Luận văn bằng tiếng anh chuyên ngành tài chính doanh nghiệp Học viện tài chính. Đề tài: Giải pháp cải thiện tình hình tài chính tại công ty TNHH kinh doanh và dịch vụ ô tô Hyundai Ngọc Khánh. Tài liệu hỗ trợ tốt cho các bạn chuyên ngành tài chính kế toán quản trị kinh doanh tại Học viện tài chính và các trường đại học trên toàn quốc.
Graduation Thesis Academy of Finance Academy of Finance Graduation Thesis Đề tài Solutions for improving Ngoc Khanh Auto Service and Trading Limited Company’s financial situation 1 Graduation Thesis Academy of Finance Academy of Finance Graduation Thesis DECLARATION I hereby declare that this is my own research and effort The data, results that are stated in the graduation thesis are true from the actualsituation of the internship Graduation thesis author 2 Graduation Thesis Academy of Finance Academy of Finance Graduation Thesis LIST OF TABLES FIGURES 3 Graduation Thesis Academy of Finance Academy of Finance Graduation Thesis TABLE OF CONTENTS 4 Academy of Finance Graduation Thesis THE PREFACE Research problem The reform and opening up of the economy starting in 1986 brought the concepts and theories of corporate finance management from developed countries into Vietnam Since then, corporate finance management concepts and corporate finance theory have graduated been studied and applied in Vietamese enterprises, which have made important contributions to the construction of the national economy But more important is how to apply financial theories that are developed from advanced countries into the context of Viet Nam So far, Vietnam's economy has achieved great achievements In 2017, the government signed free trade agreements such as CPTPP(Comprehensive and Progressive Agreement for Trans-Pacific Partnership), EVFTA (EU-VN Free Trade Agreement),…which boosted FDI flow with modern technology and modern management experience flowing into Vietnam In 2018, free trade agreements, policies, circulars and decrees of the Government will come into force, it will make strongly change the supply and demand of the entire market economy Since the 1990s, the appearance of the Vietnamese automobile industry has not been completed The automobile market in Viet Nam has shown many weakness in manufacturing and supplying products The new government policies has brought benefits to the automobile assembly enterprises but also hindered the business of car dealers in the market A reasonable financial management policy is very necessary for the automobile business in the current period Based on the meaning of the assessment and analysis of corporate finance, after more than three months of practice at Ngoc Khanh Company Under the guidance of instructor ************h and the guidance of the staff 5 Academy of Finance Graduation Thesis in the Finance - Accounting Department of the company I bravely selected the topic: "Solutions for improving Ngoc Khanh Auto Service and Trading Limited Company’s financial situation" as the theme for my graduation thesis Purpose and thesis questions • First, the purpose of thesis is systematize the knowledge of financial situation and financial management in the enterprise, thereby studying the current financial situation at Ngoc Khanh automobile company • Secondly, the thesis find out the shortcoming and limitations in the financial management of the company in order to propose practical solutions to improve the financial situation of the company Scope of reseach • Space: To study the financial situation of Ngoc Khanh company • On time: The financial situation of the business in 2015,2016 and 2017 • Data source: The data used are collected from the accounting records, industry report, economic reports of Viet Nam and the world, the financial statements of Ngoc Khanh company in three years 2015,2016 and 2017 Methodology Based on knowledge at university, books and self-accumulation and to achieve these above objectives, several methods of studying the thesis are used as follow: • Figure collection: from websites of Ngoc Khanh company, books, magazines, internetand internal information of the corporation • Inductive, deductive and statistical method • Figure comparison, data evaluation, judgment and conclusion • Method of analyzing, summarizing, synthesizing materials and books from the theoretical background Thesis structure Beside the Content, Introduction, Conclusion and References, the thesis conissts chapters: 6 Academy of Finance Graduation Thesis • Chapter 1: Theories of firm’s financial situation • Chapter 2: Financial situation in NGOC KHANH AUTO SERVICE AND TRADING LIMITED COMPANY • Chapter 3: Solutions for improving NGOC KHANH LIMITED COMPANY’s financial situation This thesis is the result of my internship experience at Ngoc Khanh Auto Service and Trading Limited Company After that, I want to express my gratitude and appreciation to many people who trained, supported and encouraged me to finish this graduation thesis I would like to send my deepest gratitude to my instructor, Dr Pham Thi Van Anh, lecturer at Corporate Finance department, Academy of Finance She has provided me many supports and advices from the beginning and inspired me by her knowledge and professional experiences, as my motivation to finish my work I also want to express my sincere thank to Ngoc Khanh Automobile Company and Accounting department of the company where provided this opportunity for me to