In the market economy, capital plays an important part for enterprises. It has a significant meaning to identify its following steps in the process of producing.
CONTENTS FOREWORD .1 CHAPTER THEORY OF WORKING CAPITAL AND ITS EFFECTIVE UTILIZATION IN ENTERPRISE 1.1 Theory of working capital 1.1.1 The notion of working capital 1.1.2.Working capital and the classification 1.1.3 Working capital’s structure and driving factors behind .4 1.1.4 Working capital resources 1.1.5.Working capital demand and the driving factors behind 1.2 Working capital and its importance in increasingly effective utilization 1.2.1 Working capital and norms to reflect its cycle speed 1.2.2 The main factors have influences on the utilization effects of working capital 1.2.3 Some solutions aiming to increase the utilization effects of working capital CHAPTER THE REAL STATE OF WOKING CAPITAL MANAGEMENT AND UTILIZATION IN THE COMPANY 10 2.1 Overview of producing activities in Petrolimex Asphalt commercial limited company 10 2.1.1 Back ground and developing process 10 2.1.2 Business sectors and main products 10 2.1.3 Organization of management 11 2.1.4 Accounting’ s structure 11 2.2 The real state of working cappital’s utilization at Petrolimex Asphalt commercial limited company 14 2.2.1 Overview of assets and capital resources of the company .14 2.2.2 The real situation of working capital’s utilization at the company 16 2.2.3 In summary 26 CHAPTER SOME SOLUTIONS TO INCREASING EFFECTIVE OF WORKING CAPITAL IN MANAGEMENT AND USTILIZATION AT PETROLIMEX ASPHALT COMMERCIAL LIMITED COMPANY .27 3.1 Advantages and challenges in operation of the company 27 3.1.1 Advantages 27 3.1.2 Challenges .27 Oriented developing of the company in the coming years 27 Pham Thi Mai Huong MSV:04D02811 3.3 Some primary sollutions to improve the effective utilization of working capital .28 3.3.1 Actively work out plans in mobilising and using working capital efficiently 29 3.3.2 Push up effectively the use of cash capital and specify clearly resonable reserves .30 3.3.4 To strengthen investment and enlarge market to push up goods consumption 31 3.3.5 Investment satandar to workers and officials 32 3.3.6 Other solutions 33 CONCLUSIONS 34 Pham Thi Mai Huong MSV:04D02811 FOREWORD In the market economy, capital plays an important part for enterprises It has a significant meaning to identify its following steps in the process of producing Therefore, enterprises want to exist for developing sustainably have to focus on capital management activities in utilization to gain optimum profitable target Business capital is divided into parts : Fixed capital and working capital Enterprise management in increasing effectively In fact, Petrrolimex Asphalt commercial limited company is a enterprise which is doing business in trading field have been making efforts in capital using and management, especially working capital occupied a large proportion in the total capital Stem from appreciating of working capital in reality as well as to meet increasing demand effectively in every enterprise, for the past probrationary period, I’ve decided to chose this subject for my thesistation “Working capital and some solutions to increasing capital in utilization at Petrolimex Asphalt commercial limited company” The graduation thesis’s content consists of chapters : Chapter :The theology of woking capital and woking capital’s effects in enterprises Chapter : The real state of working capital management and utilization in the company Chapter 3: Some main solutions to increasing the effects of woking capital in utilization and management CHAPTER THEORY OF WORKING CAPITAL AND ITS EFFECTIVE UTILIZATION IN ENTERPRISE 1.1 Theory of working capital 1.1.1 The notion of working capital Any enterprise wants to carry out its produce and business process, it needs a combination of factors : labour force, tools and materials Difference between tools for working and materials for working (materials, fuels, semi- unfinished products …) It only take part in one producing process and does not come back its initial form, all its value will change into in product’s value Materials for working : as in kind form it is called working assets As for value form, it is called Working capital of enterprise Working Assets included : Working assets for manufactoring and working capital for circulating Working Assets for manufactoring included such as : raw materials, fuels, materials, alternative accessories, half of products, unfinished products … are all being in process of reserve or manufactoring Working Assets for circulating included : finished products are waiting for consumption, capitals in cash, capitals in payment, prepaid costs … In producing and businessing process, working Assets for manufactoring and working assets for circulating are always mobilising, transforming to each other and at last aiming to ensure non-stop produce and business process It is also an expressed form of working