completing financial management at an thuan boat company limited

3: Organizational structure of the financial management apparatus of An Thuan Boat Company Limited .... However, these businesses often encounter many difficulties on the development pat

Reason for choosing the topic

After many years of innovating policies to build and develop a multi-sector economy, small and medium-sized enterprises in Vietnam have grown increasingly strong, contributing to creating a part of jobs for society, contributing source of revenue for the State, and increasing the national GDP At the Conference "Small and Medium Enterprise Sector with the EVFTA Agreement" held in 2021, according to Deputy Minister Tran Duy Dong, among the total number of currently operating enterprises, small and medium-sized enterprises accounted for 97% Among them, the limited liability company type of business accounts for the largest proportion thanks to its advantages in operation and operation Thereby showing that the role of this type of company occupies an important position in the construction and development of the Vietnamese economy

For limited liability businesses, finding, mobilizing, and using capital effectively with low costs in limited resources is a top priority However, these businesses often encounter many difficulties on the development path: difficulty accessing social resources to serve production and business, not having access to credit capital of banks, inability to accumulate and concentrate capital for investment, technological innovation, expansion of production scale, little linkage with large enterprises (Chu Thanh Hai, 2020); thin capital resources, limited input production factors, and limited access to technology (Nguyen Anh Tuan, 2019); the management of working capital, particularly cash and receivables is still inefficient (Handle, 2015) The cause of the above difficulties is partly due to a lack of financial resource management, not being aware of the important role of financial management, and business owners having a low level of risk tolerance Therefore, their financial management practices are often considered poor, leading to frequent challenges and obstacles

An Thuan Boat Company Limited is an enterprise operating in the field of water transport Throughout the development process, the company has gradually improved its organization, company apparatus, and general management As a result, the

2 company's business operations have become more stable and have gradually developed However, similar to other small and medium-sized companies, the company's financial management still has many shortcomings and lacks attention from leaders, so it cannot become a tool that takes on an important role in supporting the company to improve production and business capacity, operational efficiency, and competitiveness in the market Realizing the urgency of the above issue for small and medium enterprises in general and An Thuan Boat Company Limited in particular, the author chose the topic: “Completing financial management at An

Thuan Boat Company Limited” as a graduation thesis topic.

Objectives of the study

General objective

Based on the theoretical framework, this study provides a detailed analysis of the financial management situation at An Thuan Boat Company Limited, with the main focus on the period from 2020 to 2022 Subsequently, an evaluation process is conducted to measure the effectiveness of the current financial management system by calculating the company's financial indicators based on the financial reports during this period and comparing them with industry peers The purpose is to identify existing issues and then implement measures to address the identified problems, contributing to improving operational efficiency and competitiveness with industry rivals.

Specific objective

- Systematize theories, principles, and practical issues related to corporate financial management

- Analyze and evaluate the financial management situation at An Thuan Boat Company Limited in the period 2020 - 2022

- Propose solutions to improve financial management at An Thuan Boat Company Limited in the future.

Research scope

Spatial scope

The thesis was conducted at An Thuan Boat Company Limited.

Time scope

The thesis uses secondary data collected from the Accounting - Finance Department of An Thuan Boat Company Limited in the period 2020 - 2022.

Research methods

- Data collection method: Data is collected from different reliable sources such as previous studies to systematize the theoretical basis of corporate financial management At the same time, secondary data from An Thuan Boat Company Limited is also used to evaluate and analyze the current state of the company's financial management

- Data analysis method: The thesis uses a combination of qualitative analysis methods and quantitative analysis methods such as descriptive statistics, statistical comparison, and general analysis to evaluate the current state of management Financial management of An Thuan Boat Company based on financial criteria and indicators.

Structure of the thesis

The thesis structure includes 4 main contents:

Chapter 1: Overview of An Thuan Boat Company Limited

Chapter 2: Theoretical base of corporate financial management

Chapter 3: Current status of financial management at An Thuan Boat Company Limited

Chapter 4: Solutions to complete financial management at An Thuan Boat Company Limited

OVERVIEW OF AN THUAN BOAT COMPANY LIMITED

History of formation and development

- Company name: An Thuan Boat Company Limited

- Address: Hai Thanh Village, Thuan An Ward, Hue City, Thua Thien Hue Province

- Legal representative: Pham Thi Thu Hien, position: Director

Image 1 1: Business license registered for the 6th change of An Thuan Boat

(Source: Accounting - Finance Department, An Thuan Boat Company Limited)

- The process of formation and development

The company is a unit operating in the form of a limited liability company with two or more members and was granted business license number: 3300375090 by the Hue Department of Planning and Investment, issued on June 10, 2005 An Thuan

Boat Company Limited was established after separating from the new shipbuilding and boat repair workshop of Hue Fisheries Development Joint Stock Company due to the business restructuring process in 2005 As a long-standing boat building and repair company trusted by many fishermen in Thua Thien Hue province to order shipbuilding, since its establishment, the company has always tried to invest in more equipment and improve staff capacity to improve the company's ability to build, convert, and improve ships

In 2017, to ensure compliance with Decree 67 of the Government, the company expanded its shipbuilding and repair area to 3,000m 2 , accommodating more than 40 ships at the same time At the company, the workshops are invested in machinery, equipment, and technical conditions to be able to promptly meet many requests for repairing and construction ships of up to thousands of CVs Some machines that can be mentioned include vertical and horizontal road systems, 7KW winch motors, and slope road systems with a maximum lifting capacity of up to 100 tons Compared to before, a ship that fishermen ordered to build took more than six months to complete, but currently, each month the company can build 1-2 ships and convert about 10 ships with the support of modern machines and workers

Since its establishment, the company has been engaged in both manufacturing and strengthening internal capabilities The company meets the demand for the construction and repair of various types of boats, including wooden hulls, steel hulls, and hulls made of various aluminum alloys All the company's boat construction and repair services are accepted by the fisheries inspection authorities, meeting market demands and gaining popularity among customers In addition, An Thuan Boat Company Limited is a company operating in the field of waterway transport in Hue City, Vietnam The company specializes in providing passenger and cargo transport services by boat on rivers and bays in the Hue area and surrounding areas This company can provide services such as carrying tourists on the Huong River, Ben Ngu River, An Cuu River, and other famous attractions Besides, the company can also provide cargo transportation services on boats in the region An Thuan Boat Company Limited plays an important role in developing the tourism and waterway transportation industry in Hue, meeting the needs of tourists and businesses in the

The business sectors

Currently, the company operates in the following industries that have been updated on the national information system:

- Repairing and construction types of ships, floating structures, and water transport vehicles (Primary sector)

- Construction of sports and recreational boats

- Trading in all kinds of materials and equipment for fishing

- Trading in alternative production materials in the field of ships and boats

- Periodic repair and maintenance of boats and water transport vehicles

Organizational structure and functions and tasks of departments

The company's organizational structure model is based on the model of a limited liability company with two or more members

Image 1 2: Organizational structure of An Thuan Boat Company Limited

At the head of the apparatus is the Board of Directors consisting of 03 people, responsible for the management of the capital invested in the company In particular, the Chairman of the Board plays the role of representing the Board in making management decisions, strategies, and development directions of the company

The Director is the legal representative of the company, responsible for directing, operating, and deciding on issues in daily business operations and is responsible for the annual business results of the company

The Accounting - Finance Department is responsible for monitoring and regularly updating newly issued policies, regulations, and tax laws to operate in accordance with the law At the same time, the department prepares financial reports and provides timely advice to the Board of Directors and the Director This department is also responsible for managing output costs, income, debt, and salary systems

The Engineering Department takes on the main production and business role in the company The department's structure consists of 3 groups: Tractor Team, Carpentry - Iron Welding Team, and Mechanical - Electrical Team Each team is assigned specific tasks and responsibilities related to technical aspects, quality assurance, ship design drawings, and timely ship construction

The Marketing - Bidding Department is responsible for understanding and expanding the customer base It collects and completes documents to introduce and participate in bidding sessions organized by the government to bring projects to the company.

