“Financial analysis in PetroVietnam Energy Technology Corporation (PVEIC)”

During the development of market economy as well as making the socialist republic of country, the high development of entrepreneurs is extremely essential. Within the current context of strongly regional and international economic integration, the best way for the entrepreneurs of Vietnam to survive and get on is constantly improving themselves, enhancing the competition and the enterprise value. Therefore, it is necessary for enterprises to reinforce their financial strengths by many different methods. Managing finance via checking, analyzing financial statements in the corporates is a really urgent requirement nowadays. After studying to find out the status of the financial analysis based on the information of the business operations in PetroVietnam Energy Technology Corporation (PVEIC) as well as the Corporation’s business orientation, the author has finished this dissertation that mainly focused on evaluating the way of analyzing financial statements being currently carried out in Vietnam in general, in PVEIC corporation in particular in order to estimate the strengths and weaknesses of financial analysis activities. The dissertation also carried out analyzing PVEIC’s finance based on the data of the 2012 financial statements in order to not only clear the currently financial features but also give some solutions for PVEIC to complete its activities better in the future. Theoretically, this dissertation illustrates the issues related to the financial statement analysis. Moreover, it collected both the theory of this issues and the basically-used methods for readers to have a comprehensive view of these activities. Besides, this dissertation also demonstrates the system of financial statements in Vietnam and its implementation process. More importantly, it contributes to the practical evaluation to the implementation of financial statement analysis in Vietnam. This dissertation focuses on analyzing the implementation process. Then, they compared and evaluated systematically based on the methods and results of the financial statements of the United States. This dissertation also assesses the role as well as the significance of the financial statement analysis to the current market. This dissertation shows that the essential problems should be improved in the financial statement analysis in general and in Vietnam in particular. To PVEIC, a big corporation, owns capital intensive but its efficient use is not really high. In the recent time, however, the financial statement analysis of this corporation has still been encountering the common problems of financial analysis in Vietnam. The implementation of the essay brings the significant so PVEIC. After surveying the features of production and business activities, and the products of PVEC in order to make sure the role of its important contribution to the economy during the integration period, the dissertation has assessed the status of the financial analysis of PVEIC and it is mentioned the advantages, limitations and causes of the financial analysis in this corporation. Through research, the author has found out the fundamental limitations including restrictions on methods, financial analysis indicators(they are too few and sporadic). On the basis of deep research and theoretical shortcomings identified in practice in combination with mentioned experience lessons; this dissertation provides directions and solutions to improve the examination and analysis of financial statements associated with the strengthening of financial management at PVEIC. Another important contribution is made during the implementation process of this dissertation; the author has analyzed the financial statements of PVEIC according to the Dopunt method. This is a new point to the analysis of financial statements in this corporation. Besides, this is the first time that the corporation’s financial statements are analyzed comparably with those of the other companies operating in the oil and gas field in Vietnam. This is an important basis of the analysis of the financial statements in order to assess adequately about the status of the corporation’s operations. With those bases, the dissertation has shown the strengths and weaknesses of financial operations in particular and business activities in general. Thus, the dissertation not only contributed to the business about the practical measures to improve the quality of financial statement analysis but also pointed out the strengths and weaknesses in the current financial structure of the corporation. This is the practical contributions that the dissertation has been done and the corporation can fully apply to improve the quality of financial statement analysis in its business. However, due to the limitation about time, information and knowledge, this dissertation is still insufficient. One of the previous shortcomings is the system of information that is used to compare the financial statement analysis indicators of PVEIC is inadequate. It comes from the causes in term of information as well as existing shortcomings from some annual research in comparison with other enterprises in Vietnam. The lack of comprehensive assessment system makes this dissertation lack bases on evaluating PVEIC’s real finance. In addition, even though the comparable indicators are compared with those of other enterprises in the same petroleum industry of Vietnam but these enterprises operate at different fields. This is the biggest limitation which this dissertation has not been fully overcome. This is also an opportunity and a direction for further dissertation to research in the future. Furthermore, it is the way to build systematic quantities to create the background of comparison and evaluation to the business activities in specific areas. Therefore, the financial statement analysis can be done seriously and effectively.

It is a great pleasure to thank everyone who helped me write my dissertation successfully

I am truly indebted and thankful Mrs Lespine Bachelard Sophie for her patience,flexibility, genuine caring and concern, and faith in me during the dissertation process

In particular, I would like to thank Mr Vu Thuy Tuong – Chief Accountant, Nguyen ThiThanh Hien – Accountant of PV EIC for their guides and advises in helping me to complete thisdissertation

I owe also sincere and earnest thankfulness to all teachers at International EducationFaculty of Vietnam Commercial University and at University de Lyon for their academicsupport, flexibility in scheduling, gentle encouragement and education

At the same time, many thanks hearty thanks go to the Mrs Vu Thi Hoan – Director ofHanoi Branch, Mr Nguyen Quang Hung and all of my colleagues at PetroVietnam EnergyTechnology Corporation (PVEIC) who supported me during the implementation of thisdissertation

