CHAPTER 3: SOLUTIONS TO IMPROVE FINANCIAL SITUATION . OF
3.4. Solutions to improve financial situation of Minh Dang company
3.3.1. Solutions to improve the efficiency of capital structure management
- Firstly, the conpany build an optimal capital structure.
- Secondly, actively mobilize capital for business activities, always ensuring timely capital sources for production and business with the lowest cost of capital.
- The company should consider a plan to raise capital in the direction of lowering the debt ratio and increasing equity by:
+ Consider investment projects the company is implementing and withdraw investment capital to have capital suitable with the development of the company.
+ The company has not issued ordinary shares, preference shares can research more about the issuance, or go on the floor to attract investment capital or can attract more from outside individuals by capital contribution.
+ Accumulate capital from retained earnings, increase accumulated profits to invest in business expansion.
+ Exploiting more appropriated capital sources such as: having to pay the seller, the buyer pay in advance,... which helps the company appropriated without cost of capital and low cost.
+ Make the most of commercial credits, undue debts such as salaries, social insurance and so on. The use of this capital will significantly reduce the cost of capital, thereby improving efficiency business capital.
+ Balance between occupied capital and capital used in another company to bring the best effect to the company.
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3.3.2. Solutions to improve the efficiency of cash flow
- The company needs to establish an effective management policy to ensure the balance between cash in and cash out for the business operation.
- Identifying the deficit, or surplus cash flow of the company by planning cash flow, measuring and analyzing cash flows in and out of each given time period. Simultaneously, proposing cash flow control strategies, achieving a balance of cash flow in and out, and managing the cash flow of corporate transactions in line with the business's life cycle.
3.3.3. Solutions to improve debt management
- Enterprise should have policies to deal with their secured assets and increase the appropriation of capital by the suppliers.
- Regularly compare debts, continue to promote the collection of due receivables, urge customers to pay on time. Measures to encourage customers to pay early and on time. To attract business customers should have discounts at the appropriate rates (payment discounts) which will help the company quickly collect money without having to take out a loan to meet production needs while waiting for customers to pay off backlogs.
- In addition, it is necessary to conduct debt classification, monitor bad debts. There are several bad debts for Minh Dang Construction and Trading Joint Stock Company. As a result, it is also important to pay attention to long-term debts, particularly the provision of bad debts, so that the company's financial condition is not harmed when bad debts occur. Debt collection should be done on a regular basis and should not be left until the end of the year.
- Along with strengthening debt collection, business must also pay off past-due obligations, reduce debt capacity, improve reputation, and reduce financial risks.
3.3.4. Solutions to increase the efficiency of inventory management
- The calculation determines the necessary material structure in the plan year to reserve inventories, to avoid capital shortage or capital stagnation
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affecting the production and business process. On the basis, proactively choose suppliers in terms of quantity, quality and price. Improved warehouse management and management to limit the loss of inventories.
- With the characteristics of the commercial industry, the process of acceptance and settlement is relatively complicated. The company needs close coordination between departments to complete technical, financial documents to meet the investor's requirements and quickly answer the investor's problems with acceptance documents to acceptance process, settlement is happening faster.
- Reduce investment in inventory through solutions to enhance inventory management
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CONCLUSION
Vietnam is on the path to international economic inclusion and growth, with a focus on small and medium-sized businesses. Researching the corporate financial situation and providing financial solutions to improve efficiency. Business performance in a business is essential. Researching corporate finance activities is one of the important activities in the management of each business. Financial research is important and must be done on a daily basis because it impacts management decisions and the quality of company development. During the practical work at the unit, the enthusiastic help of the teacher Mrs. Dang Thuy Nhung, and based on the knowledge learned at the Faculty of International Finance, I would like to offer some reference solutions with the desire to contribute to better business performance at the Minh Dang Construction and Trade Joint Stock Company.
Due to limited terms of time, as well as the ability to recognize in the process of research and assess the financial situation inevitable shortcomings.
As a result, I eagerly anticipate receiving feedback from teachers and friends in order to continue to develop this thesis.
I'd like to thank Mrs. Dang Thuy Nhung once more for her unwavering support and guidance during the creation of this topic. I'd like to express my gratitude to the company and my coworkers at Minh Dang Vietnam Construction and Trading Joint Stock Company for their assistance in completing this thesis.
Thank you very much!
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1. MSc Tran Thi Quyen,
"Analyzing the financial Company"
REFERENCE
2018, Posted in Industry and Trade magazine situation at Song Da Consulting Joint Stock
2. Luong Hong Thai, 2019, "The Financial Situation at Sao Viet Joint Stock Company".
Master Thesis in Economics.
3. Dr. Ngo The Chi (editor) - Associate Professor, PhD. Nguyen Trong Co, 2015,
"Curriculum on corporate financial analysis"
texbook - Finance Publishing House.
4. K.R. Subramanyam, 2009, “Financial statement analysis” texbook.
5. STEPHEN A. ROSS, 2011, “Corporate finance” texbook.
6. Associate professor of PhD. Nguyen Nang Phuc, 2009, “Financial statement analysis”
7. Dr. Bui Van Van - Dr. Vu Van Ninh (co- editor), 2015, "Business finance textbook" - Finance Publishing House.
8. Financial statements of Minh Dang
Construction and Trading Joint Stock Company in periods 2018 - 2020.
9. Management reports of Minh Dang
Construction and Trading Joint Stock Company from 2018 to 2020.
10. Overview industry FPTS 2018 – 2020.
11. https://www.gso.gov.vn
12. https://www.investopedia.com