Organize the company's financial management apparatus

1.4.1 Organizational structure of financial management apparatus

Currently, the Accounting - Finance Department is in charge of all financial accounting work of An Thuan Boat Company Limited; it consists of 4 people, in which the department head is also the chief accountant, holding the role of organizing and directing all accounting and financial work occurring at the company The

9 remaining members are responsible for the following tasks: General Accountant, Payroll Accountant, Treasurer

Image 1 3: Organizational structure of the financial management apparatus of

An Thuan Boat Company Limited

In general, the financial management apparatus of An Thuan Boat Company Limited is relatively simple and suitable for its current scale and resources The Director is fully responsible for making decisions related to financial management in the company with the advice of the Accounting and Finance Department The company has not had any decentralization or decentralization of power in the financial management process to relevant departments, so the operations of the financial management apparatus have not achieved optimal efficiency In addition, simplifying the current financial management apparatus will cause financial forecasting and planning to encounter many difficulties and obstacles in the company's sustainable development process For small businesses like An Thuan Company, combining the two accounting and finance departments into one functional department is most appropriate and reasonable for operations in the short term But if they want to develop in scale sustainably, separating the functions and roles of the above two departments is necessary

In addition, regarding the financial management information system, the Accounting - Finance Department is fully equipped with appliances, equipment, and machinery to serve the operational activities of employees The company also regularly pays attention to and invests in specialized software, making the department's working process more convenient and professional It can be seen that

General Accountant Payroll Accountant Treasurer

10 the financial management information system of An Thuan Boat Company Limited is used mainly for accounting activities at the company In the current context of scale and resources, this system can help the company complete accounting tasks such as financial consolidation, cost accounting, or performing other accounting operations, tax operations However, because the company's financial activities have not been focused on, the financial management information system is still relatively simpler than other companies

1.4.2 Functions and duties of Accounting and Finance Department positions

The chief accountant is the person in charge of managing and supervising arising activities, checking and verifying sources of revenue and expenditure in the company; analyzing and forecasting future financial resources; coordinating with general accounting in performing periodic tax reports, tax declaration and finalization at the end of each quarter and year In addition, the chief accountant is also the manager of the accounting staff; from there, improves work efficiency, maintains routines and general regulations when working in the department, and promotes all the strengths of each accountant

The main duties of the chief accountant at the company include:

- Manage the activities of the accounting department

- Prepare tax reports and work directly with tax authorities if there are problems

- Participate in preparing quarterly and annual financial statements

- Collect and process accounting information and data

- Provide accounting information and data according to legal regulations

- Ensure capital sources, check economic contracts

In a company, the general accountant has the main function of synthesizing,

11 processing, and checking economic transactions arising in the company, including:

- Accounting expenses, income, and other arising operations into the software

- Monitor the company's debt and propose backup plans if necessary

- Support the chief accountant in preparing tax reports and periodic financial statements

- Store accounting data according to state regulations

- Participate in coordinating inventory work

For a service-oriented company like An Thuan Company, the number of formal and temporary employees is substantial Therefore, the payroll accountant plays a crucial role in closely controlling the documents used as a basis for salary calculations to ensure accuracy in determining wages for workers at the end of each period At the end of the period, the payroll accountant will rely on attendance records and relevant documents to calculate the appropriate salary for each employee in the company Duties of payroll accountant:

- Record data and reflect fluctuations in quantity and quality of labor and working time

- Carry out the work of calculating salary, insurance, personal income tax, bonuses, etc for employees according to the current regime and distribute salaries to employees

- Check the use of salary funds, union fees, insurance, to control cash flow, and propose measures to improve salary funds

The function of the treasurer in the company is to manage funds, monitor revenue and expenditure issues, and ensure transparency in the use of funds The treasurer's duties include:

- Pay for business transactions, save transaction information for verification in case of necessity

- Control and manage activities related to revenue and expenditure

- Handle financial risks, undertake inventory, and compare legal documents

- Make full reports about cash funds and bank deposits

Accounting system

The Company applies accounting standards and the Vietnamese business regime issued under Circular 133/2016/TT - BTC dated August 26, 2016 and circulars guiding the implementation of accounting standards of the Ministry of Finance in the preparation of financial statements

- The company's currency unit is the Vietnam Unit (VND)

- The company's annual accounting period according to the calendar year begins on January 1 and ends on December 31 of each year

- Value-added tax is recorded using the credit method

- Inventories are recorded at cost The cost of inventories includes purchasing costs, processing costs and other directly related costs incurred to bring the inventories to their present location and condition Inventories are accounted for using the regular declaration method Inventory value is determined according to the weighted average method

- Tangible fixed assets and intangible fixed assets are recorded at cost During use, tangible fixed assets and intangible fixed assets are recorded at cost, accumulated depreciation, and residual value The straight-line method of depreciation of fixed assets is based on the useful life of the assets as follows: buildings and architecture 5

- 40 years; machinery and equipment 5 - 15 years; transport vehicles 6 - 15 years; office equipment 3 - 8 years; computer software 3 - 8 years; other assets 6 years Regarding accounting form: The company uses computer accounting combined

13 with book organization in the form of a general journal

: Enter daily data : Print books and reports at the end of the quarter and year : Compare quarterly and annually

Image 1 4: Computer accounting bookkeeping cycle at the company

Currently, the accounting software used at the company is SMART PRO software, a product of Nang Unit Software Company The software supports accountants to quickly enter data thanks to the interface of only one input screen, not divided into multiple subsystems While entering data, the software also supports opening multiple file categories at the same time and allows viewing and editing other terms Besides, at the end of each period, the software will automatically transfer and determine business results; at the same time, when accountants render financial statements, the software will automatically check the financial statements if the Financial status statement is not balanced, comparing data between the Business Results Report and the accounts 911 In addition, there are many other support functions such as data storage and decentralization functions, inventory management

Summary table of similar accounting vouchers

Accounting ledger General journal General ledger Subsidiary ledger

14 functions, cost extraction and allocation functions, and debt management functions

Image 1 5: Login interface of SMART PRO software

Strategy and development direction of the unit in the future

An Thuan Boat Company Limited strives to become one of the leading

15 enterprises in the field of building and repairing all types of sea transport vehicles in Thua Thien Hue province Bring maximum work efficiency and maximize economic benefits for customers in the context of economic integration Build a team of professional and courageous leaders; build a team of dynamic, enthusiastic and highly qualified employees

An Thuan Company aims to:

- Average revenue growth: 20% per year

- Average profit growth: 25% per year

- Expand new industries, improve service quality

The core values that An Thuan Company is pursuing are belief in people, creative spirit, team spirit and differences of company members At An Thuan, the entire board of directors and employees have determined: An Thuan Boat Company Limited is a business but always values profession over the business; put responsibility first, wholeheartedly focus on the fishermen's trips to the sea; try our best to help fishermen improve their ability to exploit and catch seafood

In the coming years, An Thuan Boat Company Limited will focus all resources on developing the main business of building and repairing all types of waterway vehicles Increase investment in technical facilities towards the goal of building iron- hulled ships with large capacity As follows:

First, consolidate the existing market In the current integration trend, many opportunities open up as well as more risks and challenges, causing difficulties for small and medium enterprises Therefore, to survive and develop, An Thuan Company urgently has to make decisions to maintain and consolidate the market share it previously captured To do this, the company must diversify the products and services provided to the market Regarding the quality and price of services provided, the company always tries to bring the best quality services and reasonable prices to customers On the other hand, the company will optimize business processes to

16 reduce costs and increase competitiveness in the market At the same time, it promotes the process of quick capital turnover and limits backlog and misappropriation of capital

Second, manage existing human resources The company has policies to reorganize and streamline the staff such as pay based on work results, voluntary resignation; and recruiting, training and developing technical staff At the same time, the company is also building and developing a professional management team, developing the employee management capacity of department heads in the company

Third, consolidate and develop current marketing and bidding capacity Currently, the company's marketing and bidding process is still relatively simple, and there are not many mechanisms to promote customer development Therefore, the company aims to develop and complete marketing and bidding processes such as the bidding process, contract implementation and debt payment process, and brand development process In addition, the company is ready to train a team of marketing and bidding personnel who understand the shipbuilding and repair consulting market

THEORETICAL BASE OF CORPORATE FINANCIAL

Enterprises, corporate finance, functions and roles of corporate finance

2.1.1 Concept of enterprise and corporate finance

According to the 2014 Enterprise Law: “An enterprise is an economic organization with its own name, assets, a stable transaction office, and business registration according to the provisions of law to carry out activities business" In particular, business is "the continuous implementation of one, several or all stages of the investment process, from production to consumption of products or provision of services on the market for profit"