experience this interesting internship, especially Mrs Thuy Linh, Mrs Thu Giang who provided me not only the useful information but also the practical experiences to enrich my knowledge and promote my future career Due to my shortage of knowledge and limited time, the thesis can not avoid short-comings, therefore, I looking forward to receiving comments from instructors as well as administrators in Ngoc Khanh company to complete my graduation thesis Ha Noi, May, 2018 Sincerely CHAPTER 1: THEORIES OF FIRM’S FINANCIAL SITUATION 7 Academy of Finance Graduation Thesis 1.1 Corporate finance and financial management 1.1.1.Corporate finance and financial decisions 1.1.1.1 Definition of corporate finance There are many concepts of corporate finance that have been given up to now According to “The basic corporate finance” of Dr.Nguyen Minh Kieu: “corporate finance is an activity related to the mobilization of capital formation and the use of such capital to finance the investment in the assets of the enterprise to reach the target” According to The corporate finance book of Academy of Finance, the form and essence of corporate finance are expressed as follows: - In terms of form, corporate finance is the monetary funds in the process of creation, distribution, use and movement associated with the operation of the business - In essence, corporate finance is the economic relations in the form of value associated with the creation and use of monetary funds of enterprises in the course of operation Based on this view, there are some ideas for that: “ Corporate finance is cash flow generated in the process of creating and using monetary funds associated with the operation of the business.” This perception is identical between the nature and form of corporate finance There are some other opinions that: “Corporate finance is the method of monilizing, allocating and utilizing the financial resources of the business to achieve business objectives” But this opinion has been consistent “corporate finance” – an objective economic category with financial management - a subjective activity of the corporate finance manager 8 Academy of Finance Graduation Thesis Thus, corporate finance can be approached under different perspectives However, proper perception of corporate finance and its nature have important implications in theory and practice This provides the basis for the use of financial relationships to make sound financial decisions to achieve the goals of the business 1.1.1.2 The financial decisions According to the financial operations, financial decisions are divided into investment decisions, mobilize capital decisions and profit distribution decisions • Investment decisions: As the decstons related to the total value of assets and the value each property unit (fixed assets and current assets) Investment decisions affect the left (assets) of the balance sheet The investment decisions are mainly: - Decision to invest liquid assets: cash balance decisions, inventory decisions, sales policy decisions, investment decisions of short-term financial - Decision of fixed asset investment: Decision of fixed asset procurement, project investment decisions, long term financial investment decisions - Decision structural relationship between invests in current assets and invest in fixed assets: the decision to leverage business applications, breakeven point decision • Mobilize capital decisions: As the decision concerning the choice should be to provide capital for investment decisions Funding decisions affecting the right of balance sheet (capital resources section) The decision to mobilize capital of business mainly covers: - The decision to mobilize short-term: Short-term lending or use trade credit decision - The decision to mobilize long-term capital: The decision to use long- term liabilities through long-term loans from banks or issuing corporate bonds; decide to issue shares (ordinary shares or preference shares); decided to 9 Academy of Finance Graduation Thesis structure relations between debt and equity (gearing); lending decisions to purchase or lease the property, etc • Profit distribution decisions: It is an important decision for stock companies to distribute dividends or dividends policy.The finance manager will have to choose between the use of the profit after tax to dividends, or retained for reinvestment These decisions related to the business should pursure dividend policy of how and wheather the dividend policy has an impact how the value of the business or stock price on the market or not Over time, financial decisions can be divided into long-term decisions and short-term decisions • Long-term financial decisions: As those decisions have strategic nature, there is a great influence on the survival and development of enterprises Each decision requires executives to scrutinize, analyze methodically and scientifically to ensure minimize risks that occur Long-term financial decisions include: - Long-term Investment Decision: A decision to select businesses should invest in these opportunities, or the public investment projects in the context of limited financial resources to maximize the value to the owner - The decision to mobilize long-term capital: The decision to select should mobilize long-term capital from public sources, with the scale of how much to maximize the value to the owner - The decision on a profit distribution