turnover has increased while the working duration has decreased, enhancing the efficiency of capital use and saving working capital, there will be a favorable improvement in the company's ability to use working capital in 2021.

- The company's inventory has tended to grow significantly in comparison to 2020; the number of inventory turnovers grew while the turnover duration also dropped, indicating a favorable development in the company's inventory turnover and the use of appropriate policies to balance supply and demand

- The profitability of the company: The growth in total assets and net revenue caused a positive improvement in the company's net profitability from assets, demonstrating that the organization had adequate practices for using and managing assets The company's operating profitability also improved somewhat and was higher than that of its competitors in 2021, demonstrating that the company's strategy of decreasing the proportion of short assets and raising the proportion of long-term assets was generally appropriate

Although the company has made great strides in 2021 toward repairing the damage the economy has done, there are still obstacles that must be removed in order for the production and business process to run smoothly and produce the best results, avoiding the situation where goods are stagnant and there are high costs involved Specifically:

- Efficiency of using capital : Because the ratio of fixed capital can have a negative influence on revenue even while it is increasing, the efficiency of employing fixed capital needs to be adjusted to reduce potential hazards Additionally, even if the company's short-term receivables have dropped over the past year, a sizable portion of capital was still occupied. Consequently, the business needs to establish policies to reduce financial risks and boost financial competitiveness.

- By the end of 2021, the company will have grown capital from equity,decreased reliance on outside investors and increased costs as a result This demonstrates that the enterprise has a successful capital allocation strategy but has not yet reduced costs As a result, the firm will need to carefully plan for potential scenarios in order to prevent a capital shortage and a lack of financial supply that negatively impacts operations, sales and service delivery. Service

- The profitability of the company: Because total net turnover expanded more quickly than the growth rate of total expenses, the profitability of the business's equity only marginally improved, but it was still insufficient to pay interest costs, demonstrating that the company had an irrational short-term capital mobilization policy.

- The fund for stabilizing gasoline prices is negative as a result of the State Audit Board and Ministry of Industry and Trade's management of domestic gasoline prices fully utilizing it.

+) The company's import procedure encountered numerous challenges as a result of the intensifying economic tensions in various central European countries.

+) Abnormally fluctuating and difficult to predict crude oil prices, particularly at the end of the year, cause supply chains to break down and negatively impact sales and corporate operations.

+) Bank lending interest rates are changing constantly and several economic policies are being launched in the midst of a precarious and inflating economy.

+) There are many concerns about the difficult Covid-19 pandemic developments and the appearance of the new strain Omicron, which has produced a dramatic decline in oil prices and uncertain developments in the coming years.

+) Investment policy hasn't had a very noticeable impact, although corporate and selling expense management may use improvement.

+) The company has no strategies to modify capital mobilization as well as capital use in case of shortage or surplus since it has not diversified its capital mobilization channels and has not used particular methodologies to identify the requirement to reserve capital in cash and essential inventories

In order to enhance the limits that need to be overcome and sustain the results already attained, the company should:

+) Completing the internal management regulations to correspond with the new period's operations for the company.

+) Coordinating and encouraging initiatives to create and expand petroleum retail chains across all provinces and cities of the nation, ensuring a steady supply of fuel.

+) Strictly supervise the company's financial resources, cash flow, and capital turnover to boost profitability

+) Expand payment methods for the petroleum industry and employ financial management software.

+) Encourage jobs in fields such as oil refining, petrochemicals, and gasoline distribution at acceptable retail locations.

+) Maintaining and growing ties with multinational clients while offering standardized products to the market globally.

+) Building a sensible gasoline price stabilization fund can help you avoid being shocked by the market economy's ongoing and abnormal changes.

+) In order to cut costs and deploy the wholesale of all sorts of products in a big area with high turnover, it is also important to build the capacity to move agent items.