Nowadays, the market economy is increasingly developing, businesses have to face more and more fierce market competition and elimination The challenges in their operations create significant pressure on enterprises, forcing them to manage, adapt, and operate more efficiently, especially in the utilization and management of their financial resources

In reality, there are various definitions of the concept of corporate finance in financial theories

Corporate finance is concerned with three areas namely capital budgeting, capital structure and net working capital management Among them, capital budgeting is the process of forming and managing costs for long-term investments; capital structure is the ratio between debt financing sources such as short-term and long-term debt, and equity capital; and the term net working capital is used to describe the difference between current assets and current liabilities (Stephen A Ross, 2010)

In the same vein, corporate finance is a system of value transfer flows that reflect the movement and transformation of financial resources in the distribution process to establish or utilize monetary funds to support the business production activities of the enterprise The movement of corporate monetary funds is an external manifestation of corporate finance (Tran Thi Hoa, 2014)

Similarly, corporate finance is the process of establishing, distributing, and

18 utilizing a business's monetary funds This process is associated with economic relationships that arise throughout the business's operations, contributing to achieving the business's goals (Nguyen Minh Kieu, 2014)

According to the definition provided by the Ministry of Finance (2014), the term corporate finance describes "monetary funds in the process of establishing, distributing, using, and mobilizing associated with enterprise operations" In general, in essence, corporate finance has an economic relationship with the creation and use of an enterprise's monetary fund in the form of value arising during the enterprise's operations

Thus, although there are differences between the concepts of corporate finance among authors, there is still a general consensus that corporate finance is a system of value circulation cycles associated with Economic relationships, reflecting the mobilization of financial resources, creation and transformation of monetary funds during the business operations of the enterprise

Furthermore, financial relationships are also intertwined with corporate financial activities For each type of business and different forms of capital ownership, financial relationships in corporate finance exist in various forms However, overall, corporate financial relationships often include economic relationships expressed and measured through value metrics Specifically:

● Financial relationships between enterprises and the State

Through the State providing capital for business operations, it implies that the State is the owner of the enterprise; and the enterprise fulfills financial obligations to the State, such as paying fees, charges, taxes, and mandatory contributions

● Financial relationships between enterprises and other entities

Through relationships such as payment relationships and material rewards and punishments in providing goods and services to entities (suppliers, customers, etc.) or in lending to and borrowing from banks, credit institutions, and financial institutions ; payment relationships in capital investment in businesses or other economic organizations; financial relationships in funding social organizations

● Financial relationships within the internal structure of the enterprise

Through the financial relationship between businesses and employees such as payment of salaries, bonuses, fines , payments between departments within the business, relationships among investors, owners, and shareholders in profit distribution

Financial activities and financial relationships always coexist and are interconnected, all aiming toward the common economic and financial goals of the enterprise

(Source: Tran Dinh Tuan, 2008) 2.1.2 Functions of corporate finance

Corporate finance needs to fulfill the following basic functions to facilitate the smooth operation of the business production and operations Specifically:

● Capital funding function for business operations

Business capital is a prerequisite for the activities of businesses; therefore, to meet the capital needs for production and business activities, corporate finance needs to perform the function of establishing sources of funds for business Corporate finance needs to calculate capital requirements, mobilize, select appropriate capital sources and use them for the right purpose and nature to maximize the efficiency of capital utilization

For small and medium-sized enterprises with relatively low initial capital investment, it requires maximizing the mobilization of various capital sources to meet investment portfolios At the same time, the utilization of capital also requires to be done effectively

● Director and monitoring functions to ensure effective business operations

Through financial activities such as income and expenditure management, corporate finance monitors the financial situation to ensure funding for business operations In addition, by analyzing the proportion, structure of capital sources, capital utilization corporate finance assists administrators in accurately evaluating

20 capital funding in line with the characteristics of business operations Along with that, corporate finance can also examine compliance with financial discipline within the company concerning relevant parties through financial relationships with suppliers, customers, the government, and employees

The function of distributing business results is evident in the financial relationships between businesses and other entities such as the government, suppliers, shareholders, employees, etc Corporate finance must ensure the preservation and development of the business's capital This function also demonstrates the comprehensive nature of corporate finance throughout the business operation, allowing administrators to calculate investment and business efficiency by comparing output results with the input factors

In addition to the mentioned functions, corporate finance also supports businesses and government regulatory agencies in forecasting the development trends of enterprises

(Source: Bui Huu Phuoc, 2020) 2.1.3 The role of corporate finance

● Tool to exploit and attract financial resources to ensure capital needs for business investment activities

Corporate financial management

2.2.1 Concept of corporate financial management

Through the analysis of the functions and roles of corporate finance, we can see that every business decision, from research and development of products, decisions to bring products to the market, pricing decisions, capital mobilization decisions, decisions related to recruitment and compensation (salary, bonuses, benefits) for employees, decisions to buy or lease machinery and equipment, are closely related to the financial activities of the enterprise and fall within the scope of financial management of enterprises It is evident that financial management is an integral part of business management and has a close relationship that influences the activities of the enterprise

According to Hirawati (2021), corporate financial management is concerned with planning, analyzing, and controlling financial activities Additionally, in accordance with Vesna, Katerina, and Nikolche (2017), Financial management encompasses the planning, organization, direction, and control of various financial activities, including the procurement and utilization of an organization's assets It applies fundamental management principles to effectively manage the financial

Image 2 1: Organizational chart of financial management in the company

Most generally, according to Nguyen Minh Kieu (2014), corporate financial management is an activity related to the process of procurement, investment, and asset management of the business to achieve set objectives This illustrates that financial management is related to three main decisions of a business: investment decisions, capital mobilization decisions, and profit distribution decisions in the most beneficial way for the business owner and shareholders

Transaction relations with commercial banks and investment banks

Cost accounting Cost management Data processing Financial records Reporting to government agencies Internal control financial statementing Financial planning Financial forecasting

2.2.2 Objectives of corporate financial management

Most businesses share a common goal of surviving and achieving sustainable development in the future To achieve this common goal, businesses will implement actions and decisions to maximize revenue, maximize profits, or maximize the benefits that businesses can achieve Effective corporate financial management is a condition that helps administrators ensure that the financial resources of the enterprise are managed and used effectively to create value for the entire enterprise; including cash management, asset management, and capital management (Hirawati, 2021) Corporate financial managers need to identify and prioritize investment projects, allocate financial resources appropriately, and ensure that business activities achieve maximum profits

Besides, having a proper financial management cycle will ensure the sustainable development of the business, that is, corporate financial management needs to ensure that the business has enough financial resources to maintain business operations and meet short-term financial needs Therefore, managers must forecast cash flows, ensure that debts are paid on time, and manage financial risks effectively (Tran Dinh Tuan, 2008)

2.2.3 The role of corporate financial management

In the management activities of a business, financial management always plays an important role, this activity determines the independence and success of a business in the process of formation, survival, and development In particular, in today's international business environment, due to competition and mutual elimination between businesses taking place increasingly fiercely around the world, financial management has also become more crucial than ever Through understanding the concept of corporate finance and the role and function of corporate finance in the financial system and sustainable development of businesses, the primary roles of corporate financial management are highlighted in the following points:

● Efficient mobilization and utilization of business capital

The capital needs of businesses always change in an upward direction, with new

25 businesses requiring capital for initial operations, and existing businesses needing additional funds for research and development, expanding production scale, entering new markets, or acquiring other companies Corporate financial management helps financial managers accurately determine their needs through financial indicators and their own acumen Managers can identify strengths and limitations in the financial situation at each stage of the business Additionally, financial management helps business leaders plan short-term, medium-term, and long-term financial strategies based on a comprehensive evaluation of every financial factor influencing the business's existence, such as strategies involving participation in currency or capital markets, expansion or contraction of production scale, and more This enables managers to forecast and evaluate the effectiveness of investment and collaboration activities, propose split or merge plans, and detect competitive threats