Table of contents

ACKNOWLEDGMENTS ii

INTRODUCTION 1

1 Research context 1

2 Research questions 1

3 Dissertation structure 2

CHAPTER 1: THEORETICAL FRAMEWORK 3

1.1 Overview on corporate financial analysis 3

1.1.1 Conceptions 3

1.1.2 Role of financial analysis of the firm 4

1.1.3 Literature review on corporate financial analysis 5

1.2 Analytical methods of cooperate financial analysis 10

1.2.1 Method of comparison 10

1.2.2 Method of Ratio 11

1.2.3 Dupont Method 13

1.3 Corporate financial analysis in Vietnamese enterprises 14

1.3.1 Rules and forms of financial statements 14

1.3.2 Content in financial statement analysis in Vietnamese enterprises 15

1.3.3 Implementation phases in Vietnam 16

1.3.4 Information used in financial statement analysis in Vietnam 16

1.3.5 Limitations of financial statement analysis in Vietnam 18

CHAPTER 2: METHODOLOGY 20

2.1 Research phases realized 20

2.1.1 Reasons of subject choice 20

2.1.2 Research objectives 21

2.1.3 Research object and limits 21

2.2 Presentation of case study of PVEIC 22

2.2.1 History of PVEIC 22

2.2.2 Services and products 22

2.2.3 Actual situation of financial analysis at PVEIC 23

2.3 Data collection and treatment 24

2.3.1 Data collection 24

2.3.2 Processing data 25

CHAPTER 3: RESEARCH RESULTS – ANALYZING FINANCIAL HEALTH OF PVEIC 26

3.1 Financial structure and balance of PVEIC 26

3.1.1 Financial structure 26

3.1.2 Financial balance of PVEIC 28

3.1.3 Liquidity of PVEIC 28

3.2 Analyzing the income statement 29

3.3 Assessing the financial ratios 32

3.3.1 Analysis of operating margin 32

3.3.2 Return on assets ROA 32

3.3.3 Return on equity ROE 32

3.3.4 Implementation of the Dopunt method 33

3.4 Analyzing the cash flow of PVEIC 33

3.4.1 Cash flow from business operation 34

3.4.2 Cash flows from investment activities 35

3.4.3 Cash flow from financial activities 35

3.5 Discussions and recommendations 35

3.5.1 Assessing the current situation of the activities of financial analysis at PVEIC 35

3.5.2 Recommendations 37

CONCLUSION 42

BIBLIOGRAPHY 44

1 Research context

Financial analysis is the combination of the methods used for assessing the past andpresent financial situations, which will enable information users to assess the financial health,profitability and prospects of an organization Financial analysis therefore is of great significancenot only to the enterprise owners, administrators but also is beneficial to investors, providers,credit institutions, employees in enterprises Particularly, to those joint-stock companiesmanaged by the State by holding most of the shares, financial analysis plays an essential role,since it has effect on the State management over the enterprise and ensures transparency in ajoint-stock company’s operations

In recent years, the Vietnamese economy has been being changing gradually towardsdiversifying forms of corporate ownership in a market-oriented economy Being a WTO member

is synonymous with to join the international economy, thereby increasing the number ofinformation users of enterprises Not restricted to tax agencies, now investors, shareholders,managers, financial intermediators, insurance firms, international economic institutions arebecoming more and more interested in the situation of financial operations and information

For an organization, financial management helps to make financial decisions,implementation decisions to achieve its financial performance The role of corporate financeshown at the right place to determine the needs of capital for the business activities of theenterprise during the period and then have to choose the appropriate methods and forms ofmobilization capital from within and outside timely meet capital needs for the operation of thebusiness Therefore, the role of corporate finance is increasingly more important in the choice ofform and methods to raise capital to ensure business activities smoothly and continuously withthe cost of raising capital at lower

In this context, along with my work at PVEIC, I selected the theme on “Financial analysis in PetroVietnam Energy Technology Corporation (PVEIC)” as a research topic for his

master's dissertation This topic brings practical and in accordance with the actual requirements

of enterprises today

2 Research questions

The research questions are the following:

- What are the models of financial analysis organization and financial analysis normsystem?

- What effects do the factors have on financial analysis?

- What are the organization, contents, and methods of financial analysis being applied

at enterprises like?

- What are shortcomings that still exist in the process of financial analysis and thesystem of financial analysis, the solutions for perfecting and conditions forimplementing such solutions?

- How to improve the efficiency of capital use of PetroVietnam Energy TechnologyCorporation.

- How to attract the investors both domestic and foreign investors for the company?

3 Dissertation structure

The scope of this dissertation comprises three chapters as following:

 Chapter 1 consists to a theoretical framework on corporate financial analysis

 Chapter 2 present the methodology such as case study implanted at PVEIC thatinclude a general presentation of the Group and our data collection and treatment

 Chapter 3 involve the research results, precisely an analysis of financial health ofPVEIC and some discussion, recommendation for the Group

CHAPTER 1: THEORETICAL FRAMEWORK

1.1 Overview on corporate financial analysis

1.1.1 Conceptions

According to some scientists, the corporate financial analysis today is one of the mainprerequisites for successful management of financial resources, and it is one of the mostimportant factors of financial management Effective operation requires the manager to make adecision based on the analysis of current activities and financing activities According to theclassical view, financial analysis is the investigation of key parameters, factors and multiples,offering an objective assessment of the financial situation, as well as the stock price analysis ofthe company with the aim of making decisions in the field of capital investment However, thereare many different opinions on the exact definition of what financial analysis is?

Martin et al (1990) suggest that financial analysis includes all stages of financialmanagement analysis connected with financial resources management including capital market

As a process, its aim is to assess financial situation at present as well as in the past, and theperformance of the business The most important thing is to estimate and forecast futureconditions as well as the subsequent operations of a company Helfert (2003), the economist,believes that financial analysis is a research, as well as a support in answering the questionsarising in the management of the company Sharpe et al (1998) have a different approach bynarrowing its scope, paying attention on financial indicators

Keown et al (2007) believes that financial analysis is not a separate branch of science; it

is an important factor of the financial management system Financial analysis is used to makemanagement decisions With the same point of view, White et al (2002) suggests that financialanalysis is an important factor of the financial management as well as in the formation ofeconomic relations with partners, financing and loan system of the company However, asmentioned previously, there are different approaches to this question Some scholars believe thatfinancial analysis is a separate science and problems of financial management to conductfinancial analysis should be considered separately However, most scholars agree that financialanalysis is an integral part of corporate governance, to help businesses make decisionsaccurately

Financial analysis is the process of determining the operation and financial characteristics

of a company in the term of accounting and financial statement The objective of this financialanalysis is to identify and implement effective financial management of the company through thedata reflected in the financial records and reports Analysts are trying to measure the solvency,profits and other indicators of the business, to ensure sufficient profits to shareholders in order tomaintain its market value The ability in financial analysis is essential to improve its competitiveposition in the market Through careful analysis, organizations can identify opportunities toimprove the performance of the department, unit and organizational level

Typically the financial analysis is conducted as the following steps: (1) information

collection, (2) handling Information and (3) forecast and making decision.

One of the basic principles of corporate governance mentioned in OECD is to publicizethe quality and transparency of financial information (OECD, 2004) A key characteristic offinancial information quality is the possibility of impact on the decision-making process of users

in general and investors in the capital market in particular through the quality of financialstatement analysis (Francis et al., 1999) Financial analysis is considered as a process, the aim is

to assess your current financial situation as well as in the past, and the performance of thebusiness, and it also indicates the future trend for enterprises

According to the opinion of the quality management system ISO, quality is a set ofinherent characteristics of an entity to meet the requirements of customers Thus, the quality offinancial analysis can be understood as follows: The quality of financial analysis is an economiccategory reflecting the reliability and relevance of information systems, processes, methods andanalysis content used to evaluate and make the best financial decisions contributes to improveoperational efficiency and financial performance of the overall objectives of the business

Analysis quality is good when it meets the high requirements of the user, reflects thefinancial performance closely, and finds out the strengths and weaknesses of the business as abasis for decision- making

The indicators reflecting corporate financial analysis quality are:

- The quality of the input information

- The methods applying in appropriate analysis

- The suitability of financial analysis indicators

- The accuracy of analysis results

- The rationality of analysis time and density of analysis statement

1.1.2 Role of financial analysis of the firm

Financial analysis has always been considered as an important factor in the making since it relates to investment and finance in the short term Financial managementdesigned and implemented seriously will contribute greatly to the value creation of a company.The dilemma in financial management is to achieve the desired trade-offs usually exchangesbetween liquidity and profitability (Lazaridis, 2007) Working capital management, liquidityensure and profitability management are essential for the good financial activities because theyhave a direct impact on the profitability of the firm (Rajesh and Ramana Reddy, 2011) A keypart of the working capital management is necessary to maintain liquidity in daily activities toensure the smooth running The ultimate goal is to achieve profit by using resources efficiently

decision-It is related to maximizing the value for the owner Effective financial management can beachieved through effective financial analysis Financial analysis means examining the overallfinancial situation of the business in a certain time

The financial analysis is particularly important in the management of corporate finance; ithelps the interested people capture the financial situation of enterprises, thereby makingdecisions timely and properly In business, the enterprises of different ownership forms are equalbefore the law in selection industries and business sectors Thus, there will be many interestedpeople to the financial situation of enterprises, such as: Business owners, sponsors, suppliers,

customers including State agencies and employees Each actor is interested in the financialsituation of enterprises in the different perspectives as following:

+ Financial analysis for business managers: Atrill (2006) suggests that financial analysis

exists to manage companies, plan for a long term and make daily decision Helfert (2003) alsobelieves that financial analysis will provide an effective support in managing the operations ofthe company Therefore, the financial information not only gives business leaders an overview ofthe financial situation of the business but also helps them to make decisions in the investment,financing and profit distribution promptly and properly

+ Financial analysis for investors: Corporate financial analysis is considered as a tool for

risk management of the company (Atrill 2006) For investors, as well as business leaders, theirultimate goal is to maximize the value of the owner and financial information with the marketvalue target of the business in general and the value of the shares in particular, if the business hasshares traded on the stock market; the potentially lucrative will help investors make investmentdecisions effectively

+ Financial analysis for creditors: White et al (2002) suggests that financial analysis is

an important factor of the financial management as well as in the formation of economicrelations with partners, financing and loan system of the company Creditors are alwaysinterested in the repayment capacity of the business and financial information, in particular, theinformation on the solvency and the potentially lucrative will help them offer lending decisionssuitable with the financial situation of enterprises

+ Financial Analysis for State management agencies: Based on the financial information,

State management agencies can assess, inspect and control the businesses performance, thefinancial and monetary activities of enterprises in accordance with policies, regimes andprovisions of the law

+ Financial Analysis for workers: Workers in enterprises are also concerned about the

financial information of the business, especially the profitability Because the results of businessoperations have a direct impact on the wages of workers Moreover, in joint-stock enterprises,employees participate in the equity, they are also the business owners, so they should have therights and responsibilities associated with business

Thus we can see the importance of financial analysis for the various componentsinvolved in the business Financial analysis helps the users from different perspectives not onlyevaluate comprehensively, generally, but also review the corporate finance activities specifically,

to find out the strengths and weaknesses of business activities to recognize, judge, predict andmake suitable decisions in finance, funding and investment

1.1.3 Literature review on corporate financial analysis

Business effectiveness is the most importance concern of every company Financialanalysis is the most necessary and important operation as it reflects, measure, estimates thebusiness results This is also an interesting subject for many local and international researchers

 On the international plan

- Friedlob and Schleifer (2002) show how to analyze a company as a prospectiveinvestment This one-stop resource includes a basic introduction to accounting; shows how to useratio analysis to evaluate a company's profit, liquidity, and solvency; and provides actual

financial statements of a variety of companies as illustrations.

- Singh A J and Raymond S Schmidgall in the article “Analysis of financial ratioscommonly used by U.S lodging financial executives”, published in the Journal of LeisureProperty, August 2002, has shown the importance of analysis criteria for business efficiency infinancial terms, in which the criteria reflecting the profitability indicators were rated as the mostimportant

- Timothy R Mayes, Todd M Shank (2012) address today's most important corporatefinance topics, including financial statements, budgets, the Market Security Line, pro formastatements, cost of capital, equities, and debt This edition now covers Excel tables, pivot tablesand pivot charts and other areas that have become increasingly important to today's employers.The book's reader-friendly, self-directed learning approach and numerous study tools helpreaders build upon basic skills for the Excel 2010 proficiency and the solid finance knowledgebusiness professionals need for success

- In the “Performance evaluation for airlines including the consideration of financialratios”, the Cheng-Min Feng and Rong-Tsu Wang (2000) have developed the process ofevaluating business efficiency of the aviation company in Taiwan First, the two authors follow

an old study to systematize the assessment criteria applied to both transportation and financing ofthe company The particular problems when analyzing the performance of aviation are:difficulties in accessing information for sampling operations research (so they have to acceptsmall sample), ignorance of sample distribution law To solve these problems, they combine tworelational analysis model GREY (grey relation analysis) and the TOPSIS method Finally, anexperimental study was conducted and the results are very valuable: the combination of thefinancial indicators analysis for the airlines (which are less focused on the past) and the normsanalysis of transport has brought a better analysis results

- Follett Robert (2012) shows you exactly how to "keep score" in business by reading andinterpreting company financials Step by step, Follett helps you capture crucial insights buried inbalance sheets, income statements, and other key reports Follett shows how to apply core toolsfor analyzing financial reports and investment opportunities, and demystifies key accountingterms every business decision-maker and investor needs to know

- Wahlen James M, Stephen P Baginski, Mark Bradshaw (2010) present a balanced,flexible, and complete Financial Statement Analysis book that is written with the premise thatstudents learn financial statement analysis most effectively by performing the analysis on actualcompanies Students learn to integrate the concepts from economics, finance, business strategy,accounting, and other business disciplines through the integration of a unique six-step process

- Fridson Martin S, Alvarez Fernando (2011) provide the analytical framework you need

to scrutinize financial statements, whether you're evaluating a company's stock price ordetermining valuations for a merger or acquisition This will help you to evaluate financialstatements in today's volatile markets and uncertain economy, and allow you to get past thesometimes biased portrait of a company's performance

- Research by Stephen H Penman and Luis Palencia, “Financial Statement Analysis andSecurity Valuation” (2001) at the University of Columbia - United States, have used financialanalysis tools to analyze financial statements for the purpose of business valuation The authorsrefer to the importance of the input information the quality and make the criteria for evaluating

the quality of information A very valuable content of this study is the relationship between theresults of the financial analysis and the forecasts of the company's prospects for the company'sshares The criteria used by the authors to analyze include: P / B, RE, ReOI