assets, so the characters of working capital exercises are always affected by working assets’s characters Working capital will be transformed and repeated consecutively So, they will create repeated cycle of working capital One cycle starts since investing capital under the monetory form then finishing at the production cycle to come back its initial state To the manufacture enterprises, the cycle of working capital process always mobilises under the following formula : Manufacturing materials C-G Manufactoring object … Produce … G’- C’ Labour For commercial enterprises, the repeated cycle of working capital process always mobilises under the following formula : C– G – C’ Therefore, Working capital is under the monetory, it is an expressed form of working capital or in other words, it is monetory on prepaid account to take shape of working assets for producing and working assets for circulating to ensure process of produce and business are going on smoothy 1.1.2.Working capital and the classification 1.1.2.1 The classification under expressed form According to the classification, working capital is divided into parts : - Capital in cash and accounts receivable : It consists of monetory in funds, bank’s deposit, capital in payment, short-term investment in securities … - Capital in materials, goods : They are working capitals which are under the expressed forms such as raw materials and materials, unfinished products, semi-finished products, finished products … The classification will help enterprises to evaluate the level of inventory and ability of payment 1.1.2.2 The classification under the working capital’s role in produce and business process Under the classification, working capital are divided into parts : - Working capital in producing reserved : Including of prime materials, sub materials, fuels, alternative marterials, tools - Working capital in producing process : Value of unfinished products, semi-finished products and other costs - Working capital in circulating process : Value of finished products, capital in cash, short-term investment, mortgages, pay a security, pay earnest money in short-term and accounts capital in payment 1.1.3 Working capital’s structure and driving factors behind There are many factors that have influences on capital’s structure, including many parts There can be divided into main groups below : - The factors related to supply materials such as : The distance between enterprise and supplier places, market and ability of supply materials, material prices, the scale of production - The factors related to production : Character, technology, producing technology of the enterprise, the complexion of produced products, the lengh of produce cycle, the level ability of producing process organization, professional skills of Workers - The factors related to payment method : payment methods and the execution of payment principles between enterprises 1.1.4 Working capital resources 1.1.4.1 The classification with the relation of ownership According to the classification, it is divided into parts : - Loan Accounts : It is the capital resource of borrowing from commercial banks or financial organizations, Customer ccounts receivable enterprise is entitled to use them in a given temporary - Owner’s equity : This is account capital which is under enteprise ownership, including * Mobilised capital inside : left benefit, funds * Mobilised capital outside : From the members of enterpsie, joint-venture capital, State budget capital, Share capital is mobilised by issuing shares to the public 1.1.4.2 Classification of working capital following to mobilising time and utilization methods According to the norm, enterprises’working capital included : regular capital and current capital - Regular capital : Including the Owner’s equity and long-term debts The capital is stable and can use for along time Enterprises use it for investment, buying Fixed assets or using all or part of regular working capital which is necessary for business activities - Current capital : Including of short-term loans from banks and other credit organizations, long-term debts fall due, Accounts receivable from suppliers, Accounts payable for workers, Accounts payable for the State budget … This is short term capital that enterprise can use it to meet the temporary working capital demand in produce and business activities The classification will help managers to evaluate the mobilised capital which is suitable to quality and in the time to use necessary factors for business activities 1.1.5.Working capital demand and the driving factors behind Working capital demand always changes and depend on many factors In there, we need to care about following the fomula and the main factors : capital Suppli Custo Working = Inventories + mer accounts receivable demand - ers accounts prepaid - The factors related to Business features such as : Business period, Business scale, it is temporary Business activities, The