Analyze the performance of account receivable mana- 123docz.net

CHAPTER 2: SITUATION OF BUSINESS PERFORMANCE AT HOANG

2.3 Analysis of business performance at Hoang Long Mechanics Technology

2.3.2 Analyze the performance of account receivable management

• Effective division of receivables management

The situation of liabilities reflects the relationship of appropriation in payment, when the source of compensation for reserve assets is insufficient, the enterprise goes to appropriate capital, whereas when the source of compensation for redundant assets, the enterprise is appropriated capital. . If the appropriated capital is bigger than the appropriated capital, the enterprise will occupy an additional part of the capital into the production and business process. In contrast, businesses will be reduced capital.

For the company, liabilities mainly arise in the short term. When analyzing, it is necessary to identify appropriately appropriated and appropriated amounts (those that are still in the debt payment term, and have not yet been repaid). Enterprises need to urge the recovery of appropriated debts, especially debts that have expired, and at the same time, must actively settle debts due to respect the discipline of payment.

In order to clearly assess the situation of liabilities, the receivables must be compared with the payables fluctuating over the years.

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Table 6: Analyze of debt situation over 03 years 2016 - 2018 Unit: VND

Targets 2016 2017 2018

2016 / 2017 2017 / 2018

2017/2016 Difference 2018/2017 Difference Total short-term receivables 15.506.657.021 24.206.899.886 20.975.314.892 8.700.242.865 35,94 -3.231.584.994 -15,41 Total short-term payables 9.709.391.994 23.793.266.060 26.159.043.043 14.083.874.066 59,19 2.365.776.983 9,04 Net revenue 67.578.786.933 77.043.364.858 86.465.631.757 9.464.577.925 12,28 9.422.266.899 10,90

Analysis period (day) 360 360 360 - - - -

The ratio of receivables to payables

(%) 160 102 80 -57,97 -56,98 -21,55 -26,88

Receivables turnover (day) 4,36 3,18 4,12 -1,18 -36,93 0,94 22,79

Average collecting period (day) 82,61 113,11 87,33 30,51 26,97 -25,78 -29,52

( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)

Through the analysis of the debt situation, we see that the proportion of accounts receivable compared to accounts payable tends to decline quite sharply, in 2017 decreased by 56,98% compared to 2016, in 2018 decreased by 26,88% compared to 2016. 2017 shows that the amount of capital the company appropriated tends to increase. This ratio over 3 years is 100% higher, showing that the amount of capital the company appropriates from other units is more than the amount of capital appropriated. However, based only on the figures on the balance sheet, it cannot be accurately assessed, but it must be based on the nature, duration and causes of receivables, payables as well as measures. that the company has been applying to recover and pay debts to be able to assess objectively and accurately.

• Receivables turnover

This indicator can be understood as the speed of converting receivables into money in a fiscal year.

Because in 2017, receivables increased sharply, up 35,94% compared to 2017, this is the reason why the number of receivables receivable in 2017 decreased relatively (about 36,93%) compared to The year 2016 showed that in 2017 the Company did better in collecting debts. Striving to resolve the situation in 2018, the Company settled many works with state partners so by 2018, the receivable turnover increased again, reaching 4,12 rounds (up 22,79 % compared to 2017). The higher turnover cycle proves that the number of days of conversion from receivable debts to cash is gradually improving, but to avoid capital stagnation, the company needs to find ways to recover debts and protect safety for its production capital.

• Average collection period

It reflects the time of a turnover cycle, that is, how long it takes to collect receivables. Due to the lower turnover of receivables in 2017 compared to 2016, the number of days of a 2017 rotation also increased, from 82.61 days in 2016 to 113,11 days in 2017, an increase of 26,97%. But in 2018, a receivable turnover only took 87,33 days, down 25,52% compared to 2017, demonstrating that in 2018 the company recovered the short-term debt quite well, so the short-term receivables from VND 24.206.899.886 at the end of 2017 to VND 20.975.314.892 at the end of 2017.

