Nâng cao hiệu quả sử dụng vốn lưu động của các doanh nghiệp ngành thép việt nam tt tiếng anh

MINISTRY OF EDUCATION AND TRAINING MINISTRY OF FINANCE ACADEMY OF FINANCE œ TA DINH HOA A STUDY ON IMPROVING WORKING CAPITAL MANAGEMENT EFFICIENCY OF STEEL COMPANIES IN VIETNAM Major : Finance - Banking Code : 9.34.02.01 DOCTORAL THESIS SUMMARY Hanoi, 2020 This thesis was completed at the Academy of Finance Academic supervisor: Assoc Prof., Dr Bui Van Van Reviewer 1: Reviewer 2: Reviewer 3: Thesis defense is held in front of the Academy-level examination committee at the Academy of Finance At 2020 Information regarding the thesis could be found at the National Library And the Academy of Finance Library INTRODUCTION Research significance Steel is an industry of economics and technology that has direct impact on various sectors and operations in the economy, from manufacturing engineering, civil and industrial construction, automobile and ship building industries, etc to defense and aerospace industries of a nation It could be affirmed that: the development of steel industry in general, and of steel companies in particular, always associates with and has great influence on economic growth of all countries As a typical characteristic of the steel industry, working capital (WC) of these companies often accounts for a large proportion in the total business capital Therefore, the efficiency of working capital management (WCM) has significant influence on the efficiency of business capital management and the performance of steel enterprises In Vietnam, steel is one of the key economic sectors, the total production the steel industry in 2016 accounted for approximately 5% of the country's GDP However, in the past few years, the efficiency of WCM of steel enterprises in Vietnam is both low and unstable: the return on WC has decreased for three consecutive years, while the cash conversion cycle has an increasing trend and is always higher than the average of Vietnamese enterprises This has a negative impact on the efficiency of capital management and the performance of enterprises in the steel industry in Vietnam The above situation requires a comprehensive and systematic study on the WCM efficiency of steel enterprises in recent years, thereby, specifying the shortcomings and causes to the efficiency of WCM, and proposing solutions to improve the WCM efficiency of steel enterprises in the coming time That is why I choose the topic "A study on improving working capital management efficiency of steel companies in Vietnam" for my Doctoral Thesis Research Objective The research is conducted in order to propose solutions to improve WCM efficiency of steel companies in Vietnam Scale and Scope of the study - The study focuses on: WCM efficiency of steel companies - Sample of the study includes: 26 companies in Vietnam which operate in manufacturing and trading steel - The study period is from: 2009 to 2018 Literature review There have been researches on working capital, working capital management, and efficiency of WCM in the world and Vietnam Accordingly, international scholars study WC on two main aspects: (1) Research on the relationship between the efficiency of WCM and the profitability of companies (2) Research on determinants of WCM efficiency of firms In Vietnam, researchers also follow two trends, in which the first is similar to studies in the world, that is to find out the relationship between the efficiency of WCM and the profitability of Vietnamese firms And the second trend is to study solutions to enhance the WCM ability in enterprises of some industries or in a specific company Research gap First, most of the studies focus on the relationship between the efficiency of WCM and the profitability of enterprises through Cash Conversion Cycle, Days Inventory Outstanding, Days Sales Outstanding, Days Payable Outstanding, but the research results or comments not completely match, even contradict each other Second, studies are conducted on either determinants of WCM of enterprises in different countries and industries or solutions to enhance WCM efficiency enterprises in a specific industry, or group of industries, over a specific period Third, most previous studies are usually based on a sample of all enterprises in a country or research on solutions to improve the efficiency WCM of enterprises in other industries in Vietnam Up to now, there have been no in-depth studies on the determinants of WCM efficiency, as well as solutions to improve the WCM efficiency of steel enterprises in Vietnam Therefore, the topic chosen ensures the independence, does not overlap with any of other thesis topics, or any researches that have been conducted and published that I know Main findings and contribution First, systematize theoretical fundamentals of WC and efficiency of WCM In which, WCM efficiency is approached in two aspects: (1) Combined efficiency of WCM; and (2) Efficiency of WCM in each stage Second, compile the experience of improving WCM efficiency of enterprises around the world, from various perspectives: the government, the US, South Korea, and from international financial consulting firms This helps summarize important lessons for Vietnamese enterprises Third, assess the current status of WCM efficiency of Vietnam's