SOLUTIONS TO IMPROVE THE EFFICIENCY OF USING

Socio-economic context

3.1.1 The state of the global economy

In 2023, because of the impact of rising interest rates, the measures several nations have taken to combat inflation, the ongoing conflict in Ukraine and the numerous challenges the main economies of the globe are facing, many economies' growth rates are near to "the edge of recession" The developed economies are where growth is slowing down the most and the US economy may only increase by 0.5% in that year.

As the global economy rapidly recovers from the pandemic, the global supply chain has deteriorated While industrial and transportation activities did not rebound at the same rate as consumer demand, the entire supply chain was constrained at many points, which resulted in rising inflation.

The "storm" of inflation, which began in the middle of 2021, has persisted longer than expected and so far doesn't appear to be abating In most of the countries using the inflation targeting system, including industrialized nations, this rate has been observed to be higher than the threshold set by central banks and has even risen to its highest level in many decades Over 43% of the world's nations experienced double-digit inflation Inflation has risen dramatically in many nations, causing the central bank to hike interest rates regularly and aggressively This has sharply reduced trade demand and elevated financial and other risks, including debt concerns in many nations and the current recession risk.

According to the World Bank Report, China (which accounts for about85% of the region's GDP) growth slowed significantly as a result of repeated

COVID-19 outbreaks and movement restrictions, unprecedented droughts and long-lasting in many economic fields This slowdown in the region's growth followed a strong recovery in 2021.

The World Bank urged the international community to enhance aid to low-income nations in order to help them deal with the food and energy crises, as well as the rising risk of a debt crisis and the need to assist people displaced by armed conflict.

+) In its Global Economic Prospects Report released on January 10, the World Bank forecasted that global GDP would grow at 1.7% in 2023, significantly lower than the 3% announced in June 2022.

+) Asia-Pacific growth is expected to stabilize at 4.3% as pandemic- related restrictions ease, allowing operations in China to gradually recover.

+) As inflation gradually settles down and the global economy recovers, crude commodity prices may rise in the short term (due to the West imposing a ceiling on Russian oil prices at 60 USD/barrel (sea shipping), which is 5% lower than the price Russia sells to Asian countries, ensuring that supply is not limited).

+) With the crude oil price margin remaining high, the world price of gasoline and oil products in 2023 is expected to be around 95-105 USD/barrel According to the Ministry of Industry and Trade, this level is down about 12 - 20% from last year's average price, but it is still high, which will have an impact on the domestic economy.

3.1.2 The state of the Vietnamese economy

It can be said that Vietnam's economy recently recovered well after a protracted period of "freezing" due to the epidemic, it can be claimed that

Vietnam's economy will be a bright spot in the otherwise gloomy image of the global economy in 2022.

Even though Vietnam's economy still faces many challenges, the main one is the unfavorable global environment Some regions and nations, particularly Vietnam's major trading partners, may experience a mild recession, which would lower demand for exports, investments, consumption and international travel, but in 2023, the economic situation will still be favorable

The expected total state budget revenue for January 2023 was 183.7 trillion VND, which was a decrease of 0.5% from the same month the previous year and equivalent to 11.3% of the year's forecast The expected total state budget expenditure in January 2023 was 114.9 trillion VND, which was an increase of 0.9% over the same period in the previous year and 5.5% of the annual estimate In January 2023, the expected total retail sales of consumer goods and services were 544.8 trillion VND, up 5.2% from the previous month and 20% from the same time last year Due to Vietnam's opening up to tourism, international routes are now open again, which resulted in a rise of 23.2% over the previous month and a 44.2 times increase in foreign tourists to Vietnam in January.