changes of producing technology … The factors have affected directly to the level of working capital that enterprise has to meet the prepaid capital with a required time demand - The factors related to buy materials and product consumption : +The distance between enterprises and suppliers + The fluctuations of goods and material costs which are being used in produce and business of the enterprises + The gap between enterprises and selling market + Conditions and means of transportation … - Enterprise’s policies in consumption activities and credit with payment organization impact on payment term and scale of Accounts receivable Consumption activities organization and carry out the payment activities organization of selling goods have strongly affected to enterprise’s working capital demand 1.2 Working capital and its importance in increasingly effective utilization 1.2.1 Working capital and norms to reflect its cycle speed 1.2.1.1 Payment ratios * Short-term debts payment ratio It is the relation between short-term assets and short-term debts ( including: short-term debts in term and long-term debts fall due ) Value of current aassets The current ratio = ––––––––––––––––––––––––––– Short-term debts This ratio assesses changeable ability of short-term assets into cash in order to pay Short-term debts in term of Enterprises Short term Assets = Inventories + Cash and equivalent + Accounts receivable Among them, Inventories is a part of working capital which has the lowest ability to change into monetory * Quick ratio Value of current assets – Value of Inventories The quick ratio = ––––––––––––––––––––––––––––––––– Short-term debts This ratio reflects accounts debts in the fastest time.This ratio provides information regarding the firm’s liquidity and ability to meet its obligations It indicates a company financial strenghts (or weaknesses) but this ratio can be good or bad, this depends on character of every business field * The cash ratio Cash and cash equivalent The cash ratio = ––––––––––––––––––––––––––––––––– Short-term debts The cash ratio measures whether or not a firm has enough resources to pay its debts over the nest 12 moths It compares a firm’s current assets to its current liabilities A comparison with the industry of the firm’s current ratio, and a comparison with average, can help determine if the current ratio is high or low at this period in the time’s comparison These comparisons not indicate why the current ratio is higher or lower than industry For some possible reasons of the current ratio is out of line, which can be found from analysis of the individuals account that has been usually performed for Accounts receivable and Inventories 1.2.1.2 The number of Inventory cycle The number of inventory cycle are the times of average inventory, which is mobilised in term Costs of goods sold The number of inventories cycle = –––––––––––––––––––––––– Average Inventories The number of inventory cycles are more and more higher, the business will be better because enterprises only need to invest a small level of Inventories but they still achieve a high turnover 1.2.1.3.The number of accounts receivable cycle The norm reflects ability of capital recovery for payment in enterprises Accounts receivable cycle = Net Sales Remainder average Accounts receivable The cycle is more higher, the more better It proves that the fast speed of recovery of Accounts receivable Enterprises will needn’t to invest too much in Accounts receivable 1.2.2 The main factors have influences on the utilization effects of working capital * Objective factors + Fluctuations of economy : If economy with its inflation causes the rising of goods prices, including input material costs, produce costs will grow, product prices will be raised and of course to make the consumption will become ineffciently + The non-stop development of Science and Technology also contribute to increasing effecient utilization of working capital Science and technology are developing that it can be helpful factors or can be adverse factors to enterprise if enterprise produces redundant products and they can not be consumed Therefore this will be negative factors + Business environment : The number of rising competitors, alternative products, changed market demand … They will impact on the ability of consumption, even though leading to the situation of capital losing + The State with marcro policies : The state’s policies are very important to enterprises’ operations In each policy has effects, may be positive and may be not positive to Business activities in their fields * Subjective factors + We can recognize enterprises’ weak points in quality of management It causes the redundant or shortage of capital Graduation thesis Faculty of finance and banking 2.2.2.3 The Situation of accounts receivable management The component of Accounts receivable in the total of working capital at the end of 2007 increased more than at the end of 2006 was 