● Promotion and regulation of business production and operations

Stemming from the nature of corporate finance, the financial-economic relationships are a fundamental and indispensable part of any business In the current conditions, both nationally and globally, these relationships are becoming increasingly complex and diverse Therefore, financial management assumes the role of regulating economic interests among various entities in the economy On the other hand, through financial plans, businesses generate reasonable purchasing power for production factors, attracting additional labor to meet production and business operation needs Using financial and cost factors, businesses can establish reasonable selling prices, thus accelerating the consumption process and increasing the capital turnover On the other hand, salary-bonus systems and profit distribution policies create trust among stakeholders and enhance the company's reputation The role of regulating and promoting production and business operations by corporate financial management is evident in every managerial decision

Furthermore, corporate financial management also plays a role in controlling the use of the company's assets, preventing misuse, and avoiding losses for the business It is evident that financial management in a business is an essential activity in the cycle of managing the production activities of the enterprise However, the

26 positive impact of financial management on a business depends on various factors such as government policies, state management systems, business sectors, business environment, organizational structure, and financial systems within the enterprise, as well as the capabilities and qualifications of business managers

(Source: Bui Huu Phuoc, 2020) 2.2.4 Content of corporate financial management

Financial planning and budgeting is the first step and has a decisive relationship with the remaining stages in the business's financial management cycle This activity serves as the foundation for selecting future financial operations of the business and provides the basis for evaluating achieved results

The process of financial planning and budgeting in a business typically involves the following five steps:

Image 2 2: Corporate financial planning process

- Step 1: Research and forecasting the environment

To develop a financial plan, a business must research the factors directly and indirectly affecting the financial activities of the enterprise Managers need to study the external business environment to identify opportunities, potential challenges, and

Research and Forecasting the Environment

Developing implementation plans to achieve objectives Analyzing and evaluating plans

27 existing influences affecting the financial operations of the business Additionally, an internal environment analysis helps identify the strengths and weaknesses of the business, suggesting effective solutions to leverage strengths and address weaknesses

Financial objectives of a business include profit, sales, and efficiency goals These financial goals must be clearly defined, measurable, and highly feasible Therefore, these objectives should be established based on the current situation of the business at the time of planning, and the results from the environmental forecasting process Moreover, managers need to define the responsibilities and authorities of each department in achieving these objectives

- Step 3: Develop implementation plans to achieve objectives

Based on the established objectives, managers develop feasible plans to achieve these goals These options must be scientifically grounded, and the most promising options are analyzed and evaluated

- Step 4: Analyze and evaluate plans

Managers conduct an analysis, calculating financial indicators for each plan to compare and evaluate strengths and weaknesses, the feasibility of implementation, and the potential for development This analysis guides timely and suitable solutions for each plan

- Step 5: Selecting the optimal plan

CURRENT STATUS OF FINANCIAL MANAGEMENT AT AN

Preparation and implementation of the company's financial plan

The Accounting and Finance Department is responsible for synthesizing, and analyzing the financial situation and preparing financial plans for the company Based on previously compiled accounting data, the chief accountant and general accountant will calculate financial ratios and synthesize them into a report to send to the board of directors according to company regulations Currently, the company's financial planning is based on the following factors:

- The company's annual target plan;

- Production and business plan of the company;

- Specific investment goals for each period

From the above factors, the Accounting and Finance Department carries out the financial planning process in the following order:

- Step 1: Define the objectives of financial management

- Step 2: Propose solutions to achieve the set objectives

- Step 3: Analyze and evaluate the proposed solutions, selecting the most optimal one

- Step 4: Formalize the chosen plan through documentation and disseminate it throughout the entire company

Specifically, at the end of 2021, the company's board of directors agreed on financial performance goals for 2022 as follows:

- Profit after tax growth rate reached 5%;

- Profit after tax ratio on total assets (ROA) reached 10%;

- After-tax profit margin on equity (ROE) reached 6%

However, in the actual implementation of the plan, the company's economic situation did not show optimism when both revenue and profit after tax decreased sharply Revenue in 2022 decreased by more than 1.06% compared to 2021 and profit after tax reached just over 302.2 million VND, compared to more than 330 million VND the previous year Therefore, the two indices ROA and ROE both reached their lowest rates in recent years Based on these indicators, the company did not achieve any of its goals, raising questions about whether the company's financial planning method was truly appropriate to the regional economic situation

Table 3 1: Results of implementing the 2022 financial plan

(Source: Compiled and calculated by the author based on data from the Accounting and Finance Department)

Based on table 3.1, we can see that all targets were not met, and the company's forecasting and financial planning were not good For revenue targets, the company only achieved 86.04% compared to the set plan and 98.94% compared to the previous year This shows that the company did not achieve the expected revenue target in

2022 For the profit after-tax target, the company reached 68.04% compared to the plan and 71.44% compared to 2021 Worthwhile notice, ROA and ROE both decrease from 2021 to 2022 This shows that the company is ineffective in generating profits from its assets and equity The actual ROA reached 9.52% in 2022, lower than both

44 the ROA in 2021 and the target set for the 2022 plan Similarly, the actual ROE reached 10.33% in 2022, only reaching 60.44% of the 2022 plan and reaching 64.06% compared to 2021 In short, the company needs a change in the financial planning process to improve in the coming years.

Financial inspection and control

An Thuan Boat Company Limited has a certain interest in the inspection, supervision and examination of financial activities in its financial management process The proof is that the company has established and operates a strict management system of accounting books, documents and complies with the regulations of the Ministry of Finance In addition, the implementation of financial control processes (control of revenues, expenditures, payments, costs, financial statements ) is also implemented by the company on a quarterly and annual basis It can be said that because the company's current scale is still relatively small, the financial inspection process is carried out quite smoothly, with few difficulties or delays

Based on reports from previous quarters and the previous year, the company's leadership establishes benchmarks for regular expenditures for the upcoming quarters to manage expenses efficiently and save costs where possible The established benchmarks include salaries, bonuses, meals for employees, electricity bills, water bills, taxes, telephone bills, and administrative and business management costs For example, the cost budget sheet for the fourth quarter of the year 2022 is calculated based on the expenses incurred in the third quarter of 2022 and the fourth quarter of

Table 3 2: Cost estimate sheet for the fourth quarter of 2022

1 Salary + Salary allowance + Meal allowance 211,035,000

1 Electricity, water, internet, taxes, telephone, stationery 11,177,500

Salaries, salary allowances, social insurance, health insurance, and unemployment insurance are paid according to state regulations and the company's specific payroll regulations

On public holidays and Tet holidays, employees are entitled to leave and receive holiday pay based on state regulations The company allocates funds for other holidays such as New Year's Day, Lunar New Year, April 30 th Liberation Day, International Labor Day on May 1 st , Hung Kings' Commemoration Day, and National Day on September 2 nd (about 200.000 – 300.000 VND/person/day)

The Accounting and Finance Department staff are authorized to purchase necessary office supplies and distribute them directly to the departments that need them When delivering goods, the recipient, deliverer, and user must sign the delivery receipt

All expenses must have payment requisition forms, advance payment requisition forms, etc., accompanied by original documents with the approval signatures of relevant departments, such as delivery notes, supplier receipts, invoices, etc Once all necessary documents are received, the chief accountant or the head accountant gathers them and submits them to the director for approval and signature before creating an expense voucher or payment authorization for bank transfers

Table 3 3: Payment cycle at An Thuan Boat Company Limited

In charge of Work order Related document

- Request for payment or advance payment

- Documents with signature: delivery record, purchase invoice

- Payment slips, payment orders, checks

Every year, the Accounting and Finance Department prepares financial statements according to regulations on forms and accounting regimes of the Ministry of Finance The set of financial statements will be submitted to the Board of Directors for review and correction if errors are detected, then submitted within the prescribed time The Board of Directors and the Accounting - Finance Department are

Prepare payment request and advance Request

Compilation, inspection of payment proposal documents, advances

47 responsible for the correctness and accuracy of the data presented in the report.