Table 7: Analyze the performance of solvency over 03 years 2016 - 2018 Unit: VND

Targets 2016 2017 2018

2016 / 2017 2017 / 2018

2017/2016 Difference 2017/2016 Difference Short-term assets 19.039.569.943 33.076.640.756 34.478.198.031 14.037.070.813 42,44 1.401.557.275 4,07 Inventory 2.574.742.571 6.908.112.154 12.780.788.622 4.333.369.583 62,73 5.872.676.468 45,95 Short-term assets - Inventories 16.464.827.372 26.168.528.602 21.697.409.409 9.703.701.230 37,08 -4.471.119.193 -20,61 Short-term debt 9.709.391.994 23.793.266.060 26.159.043.043 14.083.874.066 59,19 2.365.776.983 9,04

Current payment rate (times) 1,96 1,39 1,32 -0,57 -41,06 -0,07 -5,47

Fast payment rate (times) 1,70 1,10 0,83 -0,60 -54,18 -0,27 -32,60

( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)

Because the company mainly incurs short-term debts, there are few long-term liabilities, so it only analyzes the company's current solvency. Short-term solvency analysis is an examination of whether the company's current assets are able to meet short-term liabilities.

 Current payment rate

This coefficient is used to measure the enterprise's ability to pay short-term debts (such as debts and payables) with its short-term assets, such as cash, receivables, and inventories. warehouse). The higher this coefficient is, the greater is the solvency of the enterprise. Through the table below we can see that the Company's current solvency is not going well. This coefficient decreases year by year. Specifically, in 2017 reached 1.39 times, down 41,06% compared to 2016, the main cause of this decline due to the Company's short-term debt is increasing rapidly in 2017 due to the shortage of production capital. business. Bad performance continues until 2018 when the current ratio continues to decline to 1,32 times, decreasing by 5,47% compared to 2017. If it continues to be difficult in autonomy in production and business capital Maybe in the coming time, the Company will fall into the solvency decline.

 Quick payment ratio

The quick ratio will show the company's true solvency and be calculated on movable assets that can be quickly converted into cash to meet the payment needs needed.

Over 3 years, the quick ratio did not go well, even in 2018 decreased to 0,83 times, equivalent to 32,60% reduction compared to 2017. With a quick ratio of less than 1 Company will meet difficulties when your debts are due. Obviously, the Company needs to seriously restructure the debt and assets ratio to create a strong financial system, especially in the near future.

Table 8: Profitability analysis over 03 years 2016 - 2018 Unit: VND

Targets 2016 2017 2018

2016 / 2017 2017 / 2018

Amount % Amount %

Profit before coporate income

tax 6.213.366.998 7.254.505.456 8.329.522.214 1.041.138.458 14,35 1.075.016.758 12,91 Profit after coporate income tax 4.970.693.598 5.803.604.365 6.663.617.771 832.910.766 14,35 860.013.406 12,91 Total revenue 67.585.275.300 77.049.993.860 86.474.447.413 9.464.718.560 12,28 9.424.453.553 10,90 Total assets 19.544.169.943 33.852.440.756 36.388.264.698 14.308.270.813 42,27 2.535.823.942 6,97 Equity 9.956.841.332 10.145.501.967 10.229.221.655 188.660.635 1,86 83.719.688 0,82 Profit before tax / revenue ratio

(%) 9,19 9,42 9,63 0,22 2,36 0,22 2,25 Profit before tax / Total assets

ratio (%) 31,79 21,43 22,89 - 10,36 - 48,35 1,46 6,38

Profit after tax / equity ratio (%) 49,92 57,20 65,14 7,28 12,73 7,94 12,19

( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)

 For the ratio of profit before tax to revenue

In 2016 of 100 VND revenue, there was 9,19 VND profit before tax, 2017 of 100 VND revenue was 9,42 VND profit before tax (increased by 2,36% compared to 2016), and 2018. Of the VND 100 revenue, there was VND 9,63 profit before tax, an increase of 2,25% compared to 2017.

It can be said that the ratio of profit to revenue of the Company is relatively low, which poses an urgent problem in managing cost of goods sold and management of enterprises.

 The ratio of profit before tax to total assets

We realize that for every 100 assets generated VND 31.79 billion in profit before tax in 2016; VND 21,43 in 2017 (down 48,35% compared to 2016), and generated VND 22,89 in profit before tax in 2018. Despite a decrease in 2017, from 2018 began to increase slightly. again, about 6,38% compared to 2017.

In 2017, the total assets of the company increased quite high, up 42,27% compared to 2016, because in the year the company expanded its production and business scale but did not create high business performance commensurate with the scale, thus reducing the profitability of the property. But in 2018, the scale of production and business of the company expanded and the performance of business operations also increased, making the profitability of the assets increased by 6,38% compared to 2017. This is a sign. well, demonstrating that the business of the company is growing with the investment in facilities.