80.176.627 thousand dongs, equal to 17.1% All in all, among total Accounts receivable, Customer accounts receivable played a majority Management financial activities of Accounts receivable are very important and complex problems Customers Accounts receivable went up 77.728.067 thousand dongs, equal to 16.6% At the end of 2006 was 467.598.807 thousand dongs up to 545.326.874 thousand dongs at the end of 2007 The company was in expanding process its marketshare so it applied selling on credit policy to customers That was the main cause of Accounts receivable increased However, it is necessary to tie closely management activities, have selling on credit policy to customers and identify the term of payment and increase incentive quick payment policy in order to reduce Accounts receivable Suppliers Prepaid accounts also increased because of the store bought quality of goods pushed up to supply for selling activities It increased by 743.353 thousand dongs in value, was 10.789.501 thousand dongs up to 11.532.854 thousand dongs, but the density moved down 2.1% density at the end of 2007 Accounts receivable increased both of density and ratio At the end of 2006, as for other Accounts receivable accounted for 3.8% density, equal to 17.861.692 thousand dongs but at the end of 2007 was up to 3.9% density, following that its value also was plus of 2.203.187 thousand dongs and up to 20.064.879 thousand dongs Accounts receivable tended to move down It would help the company reduce pressure in capital cycle demand In 2007, the growth of spare bad Accounts receivable showed that the company had a preparation for bad situations to avoid falling to lose the state of balance if these bad situations would have happened It also helped the company classify every customer to give capital recovering policy effectively Management of Accounts receivable with the aiming to help the company recover Accounts receivable within required time and to avoid losing Pham Thi Mai Huong 21 MSV:04D02811 Graduation thesis Faculty of finance and banking capital at once Accounts receivable cycle reflected ability of recovering capital in payment so we should take cycle indexes of Accounts receivable and average collect term of Accounts receivable for considering In Genaral, the cycle indexs of Accounts receivable and average money collection term was better than last year Net sales was higher than average Account receivable so its cycle increased from 4.16 as the end of 2006 to 4.81 at the end of 2007, equivalent of 0.65 Accounts receivable cycle grew so average money collection term reduced by 12.79% It created good conditions for the company to have faster cycle of floating capital and reduce the level of working capital demand It showed that PLC had positive measures to deal with Accounts receivable in due time Yet, average Accounts receivable moved up because it has a selling on credit policy under which to push for the better goods consumption up as its purpose and to make relationships to many other different customers 2.2.2.4 The situation of inventories management activities Look at the table Inventories occupied a high density out of the total capial As the end of 2006, accounted 38% density and moved up 41.8% in 2007 in the number of working capital resoure It not only increased in density but also grew in scale The value of Inventories at the end of 2007 was 453.229.739 Meanwhile, at the end of 2006 was only 337.661.825 thousand dongs, increased of 115.567.914 thousand dongs, equal to 34.2% Inventories increased, the main cause was that its scale of consumption market was being expanded and leading to the growth of its marketshare and so, materials and finished products in stock also arose in order to meet the dated delivery as contracts In addition to the increase is that a part from goods and materials are imported to meet the demand activities of produce and business process Moreover, imported materials prices were impacted by exchange rate in tandem with the cost of delivery import for each time was relatively high, procedures would arise more time and more money Therefore, the company had enough materials and finished products Pham Thi Mai Huong 22 MSV:04D02811 Graduation thesis Faculty of finance and banking available in stock to supply for market when requested which helped it avoid any change situation of these The Inventories cycle was 5.34 in 2006 and it increased 5.81 cycle This made the number of days per cycle decreased factors to keep its reputation to customer It explained why the level of materials, finished products and goods in stock grew Materials increased 38.4% ratio, finished products also grew 35.2% and goods increased of 31.4% It showed that the company had a good schedule for working out of plan Inventories reserved which helped to gain the initative in all business operations and reduce influence on changeable innermaterials prices Look at the table 4, Inventories cycle in 2007 was 5.81, its cycle