steel enterprises over a 10-year period from 2009 to 2018, thereby pointing out the basic limitations including: (1) Apart from the group of Large-scale firms, WCM efficiency in the remaining groups of enterprises in Vietnam's steel industry has shown signals of deterioration; (2) The efficiency of inventory management of Stainless steel firms and Galvanized steel - Steel pipes firms has not been improved; (3) The efficiency of receivables management has shown notable concerns; (4) The efficiency of cash management has been negative in most groups of firms in the steel industry in Vietnam Fourth, by using panel data regression method, the thesis has identified determinants of WCM efficiency of Vietnam’s steel enterprises, namely: economic growth, firm size, profitability, proportion of tangible fixed assets, and industry characteristics Fifth, propose two specific groups of solutions to improve the efficiency of WCM of Vietnam's steel enterprises in the socio-economic context of 2020 2025, vision to 2035 Methodology 7.1 Qualitative methods: The thesis uses a combination of interpretation, induction, analysis, combination and comparison methods to describe statistical data on the efficiency of WCM of firms in the steel industry in Vietnam 7.2 Quantitative method: The thesis uses a panel data regression model to evaluate the determinants of the WCM efficiency of Vietnam's steel enterprises over the period 2009 - 2018 Thesis structure Besides the introduction, conclusion, and appendix, the thesis consists of chapters as follows: - Chapter 1: Theory about working capital and the working capital management efficiency of companies - Chapter 2: Current situation of working capital management efficiency of steel companies in Vietnam - Chapter 3: Solutions to improve working capital management efficiency of steel companies in Vietnam CHAPTER 1: THEORY OF WORKING CAPITAL AND WORKING CAPITAL MANAGEMENT EFFICIENCY OF COMPANIES 1.1 OVERVIEW OF WORKING CAPITAL OF COMPANIES 1.1.1 Working capital and roles of working capital in companies 1.1.1.1 Working capital concepts and characteristics Working capital (WC) of a business is the amount of advance capital to form working assets, ensuring the process of production and operation in the company on a regular and continuous basis The main characteristics of WC are as follows: (1) WC participates in a business cycle, and always change the manifestation form through the stages in the business and production process, from the initial monetary capital form to materials, inventory reserve, to become unfinished products, semi-finished products, finished products and finally returns to monetary capital form; (2) At the end of each business cycle, the value of WC is transferred wholly and once to the value of produced goods and services and compensated when the enterprise receives money from selling goods and services (3) The WC rotation is associated with the end of a business cycle The above process takes place regularly, continuously, and is repeated after each business cycle, forming a WC cycle 1.1.1.2 Roles of working capital in the business Firstly, WC is the prerequisite material condition of the production and business process Second, analyzing and evaluating the movement of WC through stages helps business administrators to control the entire business activities of companies 1.1.2 Working capital classification According to the manifestation form, WC can be divided into: cash, receivables, and inventory According to the role of WC in the production and business process, WC is divided into the following main categories: WC in production reserve, WC in production, WC in circulation 1.1.3 Working capital structure and factors affecting working capital structure of enterprises 1.1.3.1 Working capital structure Working capital structure is the proportion of each component of the WC in the total amount of WC in the enterprise Working capital structure varies from companies to companies Working capital structure also varies among companies in the same sector Even one company could have different working capital structure in different periods of development 1.1.3.2 Factors affecting working capital structure of the business - Factors in terms of material supply: - Factors in terms of production: - Factors in terms of circulation: 1.1.4 Working capital requirement of the business In order that production and business activities to operate regularly and continuously, companies always need a certain amount of WC This amount of WC is called the working capital requirement (WCR) of the firm Based on the nature (or time of arising), it is possible to divide the WCR of the business into categories: regular WCR and irregular WCR (short demand term, temporary needs) In the scope of the thesis, the author focuses on the necessary regular WCR of enterprises, so the term WCR is understood as the necessary regular WCR of enterprises 1.1.5 Sources of working capital WC of a business is the amount of advance capital to form working assets, ensuring the process of production and operation in the company on a regular and continuous basis Companies need to exploit WC from different sources in order to have enough WC for production and business activities Each types of business at different