In addition to the domestic crude oil price condition, many analysts said that the price of crude oil is expected to be between 85 and 90 USD per barrel, meaning that the cost of gasoline and oil-related items will continue to fluctuate As a result, the country's retail price for gasoline is currently close to 33,000 VND a liter, or has only slightly increased from its previous level. Additionally, the Chairman of the Vietnam Petroleum Association stated that when Nghi Son Refinery temporarily shuts down to address technical issues in January 2023, the trend of petroleum imports will increase and in the months of June to August 2023, Dung Quat Oil Refinery (Binh Son) will organize the 5th overhaul, which will take almost two months, this will result in a fall in domestic petroleum production and a dependence on imports.

Even if there are a lot of variables that will affect the oil price in 2023, most economists agree that the petroleum market will be unpredictable So, in the past, Petrolimex has always actively monitored the movements of the global and regional petroleum markets, domestic market demand and fluctuations in global oil prices in order to build its political tasks and have a plan to carry out the best production and business process Promote the growth of your services concurrently to boost your competitiveness, draw in domestic customers and keep gas costs stable.

+) According to economists, Vietnam's GDP growth slowed down in

2023 but remained at a respectable level, about 6-6.5%, in light of the slowing global economic development and the possibility that certain nations would experience a short-term local recession (baseline scenario).

+) In which final consumption is anticipated to rise by around 9-10%, domestic and international investment by roughly 8% and export by 8-10%.

+) In terms of inflation, analysts predict that due to increased imports the average CPI will reach 4-4.5% in 2023 (up from 3.3% in 2022) There will be an increase in the money supply as of year-end 2022 and the need to accept price increases for some state-managed goods such as basic salary, cost of electricity, health care, education …

+) Businesses still deal with several obstacles and difficulties, which will make generating revenue for the budget more difficult The pressure of rising interest rates and exchange rates is still a significant problem for macroeconomic management.

Targets and development orientation of the Parent company - Vietnam

Vietnam National Petroleum Group (Petrolimex) is a state-owned company that has a crucial role to play in providing petroleum sources to meet domestic consumers' consumption needs in a manner that supports the nation's economy and energy security As a result, the Company has established the following objectives to pursue in the future:

+) Becoming the top energy organization in Vietnam with petroleum trading as its primary business line, performing multi-ownership, putting an emphasis on investments, and developing related and supporting business segments for petroleum trading

+) Ensure energy security assurance, brilliantly accomplish political tasks assigned by the State, create shareholder value, and successfully complete commercial and political missions And it should also operate as the state's macroeconomic stabilizer.

+) Maintain and sustain its dominant position in the domestic market as the largest Corporation in the downstream petroleum business, investment and development of liquefied gas fields (LPG, LNG, CNG), petrochemical, petroleum transportation, petroleum construction, insurance and other fields; rank among Vietnam's Top 10 enterprises in terms of business scale and business performance.

+) Choose key and profitable investment projects, focus on maximal utilization of existing technical facilities; Foster investment and development of retail network with commercial comparative advantages, follow up the development trend of IT to have full application in operations.

+) In 2025, the Parent Company's charter capital aims to reach VND 20.000 billion The Parent company will be restructured to ensure that it has the financial resources necessary to invest in important projects, support the Group's expansion and increase the effectiveness of investment capital.

+) Improve the establishment and administration of the Petrol Price Stabilization Fund (BOG Fund), which will help to stabilize the price level, rein in inflation, stabilize the macroeconomic environment and maintain sustainable development for Petrolimex in particular as well as for the nation's economy and society as a whole.

+) These targets set are entirely based on the actual situation in order to maintain the development momentum of the company as a leading economic group in the nation As a Parent company, the firm should always actively conduct research, learn and discover new information, make high-level decisions, set the goal of increasing profits, contribute to the achievement of the Group's overarching objectives with specific goals such as in 2023 revenue will reach 121,100 billion VND, profit before tax will reach 1,800 billion VND or profit after tax on equity reached 7% based on the expected average oil price in the period of 2023 - 2025 at an average of 67 USD/barrel and excluding other influences from objective factors.