was decreased every cycle 5days Costs of goods sold’s speed increased faster than average Inventories, leading to the growth of Inventories cycle Costs of goods sold’s value moved up to 530.652.050 thousand dongs, equal to 30.27% ratio of speed Meanwhile average Inventories only increase by 19.62%, equal to 64.415.790 thousand dongs This showed that the company had a good directions of inventory in management activities However, it also should consider the level of reasonable Inventories to push up effectively used 2.2.2.5 Evaluation of working capital using Look at the table 4, we realised that the cycle of working captial increased, from 2.49 in 2006 to 2.61 in 2007, equal to 0.13 cycle To get the good results were due to the increasing net sale’s speed, it was higher than average Working capital’s growth speed Because the company was in expanding market process for selling activities that was leading to revenues of the company was growing faster In 2007, the company had a number of big export contracts, take Lao, Philiphin… for example This was a main factor to increase high relatively sales in 2007, compared to 2006 Working capital cycle grew up, this cause of high speed of floating of working capital, which help floating term of working capital decreased every cycle was days Pham Thi Mai Huong 23 MSV:04D02811 Graduation thesis Faculty of finance and banking Table : Some norms to evaluate the efficient utilization of working capital Year Order 1 10 11 Net Sales Average outstanding accounts receivable Accounts receivable cycle (1) : (2) Average accounts receivable collection term 360 : (3) Cost of goods sale Average Inventories Inventories cycle (5:6) Days on per Inventories cycle Average Working capital Working capital cycle (1: 9) Working capital ratio (9 : 1) unit 2006 2007 dongs 1.990.762.126 2.581.707.245 dongs 478.347.698 536.587.305 Compare 2007/2006 Value Ratio dispropotio dispropotion n (%) = 4-3 6= 5/3 590.945.119 29.68 58.239.606 12.17 cycle 4.16 4.81 0.65 15.62 day 86 75 -11 -12.79 dongs dongs cycle day dongs cycle % 1.753.023.028 2.283.675.078 530.652.050 328.363.788 392.779.579 64.415.790 5.34 5.81 0.47 67 62 -5 800.790.808 988.182.160 187.391.351 2.48 2.61 0.13 0.4 0.38 0.02 30.27 19.62 8.8 -7.46 23.4 5 (source of Accounting department at PLC) Pham Thi Mai Huong 24 MSV:04D02811 Graduation thesis Faculty of finance and banking Working capital ratio was 0.4 in 2006, means that to achieve one unit revenue, it has to spend 0.4 working capital unit In 2007, working capital ratio was down to 0.02 in comparison with 2006 Throughout analyses, showing the utilization of working capital in 2007 has more efficient than 2006 2.2.2.6 Several solutions to improve efficiently used working capital Because of right awareness of working capital in using and managing activities were very important, so the company made every effort and achieved great success in Business operation in 2007 - The company was a success in payment activities, not allowed to raise overdue accounts and always keep its prestige to suppliers as well as customers, and did full its duty to the State - The company’s finance situation was sustainable, made by a flexible and reasonable capital’s structure Financial indexes tended to a positive growth - The company sent money to the banks in order to intensify ability of making profits and to avoid unliquided capital situation Transfer form was used, specially in the international payment so business activities go on smoothy, quikly and conveniently in line with business character 2.2.2.7 Hardly existed on working capital management activities Firstly, materials were imported, it still meet greartest difficult with import activities as well as the fluctuation of materials prices on the world market The company need the level of stable inventory We can realise that it was higher this year than last year, leading to lose ability of making profits from it The increasing of inventory capital could be stagnant Thus, the company has to determine accurately the level of necessary inventory for demand Secondly, Accounts receivable was over high, specially customers accounts rceivable Although, the company was being under the market expansion but necessary to sort well those customers which have priority in selling on credit policy Pham Thi Mai Huong 25 MSV:04D02811 Graduation thesis Faculty of finance and banking Third off, Cash has a high level in funds Specially the company applied transfer method in payment activities, therefore it is necessary to reduce the stagnant capital in order to avoid being waste of capital and unsafe in capital management activities 2.2.3 In summary From analyses above, we can realise that the real state of working capital was developing sustainably in 2006 and 2007 Working capital in 2007 was higher than 2006 and along with this, its ability of payment ratio increased, that is a good signal to conclude PLC had a good situation in finance In the