times would have different sources of WC It is possible to classify sources of WC according to many methods, but mainly according to the time of mobilizing and using capital Specifically: WC is taken from two sources: the permanent WC source and the temporary WC 1.2 WORKING CAPITAL MANAGEMENT EFFICIENCY 1.2.1 Concept of working capital management efficiency Efficiency of WCM is an economic category reflecting the ability to optimize the amount of WC used in production and business activities to create the maximum amount of profits Efficiency of WCM has a great influence on the entire efficiency of business capital management of an enterprise, and especially, it has a decisive effect on the ability to pay off due debts of the enterprise 1.2.2 Working capital management and working capital management efficiency 1.2.2.1 Inventory and efficiency of inventory management * Inventory and inventory management In manufacturing enterprises, inventory (also known as capital in terms of materials - goods, or capital in terms of inventory) is the value of raw materials, fuels, tools (collectively referred to as manufacturing reserve), value of work in progress and semi-finished products (collectively referred to as work in progress) and value of goods and finished products in stock In manufacturing enterprises, inventory often accounts for the largest proportion in the amount of WC Therefore, the management and use of inventory in general, the efficiency of inventory management in particular has a great impact on the efficiency WCM of enterprises * Efficiency of inventory management Efficiency of inventory management could be assessed by two ratios: Inventory Turnover and Days Inventory Outstanding (1) Inventory Turnover = Cost of goods sold Average Inventory (2) Days Inventory Outstanding = 360 Inventory Turnover 1.2.2.2 Receivables and receivables management efficiency * Receivables and receivables management Receivables, also known as accounts receivable, are the corporate capital that is used by organizations and individuals inside or outside the enterprise in the form of appropriation or being provided with commercial credit that the company is responsible for collecting Receivables include: Value of goods and services provided by the enterprise but the customer has not yet paid; Prepayments to sellers for supply of goods or services; deductible taxes; advances for officers, employees and employees in enterprises; other receivables such as damages of individuals or collectives that the company has not yet collected, etc In which, receivables from customers often account for the largest proportion At the same time, in most businesses, receivables accounts for a relatively large proportion of the total WC * Receivables management efficiency 1.2.3.2 Subjective determinants In addition to the above objective determinants, there are many subjective determinants created by the enterprises themselves that affect the efficiency of capital use, including: firm size, proportion of tangible fixed assets, financial leverage, profitability, sales growth, age of the business, corporate governance and leadership characteristics Moreover, many other subjective determinants are also considered factors affecting the efficiency of WCM such as: Financial management regulations of the company, vision and strategy of the company, relationship between the company and its customers and suppliers, qualifications of officials and employees in enterprises, expenditure capital, etc 1.3 INTERNATIONAL EXPERIENCE IN WCM EFFICIENCY AND LESSONS FOR COMPANIES IN VIETNAM With experience from many different perspectives, from state management to specific enterprises of countries in the world, businesses in Vietnam can learn many lessons, as follows: First, CFO takes the main responsibility for the management of WCM Second, improving the efficiency of WCM should be in the long-term strategy of businesses Third, businesses need to focus on minimizing the cash conversion cycle Fourth, technology should be modernized to improve the efficiency of WCM Fifth, the government's state capital management committee should develop a manual on WCM for state-owned enterprises 11 CHAPTER 2: CURRENT SITUATION OF WORKING CAPITAL MANAGEMENT EFFICIENCY OF STEEL COMPANIES IN VIETNAM 2.1 OVERVIEW OF STEEL COMPANIES IN VIETNAM 2.1.1 Development process and industry characteristics of steel companies in Vietnam Vietnam's steel industry started in the early 1960s with the appearance of Thai Nguyen Iron and Steel Complex, considered as the first industrial park in Vietnam to have a closed integrated production line from iron ore mining Despite a history of nearly 60 years, Vietnam’s steel companies have really thrived in the past 20 years Although there were times of negative impacts from the financial crisis and economic recession, enterprises in the steel industry still maintained an average growth rate in the 2010-2015 period at 7-8% / year Even the compound growth rate of the industry in the period 2015 - 2018 reached 20% - relatively impressive Characteristics of production and business activities of steel companies in Vietnam are as follows: First, the production scale of steel enterprises in Vietnam is quite small, with low technology level Second, businesses