 Return on equity

Through the table above, we can see that the ratios have increased over the years. In 2016, every 100 dong of equity generated 49,92 billion dong of after tax profit, but in 2017 it generated 57,20 dong of after tax profit, up 12,73% compared to 2016. And billion This rate continues to increase rapidly in 2018, from VND 100 of equity, there is VND 65,14 profit after tax, an increase of 12,1% compared to 2017. This is a good expression in business activities, for see the increasing performance of capital use, contributing to improving the business performance of the company.

2.3.5 Analyze the performance in using capital

The business performance of an enterprise is an economic category, reflecting the level of its use of human resources. This is a very complicated issue, involving many factors and many aspects of the business and production process of the enterprise, such as labor, labor materials, labor objects, etc. Therefore, when analyzing, it is necessary to combine many criteria, such as capital use performance, profitability of capital.

Based on the company's financial statements over the past 3 years of 2016, 2017, 2018, we have the following business results:

Table 9: Analyze the business performance of the company over 03 years 2016 - 2018 Unit: VND

Targets 2016 2017 2018

2016 / 2017 2017 / 2018

Difference 2017/2016

Difference ratio

Difference 2018/2017

Difference ratio Total revenue 67.585.275.300 77.049.993.860 86.474.447.413 9.464.718.560 12,28 9.424.453.553 10,90 Total cost 61.378.396.670 69.802.117.405 78.153.740.855 8.423.720.735 12,07 8.351.623.450 10,69 Profit before coporate

income tax 6.213.366.998 7.254.505.456 8.329.522.214 1.041.138.458 14,35 1.075.016.758 12,91 Total production capital 19.666.233.326 33.750.107.392 36.388.264.698 14.083.874.066 41,73 2.638.157.306 7,25 Working capital 19.039.569.943 33.076.640.756 34.478.198.031 14.037.070.813 42,44 1.401.557.275 4,07 Aggregate business

performance 1,101 1,104 1,106 0,00271 0,25 0,00 0,24 Efficient use of production

capital 0,31594 0,21495 0,22891 - 0,10099 - 46,99 0,01 6,10

Efficient use of working

capital 0,32634 0,21932 0,24159 - 0,10702 - 48,79 0,02 9,22

Number of times of working capital turnover (times)

3,55 2,33 2,51 - 1,22 - 52,39 0,18 7,12 Working capital turnover

(day) 101,42 154,54 143,54 53,13 34,38 - 11,01 - 7,67

( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)

The ratio of combined business performance over 3 years is greater than 1, indicating that the company's revenue situation is greater than the total expenditure, and this coefficient tends to increase gradually over 3 years. Specifically, in 2017 reached 1,104 times, an increase of 0,25% compared to 2016, in 2018 reached 1,106 times, an increase of 0,24% compared to 2017. However, compared to the current average value of business performance coefficient This sales is relatively low. Obviously, the issue of cost cutting is an urgent problem that needs to be overcome early by Hoang Long Mechanics Technology Joint Stock Company as well as almost all other businesses in the period of market opening and this fierce competition.

The performance of using capital for production is an indicator reflecting the results of the use of capital types in the company. Because the proportion of working capital accounts for most of manufacturing capital, the author will analyze these two ratios in general. Over 3 years, the performance of capital use in 2017 had the lowest results, it can be said that this is the general situation of small and medium enterprises at that time. The performance of working capital of the Company in 2017 reached 0,21495 times, down 46,99% compared to 2016. In 2018, with the support of policies from the State, the business environment and the With the company's efforts, the performance of working capital has increased by 0,222891 times, an increase of 6,10% compared to 2017.

However, as well as the overall business performance factor, the performance of use The company's capital is still very low. In order to improve this situation, Cong needs to have a plan to improve the situation in all factors involved in the production process such as production, business, human resources, costs, raw materials, science and technology.

Working capital turnover cycles show us the effect of using working capital in bringing in revenue. Through the data analysis table, we see that in 2017, the working capital turnover reached 2,33 times, down 52,38% compared to 2016. In 2016, the Company only spent 101,42 days to return working capital. but in 2017 this number increased to 154,56 days. The situation did not improve much in 2018, the number of working capital turnover reached 2,51 times, equivalent to an increase of only 7,12%

compared to 2017. It can be said that an enterprise has both production, trade and Services such as Hoang Long Mechanics Technology Joint Stock Company, such working capital turnover is relatively good. However, the Company needs to improve the use of costs for production and business activities. Only in this way can the Total Revenue and Profit after Tax increase.

Analyze the performance of account receivable management

Overview of business performance in the period 2016-2018

Analyze the performance of using labor