other side, the company has a lot of challeges therefore, it should have strongly measures to improve its advantages and overcome shortcomings in the next period Pham Thi Mai Huong 26 MSV:04D02811 Graduation thesis Faculty of finance and banking CHAPTER SOME SOLUTIONS TO INCREASING EFFECTIVE OF WORKING CAPITAL IN MANAGEMENT AND USTILIZATION AT PETROLIMEX ASPHALT COMMERCIAL LIMITED COMPANY 3.1 Advantages and challenges in operation of the company 3.1.1 Advantages One of the most biggest advantages of the company is to be hesistated popularity as well as good achievements of Viet Nam general company over 50 years Throughout 12 years of developing, the company has a great streasury of experiences in tandem with a good infrastructure, stocks of the compay covered by throughout the nation wide Its popularity was confirmed to be as a good partner as well as a good friend to consumers Quality of its products were awarded by many great prizes such as golden metal in Expoexhibition for many years, Racer products were chosen “ Viet Nam high - quality products ” for consercutive years In addition to won more another prizes 3.1.2 Challenges In the global intergration economy nowadays, products of the company has a strongly competitive on the market Specially, the competition of chemical and lubricant products Foreign enterprises are starting entering into Viet Nam market so it has been pushing struggles were raised, leading to highly competitive pressure Therefore, required to work out the best of effective strategics to keep its marketshare Along with increasing of inner materials costs to make a high pressure for the company In amid, it has to carry out of saving policy by cutting down costs in business activities in order to reduce of goods prices Oriented developing of the company in the coming years Working capital plays a major part of the total capital and so the effection in management and utilization activities are very important strategics Pham Thi Mai Huong 27 MSV:04D02811 Graduation thesis Faculty of finance and banking For long term, the company tends to expand under the model of multitrade coporation which has potential in finance, high quality human resoure and modern stocks combine with selling systems throughout the nation, contribution and bring its trademark into play for popularity It has not only high competition in the domestic market but also in the regional countries The company’s doing business in Asphalt products and some sectors related but the company still focus on chemical and lubricant products Strongly developing and exploring its optimal advantages such as : trademark, infrastructure, stock systems, experienced human * Some targets of PLC from now to 2010 - Revenues : VND 2.800billions - Per capita income: 5.800.000 for a month 3.3 Some primary sollutions to improve the effective utilization of working capital Viet Nam has just entried World Trade Organization but this has been opening opportunities to Viet Nam enterprises for developing Specially, to enterprises which are doing business in import and export fields with enlarged market, tax barrier has been step by step lifted … However, Viet Nam enterprises are facing new challenges from foreign enterprises even includingof conglomerates In order to take business opportunities in this competition, it required a good preparation as for the company with high quality products as well as competitive prices To this well, the resources of the company have been used saving and effectivelly In one hand to make high quality products and the other hand to have good prices to compete with other same products on the markert at the present If so, should the company have to pay attention to use Working capital efficiently which is becoming significant at the present On the right appreciation of the important Working capital I personally would like to give some following solutions Pham Thi Mai Huong 28 MSV:04D02811 Graduation thesis Faculty of finance and banking 3.3.1 Actively work out plans in mobilising and using working capital efficiently Capital is one of the impossible factors not to have when enterprises want to carry out any business activity Aiming to increasing effectively of capital using in general and efficiently Working capital in particular, first of all PLC has to work out reasonable plan in mobilising and using working capital effectively It has to clearly about how much the Working capital does it really need ? which form the company really will do? Determining of the necessary capital level to meet the business demand at the lowest costs Redundant or shortage of capital is not good for the company If the company identify over enough capital demand, this problem does not encourage the company does it best to address potential problems and looking for solutions to improve business operation On the contrary, if the capital is not enough, leading to the company has to face many difficulties in producing and business