policy of the enterprise: Is decide how much should be spent to split profits to owners, how much to reinvest profits back to maximize enterprise value to the owner • Short-term financial decisions: As these decisions have operational nature, no big impact on the survival and development of enterprises; so it is also calledthe tactical financial decisions.The rationality and correctn correctness of this decision 10 10 Academy of Finance Graduation Thesis among the contingent of officials and employees in the company to serve the production and business process 3.2.2 Adjust the company’s financing model and asset structure Like capital structure, asset structure also needs to be optimal Through the assets structure, we can see how the structure of investment as well as financial policies are consistent with the mobilization capital? In fact, the current financing model of the company is not reasonable compared to characteristics of the trade and services industry The company limited mobilize long-term capital but its long-term asset proportion is very high, which makes financing model was unbalanced Thus, the company needs some solutions to adjusting the financing model such as: - Make timely, accurate and adequate planning of capital utilisation Each source of capital has different cost of capital use, enterprises need to calculate the benefits to choose the source of funding with reasonable cost of using capital, in accordance with the financial situation of the enterprise in order to lower the costs Make a plan to allocate and use mobilized capital so that it is most effective to avoid stagnation Use mobilized capital in a flexible way to save and make the most of idle capital with low cost of use - Negotiate to adjust the term of the debt from short-term debt to long-term debt, adjust the pace of growth slow down, reduce the pace of new investment, sell assets and contributed capital in affiliated companies are not Core to repay debt to gradually balance the financial, restructuring business operations to improve profitability, thereby, increase the equity capital Owners can make use of the rental locations on Nguyen Khang Street to recover their long-term capital and finance for future business operations - Increase investment in short-term assets, reduce the proportion of long-term assets 99 99 Academy of Finance Graduation Thesis If it is difficult to raise capital, the company can restructure its assets to maintain its financial balance In short-term assets, inventory accounts for the highest proportion Consequently, the solutions offered to reduce inventory would be essential for the company Specific solutions will be presented later Reducing the proportion of long-term assets is also a solution to help companies increase their demand for working capital Specifically, the company needs to liquidate, sell the fixed assets were fully depreciated as the bridge lift four Nguyen Khang garage that has been imported since 2010 Annually, the company has to spend more than 20 million VND to gas pump and maintenance for these two cylinders Liquidation of these assets will help the company acquire some money to invest in new equipment or to meet working capital requirements while reducing the share of long-term assets - Financial lease or Sale and lease back Finance leasing is actually a form of credit When a finance lease is signed, it means that the business is funded This capital is earned by businesses not having to spend money to buy assets but still have assets for long-term use for production and business As a matter of fact, maybe the business would have to borrow a certain amount of capital equivalent to the value of the assets in the lease contract to finance leasing companies, including principal and interest Sale and lease back is the form of finance lease that the financial leasing company will buy the assets of the business, pay the business a cash and then lease the business to the enterprise This credit channel also allows businesses to be completely active in selecting machinery, equipment, suppliers, as well as models of the type suited to the requirements of their business In addition, if the enterprise has missed the investment in asset purchase and lack of working capital, it can resell to the finance leasing company and then the company will lease the business Thus, enterprises have working capital for production and business activities but still use assets 100 10 Academy of Finance Graduation Thesis At the end of the leasing term, the enterprise shall be entitled to prioritize the repurchase of assets with the nominal value less than the actual value of the assets at the time of redemption In addition, one of the most important advantages of leasing is the benefit from the tax shield Financial lease assets are still under the lessor's ownership, so the lessor is allowed to depreciate such assets, thus reducing the income tax payable On the other hand, the lessee must pay the rent, which is tax deductible so it also reduces the tax payable by the business So both businesses benefit from the tax shield Company equipment such as plunger compressors or four-axle lifts are expensive and difficult to buy Or the biggest demand of the company is the showroom, garage to expand the scale of consumption Therefore, the company can fully finance to use, while reducing the proportion of long-term assets and