mainly participate in outsourcing and processing, so the added value created is not much Third, there is an imbalance between product groups of steel companies and domestic consumption demand Fourth, Vietnam's steel companies depend heavily on external factors Fifth, the manufacturing cost of steel products in Vietnam is relatively high 12 2.1.2 Business results and financial situation of steel companies in Vietnam In order to evaluate the current situation of the efficiency of WCM of companies in the steel industry, I choose a sample of 26 companies and classify into groups of enterprises according to two criteria: Business field - Key product, and firm size In general, the business performance and financial situation of most enterprises in the steel industry are quite low and unstable in the period 2009 2018 2.2 CURRENT SITUATION OF WMC EFFICIENCY OF STEEL COMPANIES IN VIETNAM Evaluating the current situation of the WCM efficiency of steel companies in Vietnam, I carry out in-depth analysis of the efficiency of inventory, receivables, cash management and the combined efficiency of WCM Steel companies in Vietnam achieve some important achievements but still have shortcomings, especially with the groups of companies of Galvanized steel - Steel Pipes, Steel Trading, Stainless Steel, Small-Scale companies 2.3 EMPIRICAL RESEARCH ON DETERMINANTS OF WCM EFFICIENCY OF STEEL COMPANIES IN VIETNAM The research was conducted on 26 Vietnamese steel enterprises in the period from 2009 to 2018 Based on the analysis of panel data regression results, it is pointed out that: - Determinants that have a positive impact on the efficiency WCM of Vietnam's steel enterprises are: Economic growth, firm size, and profitability - Determinants that have a negative impact on the efficiency of WCM of Vietnamese steel enterprises are: The proportion of tangible fixed assets over total assets of enterprises - Industry characteristic has an impact on the efficiency WCM of Vietnamese steel enterprises 13 - Factors that not have a statistically significant relationship with the WCM efficiency of Vietnamese steel enterprises are: inflation, financial leverage, sales growth, and enterprise age These results are consistent with some previous studies, but there are also conflicting results The reason is the difference in the number of samples, enterprises, time and space to conduct the research However, these results also give the author important suggestions in proposing solutions to improve the WCM efficiency of steel companies in Vietnam 2.4 GENERAL ASSESSMENT OF WCM EFFICIENCY OF STEEL COMPANIES IN VIETNAM 2.4.1 Achievements First, in the period 2012 - 2018, the recovery of the economy and the real estate market helped improve the output market of enterprises in the industry, thereby contributing to increasing profits and ROW The ROE rate has improved from 7.27% (in 2012) to 15.72% (in 2018) In terms of the combined efficiency of WCM, the ROW rate increased from 4.3% (in 2012) to 11.75% (in 2018), which is quite high In particular, the group of Construction Steel and LargeScale companies always have relatively stable labor turnover and highest ROW in the research sample, showing that the WCM efficiency of this group is quite good Second, in terms of the inventory management efficiency, in general, the rate of inventory rotation is stable, inventory growth meets revenue growth In the period of 2014 - 2018, Inventory Turnover tended to improve, from 4.03 times in 2014 to 4.4 times in 2018, reflecting a better trend of inventory rotation In which, the group of construction steel enterprises, steel trading enterprises, when classified by business areas and key products, and the group of medium-sized enterprises effectively use inventory and tend to improve 14 Third, in terms of receivables management efficiency, most of receivables come from short-term receivables from customers, stable turnover speed, tends to increase gradually, especially the group of Galvanized steel - Steel Pipes enterprises and Large-scale enterprises The average collection period of the Galvanized steel - Steel Pipes group decreased from 39 days (2010) to 34 days (2018), lower than the sample average Similarly, the group of Large-scale enterprises saw a decrease in average collection period from 45 days (2010) to 35 days (in 2018) Fourth, in terms of cash management efficiency, cash reserves and solvency of Construction steel enterprises and Large-scale enterprises are always higher than the whole sample and remain stable Cash conversion cycle (CCC), despite a tendency to increase slightly, still remain stable during the research period and lower than the sample average, showing that the conversion rate to money of these two groups is quite good By maintaining a stable level of rotation cycles in the context of a decade witnessing great fluctuations in the world economy, it shows that steel companies have tried very hard to maintain efficiency of WCM 2.4.2 Shortcomings Besides the achievements, steel companies in Vietnam over the period 2009 - 2018 still have potential shortcoming as follow: First, the efficiency of WCM in some groups of steel enterprises shows signals of deterioration Except for the groups of Construction steel enterprises and Large-scale