Analyze the financial management efficiency of An Thuan Boat Company

In conclusion, An Thuan Ship Boat Limited Company actively performs financial inspection and control to ensure the accuracy and legality of its financial operations The processes in place cover expense management, salary, and bonus administration, office supplies expense management, and a meticulous payment control process These practices contribute to efficient financial management, ensuring transparency and compliance with regulations

3.3 Analyze the financial management efficiency of An Thuan Boat Company Limited

Currently, all fixed assets in the company have been fully depreciated, meaning their book value equals the accumulated depreciation value, resulting in a net fixed asset value of 0 on the financial statements in recent years Therefore, in this analysis, the author only examines the structure and changes in current capital sources during this period, disregarding the impact of fixed capital during the financial management efficiency analysis Additionally, financial reports from 2020 to 2022, such as the Balance Sheet, the Income Statement, and the Financial Statement Notes, will be used to obtain the most comprehensive and accurate financial analysis figures

3.3.1 Analyze fluctuations and asset structure

To evaluate a company's investment and capital use, we must first evaluate in detail each indicator of asset structure Based on the financial situation report over the years 2020 - 2022, we can see that the company's asset structure is as follows:

Table 3 4: Asset structure of An Thuan Boat Company Limited over the years

- Cash and cash equivalents: In financial planning, the company must always ensure issues related to cash, such as the amount of cash needed to meet the company's expense needs, at what cash value the company needs to resort to bank loans, and the relationship between cash revenue and cash expenses

Figure 3 1: Cash and cash equivalents over the years of An Thuan Boat

Compared to 2020, total assets in 2021 have increased by 12.25%, due to most indicators increasing, in which spending on cash and cash equivalents has increased by 36.2% In 2022, cash and cash equivalent spending increased from 238.84 million VND to 419.88 million VND, equivalent to an increase of 75.8% compared to the previous year, the highest in all three years The reason for this is that the company began to change the payment method from cash to combining with transactions through banks, so the debt collection process with customers is faster than in the past, Figure 3.1 shows that the company's bank deposits increased to 187,357,824 VND during the period from 2020 to 2022 This indicates an improvement in the company's ability to pay and accumulate cash, which can be used for investment or to meet short- term financial obligations Furthermore, the company's revenue during this period has experienced exceptional growth, resulting in a rapid increase in the amount of money held within the company

Collections from sales of products, services and other revenues 1,880.18 2,385.56 1,776.17 26.88% -25.55% Other collections from operations 60.64 342.12 25.89 464.21% -92.43%

Paid Payments to suppliers (811.74) (1,070.76) (671.64) 31.91% -37.27% Paid payment to employees (754.89) (830.16) (668.17) 9.97% -19.51% Payments for corporate income tax (8.64)

Net cash flow 72.76 63.43 180.99 -12.83% 185.36% Table 3 5: Cash flow from the company's operating activities over the years

To pinpoint the causes of the changes in the company's monetary amounts more precisely, the author conducted calculations and analyzed the cash flow reports

50 during the period from 2020 to 2022 From the cash flow statement, it can be observed that cash flow from operating activities constitutes a significant proportion of the total cash flow from all activities, approximately 99.99% From the results in the table, we can see that the net cash flow from business operations in 2021 decreased by 12.83%

In this, all cash inflows and outflows show a significant increase compared to 2020, specifically, the other collections from operations increased by 464.21%, and the Other payments for operations increased by 153.24% On the contrary, the net cash flow in 2022 increased by 185.36% compared to 2021, and both cash inflow and outflow showed a decreasing trend

- Accounts Receivable: The company's management board always pays attention to the accounts receivable statement to review which customers and receivables are often paid late, in order to take necessary measures to deal with these customers

Figure 3 2: Receivables over the years of An Thuan Boat Company Limited

The indicators of accounts receivable show a continuously increasing trend over the years Compared to 2020, the value of receivables in 2021 increased by 11.73%, from 546.8 million VND to 610.93 million VND By 2022, the value of this account

51 has reached 760.23 million VND, equivalent to an increase of 24.44% over the same period last year Due to the negative impact of the COVID pandemic on the economy during the period from 2020 - 2021, the company has loosened purchasing policies and regulations and allowed customers to owe more This can help the company increase its reputation with customers, but it also leads to the company's capital being misappropriated for some time Figure 3.2 illustrates that, although the value of customer receivables increases, the proportion of this amount in the company's total receivables tends to decrease, from about 90% in 2020 to about 85% in 2022

- Inventories: In contrast to the cash and cash equivalents ratio, the company's inventory ratio tends to decrease Compared to 2020, the company's inventory value in 2021 increased by about 9.68%, because the company increased the amount of raw materials used for business activities Along with that, the value of inventory in 2022 has decreased by more than one-tenth of the value in 2021 and reached 1,358,156,983 VND The reason is that the company's inventory only includes materials such as iron and steel, rust-resistant paint, anti-corrosion paint, etc., with a long shelf life used for repairing various types of water transport vehicles Therefore, over the past three years, the company has limited the purchase of new materials to save unnecessary expenses

3.3.2 Analyze fluctuations and capital structure

The company's capital mobilization organization is shown through targets on scale and capital structure over each year First of all, let's review the Balance Sheet of An Thuan Boat Company Limited to understand this structure:

Figure 3 3: Capital structure of An Thuan Boat Company Limited in the period 2020 - 2022

It can be seen that the company's main source of operating capital comes from equity Specifically, in 2020, the value of liabilities reached 252,774 million VND and only accounted for 12% of the capital structure In 2021 and 2022, the proportion of liabilities will only account for less than 10% In contrast to the decreasing trend of liability value, the proportion of equity capital has tended to increase over three years At the end of 2020, the recorded equity value reached 1,763.445 million VND, equivalent to about 87% of the capital structure By the end of 2021, this value has increased to 2,344,651 million VND, accounting for 92.9% of the company's operating capital The year 2022 recorded a slight decrease in the proportion of equity in the capital structure, reaching 92.17%, equivalent to 2,344,651 million VND

To analyze more clearly, we consider the changes in capital sources over the years:

Table 3 6: Changes in the capital structure of An Thuan Boat Company

As analyzed above, the company's liabilities tend to fluctuate strongly over the years from 2020 to 2022 Specifically, compared to 2019, liabilities in 2020 have decreased from more than 252 million to 160,693 million, corresponding to a decrease of 36.43% In 2022, the company's liabilities increased to 199,183 million VND, equivalent to an increase of 23.95% over the same period last year In all three years from 2020 to 2022, the company's debt structure includes only short-term liabilities; therefore, the company needs to establish a system and cycle to regularly monitor debts to have a debt repayment plan when they are due

Besides, the company's equity tends to increase slightly each year In 2021, equity increased by 19.22% compared to 2020; the main reason is that this year's undistributed after-tax profit increased by more than 300 million It can be said that the company has had a year of strong development after a period of crisis due to the COVID-19 pandemic However, if we look at the company's capital structure in general, it can be seen that the company's equity accounts for a fairly large proportion, mainly based on profits earned from previous years.

Indicators to evaluate the results of the company's financial management

3.4.1 Results of production and business activities in the period 2020 - 2022

Table 3 7: Results of production and business activities of An Thuan Boat Company Limited over the years

Value Proporti on (%) Value Proporti on (%) Value Proporti on (%) 2021-2020 2022-2021

1 Revenue from sales and service provision 1,819.05 100 2,058.36 100 2,036.59 100 239.31 -21.77

4 Net profit from business activities -5.41 -0.30 351.44 17.07 303.43 14.90 356.85 -48.01

In general, the company's business results in the three years 2020 - 2022 have many fluctuations, showing that the company has not yet operated stably and is still strongly affected by the economic and political context in Vietnam

The company's revenue primarily comes from repairing various types of waterborne transport, and therefore, its income depends on the number of vessels coming ashore each month and the duration of berthing In 2021, due to active fishing activities in Thua Thien Hue province, the number of vessels launching offshore exceeded 50 units As a result, the company's revenue reached its peak at 2,058.36 million VND, an increase of over 239.32 million VND compared to 2020 However, due to global changes in 2022, many offshore fishing fleets had to suspend or reduce their fishing activities, leading to a decline in the company's business operations The total revenue for the year 2022 was 2,036.59 million VND, a decrease of over 21.78 million VND compared to the same period last year Thus, it can be seen that the company's operations are not truly stable, and it focuses on developing a dominant industry with less emphasis on activities to increase other sources of income

As mentioned above, the main revenue-generating activity for the company is repair; so the two main types of costs in the company's business operations, which account for a significant portion of the revenue, are the cost of goods sold and operation expenses Due to the impact of the COVID pandemic, the company's business situation is not favorable; resulting in total production and business costs in