save on cost of capital - Saving the optimal cost of capital in the process of operation Companies use capital is not effective, so the cost of capital is very high In order to save on these expenses, the company needs to renovate and upgrade its machinery and equipment to help reducing the cost of capital When labor productivity increases, the depreciation cost allocated to each product will be reduced, thereby reducing the cost of capital In addition, the company also needs to make use of fuel and energy savings in the maintenance and repair of cars Raise awareness and self-interest for the company staff 3.2.3 Better inventory management, minimizing inventory costs The volume of inventory in the year was quite large, showing that the goods and raw materials were still abundant With stagnant inventory, the company can take the following measures: 101 10 Academy of Finance Graduation Thesis Regularly monitoring market developments in terms of product demand, tastes, etc., to take measures to control the volume of purchased goods Plan business activities on the basis of the reporting year, detailed monthly and quarterly figures Check quality of imported vehicles when imported to avoid quality condition is not satisfactory so it must be stored for processing Regularly monitor the volatility of the domestic and international car market From there, it is anticipated and decided to timely adjust the import of goods and the stock of goods left in stock This is a very important measure to preserve the company's capital - Accelerate inventory rotation speed: The company needs to accelerate the inventory to the market through solutions such as the implementation of commercial discount to accelerate the sales process,…In fact, the car inventory is mainly COUNTY seats car This is a very high value car, estimated cost of capital of a car is more than billion Not only that, maintenance costs, periodic inspections for this car is very high Every two months, the company has to spend 10 million a month to maintain the car Therefore, the quick sale of this car to the market is the current necessity To reduce inventory quickly, the company can also use a solution that is making sales through e-commerce.This new online sales just comes with high-mobility products and goods The automotive retail business through the site is not yet popular Consequently, this market is very large and easy to exploit This is a good opportunity for the company to capture and launch products that have not been widely advertised or which are hard to sell but still in stock 102 10 Academy of Finance Graduation Thesis 3.2.4 Enhancing the Debt management As of 31/12/2017, the receivables are very large in working capital, the increase in receivables is very fast, therefore, receivables management is important to the company Over the past year, the pace of recovery of receivables is very slow Although it is the debt is appraised, there is no case of customer debt but the sudden increase in receivables caused the demand for floating loans increased significantly Therefore, the company needs to choose reputable customers, have healthy financial resources, stable income, ability to pay debts to implement commercial credit policy The Company also needs to make provision for doubtful receivables if there are signs of irrecoverable debts from customers Provisioning will help the company to be more active if bad debts occur The Company must control the receivables closely by opening monitoring books and urging customers to pay debts on time, classify debts, especially overdue and due debts due date For indebtedness and maturity, the company needs to keep track of the time when it is necessary to take timely measures such as due diligence notification for customers to make timely payment procedures to shorten the time For overdue debts, the company should consider the reasons why customers not pay on time due to subjective or objective reasons If the objective is objective, the company can extend the debt If the company has urged people to collect multiple debt can not be the company needs legal intervention However, the company should avoid negative measures because it can easily affect the reputation of the company There should be clear provisions on the terms of payment in the contract such as payment method, payment period If the customer does not pay the 103 10 Academy of Finance Graduation Thesis company when the contract is due, they are violated payment law The Company may oblige the customer to be liable under the contract The Company should properly determine the commercial credit policy The use of this policy affects the company situation on two sides On the one hand it promotes the consumption of goods, reduces inventory stagnation, increases sales of products On the other hand, it creates the receivables, the capital of the business occupied by customers Therefore, the company should determine the commercial credit policy in a reasonable manner, only apply to customers with high payment and reputation to enhance the safety of receivables 3.2.5 Promoting product sales, save cost and actively seek the market to increase sales and profits For any company, the consumption of the product is vital to the company's development Ngoc Khanh Company is no exception Given the actual situation in that area, there are many trading companies involved in the market and