enterprises, the other groups of enterprises all have greatly fluctuating and low ROW with declining trend Typically, the group of Galvanized steel - steel pipes enterprises, with ROW in 2018 was only 1.12%; The group of Stainless steel enterprises even have negative ROW in 2015, and by 2018 it is only 4.47%, lower 15 than the sample average of 11.75% (2018) The speed of WC rotation of the Stainless steel enterprises group also decreases negatively during the study period Small and Medium-sized businesses also had a very low ROW and fluctuate continuously This trend is expected to continue in the coming years when the difficult economic cycle returns, strong impact from the US - China trade war and the COVID-19 pandemic This raises the need to propose solutions to improve ROW for Vietnamese steel enterprises Second, the efficiency of inventory management of Stainless Steel and Galvanized Steel - Steel pipes enterprises has not been improved Although the Inventory Turnover is stable on an overall scale, going into each specific group of enterprises, we see that the efficiency of inventory management of the Stainless steel enterprises needs improving The Inventory Turnover of this group decreases from 4.46 times (2010) to 3.64 times (in 2018) In addition, the group of Galvanized Steel - Steel pipes continuously has high inventories of finished goods, showing difficulties in consuming products in the group In addition, the proportion of inventory over the total WC is always the largest, so it is necessary to pay special attention to improving the efficiency of inventory management to help maintain the efficiency of WCM Third, the efficiency of receivables management shows notable concerns Although the receivables turnover is relatively stable and tends to increase, some of groups of enterprises appear to have remarkable problems The Stainless Steel group has the lowest receivables turnover rate in the group of enterprises classified by business field - key product, with a tendency to slow down The group’s receivables turnover decreases from 6.57 times (2014) down to 4.02 times (in 2018) Steel Trading enterprises also suffer declining receivables turnover, from 10.16 times (2010) to 9.53 times (in 2018) In addition, SmallScale enterprises also have lower efficiency of receivables management when receivables turnover decreases sharply from 14.82 times (2010) to 9.92 times 16 (2018), corresponding to the increase in days sales outstanding, from 24 days (2010) to 36.29 days (in 2018) Fourth, the efficiency of cash management has been negative in most groups of steel enterprises The reserve of cash and cash equivalents is low compared to the size of short-term debt, taking place in the groups of Galvanized Steel - Steel pipes, Steel Trading, Stainless Steel companies, groups of Medium and Small-Scale companies, leading to low ability to pay instant debts, and potential risks related to short-term debt payment Cash conversion cycle (CCC) in the above groups has shown signs of increase in recent years, making the cash flow slow down Particularly, the CCC of the Stainless Steel enterprises is currently very high compared to other groups in the industry, up to 145 days (in 2018), twofold the average of the sample, requiring attention to improve cash efficiency management 17 CHAPTER 3: SOLUTIONS TO IMPROVE WORKING CAPITAL MANAGEMENT EFFICIENCY OF STEEL COMPANIES IN VIETNAM 3.1 SOCIO-ECONOMIC CONTEXT AND DEVELOPMENT ORIENTATION OF STEEL INDUSTRY IN THE PERIOD 2020 - 2025, VISION 2035 3.1.1 Socio-economic context Global socio-economic activities have been seriously affected by the COVID-19 pandemic In the first months of 2020, international organizations continuously lowered their forecasts for global and nations’ economic growth in 2020 In the latest report (June 2020), the International Monetary Fund (IMF) predicted the world economy fell into a deep recession in 2020, at the growth rate of -4.9%, and the World Bank (WB) even forecasted a -5.2% growth rate this year This is a much deeper recession than the global financial crisis in 2008 2009 (-1.67%, WB) Facing this situation, the world steel industry in general and Vietnam in particular are also affected greatly by the pandemic because countries are closed to fight the pandemic, and supply chain disruptions occur 3.1.2 Development orientation of Vietnam's steel industry First, increase production scale, increase the competitiveness of the industry Second, make use of available raw materials, reduce costs, and apply appropriate technology Third, be proactive in international economic integration 3.2 SOME MAJOR SOLUTIONS TO IMPROVE THE EFFICIENCY OF WCM OF STEEL INDUSTRY COMPANIES IN VIETNAM 18 3.2.1 Group of solutions to improve the combined efficiency of WCM 3.2.1.1 Develop a strategy to improve the efficiency of WCM First, transform the current popular thinking to classify WCM into operational management activities, short-term to long-term strategic thinking Second, the efficiency of WCM relates to many parts of the enterprise and relates to each employee in the enterprise Third, improve the efficiency of WCM should be a daily job of all employees in the enterprise through the collection and application of continuous efficiency improvement initiatives