activities or to be short of capital, that is the reason why its business activitives would not be going on smoothy Besides, it could be the soure of the damage from coming standstill of the selling goods activities Obviously the company could lose ability of payment and take agreement on contracts away or leading to carry out it slowerly, the company will end up step by step to lose its image So it should bring its mobilising into effects from coming into operation to gain the best results in operation Working capital is a part from Business capital It has a significant meaning to companies which are doing business in trading and so working capital occupied a high rate in the total of capital Therefore, increasing effectively Working capital which also contribute to increase effectively business capital As analyses at part 2, as the end of 2007 the company has an appropriation of working capital over high, inventory and short term receipts are occupied a high density in amount of Working capital It proved that the company is facing of many difficulties in selling activities, financial settlement Pham Thi Mai Huong 29 MSV:04D02811 Graduation thesis Faculty of finance and banking and recovering accounts debt which are necessary problems to overcome The matter is that the company did not encourage customers to pay on delivery Such as short term receipts will make loss ability of pofitable capital and reduce the speed of capital’s rotation, ( Supervision of the inventory’s cycle ), still not to have the closing control of payment in contract So, it is necessary to have effective management measures of Accounts receivable in order to improve highly effective working capital Some following measures in management of Accounts receivable - Open book in details to check frequently Accounts receivable to recover it in dated time - Having sollutions to avoid risky payment (chosing good customers, limited credit, ask for paying a deposit, pay in advance a part of contract’s value, selling Accounts debts to recover capital for the company) - Having a right selling goods on credit for its policy to customers When the company this, it should check ability of payment by contracts in details Because, It would ensure to benefit from these activities, similar to benefit from bank’s interest overdue - Classification of overdue debts and looking for their reasons ( objective or subjective ) then to have suitable methods to deal with them : agreement on overdue debts, citing money for overdue debts, absolve customers from payment of a part debt or asked economic court to address by current laws 3.3.2 Push up effectively the use of cash capital and specify clearly resonable reserves In year, PLC did not work out plans to identify the reasonable funds, leading to outstanding loans over depend on spending demand It was a shortcoming of cash capital in management activities PLC should carry out some solutions to its problems below : Pham Thi Mai Huong 30 MSV:04D02811 Graduation thesis Faculty of finance and banking - Firstly , the company shoud identify reasonably the level of cash funds - Secondly, forcasting and work out monetary turnover will help the company is slated for ability of spending demand in each term On the basic, PLC actively makes suitable solutions to balance between expenditures and receipts, aiming to ensure ability of payment 3.3.3 Tight activities of Inventories mangement Inventory is an importance part of working capital, as reported figures, inventory accouted for a large density in a number of working capitals PLC is the company which doing business in trading so inventory is awaited fo consumption Besides, identification of the resonable inventories help the company avoid situation lack of goods for sale and also to help the company saving of working capital - Should keep inventory in good condition of quality as well as quantity in order to execute this situation, expected a contigent of experienced staffs At the same time, always attach importance to upgrade infrastructure such as : means of transport, stocks to make sure not to be decreased quality products in stock processing It is impossible not to have a scientific keeping goods in condition process to ensure selling activities 3.3.4 To strengthen investment and enlarge market to push up goods consumption To exist and develop sustainably, the company should have good results in business’ operation Making profits in business’ operation means that its products have been accepted by consumers on the market Petrolimex Asphalt limited company is being on development and it has potential for developing in amid, global intergration process is strongly taking place, Viet Nam more and more deeply entried World Trade Organization It opens many good business oppotunities as well as challenges to Viet Nam enterpries in general and to PLC in particular Furthermore, there are more and more foreign enterprises jumping into Viet Nam market to look