competition has become more and more severe, Ngoc Khanh Company has been experiencing some difficulties in selling products Especially in 2017, the revenue of the company decreased quite a lot compared with 2016 Solutions set for the company to improve the consumption of products, increase sales: - Improve the quality of products, especially in the seat segment The company needs to invest more strongly in this car because of the value of car space is very large - Actively promote the brand by means of mass media such as newspapers, electronic newspapers, social media sites, - Use the best source of income to be optimally and effectively This source of capital is significant because only when the company is profitable, the can supplement this source of capital If the loss happened, not only not 104 10 Academy of Finance Graduation Thesis supplement but also reduce this source of capital In order to increase profitability, the company needs to increase its revenues and reduce unnecessary costs The company needs to step up its contract to get more value, thereby increasing sales Businesses also need to seriously review sales costs and business management items to cut off unnecessary expenses, making company-wide savings In addition, the company also needs solutions to overcome the situation of wasteful spending All the expenses of the company are very high and greatly reduce the company's profit First is solution for reducing cost of goods sold 3.2.6 Other solutions - Build and expand the service system in markets in need Through the organization of research work, find out the tastes of customers This is the bridge between the company and the customer As a result, the company can collect the necessary information and propose appropriate solutions to better serve the needs of customers, reinforcing the trust of customers with the company - Establish measures to prevent the risks that may occur - Companies need to rapidly and continually update their business policy changes of the State In addition, the company needs to participate in dialogue meetings between the State and enterprises - Strengthening the cooperative relations, expanding the consumption market, promoting the marketing, market research, grasp the tastes of customers - Implementing “the customer motto is king”, applying preferential policies on price, payment conditions and means of transport with many units, often or with long distance transportation 105 10 Academy of Finance Graduation Thesis 106 10 Academy of Finance Graduation Thesis CONCLUCTION Through the internship, rubbing against the actual situation at the company has helped me realize the importance of financial analysis in each business With the knowledge that has been learned, together with the dedication and guidance of the teacher Ms Pham Thi Van Anh - Department of Corporate Finance, Faculty of Corporate Finance, as well as the Department of Finance Accountant of Ngoc Khanh company I have completed my dissertation with the topic: “Solutions for improving Ngoc Khanh Auto Service and Trading Limited Company’s financial situation” In the context of the economy facing many difficulties, businesses have many unstable fluctuations, Ngoc Khanh Company with endless efforts of the company’s management and all staff strives to achieve the goal of becoming a company with a strong foothold in the field of trading and services To a certain extent, in accordance with their ability, I have solved the requirements and goals set But this is a general problem, complex, requires a lot of practical experiences Due to certain limitations in practical and knowledge, the thesis cannot avoid the shortcomings, the solutions presented may still be theoretical I hope to receive the advice and comments of the teachers and siblings in Ngoc Khanh Company for this essay to be more completely Once again, I would like to express my sincere thanks to ***********, the teachers of the Academy of Finance, the Board of Directors and staffs of the Ngoc Khanh company has facilitated, helping me to complete this thesis Ha Noi, May21th, 2018 Graduation thesis author 107 10 Academy of Finance Graduation Thesis REFERENCES a Assoc.Prof.PhD Nguyen Trong Co – PhD Nghiem Thi Tha (2011), Textbook corporate financial analysis , Financial Publishing b PhD Bui Van Van – PhD Vu Van Ninh (2013) Syllabus Corporate finance, Financial Publishing c PhD Vu Van Ninh (2014) Coporate Finance university textbook d Enterprise Law 2014 e Financial Statement of Ngoc Khanh company in 2015-2017 f Websites: https://vietstock.vn/ http://www.cophieu68.vn/ http://support.gov.vn/vn/tID1963_Bao-cao-Thi-truong-o-to-the-gioi-va-VietNam-5-thang-dau-nam-2017.html http://vneconomy.vn/nghich-canh-thi-truong-oto-dau-nam-201820180126103552453.htm g The thematic essays with topics ... firm’s financial situation • Chapter 2: Financial situation in NGOC KHANH AUTO SERVICE AND TRADING LIMITED COMPANY • Chapter 3: Solutions for improving NGOC KHANH LIMITED COMPANY’s financial situation. .. Thesis CHAPTER 2: FINANCIAL SITUATION IN NGOC KHANH AUTO SERVICE AND TRADING LIMITED COMPANY 2.1 Overview of NGOC KHANH LIMITED COMPANY 2.1.1 The basic information about NGOC KHANH LIMITED COMPANY... bravely selected the topic: "Solutions for improving Ngoc Khanh Auto Service and Trading Limited Company’s financial situation" as the theme for my graduation thesis Purpose and thesis questions •