- In “Measuring performance in a changing business environment”, Mike Kennerly andAndy Neely (2003) have pointed out that the financial analysis of businesses in the UK has beenpaid much attention in recent years; many large enterprises and credit institutions have tried tofind ways to redesign the financial analysis system and business performance assessment system

to ensure that it reflects the situation of the business in a timely and accurate manner However,the rapidly changing business environment requires businesses to always be ready to changebusiness strategy as well as the mode of operation to adapt The question is whether or not thefinancial analysis system of the business has taken steps to change, develop in line with the newbusiness environment It is a problem that very few businesses can solve thorough research at thetime of the research Through this work, the authors came up with an experimental study thatproposed the solutions to evaluate and develop financial analysis system effectively in afluctuated business environment

- “Measuring business performance in the high-tech manufacturing industry: A casestudy of Taiwan's large-sized TFT-LCD panel companies” of Fang-Mei Tseng, Yu-Jing Chiuand Ja-Shen Chen (2007) is a research on the indicators of business efficiency at high-techindustrial production companies in Taiwan The authors suggest that the nature of competition inhigh-tech manufacturing industry was rapidly changing and the assessment indicator system ofbusiness results (at the time of the study) was no longer appropriate From that point on, theresearch has given financial and non-financial targets just for high-tech manufacturing industry,and also has developed a model of the new performance evaluation This model consists of threebasic components as follows: A data envelopment analysis DEA, an Analytic Hierarchy Process

- AHP, a multi-criteria decision-making approach

- In “Determinants of the profitability of China's regional SOEs” of Shuanglin LIN, WeiROWE (2005), the authors have identified the factors determining the profitability of state-owned companies in China

- Haitham Nobanee, Modar Abdullatif, Maryam AlHajjar (2011) in “Cash conversioncycle and firm's performance of Japanese firms” have studied the relationship between currencyconversion cycle and business performance of companies in Japan

- Fengyi Lin, Deron Liang and Enchia Chen (2011) have written “Financial ratioselection for business crisis Prediction”, a study at Taiwan National University Three authorsbrought a “timely” research in 2011, which is the use of financial ratios to build forecastingmodels for economic crisis After researching and refining numerous financial criteria, theresearch team selected five indicators as a basis for analysis; 2 of them are not widely used sofar: the tax rate and EPS index of 4 consecutive quarters

- George E Halkos and Nickolaos G Tzeremes (2012) have written “Industryperformance evaluation with the use of financial ratios: An application of bootstrapped DEA” - aresearch at the University of Thessaly, Greece that applied Bootstrap statistical methods(developed in 1979 by the statistician Bradley Efron, widely applied in wide range of science andnow considered as a standard statistical methods) to study a model that uses financial ratios toevaluate performance of 23 manufacturing and assembly enterprises in Greece The results haveshown that the new financial model analysis (applied Bootstrap method) could give more reliable

results than the previously applied model.

- Mariluz Mate-Sanchez, Fernando A López Hernández and Jesus Mur Lacambra (2012)

in “Analyzing long-term average adjustment of financial ratios with spatial interactions,” a study

at the University of Zaragoza, Spain, have shown the change and the average coefficient offinancial analysis index at small and medium-sized enterprises in the Mediterranean region

- Moscalu Maricica and Vintila Georgeta (2012) in “Business Failure Risk Analysis usingFinancial ratios”, from Procedia - Social and Behavioral Sciences magazine, have studiedbankruptcy risk assessment based on the analysis of financial ratios 2 authors have assessed thefinancial targets of the two business groups: the bankrupted business and business about tobankrupt (business research data dated 7 years before bankruptcy)

In addition, there are many other studies mentioned issues related to corporate financialanalysis

 In Vietnam

Some authors with related topics in recent years:

- Nguyen Tuan Phuong in “Completion of the financial activities analysis at joint venturecompanies in associated with foreign business” (1998) has pointed out the situation andmeasurement to improve the financial operations analysis, one of the company’s basicoperations Another advantage of joint ventures business that the author has chosen to compare

to other types of businesses is: business leaders are very interested in financial analysis At thetime of the study, it was a new concept to base on the results of the financial analysis to supportthe business management

- In the first group of authors, author Nguyen Trong Co referred to the “Completion ofthe indicators system of financial analysis at non-financial joint stock companies in Vietnam”(1999) and focused on the analysis indicators system At non-financial joint stock companies(operated in areas such as: manufacturing, tourism, travel, training, consulting ), the differencebetween business financial analysis of financial and non-financial enterprises is that the analysis

is more focused on the indicators such as: inventory turnover, active capital turnover

- Meanwhile, author Nguyen Ngoc Quang (2002) studied the “Completion of theindicators system of financial analysis at construction companies in Vietnam” until 2008

- The group of authors: Nguyen Dang Phuc, Nghiem Van Loi, Nguyen Ngoc Quang(2006) in “Analysis of joint stock companies” have presented the indicators system of financialanalysis at joint stock companies and all approaches applied to the analysis process

- Author Tran Thi Minh Huong (2008) in “Completion of financial analysis indicators atVietnam Airlines Corporation”, has introduced a number of financial analysis indicators whichare applied in foreign airlines, thereby she has studied and selected appropriate criteria to apply

to Vietnam Airlines Corporation The solutions found: Completion of the analysis system atVietnam Airlines Corporation; recommendations and guidance on the application of thecomplete indicator system in the financial analysis; completion of financial analysis approach;completion of database for the financial analysis (including financial reports and informationsystems for financial analysis0; development of a finalcial analysis process associated with anappropriate type; organization of executive structure

Common points of these studies are related to the completion of financial analysis

indicators system in certain specific businesses This is just one of the aspects of financialanalysis, does not cover all aspects of this work

- In the second group of authors, many of them also mention the financial analysis but inanother aspect, is the completion of the financial reporting system (FS) and analytical workorganizations such as:

- Author Nguyen Van Hieu (2003) in “Completion of the financial reporting system withfinancial analysis in the construction companies in Vietnam” has analyzed that the currentquality of the input data for the financial analysis at companies in Vietnam in general and theconstruction companies in particular are not high This is because the business leaders do nothave the full attention on financial analysis; do not apply the results of financial analysis in theconduct of business Thereby, the authors emphasizes the meaning and importance of thefinancial analysis, provides some outstanding HR solutions serving the financial analysis and anumber of methods to apply the analysis results to business management

- Dr Nguyen Viet Loi (2003) in “Completion of the financial reporting system to provideinformation for corporate financial analysis”, has shown that the organization of financialanalysis should be carried out right from the preparation of input data, the input data needs toensure accuracy

- Also in 2003, author Vu Van Hoang studies the “Completion of the financial reportingsystem to strengthen financial management at construction enterprises in Vietnam” along withthe research above