To achieve the goals, the Company must follow the following guidelines to achieve the best results:

Increase the number of long-term contracts signed and use modern business methods to hedge price, exchange rate and market risks to stabilize supply with suppliers.

Improving market forecasting and developing business and sales organization operating scenarios for unexpected situations concentrating on expanding and developing the network of petrol stations, particularly along highways, provincial roads and in major cities; developing petrol stations in accordance with new and modern standards; meeting utility facilities; serving and improving the customer experience…

Enhancing the connection and assistance between the Group's Parent business and other corporations, joint stock companies and limited liability companies with capital contributions from the Group to advance the system and boost industry competition Utilizing Group 4.0 technology in conjunction with the Digital Transformation Project in order to create and fully utilize shared "big data"

Actively expanding the market and successfully performing the information and forecasting job as a foundation for guidance for organizing and carrying out suitable production and business activities Improve internal management governance and modernize corporate operations; supporting the use of digital transformation and information technology applications in order to increase the effectiveness of ERP system data (Enterprise Resource Planning),, EGAS Petrolimex or electronic invoices, promotes non-cash payment methods in conjunction with effective research and exploitation of the Petrolimex ID database in order to improve the customer experience and attract more customers.

In the coming years, the Group needs to introduce low-carbon products such as Euro 6 and even Euro 7 when the standard is released Besides the currently trading E5 and A82 products, E10 to E85 product lines for A92 andA95 ones will continue to be developed according to the roadmap set by theGovernment.

Positioning the petroleum industry chain, zoning and rearranging the market, taking the initiative and shoring up control within the company to boost productivity and lower risks Enhance the effectiveness of the system's management of petroleum quality; distinctly outline who is in charge of each stage of the distribution system's quality control Enhance the standard of the departments responsible for researching, analyzing, rating and forecasting socioeconomic developments and competitors in order to build strategies that are appropriate for each time period In order to increase business efficiency, consolidate and develop the direct retail system for gasoline and oil, including in rural, border and island areas Since then, developing a competitive advantage especially with gasoline companies.

Participating in price stabilization and maintaining a petroleum reserve in compliance with legal requirements Diversify markets, products and supply chains while enhancing and expanding the oil and gas value chain from supply to production to consumption to establish a close connection between input materials and output goods Set up retail gas stations so that the retail network system is restructured in accordance with the idea that one province or city only has to manage one petroleum firm in order to maximize the efficiency of the entire Petrolimex system.

Develop a comprehensive plan for capital balance, ensure funding sources for ventures and development investments and unblock funding sources through various channels of capital mobilization in accordance with rules Divest capital from companies that are not in the main business lines and industries related to the main business activities Build a specific divestment roadmap (fields, time, value ) in any fields that had low efficiency investment, unable to grow in good scale in compliance with regulations Good cash flow management, project progress, investment project efficiency and short-term financial management at petroleum corporations to boost capital efficiency and turnover.

Analyze the Strength, Weaknesses, Opportunities and Threats of the

+) With over 66 years of petroleum trade experience, the Petrolimex brand is well-known on the domestic and international markets

+) Possessing the largest technical infrastructure among Vietnam's major oil traders, with a level of modernity and coordination that meets regional standards This includes a terminal and storage system with a capacity of up to 2,200,000 m3, a pumping technology system, distribution, measurement; more than 570 km of petroleum pipeline.

+) Especially, Petrolimex has an unrivalled distribution system of 5,500 retail locations nationwide, in which, there are about 2,700 Due to their established brands, all of these stations are situated in commercially advantageous areas and gain significantly higher turnover than other social stations The enterprise has generated the most profit thanks to the system of these stations.

+) The Group's large-scale operation with its subsidiaries, joint ventures, and associates in the petroleum and related/supporting business contributes to the Company's advantages in capital mobilization and investment for large projects

+) Petroleum is the product governed by the State's initiative to stabilize prices; as a result, the price is not entirely decided by market forces because the State manages the price of gasoline to reach other macro aims.