2020 reaching 1,824.48 billion VND, higher than total revenue from sales and service provision and net profit from business activities of the company reaching negative levels In 2021, thanks to implementing policies to cut unrelated costs and applying material consumption norms, production and business costs have decreased by more than 117.5 million VND; and in 2022, this cost will reach 1,733.20 million VND, equivalent to an increase of 24.45 million VND

Through analysis results, the company tends to reduce production and business costs in proportion to sales and service provision revenue Specifically, the company's cost of goods sold (including worker salary costs and raw material consumption costs) has decreased from 1,583.14 million VND to 1,365.6 million VND, equivalent

56 to a decrease from 87.03% to 67.05% in proportion to revenue It can be seen that the company's cost management has been improved over the years However, the company needs to focus on operation expenses with an increasing trend for three consecutive years Compared to 2020, the company's operation expenses in 2021 increased by more than 124.49 million VND; and in 2022, it increased by 1.78 million VND The reason for this is due to the policy change to change the regional minimum wage that has been issued by the government since July 2022, leading to higher salary costs for employees

3.4.2 Financial ratios of the company in the period 2020 - 2022

To evaluate the current state of financial management of An Thuan Boat Company Limited in the most detailed and specific way, we will first analyze, synthesize and evaluate financial indicators for the years 2020 – 2022

Table 3 8: Liquidity ratio of An Thuan Boat Company Limited from 2020 -

In general, the group of liquidity ratios including current ratio, quick ratio and cash ratio of the company tend to increase sharply in the period from 2020 to 2022

In particular, the company's cash ratio has the fastest growth rate

At the end of 2020, An Thuan Company's current ratio was 7.976, meaning there were 7.976 monetary units of assets to secure one monetary unit of debt By December 31, 2021, the company's current ratio had doubled, with 14.084 monetary

57 units of collateral assets for one monetary unit of debt And by 2022, one monetary unit of debt will be secured by 12.771 monetary units of assets The current ratio of

An Thuan Company has increased gradually over the years, showing that the company has enough ability to pay its debts, and the company's financial situation is still at a safe level

On the other hand, total assets include many indicators that are difficult to convert into debt repayments such as bad debts, pending losses, and inventory Therefore, we will examine the quick ratio to analyze the company's liquidity more clearly Based on the results in Table 3.7, excluding the influence of inventory, at the end of 2020, one monetary unit of debt was still secured by 2.878 monetary units of assets; in 2021, it was 5.288 units, and in 2022, it was 5.953 units Combined with the current ratio, there is a significant difference between these two ratios Over the three years, the current ratio is almost twice the quick ratio, indicating that the company still focuses a lot of resources on inventory Therefore, the company may not be more flexible in paying its debts

Regarding the cash ratio, this ratio is the most stable in the liquidity ratio group, with values close to 1 for all three years In 2020, the ratio was 0.694, below 1, indicating that the cash on hand at the end of this year was not enough to pay off short-term debts immediately In the following year, the cash ratio increased to 1.486, equivalent to a threefold increase compared to the previous year In 2022, this ratio reached 2.108, meaning that for every unit in total cash, there were 2.108 units of short-term debt These ratios indicate that the company almost did not encounter difficulties in ensuring debt payments However, these three ratios also show that the cash reserve at the company is quite large Although maintaining cash reserves will help the company ensure its ability to pay, it also incurs costs due to excessive idle capital

Table 3 9: Operational efficiency ratio of An Thuan Boat Company Limited from 2020 - 2022

The group of indicators reflecting the company's performance in the last three years has had many changes Total asset turnover tends to decrease and is less than 1 for three consecutive years In 2020, from one unit of assets, the company earned 0.94 units of revenue By 2021, the total asset turnover ratio has increased to 0.96 times, corresponding to 0.96 units of revenue for one investment asset However, by 2022, with one unit of assets, An Thuan Company will only earn 0.85 units in revenue Total asset turnover is low and always less than 1, proving that the company's revenue growth rate is not faster than the average total assets target According to the company's financial statements, we can see that the company had receivables occupied for all three years, leading to limited investment to increase the company's annual revenue Therefore, the company needs to have policies and regulations to promptly collect misappropriated receivables

Based on the data in table 3.8, it can be seen that the company's receivable turnover also tends to decrease The highest receivable turnover rate is 3.95 times in

2020 and the lowest is 2.97 times in 2022, corresponding to the average number of days of collection increasing from 92.34 days to 122.87 days Compared to Song Cam

Shipbuilding Joint Stock Company's receivable turnover index of 9.39 times at the end of 2022, three times the index of An Thuan company, showing that the company's index is quite low, this means that the company's cash flow will have difficulty when the customer payment time is too long Therefore, the company needs to have policies to be able to recover debts from customers quickly

Besides, the turnover rate of payables to suppliers also continuously fluctuates Specifically, in the period 2020 - 2021, the payables turnover ratio decreased from 16.93 times to 11.68 times The reason is that the company's average payables in 2021 increased by 42.84% compared to the previous year, faster than the revenue growth rate of 13.16% In the period 2021 - 2022, the turnover rate of payables will decrease to 9.66 times, corresponding to the company's average number of payment days increasing from 31.24 days to 37.80 days In general, the accounts payable turnover index shows that the company does not take too much time to pay its debts to suppliers However, the company's quick ratio is quite large, showing that the company is not balanced and clearly understands the company's financial situation

In addition, the inventory turnover index shows that the company's inventory only turns over once a year, approximately equal to 1 This indicates that the company's inventory lasts for an extended period, leading to additional costs for managing inventory There is a risk of inventory deterioration, expiration, such as paints, oils, iron, steel, etc., and causing a waste of resources in warehouse space when the company needs more space to store materials However, compared to the company in the same industry, Song Cam Company with an inventory turnover index of 0.97 times in 2022, An Thuan Company's index is reasonable due to the characteristics of the two business lines The company's inventory usually only includes materials used to build and repair waterway vehicles, with little turnover during a business cycle On the other hand, due to the long number of inventory turnover days, the capital movement cycle at the above two companies will often last more than a year

Table 3 10: Debt management ratio of An Thuan Boat Company Limited from

General evaluation of the financial management at An Thuan Boat Company

Firstly, regarding capital management, the company's capital structure mainly relies on existing current assets such as cash, accounts receivable, and accounts payable This ensures the company has a sufficient capital source for additional financing from financial institutions, meeting the timely capital needs during periods of simultaneous shipbuilding projects However, the company needs to explore other funding sources with appropriate costs (interest expenses, maintenance costs, etc.) corresponding to each stage of the company's development This ensures capital recovery, debt repayment, and increased profitability for company members

Second, concerning inventory management, the company has established a stringent process that aligns with each plan during different periods and adapts flexibly to market changes The Engineering Department is responsible for allocating the standards for using raw materials and tools in business operations Consequently, the usage of raw materials is controlled, and reserves match business needs, indicating the company's ability to forecast, plan, and analyze the market effectively Additionally, since the company primarily stores flammable materials like wood, paper, and ropes, the storage system is well-invested in to prevent losses due to potential risks

Third, in cash management, the company has reasonably and efficiently carried out cash management, saving costs while achieving high efficiency for small companies like An Thuan All financial transactions are recorded by the Accounting and Finance Department in the cash book and bank deposit book on the software system Regular reconciliation checks are performed at the end of each month to minimize errors and discrepancies between the cash book, bank subsidiary ledger, and bank statements This meticulous recording ensures the fastest and most accurate provision of data to the leadership when required

First, the company lacks a separation of accounting and finance functions Considering the organizational structure, these two functions have been combined into a common department so there is no clear delineation In fact, the scale of An Thuan Boat Company Limited is still quite small, focusing mainly on repairing and building various water transport vehicles As a result, the company does not prioritize financial investment activities despite having ample reserves The responsibilities and functions related to finance are managed by the Chief Accountant and the Accounting Department However, the Chief Accountant cannot replace the Finance Director in certain financial management tasks The Chief Accountant can not make decisions regarding financial policies or activities that the company needs to engage in to increase income

On the other hand, although the Accounting and Finance Departments are merged, the financial machinery primarily leans toward the accounting function rather than the financial function The company's accountants typically focus on their tasks of recording, summarizing, and statistically reporting economic transactions, lacking analysis skills to evaluate financial data and identify strengths and weaknesses in the company's financial situation

Second, the company has not fully performed financial analysis Currently, the company's financial analysis has not received much attention and attention; the Accounting and Finance Department only undertakes the job of collecting and synthesizing information into a report and presenting it to the board of directors when needed The assessment of profitability is also not guaranteed and only two calculation methods are applied: comparative analysis method and ratio analysis method Therefore, financial ratios are analyzed completely but are fragmentary and not linked to each other

Third, the company's financial planning has not been completed and there are still many risks The implementation process at the company includes only three simple steps: set goals, come up with a plan, and implement the plan It can be seen that the company lacks attention to forecasting the industry's business situation, and

70 customers' needs for new construction or repair in the near future, and has not clearly assessed opportunities, risks, and challenges for the company to be able to make financial plans that are more complete and closer to reality than rough numbers This leads to an incomplete and less realistic financial plan, contributing to the company's failure to achieve its financial goals in 2022.