- In 2004 the author Cung To Lan thesis “Completion of the financial reporting systemfor the analysis of financial situation at Election company I”

- Author Nguyen Thi Huong (2005) in “Completion of financial reporting system andfinancial analysis at Electricity companies in the North” has shown the actual situation ofelectricity industry- the difficulty in the pricing of power contracts, which interferes the function

of power projects The completion of financial reporting system and financial analysis hascontributed actively to the solution In addition, the financial analysis is also applied to theeconomic efficiency analysis of the power projects

These studies focus on the improvement of the financial statements in order to providecomplete information, more accurate and comprehensive financial analysis

The third group of author focuses on the actual status of financial analysis at thecompanies:

- Author Do Quynh Trang in “Analysis of the financial situation in order to improve theefficiency of financial management and procurement capacity at Traffic ConstructionCorporation I”, has referred to the financial analysis associated with bidding at TrafficConstruction Corporation I, thereby offered a number of solutions to apply financial analysis tocalculate the bid price

- Author Nguyen Thi Hang studied “Completion of the financial analysis at VietnamPharmaceutical Joint Stock Companies” in 2006

- Author Le Viet Anh 2007 wrote “Completion of the financial analysis at textilecompanies in Hai Duong province”

- Author Pham Thi Thanh (2009) wrote her master thesis entitled “Completion of thefinancial analysis at Phu Thai Group” In this thesis, the author has studied the financial analysisapplied to a multi-industry, multi-disciplinary company Phu Thai Group is now operated inmany different areas, including: distribution of goods, retail business, transport business,distribution business of industrial machinery and equipment, real estate business Each industryhas a characteristic and the financial ratios need to be evaluated differently

These researches have learned about the financial analysis at the companies Thecommon point of these scientific works is that they all mentioned the financial analysis atbusinesses in general or in a certain aspect (the index system, financial situation or financialstatements) They did not consider completely the entire index system, method and content offinancial analysis None of the authors has reviewed a company in the assessment sector: energy,oil, trading, merchandise, supplies and machinery for import and export Furthermore, none ofthem have specified the arrangement, improvement of the whole process of financial analysisfrom all phases of the operation Therefore, this thesis will clarify the actual situation of thefinancial analysis at PVEIC to come up with concrete measures to improve the financial analysis

1.2 Analytical methods of cooperate financial analysis

Method of financial analysis is the manner or techniques used to process financialinformation to assess the financial situation of enterprises At present, there are many methods offinancial analysis A few key methods are most commonly used as follows:

1.2.1 Method of comparison

There are a large number of method comparison studies have been made, includingchanges in supporting the public to reduce unemployment allowance, analysis of changes in thehealth care systems among countries in OECD, measuring demographic variables andsocioeconomic in cross-country studies Method of comparison is also popular in all forms orsocial groups, such as in the study of the stratification of social classes The fundamentalobjectives of this method are to look for the analog and the variances Comparison method isquite common in financial analysis, it is used to evaluate, locate and identify the trend of analysisindicators In financial analysis, the horizontal comparison is often used (also known ashorizontal analysis) and vertical comparison (also called vertical analysis) Horizontalcomparison is to compare the changes of both the absolute and relative number of each target ofeach financial statement; vertical comparison is the use of margins, ratios to show the correlationbetween the indicators in each financial statement to draw conclusions

To make a comparison, should notice the following fundamental issues:

- Firstly, the comparison process should ensure the following conditions:

+ The indicators used to compare have to reflect the same economic content.+ The indicators must have the same method of calculation

+ The indicators must be based on the same unit of measurement

+ These indicators must be collected at the same time and in the same space scale

- Secondly, the yardstick must be chosen Yardstick is the indicator of a selected period

as a basis for comparison, called the comparison base Comparison base is often determined by

time and space Depending on each different analysis purposes, the analyst will select theappropriate comparison base.

+ To assess the development trends of the indicators: Comparison base chosen isthe data of the previous period or the same period with last year

+ To assess the implementation in comparison with the plan, estimates and norms:Comparison base chosen is the planning data, estimate data, normative data

+ To assess the results of the business compared with the others: Comparison basechosen is the data of the equivalent units or the average data of the industry

There are a large number of financial indicators and research on financial indicators andhow to use them in corporate financial analysis (Keown et al., 2007; White et al., 2002).Analysis of the factors is a technique used to describe the transformation between the observedvariables in size To accomplish a task like that, it checks the correlation between variables.Closely related variables (positive or negative) are considered to be affected by similar factors

• The internal liquidity ratios that include:

+ The current payment capacity that shows the liquidity by comparing its current assets

with the short-term liabilities (Keown et al., 2007) It is calculated by:

Current payment ratio = Short-term assets / liabilities

+ Quick payment capacity: Some observers have questioned the use of the property in

order to assess a company's ability to meet its current obligations while inventory and otherassets have low liquidity (Reilly, Brown, 2006) This ratio is determined as follows:

Quick payment ratio = (Cash + marketable securities + receivables) / short-term liabilities

+ Cash ratio: that is a payment instrument which has high liquidity, only cash and

securities easily converted into cash are used to measure cash flow (White et al., 2002)

Cash ratio = operating cash / short-term liabilities

• Performance index that include:

+ Receivables Turnover Ratio: that measures the efficiency of the credit policy of the

company and shows the necessary level of investment to maintain it (White et al., 2002).Formula as follows:

Receivables Turnover Ratio = Net credit Sales / Average accounts receivable

+ Accounts payable turnover ratio: it reflects the ability in takeover capital of the

enterprise compared with the suppliers (White et al., 2002) Formula as follows:

Accounts payable turnover = Total Supplier Purchases / Average accounts payable

+ Inventory turnover ratio: the inventory turnover is a measure of the number of times

inventory is sold or replaced during the year, it means that the relative liquidity of inventory(Keown et al., 2007) A higher proportion shows that the inventory is sold faster in the year(White et al., 2002) This ratio is defined as follows:

Inventory Turnover = Cost of goods sold/ Average Inventory

+ Fixed asset turnover is sales revenue of a company divided by its fixed assets, to

measure the effectiveness of long-term capital (White et al., 2002) If the company has the belowaverage rate, it indicates that the company does not use fixed assets as effectively as the othercompanies in the same industry

Fixed Asset Turnover = Net Sales / Average net fixed assets

+ Total assets turnover ratio is sales of a company divided by total assets If the company

has the below average rate, it indicates that the company does not use the property as effectively

as other firms in the same industry Sales revenue should be increased, and some properties need

to be handled so that companies can operate more efficiently (White et al., 2002) Thi formula is

as follows:

Total assets turnover ratio = Net Sales revenue/ Average Total Assets

• Profitability index that include:

+ Gross profit margin (%): A measure of profitability is the relationship between the cost

and sales of the company The ability to control the costs related to sales revenue and earnings.Profit rate captures the relationship between revenue and production costs (White et al., 2002), asthe following formula:

Gross profit margin (%) = Gross Profit / Revenue

+ Operating profit margin indicates the success of business leaders in creating profit

from operations of the company Operating profit margin is calculated by earnings before interestand taxes (EBIT) divided by revenue This ratio is defined as follows (Keown et al., 2007):

Operating profit margin = Earnings before interest and taxes / Revenue

+ Net profit margin: reflects the net income (profit after tax) of a business compared with

revenue If the profit rate is below the industry average, it indicates that the sales revenue is toolow, the cost is too high, or both This ratio is defined as follows (White et al., 2002):

Net profit margin = Profit after tax / Revenue

• Financial Leverage Ratio that include:

+ Liabilities to total capital: This ratio is necessary to assess long-term risks and

prospects The financial leverage brings benefits along with additional risks (White et al., 2002).This ratio is defined as follows:

Debt to capital = Total liabilities/ Total capital

+ Debt to equity ratio shows the company's capital structure and indirectly, the ability to

meet current liabilities obligations This ratio is defined as follows (White et al., 2002):

Debt to equity ratio = Total liabilities / Total Equity

+ Interest coverage ratio: There is a direct measurement than debt to equity of the

company's ability to meet interest payments from annual operating profit, it is interest coverageratio This ratio is defined as follows (White et al., 2002):

Interest coverage ratio = Earnings before interest and taxes (EBIT) / interest expenseMethod of ratio is a method which reflects structure, relationship between financialindicators and the changes of volume through various financial ratios in a series of continuoustime and stages Depending on the analysis objectives, analysts shall pay more attention to thisgroup of ratio or other groups For example, the creditor specially pay attention to the solvency

of borrowers, long-term investors are interested in the performance and production efficiency Atthe same time, they also need to study the liquidity capability to assess the ability of businesses

to meet the current demand for payment and profit to consider the possibility of the finalrepayment, the ratio of capital structure making changes significantly benefit of investors Eachgroup consists of many ratios and in each case the ratio chosen will depend on the nature andscale of the analysis

1.2.3 Dupont Method

The origin of DuPont method was developed in 1918 by an engineer at DuPont He foundthat the products are usually calculated with two indicators are profit margin and asset revenue,equivalent to the return on assets (ROA) The elegance of ROA is that it contains a measure ofprofitability and is also an effective way to make DuPont method to become a tool widely used

in the financial analysis In 1970, the Dopunt model was added ROE indicator which isequivalent to net profit on equity

To evaluate the effectiveness of management activities, Nissim & Penman (2001)suggested using a modified version of the traditional DuPont model to remove the effects offinancial leverage and other factors that are not under the authority of the managers The DuPontmodels have been widely recognized in financial analysis documents

Dupont method is a method which has the aim to assess the interaction between financialratios: operating margin and consumer product profit margin to determine the profitability ofinvestment

The target of the operation is to generate net income, revenue on equity (ROE) is anindicator to assess the implementation of this target The formula is as follows:

ROE = Profit after tax / EquityROE reflects the profitability of equity, increasing profitability of equity is an importantgoal in corporate finance management

In addition, there is revenue on asset (ROA)

ROA = Earning before interest and taxes / AssetsOr:

ROA = Profit after tax / AssetsThis is the criteria used to evaluate the profitability of the investment capital Depending

on the specific business situation of enterprises and the range of comparison, people can choose

earning before interest and taxes and profit after tax to compare with total assets.

Using DuPont method is to assess the interaction between financial ratios, analysts can perform the separation of ratio ROE:

ROE = Profit after taxEquity = Profit after taxAssets x Equity Assets = ROA x EM

EM - Equity Multiplier can be transformed into:

EM = AssetsEquity = Total capitalEquity = Equity1 = 1 - Debt ratio1

Total capitalROE reflects the profitability of the equity - the increasing value for the property owners.ROA reflects the profitability of the entire assets of businesses - asset management capabilities

of managers EM is equity multiplier, it reflects the level of capital mobilizing from the outside

of the enterprise If EM increases, it shows that the businesses raised capital from outside

Separate ROA:

PM: Profit margin reflects the proportion of profit after taxes in revenue

AU: Assets efficiency

When ratio PM increases, it reflects the effective revenue and cost management of thecompany

Thus, the return on equity (ROE) can be modified as follows:

ROE = PM x AU x EM

We can summarize the basic elements having impact on ROE as the follows the ability toincrease revenue, expense management, asset management and financial leverage

1.3 Corporate financial analysis in Vietnamese enterprises

1.3.1 Rules and forms of financial statements

Financial statement is one of two types of accounting reporting systems Financialstatement is prepared in accordance with the standards and current accounting regime Thefinancial statement reflects the major economic and financial indicators, it reflects the mostcomprehensive information on property condition, sources of equity, debt, cash flows as well asthe financial position, operating results of the businesses in a certain trading period Financialstatement analysis is a very important issue and has practical significance for all people usinginformation, particularly for firms listed on the stock market

According to Decision No 15/2006 QĐ/BTC dated March 20th, 2006 of Minister ofFinance on promulgating the corporate accounting regime, financial reporting systems, includingthe following four types: (1) Balance Sheet, Code B01 - DN; (2) Performance Report, Code B02

- DN; (3) Cash flows Statement, Code B03 - DN; (4 ) Notes to the financial statements, CodeB09 - DN.

Corporate financial statement analysis provides information for not only business leaders

to help them evaluate the financial strength of the business, profitability and production outlook

of enterprises, but also for users outside the enterprise, such as: investors, lenders, suppliers,creditors, current and potential shareholders, clients, senior managers, insurance agency,employees and researchers, economics students Especially, for enterprises listed on stockmarket, providing information about the financial situation correctly and fully for investors isextremely important to help them select and make investment decisions effectively The currentfinancial statement analysis in Vietnam is diverse but can be divided into two basic categories asfollows:

• The first type: The financial statement analysis has the major content of indicators

analysis on each financial statement The objective is to provide information and help for theusers assess the financial situation of enterprises If implementing depth analysis in eachfinancial statements is not enough, we should analyze the relationship between the targets ineach financial statements and between financial statements Thus, financial analysis can providefull information to help users assess the financial situation of enterprises comprehensively andprofoundly