Fourth, properly handle the effects of the change in WCM methods in the enterprise system Fifth, set out a roadmap for implementation of specific tasks in each stage, and clearly assign responsibilities in the implementation process 3.2.1.2 Use a prudent model of WC financing Steel industry is a high risk industry, the demand depends heavily on the real estate industry and the growth of the economy Vietnam's economy has great fluctuations over time and years, its stability is low and unpredictable In case the real estate market goes down and the economy slows down, steel companies have difficulty in selling and cash flow, if they use a large proportion of short-term debt, it will lead to great pressure to pay back in short term, and threaten the solvency of enterprises Therefore, in order to ensure safety and sustainable development in long term, businesses should apply the prudent model of WC financing 19 3.2.2 Group of solutions to improve the efficiency of WC in each stage 3.2.2.1 Improve efficiency of inventory management As analyzed, inventory accounts for the largest proportion in the total WC of the steel enterprises in Vietnam, inventory clearance is always an important task for each enterprise In particular, companies in the Galvanized Steel - Steel pipes group have many difficulties in consuming inventory of finished goods, and companies in the Stainless steel group also suffer decreasing efficiency in inventory management Therefore, it is necessary to implement comprehensive solutions to improve the efficiency of inventory management of steel companies in general, Galvanized Steel - Steel pipes, and Stainless Steel in particular a Flexible application of approaches to manage inventory in accordance with the development stages of the industry First, postpone the growth rate of inventory, especially raw materials in stock Second, businesses may have to negotiate with suppliers to suspend orders as soon as sales start to decline Third, adjust the rewarding regime of the inventory manager to avoid storing too much stock Fourth, to reduce excess inventories, companies will analyze the current inventory levels compared with the new market demand forecast Fifth, make a series of operational changes in the long run b Solutions related to the operational process of managing inventory First, businesses need to well perform the process of purchasing raw materials through careful selection of suppliers Second, businesses need to have close coordination on inventory management throughout the supply chain 20 Third, businesses need to closely follow information of raw materials prices to choose the right time to buy raw materials 3.2.2.2 Strengthen receivables management, flexibly apply debt collection methods The efficiency of receivables management of Vietnam’s steel companies is relatively stable during the research period However, in some groups of enterprises such as Stainless Steel, Steel Trading, and Small-Scale enterprises, there are signs of problems in receivables management It is necessary for these companies to synchronously coordinate many different measures to effectively manage receivables, focusing on three main directions: (1) Improve the efficiency of debt collection; (2) Shorten collection term with customers; (3) Innovate payment methods in the way to be simpler and more convenient 3.2.2.3 Optimize cash management Cash reserves and cash equivalents of Vietnam’s steel companies are at a low level compared to their short-term debt, especially in the groups of Galvanized Steel - Steel pipes, Steel Trading, Stainless Steel, group of MediumScale and Small-Scale, leading to very low solvency of immediate debt, which may cause potential risks of short-term debt payment a Complete the general cash management model Cash management has the ultimate goal of maximizing the owner's assets, in addition, the regular goal is to ensure the solvency of the business (to avoid falling into a solvency crisis) Cash flow management aims to use cash to successfully implement a competitive strategy, thereby, achieving the long-term goal of maximizing owner's assets Appropriate goals and competitive strategy are the main basis for businesses to allocate and use cash resources effectively To achieve that goal, from the viewpoint of Boston 21 Consulting Group, comprehensive cash management includes three basic elements: (1) Organizational structure of cash management, (2) Maintenance of cash availability and (3) Active cash management a Improve cash flow, cash reserves and solvency * Improve cash flow Firstly, optimize cash flow through improving inventory management efficiency Second, optimize the cash flow through improving the efficiency of receivables and payables management Third, compare with industry averages to ensure that the terms of sale are not unnecessarily extensive Fourth, optimize cash flow through improving payables management efficiency * Improve solvency First, increase equity resources through prioritizing re-investment returns Second, increase equity resources through the issuance of capital mobilization shares Third, issue long-term bonds to restructure debt capital sources c Build and develop cash forecast models to determine the optimal amount of cash reserves in businesses As analyzed in