Orientation to improve financial management at An Thuan Boat Company

Firstly, manage the financial planning and analysis process of An Thuan Boat

Some solutions to improve financial management at An Thuan Boat

Firstly, manage the financial planning and analysis process of An Thuan Boat

Company Limited to continuously improve the quality and efficiency of financial management Financial analysis and management involve more than just presenting consolidated figures; it also requires deriving trends for forecasting future cash flows Effective financial planning not only outlines the plans for the next period but also forecasts the upcoming cash inflows and outflows for the company, providing the most suitable directions Excelling in these tasks will help the company avoid or minimize risks resulting from market fluctuations

Second, execute a strategy to consolidate and expand financial relationships Concerning financial relationships with the government, the company needs to fulfill tax obligations towards the state budget, as any fraudulent or tax evasion actions constitute legal violations This not only negatively impacts the company's reputation and brand but may also lead to administrative or criminal liability, depending on the severity of the company's actions Regarding financial relationships with businesses and other entities, the company must maintain its reputation and brand to instill trust in customers and partners Presenting and ensuring feasible and efficient projects will help secure funding from banks, as they can provide a large and relatively secure source of capital Internally, the company needs clear policies for responsibilities and profit distribution among relevant stakeholders (employees, owners, contributing members), based on their actual contributions to the company's development

4.3 Some solutions to improve financial management at An Thuan Boat Company Limited

Firstly, regarding financial planning, to create a comprehensive financial plan, the company needs to conduct more accurate environmental research and forecasting, combining various sources of information to assess the current financial situation of the company and the industry The company can use industry average indicators through financial ratios as a basis for comparison with its own operations However, there are some risks associated with this approach as the government currently lacks a complete system providing accurate financial indicators for businesses Additionally, the company can perform short-term financial planning using the following steps:

Image 4 1: Short-term Financial Planning Process for An Thuan Ship

(Source: Proposed by the author)

- Step 1: Determine the administrator's personal goals and the influence of personal goals on the company's financial goals to promptly adjust them to suit the company's financial goals

The personal goals of a manager greatly influence the direction of the company's financial goals For example, if the manager's goal is to establish personal goals, such

Determine the personal goals of the manager

Establish financial goals for the company

Analyze strengths, weaknesses, and the impact of external factors on the company

Forecast revenue, expenses, and profits

Implement according to the plan Feasible

72 as innovation in product or service production processes, creating differentiation, and attracting customers, the company's financial goals will focus on increasing competitiveness, sales volume, and profit On the other hand, if the manager's personal goal is to build and develop a team of competent and passionate employees, the company's goals will tend to increase work efficiency, reduce turnover, and increase employee commitment, thereby increasing productivity and profitability

- Step 2: Establish growth goals, return on investment, and expansion direction for the company These goals must be expressed in specific financial indicators, providing forecasts for actual revenue and profit

- Step 3: Identify the company's existing strengths, weaknesses and external environmental factors that can affect the implementation of set goals

- Step 4: Pay attention to financial needs, human resources, and necessary infrastructure to complete the financial plan by forecasting sales, costs, and profits for about 3 to 5 years

- Step 5: Managers cultivate more methods of operating and managing the company, seizing market opportunities, and developing products and services to find the best measures to improve the company’s productivity and operational efficiency

- Step 6: Through the company's latest financial statement, update the results of the implemented financial plan, and regularly compare your financial results with companies in the same industry to know your company's position in the industry

Second, the analysis results show that the company has significant accounts receivable, and a considerable amount of capital is tied up Therefore, the company needs to reduce the proportion of accounts receivable by regularly checking them and implementing appropriate measures to avoid losses and address difficult-to-collect debts In addition, debt recovery should also be a focus, as some receivables, although of small value, may take a long time to recover, affecting the company due to a slow turnover of capital

Regarding debt recovery deadlines, due to the nature of the business sectors, the company has not established strict deadlines for customers to make payments

Therefore, the company should tighten payment regulations for each service provided to customers Detail:

Table 4 1: Proposed debt recovery deadlines for An Thuan Boat Company

Repair and maintenance of all types of waterway transport vehicles

Construction types of waterway transport vehicles

For individual customers, organizations and businesses: Payment immediately upon completion of new construction and successful launch; or pay within 10 days after launching if a bank guarantees the payment

In case an organization or enterprise orders to build more than 3 ships, the company will support extending the debt collection period within 6 months and can pay in many installments with the condition that there is a bank guarantee or assets to secure the debt debt at the company

Water vehicle rental Immediate payment

Providing materials and equipment for fisheries and replacement production in the boat sector

Immediate payment In case the customer has purchased goods or services at the company 5 times or more, the payment term can be extended within

10 - 20 days after receiving the goods

In addition to establishing regulations regarding debt recovery deadlines, the company also needs to implement measures to prevent and mitigate instances where customers fail to make timely payments For customers requesting delayed payments beyond the payment deadline, the company still accepts it but imposes a late payment penalty of approximately 6% per annum, in line with the current bank penalty fee For customers deliberately extending payment periods or not making payments, the author suggests that the company should consider placing such customers on a

74 restricted trading list and implement measures for handling customer debts, including legal penalties stated in contracts, compensation for damages, and legal action if necessary

Third, there should be a focus on recruiting financial personnel for financial analysis activities A dedicated financial analyst should possess expertise in finance, a high level of financial knowledge, an understanding of the company's business operations, and awareness of the domestic and global economic situation, along with knowledge of financial management regulations and state tax policies Based on the current situation of the company, employees can participate in financial courses to enhance their professional skills Experienced financial experts can be invited for training sessions, and staff can attend accounting and finance classes and meetings organized by the tax bureau However, these are temporary measures, and the company still needs a specialized financial management officer with professional expertise who is dedicated to this task Staff rotation within the company or reassignment among employees in the Accounting – -Finance Department should be considered to enhance the accounting expertise of each department and provide comprehensive insights for management into the strengths and weaknesses of each employee's specialization in the company's accounting – finance tasks

Fourth, there is a need to strengthen the inspection and control of the financial management of An Thuan Boat Company Limited in terms of financial auditing and control to enhance the efficiency of working capital utilization Improving working capital efficiency means using the least amount of working capital to achieve the highest sales revenue or net profit

To maximize capital utilization efficiency, the company needs to periodically inventory and evaluate all goods and capital in cash to determine the current value of existing working capital This should be compared with accounting records to make adjustments if necessary The company should actively address and resolve capital in payment, capital that has been misappropriated to quickly recover funds and use them for business operations to accelerate the turnover of working capital Improvements in cash management should also be considered Currently, as analyzed above, the

75 company has a considerable amount of cash on hand This is because the company manages cash based on experience, without using a scientifically based capital management method, thereby reducing the company's efficiency in using cash Therefore, the company needs to determine and manage the amount of cash and cash reserves reasonably It should plan cash flow to anticipate cash receipts and payments for the upcoming period and take measures to balance cash receipts and payments to ensure regular liquidity