+) Despite being modified to reflect global fluctuations, the domestic price adjustment may not be to the same extent as those globally, which could have a minimal effect on the Company's activities

+) With the expansion of the Vietnamese economy, there is an increasing demand for petroleum In the following years, the GDP of Vietnam is expected to increase by 6-7% annually This exemplifies the petroleum industry's continual expansion.

+) Due to the country's fast rising per capita income and low relative regional per capita consumption of petroleum, Vietnam has a high market demand for petroleum (Source: World Bank).

+) Besides, Vietnam is a nation where the number of automobiles on the road is expanding quickly The compound annual growth rate (CAGR) for passenger cars is predicted to be 22.6% from 2020 to 2025 and to continue rising to 18.5% from 2025 to 2035.

+) In addition to the economy's quick expansion, the tourist and service industries are also doing well This boosts the demand for travel, logistics, and transportation, which raises the price of petroleum.

+) As a result, the petroleum industry's growth potential is still positive for the foreseeable future, providing a chance for petroleum trading companies, like The Parent Company - Vietnam National Petroleum Group, to grow their market share.

+) The market's attractiveness creates a competitive atmosphere that is only going to get more heated, which might present a number of possible challenges to the petroleum industry's firms in the shape of both new domestic entry points and foreign expansion of well-established businesses.

Up to this point, there have been over 30 petroleum importers and 100 petroleum distributors who are in direct competition with one another and petroleum exporters and importers in the domestic petroleum market

+) The prolonged Covid-19 pandemic in the world will still be the biggest risk; the global trade tensions, leading to escalated trade protectionism and more serious financial risks

+) In recently year, the world economy continued to face four major risks and challenges, namely: (1) Covid-19 pandemic was complicated and unpredictable, highly potential outbreak of next waves; (2) Trading tensions among major countries; (3) Geopolitical risks in countries and regions (China

- Taiwan, Russia - Ukraine, ); (4) Risks of global financial instability. Vietnam is not an exception since our economy is deeply integrated and strongly opened.

+) Despite the geopolitical war between Russia and Ukraine's tendency to drive up global oil prices in the fourth quarter of 2022, unpredictable events will still happen that could have an effect on the input costs for petroleum companies The Company has to face a substantial task in managing the risks associated with the oil price while also increasing the effectiveness of inventory management.

Solutions to improve efficiency of using capital at an enterprise

It is crucial and required to research ways to increase the efficiency of the firm's working capital after determining the reasons why and constraints the company is experiencing Depending on the unique circumstances of each case, each option will offer a workable solution As a result of the analysis and in recognition of its significance, I would like to provide the following suggestions to the business:

(1) Expanding the types of capital mobilization

The Parent company, Vietnam Construction Group, has increased the scale of equity, decreased the scale of receivables, and increased the scale of assets as of 2021 This demonstrates the Parent company's ability to raise capital to create assets necessary for the business to run smoothly and effectively However, the corporation has a policy of primarily using owners' stock to obtain cash This is helpful when the company can lessen its reliance on external funding sources and the amount of capital it uses, but using just one of these capital-raising avenues is insufficient because it carries numerous risks Instead, the company should think about raising additional funds from a variety of sources to ensure the flexibility of the capital that is required, such as mobilizing short-term capital to lower risks and more flexible capital use.

(2) Create a strategy for efficiently utilizing business capital

The Board of Directors of the company must create a specific capital plan suitable to meet business activities as well as ensure adequate capital, effectively used with minimal mobilization costs This capital plan must be developed based on the characteristics and business situation of the company, combined with economic and market information Avert both the unreasonable, wasteful, and unneeded deployment of capital as well as the shortage of capital that has an impact on business and production activities.

To make informed judgments and establish successful capital mobilization programs, the business must precisely calculate the amount of effective capital and the number of missing funds based on the expected capital requirements The firm must be proactive in allocating and utilizing the necessary capital as soon as it becomes available in order to maintain theCompany's ongoing commercial operations and production.