their opportunities for doing business At the Pham Thi Mai Huong 31 MSV:04D02811 Graduation thesis Faculty of finance and banking being time, the level of competition is happening strongly, customers ask for better quality products more and more increasingly In the context, quality and quantity are the main factors which can help the company to expand and affirm its brand So, the quality and the quantity of its products are always attached special importance to both In other side, the innovation of epuipments plays an important role to create better goods and contribute a strongly competitive PLC image not only in domestic but also in the region countries When output have been pushed and of course, the inventory will also reduce Following that capital of the company getting its under way, bringing about good using effectively So, the company Should put some following measures in practice: - The company should research the market and forcast business conditions frequently Besides, find out about customer demand and competitior’s activities in domestic and foreign countries Variety of allocating and selling activities to meet the different customers demand Regularly updated text reports to the leadership monthly to help them give directions to selling activities in line with market conditions requested 3.3.5 Investment satandar to workers and officials In order take business advantage as well as overtake new challeges at this time, PLC has to train scheme to get a contigent with high quality staffs to meet their new tasks in the intergration economy To achieve a good results in business operation as respects the company needs to have a right management So, the level of staffs is very important Therefore, it should have a strategic development of human resoure - Rearrangement of the company’s staff contigent Being have mechanism of recruiting staffs who have potential for development suitable to the company’s requirement for growing development - Should have training programme to foster knowledge for the staffs who have modern skills at taking good care of customers following international standard Inside, priority for people who has to directly run business operation Pham Thi Mai Huong 32 MSV:04D02811 Graduation thesis Faculty of finance and banking 3.3.6 Other solutions To improve effectivelly of working capital management, the company should put some measures below into practice - To increase awareness of capital in utilization and management from spending in cash to use materials reasonably and abidingly by priciples to use capital effectively and savingly - Leadership of the company should oversee manufacturing process frequently, to commend and reward to individuals or to departments … highly saving awareness In tandem with take strong mearues to staffs who cause losses and damages capital of the company - Actively to find the alternative resources of materials in nation to meet the demand for alternative imported materials Pham Thi Mai Huong 33 MSV:04D02811 Graduation thesis Faculty of finance and banking CONCLUSIONS Working capital plays a majority in every enterprise and it has a significant important role in putting their business operations in practice Preciation of working capital therefore, I’ve decided to chose this subject for my practice report In months probationary period as well as limited knowledge, my practice report could not avoid mistakes So, I would like to receive advices from readers to help my practice report completely I really express my sincere thanks to my teacher Ms Hoang Thi Ngoc Thuy as well as the other teachers of finance and banking faculty of Ha noi University Business and Technology and finance accounting department in Petrolimex Asphalt commercial limited company for helping me to complete my practice report well Ha Noi, 30 June 2008 Student Pham Thi Mai Huong Pham Thi Mai Huong 34 MSV:04D02811 Graduation thesis Faculty of finance and banking REFERENCE Robert A Haugen, Modern Investment Theory, copyright 2001 William F.Sharpe, Fortfolio Theory and Capital Markets, McGraw-Hill, copyright 2000 Jack Calack Fracis, Management of Investment, Mc Graw Hill Inc, 3rd Edition, 1993 Moshe Ben - Horim, Essentials of Corporate Finance, Allyn and Bacon, copyright 1987 Business and finance book of Hanoi univrsity of business and technology Pham Thi Mai Huong MSV:04D02811 ... this subject for my thesistation ? ?Working capital and some solutions to increasing capital in utilization at Petrolimex Asphalt commercial limited company? ?? The graduation thesis’s content consists... of woking capital and woking capital? ??s effects in enterprises Chapter : The real state of working capital management and utilization in the company Chapter 3: Some main solutions to increasing. .. Graduation thesis Faculty of finance and banking CHAPTER SOME SOLUTIONS TO INCREASING EFFECTIVE OF WORKING CAPITAL IN MANAGEMENT AND USTILIZATION AT PETROLIMEX ASPHALT COMMERCIAL LIMITED COMPANY