Chapter 2, cash reserves of steel companies are low, especially with Galvanized Steel - Steel pipes, Medium-Scale enterprises and Small-Scale enterprises Determining an optimal cash reserve is both a scientific work and an art in balancing risk and reward To calculate the necessary cash reserves, one of the simplest ways is that businesses will base on their expected cash reserve days and one of the following 22 two basis of calculation: (1) Average sales per day, or (2) Average requirement to spend on regular business activities per day 3.2.3 Other solutions to improve the WCM efficiency steel companies in Vietnam 3.2.3.1 Invest in technology modernization, improve firm size The qualitative and quantitative analysis in Chapter show that LargeScale enterprises have much better efficiency of WCM than other enterprises This stems from the fact that Large-Scale enterprises often invest in advanced technology and at the same time, the management and operation process is more professional Therefore, one of the solutions, and also a requirement of Vietnam’s steel enterprises, is to continuously invest in modernizing production technology, gradually improve the size of the business However, along with investment in tangible fixed assets, enterprises also need to simultaneously invest in other working assets so that the proportion of tangible fixed assets to total assets remains stable 3.2.3.2 Hire external consultants for WCM in particular and financial management in general Sometimes the internal self-assessment within the companies is also difficult to bring high results, especially for the already complicated WCM Therefore, one solution for steel companies in Vietnam is to hire external consultants 3.3 CONDITIONS FOR SOLUTIONS IMPLEMENTATION Firstly, complete supporting policies and orient the development of the steel industry in a synchronous and sustainable manner Second, ensure macroeconomic stability, control inflation, growth rate, create favorable conditions for companies 23 CONCLUSION The thesis systematizes the general theoretical issues about WC, WCM and efficiency of WCM On the basis of the above theoretical issues, the author deeply evaluates the current situation of WCM efficiency of steel enterprises in Vietnam The thesis uses a combination of qualitative research methods such as interpretation, analysis, and comparison to reflect the WCM efficiency of Vietnam’s steel enterprises through classification by groups of Business sectors - Key products and Firm size Quantitative analysis method using panel data regression model has clarified the determinants of WCM efficiency of Vietnam’s steel enterprises The analysis results show that, although the WCM efficiency of Vietnam’s steel enterprises is stable, but it is still not high, not commensurate with the development potential of the industry This is reflected in the low liquidity indicators; the proportion of inventory in the total workload is very high, especially finished product inventory; the rotation indicators are relatively stable but tend to increase, especially the CCC; ROS fluctuates greatly, significantly affecting the WMC efficiency On the basis of evaluating the current status of the WCM efficiency, the thesis has proposed solutions to improve the situation In addition, there are recommendations to the State and management agencies to facilitate the process of improving the WCM efficiency of steel enterprises From the actual situation, the majority of enterprises in the industry are small, the data on the financial situation of enterprises are incomplete and difficult to access, so the thesis focuses on a sample of only 26 enterprises Moreover, the number of steel companies listed on the Vietnamese stock market is not high, so the study of firm value according to market value has not been conducted The above limitations will be suggestions for future research./ 24 LIST OF RELEVANT PUBLICATIONS Research articles: 1.1 Ta Dinh Hoa (2018), "Working capital management in recession", Journal of Finance and Accounting, No 05 (178) 2018, pp.43-46 1.2 Ta Dinh Hoa (2019), "Determinants of working capital management efficiency: An empirical study on Steel companies in Vietnam", Journal of Finance and Accounting, No 03 (188) 2019, pp.34-36 1.3 Ta Dinh Hoa (2019), "A literature review on working capital management efficiency and some ideas for future research", Proceedings of International Conference SEDBM 2019, Finance Publication House, December 2019, pp.157165 Research projects: 2.1 Luu Huu Duc (2017), Solutions to improve working capital management efficiency of listed steel companies in Vietnam, Academy-level research project, Academy of Finance ... the steel industry in Vietnam Fourth, by using panel data regression method, the thesis has identified determinants of WCM efficiency of Vietnam’s steel enterprises, namely: economic growth, firm... IN VIETNAM 2.1 OVERVIEW OF STEEL COMPANIES IN VIETNAM 2.1.1 Development process and industry characteristics of steel companies in Vietnam Vietnam's steel industry started in the early 1960s with... industries in Vietnam Up to now, there have been no in-depth studies on the determinants of WCM efficiency, as well as solutions to improve the WCM efficiency of steel enterprises in Vietnam Therefore,