(3) Improve the company's working capital utilization efficiency

The efficiency of the Company's working capital has tended to increase over time, but in order to improve the efficiency and effectiveness of working capital further, the company requires better capital management in the following ways:

Firstly, improve receivables management while reducing the amount of capital was allocated

+) The Company should better organize debt collection by keeping a detailed book of receivables both inside and outside the Company and urging debtors to pay their bills on time With the characteristics of large and prolonged receivables, the Company should plan for and resolve doubtful receivables With each signed contract, the Company should pay special attention to the advance payment for the construction of the works and the contract settlement conditions in order to determine the best time to recognize revenue Plan the most appropriate debt recovery strategy based on this.

+) The Company must put up a system to track and manage the time of receivables, determine which ones are past due and which are not, and create a plan for debt recovery in order to encourage debt collection Implement strategies to encourage debt collection, including contacting, sending reminder letters, and requesting that customers pay off their debts.

Secondly, improve the inventory turnover rapidly

+) The Company must better manage its inventory in order to increase the efficiency of its capital utilization and overall business performance It takes coordination between the acquisition, transportation, and storage of resources as well as the stocking of finished products and goods for sale in order to effectively manage inventory In particular during peak periods like the situation with petroleum in the middle of last year, the corporation needs to accurately identify the quantity and materials to acquire in the period as well as the proper amount of inventories.

+) Properly plan the materials and commodities' storage and preservation Maintain a constant awareness of the state of your reserves and take action as soon as you notice a sluggish or unsuitable supply of resources. This will help you recover capital.

+) Preserving working capital, lowering inventory pricing, and making provisions

(4) Improve the company's fixed capital utilization efficiency

Although the company's use of fixed capital has tended to be more efficient over the previous few years, greater capital management is still required in order to raise the effectiveness and efficiency of working capital.

+) Improving the inventory and assessment of existing fixed assets' current status is a key strategy for increasing the effectiveness of using fixed capital It is important to regularly inventory and reassess fixed assets in the context of science and technology advancement in order to prevent intangible depreciation In order to accurately reflect the current state of the assets and fluctuations in the value of fixed assets due to tangible and intangible wear and tear after a period of use, the inventory of fixed assets must be conducted in accordance with price categories including cost, residual value, fully restored price, and residual restored price.

+) Strictly enforcing usage, maintenance, and major repair restrictions in order to maintain and enhance the operational capability of fixed assets.This would strengthen efforts to protect fixed capital To keep fixed assets from deteriorating or being damaged before the specified time limit,centralize control and supervision of their utilization.

Recommendations and suggestions

3.5.1 For the Parent Company - Vietnam National Petroleum Group

(1) Constant development of each employee's professional potential

The Company's Board of Directors must possess excellent qualifications and capacity in order to be able to develop a suitable and successful production plan In order for the Board of Directors to be able to make decisions quickly, there must also be a scientific accounting and bookkeeping system with a team of highly skilled and experienced professionals to assure the standards and timeliness of information provided for developing plans and providing opinions.

(2) Create a complete and methodical investigation and approach to the market strategy

Market research involves a team of professionals that are informed about the market, qualified in market research and analysis, capable of making an accurate assessment in terms of market trends and movements It also demands a scientifically and methodically planned and organized approach The Company must also develop a professional website that provides customers and partners with rapid access to fundamental information about the Company, its goods, manufacturing and business operations.

(3) Constructing various capital-raising tactics, enhancing usage effectiveness with affordable costs

The Company's Board of Directors should have a strategy in place to monitor how company capital is being used, ensuring that it is being applied logically, efficiently and accurately Expand the amount of capital that has been mobilized and always make sure that there is money available for commercial and manufacturing activities.