• The second type: The financial statement analysis has the major content which primarily

analyzes the relationship between economic - financial indicators in the financial statements.From which, it should give conclusions about the financial situation of enterprises The analysis

of the relationship between financial statements in order to draw conclusions about the financialsituation is very essential However, this level of analysis is not enough, we have to make deepanalysis of indicators in each financial statement Thus, financial analysis can provide fullinformation to help users assess the financial activities of enterprises comprehensively andprofoundly Besides, analyzing each criterion in each financial statement can help users specifythe reasons causing the completion or not of economic - financial indicators in the interplaybetween them, from which we can offer practical measures to enhance the financial strength ofany business in next production periods All economic activities are continuous interaction witheach other, we can only generate true information based on detailed and meticulous analysis,from which, corporate governance shall correctly identify the financial situation of enterprises

1.3.2 Content in financial statement analysis in Vietnamese enterprises

In recent years, financial statement analysis of Vietnamese enterprises is to carry out toanalyze the following contents:

• Analysis of each financial statement

The analysis of each financial statement includes the following major contents: (1)Horizontal analysis of each financial statement has the aim to see clearly the variation of eachindicator in term of scale, including the absolute and relative numbers (2) Vertical analysis ofeach financial statement (especially for balance sheet) has the aim to see clearly the variation ofeach indicator in term of structure (3) Analysis of the relationship between indicators infinancial statements is to assess the financial situation of enterprises generally

Analyzing each financial statement allows the users to evaluate the specific variation ofeconomic - finance indicators On that basis, we can give specific measures to promote financial

activities and the production for sustainable development.

• Analysis of the relationship among indicators in each financial statement.

The analysis of the relationship among indicators in corporate financial reports is a basiccontent of financial statement analysis, which provides information to assess the financialsituation of the business as follows: (i) general evaluation of the financial situation of enterprises;(ii) analysis of the situation to ensure short-term capital for short-term assets reservation ofenterprises; (iii) analysis of the ability to raise capital for your business enterprise; (iv) analysis

of the situation and solvency of enterprises; (v) analysis of the financial risks of enterprises; (vi)analysis of business performance of enterprises; (vii) analysis of enterprise value

1.3.3 Implementation phases in Vietnam

In recent times, the implementation of financial statement analysis in Vietnam has beencarried out as follows:

• The preparation phase: It is an important part which has lots effect on the quality,duration and efficiency of financial activity analysis Preparation works include the planning ofanalysis activities and collection, the handling of analysis materials

Analysis plan defines clearly the analysis content (all financial activities or only somespecific issues), the range of analysis (whole enterprise or a few departments), the analysis time (including preparation time), assigning responsibility to individuals, departments and identifyingforms of analysis conference (Board of Directors or employees) In particular, the analysis planinclude analysis type

• The implementation phase:

- Overall assessment: Based on indicators of the analysis content, the analysts use thecomparative method to evaluate the overall situation They can make comparison on the overallcombined with each component of each indicator in the analysis period and base period Fromwhich, the results, development trends and the dialectical relationship among business activitiescan be determined exactly

- Identifying influence factors and level on analysis indicators: Financial activity isinfluenced by many reasons, there are some reasons that can be determined and some reasonsthat can't be identified the extent of their influence to the variation of analysis object Thereasons that can be measured, quantified is called factors After defining the necessary factors,Vietnamese analysts will use appropriate methods (method of exclusion, balance, comparison,econometrics ) to determine the extent of impact and analyze the influence of each factor onthe analysis objects

- Summary of analysis results, drawing comments and conclusions about the quality ofthe financial activities of enterprises: Based on the results of calculating and identifying theinfluence of factors on the variation of analysis objects, Vietnamese analysts contact, integratethe volatility of the factors to analysis objects in order to overcome the disjointed, fragmented.From which, they can draw comments indicating the existence, causes; as well as point out theuntapped potential to make decision

• The end phase: The end phase is the final stage of the analysis In this phase,Vietnamese analysts shall write analysis report, result report for those who are interested andinvolved (Board of directors, investors, shareholders ) and complete analysis documents

1.3.4 Information used in financial statement analysis in Vietnam

• Balance sheet: this is mainly used in financial analysis in Vietnam It allows us to studyand assess the overall financial situation and business results, levels of capital and the economic-financial outlook of enterprises

• Business performance report: Business performance report provides comprehensiveinformation about the situation and results of the potential use of capital, labor, technology andproduction management level of enterprises The content of this report is important to determinethe profit and losses and to be used in financial statement analysis in Vietnam

• Cash Flow Statement: Based on the input and output cash flow, analysts makebalancing the budget with the opening balance to determine the ending balance Since it ispossible to set the minimum reserve fund for businesses in order to ensure payment Thisinformation is very useful for Vietnamese financial analysts who use them in their financialstatement analysis

• Notes to the Fiscal Statements: Notes to the financial statements are prepared to provideinformation about the production, business situation which are not included in the system offinancial report, and explained clearly some indicators that are not shown in financial statements

• General information about economic situation: The information reflecting the generaleconomic situation in a certain period which is related to the business activities of enterprises isvery important to consider In recent years, the analysis of financial statements in Vietnam hasused the following information:

+ Information about the growth or recession, especially in the range of country andregion

+ The major economic policy of the State, political, diplomatic, legal, financialinstitutions, accountants policies involved

+ Information about the rate of inflation

+ Information about interest rates, foreign currency exchange rates

• The information about business lines of enterprises: Within the scope of the industry, itneed to be considered the development of business in relationship with the operation and generalcharacteristics of the industry This common information includes:

+ The pace and movement trend of industry

+ The level and requirements of technology of the industry

+ The scale of market and development prospects

+ The competitive nature of the market, relationships between suppliers and customers+ The risk of potential competitors

• The information about characteristics of business activities: Each business has its owncharacteristics in business strategy and organization, to assess the financial situation accurately,the analysts need to study the characteristics of business activities, including major aspects asfollows:

+ Objectives and business strategies of enterprises

+ Financial policies, credit policies

+ Technology features and investment policies of enterprises

+ Cash flow characteristics in business activities

+ Seasonality, cyclicality in business activities

+ The relationship between enterprises and banks, suppliers, customers and other objects

1.3.5 Limitations of financial statement analysis in Vietnam

The financial statement analysis has some limitations as following:

- Inflation can affect and distort financial information which is recorded in financialstatements leading the calculation and analysis incorrectly For example, inflation can lead tounemployment situation (increasing demand of job hunting and rising prices) which will affectthe value of cash flow at a certain time and make cash flow in different year have different value.This makes the comparison and analysis of data among the years different

- Seasonal factors also affect the operations of the company and lead the financial ratios

to fluctuate For example, the inventories increase higher than normal in season, the inventoryturnover ratio will reflect inefficiency of the company This is an issue that leads the company torecruit a team of efficient financial managers