Table 4 2: Estimated Balance Sheet for Income and Expenditure in 2023

Revenue Content Estimate Expenditure Content Estimate

- Revenue from waterway vehicle repair services

- Revenue from the service of construction waterway vehicles

- Revenue from equipment and waterway vehicle rental services,

- Return goods and service suppliers

- Salaries, bonuses and payables to employees

- Repair and maintenance of machinery

- Tax paid to the state

To enhance capital utilization efficiency, the company needs to focus on the following issues: planning the turnover rate of working capital, debt collection, and fixed asset management In planning the turnover rate of working capital, the company must accelerate activities at each stage to minimize the number of days while still achieving efficiency The emphasis should be on promptly settling completed contracts to swiftly recover funds for business operations, minimizing the risk of capital being tied up, accelerating the capital turnover rate, and rapidly increasing the return on investment In fixed asset management, the company creates

76 records to manage existing fixed assets to avoid losses and damages during usage, which could impact the company's operations Furthermore, the company should implement policies on loan interest rates and incentive systems related to the management and use of working capital Specifically, the company may consider obtaining additional capital for expanding production and business activities if the interest rates are favorable Additionally, applying incentive and penalty systems can encourage employees to work efficiently and be more productive

Financial planning of An Thuan Boat Company Limited using the revenue

The process of creating financial forecasts using the percentage of revenue method is carried out through the following steps:

Image 4 2: Financial Forecasting Process Using the Percentage of Revenue

Identify indicators that change with revenue

Forecast Balance Sheet and additional capital requireme nts

- Step 1: Determine the revenue growth rate

To determine the revenue growth rate for the next period, we primarily rely on the revenue growth rate in previous periods, along with an analysis of An Thuan Company's business environment and business strategy Analyzing the business environment and business strategy means analyzing the business industry and competitive strategy, which is the first step in assessing business operations and forecasting finances for An Thuan Company

As shown in Image 4.2, factors influencing the revenue growth rate and the average industry profitability include the level of competition among current enterprises, threats from new entrants to the market, threats from substitute products, and the bargaining power of industry enterprises with customers and suppliers Among these factors, examining the average growth rate of the company in the past and the industry's growth rate are two decisive factors in forecasting revenue in future periods

To determine the revenue growth rate over the years, we use the simple percentage growth formula as follows:

Revenue growth rate Next year's revenue – Previous year's revenue x 100% Last year's revenue

From this, we calculate the revenue growth rate from 2020 to 2021, reaching 13.14%, while the period from 2021 to 2022 has a growth rate of only -1.06% We calculate the average revenue growth rate for the two previous years as 6.54% Therefore, the revenue for 2023 is forecasted by taking the revenue for 2022 multiplied by the average growth rate as follows:

Revenue in 2023 = Revenue in 2022 × (1 + Revenue growth rate) = 2,036.59 × (1 + 6.54%) = 2,169.78 million VND

- Step 2: Determine indicators that change with revenue

Since forecasting financial statement indicators is done as a percentage of

78 revenue, we need to identify which indicators change with revenue and forecast the percentage of revenue for those indicators Indicators on the income statement such as the cost of goods sold and operating expenses are indicators that change with revenue and affect the gross profit margin and net profit margin of the company

Based on the percentage of revenue in the past, the price trends of input factors, we can forecast the percentage of revenue for these indicators in 2023 by taking the average percentage of revenue during the period 2020-2022, as follows:

Table 4 3: Percentage of average revenue of indicators of An Thuan Boat

Building on the forecasted revenue and the ratios of cost of goods sold on revenue, the ratio of operating expenses on revenue forecasted in step 2, we prepare a forecasted income statement

Table 4 4: Forecasted Income Statement for the year 2023 of An Thuan Boat

Revenue from sales and service provision 2,169.78 2,036.59

Gross profit on sales and service provision 584.10 670.99

Net profit from operating activity 231.21 303.43

Total accounting profit before tax 231.21 302.75

Profit after corporate income tax 184.97 242.20

(Source: Compiled and calculated by the author)

- Step 4: Forecasting Balance Sheet and determining the need for additional capital

On the basis of forecast revenue and cash-to-revenue ratios, accounts receivable-to-revenue ratio, inventory-to-revenue ratio, and liabilities-to-revenue ratio in step 2, we create a forecasted Balance Sheet as follows:

Table 4 5: Forecasted Balance Sheet for the year 2023 of An Thuan Boat

Cash and cash equivalents 302.76 419.88 Decrease 117.12

Based on the company's internal management perspective, if the additional capital needs calculated in step 3 are too large and the company does not want or cannot mobilize the necessary capital, the company needs to adjust the forecast indicators by changing its capital management policies

In the financial forecast table above, alongside indicators with relatively stable fluctuations compared to 2022, the indicator of owner's equity is determined to decrease by 76.20 million VND Meanwhile, retained profit after tax reached 184.97 million VND, so the owner's equity will have to increase by 184.97 million VND, reaching 2,529.62 million VND In this case, it can be explained that the company will distribute the after-tax profits to the contributing members of the company However, this also leaves the company without enough capital to continue its operations and investments in the coming year Therefore, if the company wishes to maintain the forecast table, it will have to owe suppliers more or borrow an additional amount of 28.52 million VND

In fact, according to the company's regulations and current situation, it is unreasonable to distribute all profits during the year to capital contributors without retaining them for the company to continue operating Therefore, we can adjust the forecast table of the financial situation report for 2023 according to the plan of paying part of the profits to capital contributors and paying off debts According to the company’s regulations, the maximum annual profit-sharing rate for capital- contributing members is 30% of profit after tax, equivalent to 55.49 million VND The company's retained profits at this time are 129.48 million VND, meaning that the owner's equity in 2023 will increase by 129.48 million compared to 2022 and reach 2,474.13 million VND To balance the financial statement between total assets and total capital, the company's liabilities will be reduced to 22.03 million VND The

81 adjusted financial forecast table for 2023 is as follows:

Table 4 6: Forecasted Balance Sheet for 2023 after adjustment by An Thuan

Cash and cash equivalents 302.76 419.88 Decrease 117.12

Financial management is an important area, the foundation of any business The effectiveness of a business's financial operations will be related to many other issues such as financial planning, working capital management, fixed asset management, implementation of financial control and reporting Implementing and solving the above issues well will bring better operating results to the business, making a significant contribution to financial management

With the aim of researching and analyzing the current state of financial management at An Thuan Boat Company Limited to propose practical solutions to enhance financial management efficiency at the company, the author has chosen and completed the topic: “Completing financial management at An Thuan Boat

Company Limited” The topic has addressed the following issues:

Systematizing the theoretical basis of corporate financial management

Analyzing and evaluating the current situation of financial management at An Thuan Boat Company Limited from 2020 to 2022

Proposing solutions to improve financial management at An Thuan Boat Company Limited for the upcoming year

Although An Thuan Boat Company Limited has taken basic steps for financial management, it still simplifies the process, suitable for its current scale Therefore, if the company has a vision of expanding its scale, this cycle will become irrelevant and obsolete The topic analyzed the existing processes for financial management of the company and evaluated the effectiveness of implementing those cycles Through the analyzed items, the limitations and results achieved in financial management at the company in recent years are pointed out and explained

Based on the analyzed results and remaining limitations, the project has also proposed a few solutions to improve and improve the effectiveness of financial management for the company such as training financial personnel, improving financial planning, strengthening debt management and collection capabilities, and separating accounting and finance functions x

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Finance: Guidance on accounting regime for small and medium enterprises

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Sized Enterprises: A Strategic Management Approach Emerging Markets Journal,

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Tolerance, and Financial Management of Microenterprises Actors Society, 9(1),

18 Ross, Stephen A., Westerfield, Randolph., Jaffe, Jeffrey F (2010) Corporate

Finance, 9 th Edition McGraw-Hill and Irwin, Boston

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APPENDIX APPENDIX 1: FINANCIAL STATEMENT FOR THE YEAR 2020 xiii xiv xv xvi

APPENDIX 2: FINANCIAL STATEMENT FOR THE YEAR 2021 xvii xviii xix xx

APPENDIX 3: FINANCIAL STATEMENT FOR THE YEAR 2022 xxi xxii xxiii

Tiêu đề	Completing Financial Management at An Thuan Boat Company Limited
Tác giả	Tran Mai Bao Ngoc
Người hướng dẫn	Mba Pham Hieu
Trường học	Ho Chi Minh City University of Technology and Education
Chuyên ngành	Accountancy
Thể loại	Graduation Thesis
Năm xuất bản	2023
Thành phố	Ho Chi Minh City

Định dạng
Số trang	108
Dung lượng	7,83 MB