The State has a crucial role to play in coordinating the macro-economy in a market economy, despite the fact that it cannot interfere in the private sector's internal affairs All companies conducting business and producing goods on Vietnamese soil will be impacted by this So, in order to enable businesses to fully utilize their potential, the State should:

The legal system must be coherent, synchronized, stable and practically enforced The legal document system must get rid of those that are unrealistic and unworkable while also raising the standard of papers so that they can take effect for a while with some stability In order to ensure a healthy competitive environment for bid work, production processes and company operations, there should also be a system of solid legal documentation.

In the modern market economy, the state must restructure administrative processes, make processes simpler to remove barriers for enterprises and create environments where firms can carry out processes easily and swiftly as part of daily operations In order to prevent negative phenomena that take advantage of legal loopholes to conduct unlawful activity, harming both the efficiency of the sector and the business climate, the State must tighten its stringent regulation of the construction and installation sector.

(2) Establish a solid socioeconomic environment to ensure capital mobilization

Enterprises that effectively mobilize and use capital also have efficient production and business operations The Government must implement various policies and tools in order to create a favorable economic environment and to align market development with long-term capital market development plans and policies Creating a stable economic environment that reduces inflation, stabilizes the macro-economy and creates investment incentives.

The state should have preferential policies and support measures in place to encourage businesses in terms of capital mobilization and use. Having a policy to help businesses access capital with low interest rates, to control the ceiling of lending interest rates of all banking systems, both old and new debts apply the same interest rates, while also reducing procedures and guarantee conditions to help businesses access loans easily and conveniently

(3) Provides an incentive in financial policies implementation

The Government must establish a reasonable financial management mechanism for businesses to operate more easily and effectively Financial market institutions in general and the money and capital markets in particular must be closely linked and the banking system must transfer into information on a regular basis so that businesses can easily access capital.

State incentives for borrowing include: lowering interest rates,extending loan terms, perfecting the system of legal documents regulating economic contracts, sale contracts, capital contribution contracts, innovative management mechanisms and methods to avoid capital losses for investors,thoroughly handling violations and ensuring that enterprises' production and business activities are not disrupted.

When the economy becomes more integrated and developed, economic relations become increasingly complicated and competition becomes more aggressive With the general financial capacity of Vietnamese enterprises today being limited, burning capital leads to poor competitiveness, causing difficulties in production and business activities As a result, the urgent problem for each business is determining how to use business capital most efficiently As a result, improving capital utilization efficiency is critical to the survival and development of Vietnamese enterprises in general, including the Parent company - Vietnam National Petroleum Group.

The following contents were mentioned in the thesis " Analyzing the efficiency of capital use at the Parent Company - Vietnam National Petroleum Group," which was abstracted from the current situation of business activities at the company: systematize the fundamental theoretical issues of enterprise working capital efficiency and meaning Overview of the system of indicators reflecting business efficiency and methods for analyzing business performance in enterprises From the system of expenditures reflecting business efficiency such as capital turnover speed, business efficiency, profitability, it has applied business analysis methods such as ratio analysis method, comparative method to analyze the efficiency of capital use at the Parent company - Vietnam National Petroleum Group Based on the actual analysis results, the thesis has also made comments and assessments about the achieved results, limitations and causes of the business.

The thesis has proposed some solutions to improve the efficiency of the company's capital use as well as some recommendations to the State and theParent company - Vietnam National Petroleum Group to implement solutions based on the Parent company's development goals and directions in the coming period (2023 - 2025), combined with the results obtained through the process of analyzing capital efficiency.

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6 Circular No 45/2018/TT-BTC dated May 07, 2018 of the Ministry of Finance on guiding the regime for managing and calculating depreciation of fixed assets of agencies, organizations or units and fixed assets handed to enterprises by the State

7 Decree No.39/2014/ND-CP (May 07, 2014), Article 3 No.7, Operation of financial company and financial leasing company

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Taking steady action to advance”, Communist Magazine

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