- Analysis based on financial ratios shall depend heavily on the accuracy of financialstatements This is influenced by the principles of accounting However, the principles andaccounting practices could be different between companies, sectors, countries and in differentperiods Therefore, the principle of accounting practices can distort the sense of financial ratios

- Managers can take advantage of accounting rules to proactively create the financialratios as his desire, that makes financial statement analysis is no longer an objective assessmenttool And this is the strength that accounting can make financial statement analysis difficult

- There sometimes have a lot good ratios, and very bad ratios which makes the overallassessment of financial situation become more difficult and less meaningful

- There are also many companies operating in a large scale and multi-disciplinary, thatmakes difficult build and apply the industry average ratio systems in this companies Therefore,analysis of financial statements usually have significance in small-size companies without multi-disciplinary activities

- Currently, there is no uniform consensus of the formula of indicators in books anddocuments on the financial statement analysis This makes the comparison between analysis datafrom different sources have lots potential risks

In Vietnamese enterprises in comparison with financial statement analysis in U.Scorporates, this occur some other limitations of financial statement analysis In fact, financialstatement analysis in Vietnam is a process of learning, applying theory and practicing financialstatement analysis from U.S companies However, the accounting practices and businessenvironment in Vietnam have some differences, financial statement analysis in Vietnameseenterprises also has some differences compared with the American including:

- First, financial statement analysis in Vietnamese enterprises is facing a big problemwith the industry average data used for comparison This reduces somewhat meaningful in

evaluating the company's financial situation.

- Second, business performance report of Vietnamese enterprises don't clearly separatecosts for rent and interest, therefore, analysts seldom use interest payment ratio and solvencyratio Unless these ratios play an important role for banks and lenders, they must find ways tosplit this cost from cost of financing activities

- Third, in the views of Vietnamese investors and shareholders, return on equity (ROE) isvery necessary when making investment decisions However, business performance report justreflects the net profit, while the fact is that all net profit are not owned by shareholders becausethe company has to deduct to set some other funds So net profit ratio shall make shareholdersand investors disappointed

- Fourth, the reliability of the figures in financial statements is not high, including thefinancial statements audited, thus, the analysis results and evaluation of the financial situationonly have reference value rather than reflect reality

- Fifth, financial statement analysis in Vietnamese enterprises is rarely conducted for thepurpose of assessment by the managers; it is mainly implemented by banks or securitiescompanies outside the enterprises

CHAPTER 2: METHODOLOGY 2.1 Research phases realized

2.1.1 Reasons of subject choice

I choose this subject of “Financial analysis in PetroVietnam Energy Technology Corporation (PVEIC)” for the following reasons:

 The economic context has posed an ever-growing demand for the financial analysisquality and results at enterprises In reality, however, financial analysis at enterprises has notreally become a beneficial tool for the related objectives, thus having not yet promoted its roleand positive significance

 In the developed states, great importance is attached to financial analysis, hence, for

a long time, it has become an independent academic subject, and over a long period ofdevelopment in this field, a system of solid theoretical grounds, with numerous valuable scienceachievements and research works, has been established Also, the process of carrying out,applying on a long-term basis to reality has enabled them to accumulate so much experience, toperfect their financial analysis methods and ways in almost all economic sectors Accordingly,financial analysis in the developed states has brought about very high performance for bothinformation providers and users; this is one of the reasons why they are possessed of the businessmanagement technology which we have to step by step learn about and acquire In Vietnameserecently, financial management has also become an academic subject independent from theintegration process Nevertheless, since financial analysis in Vietnam is still a novelty, quite afew enterprises still have difficulties in this kind of job The cause of this is not only restricted tothe lack of norms that reflect the analysis contents but also to analysis methodology, average data

of the branch as well as the personnel for implementation This has led to the fact that businessfinancial analysis has not been performed on a scientific, precise, complete basis thus failing toreflect the business operation actual situation

 The financial analysis in general is still a rather new theme which is being graduallyperfected on a solid theoretical foundation of the states with developed economies, with takingthe specific conditions of Vietnam into consideration From the fact above, the perfection of thecontents, norms and method of financial analysis for enterprises in the economy today is apressing demand, in which, consultative, supervising enterprises are not exceptions Hence theauthor’s choice of “Improving the quality of financial analysis at Petrovietnam EnergyTechnology Corporation”, this stands as an issue of urgent topicality and of theoreticalsignificance

 Recognizing the important role of financial analysis, Energy Technology CorporationVietnam Oil and Gas Corporation (PVEIC) is interested in the financial analysis As a result, theCorporation has made certain achievements in production and business activities However thereare some problems in the financial analysis are limiting effective financial analysis, leading tothe lack of accurate and timely assessment of the financial situation of the Corporation

The research questions are the following:

- What are the models of financial analysis organization and financial analysis normsystem?

- What effects do the factors have on financial analysis?

- What are the organization, contents, and methods of financial analysis being applied

at enterprises like?

- What are shortcomings that still exist in the process of financial analysis and thesystem of financial analysis, the solutions for perfecting and conditions forimplementing such solutions?

- How to improve the efficiency of capital use of PetroVietnam Energy TechnologyCorporation

- How to attract the investors both domestic and foreign investors for the company?

2.1.2 Research objectives

The research aims to the following objectives:

 Conducting literature review on financial analysis is based on the combined analysis

of researches at home and abroad;

 Conducting intensive research on the system of theories and the theories of businessfinancial analysis based on analysis of professional business financial theories and the actualstatus of operations of construction, execution consultative entities in Vietnam;

 Conducting studies on the actual status of the financial analysis which is beingcarried out at PVEIC in accordance with: determining the responsibility, powers of theindividuals, departments or sections concerned with the organization and implementation offinancial analysis; assessment of the quality of the work performed everyday and the outcomes

of financial analysis;

 Supplementing and completing the norms, contents and methods of financial analysis

to help PVEIC analyze accurately and fully the financial situation, particularly researching andproposing for applying the Dupont analysis method to improve financial analysis performance;

 By analyzing based on the past and present data, the author uses the analysis results

to provide some forecasts about the changing trend in the future from that to propose severalbusiness strategies and investment orientations for PVEIC;

 Assessing the performance, advantages, shortcomings of financial analysis at PVEIC

in recent time 2010 - 2012;

 Proposing solutions for completing financial analysis at PVEIC;

 Changing the awareness of the PVEIC leadership in the positive direction of the role

of financial analysis;

 Systemizing the theoretical grounds of financial analysis at PVEIC, from that tocontribute to the financial analysis contents of the enterprises in the same sector After viewingthe actual status of the financial analysis contents and methods at PVEIC, combining with thetheoretical grounds and the specific characteristics of the sector to formulate and completefinancial analysis of these enterprises

2.1.3 Research object and limits

Research object is the financial analysis at PVEIC, including the contents about the