Luận văn solutions to improve working capital efficiency in hanoi transportation and goods services jointstock company

Therefore, improving the cfficicney of working capilal is always the target of every business To achieve that target together with to ensure good quality, reasonable price, stable develo

Trang 1

ae MANTIS AE

|

UNIVERSITE DE NANTES:

MASTER THESIS

Master in Finance, Banking, and Insurance (Southeast Asia)

SOLUTIONS TO IMPROVE WORKING CAPITAL EFFICIENCY

IN HANOI TRANSPORTATION AND GOODS SERVICES JOINT-

STOCK COMPANY

Supervisor: Nguyen Phu Hung (PhD)

Student: Nguyen Thi Thanh Nga

September 2017

Trang 2

ABSTRACT

‘Title: Solutions to improve working capital efficiency in Hanoi ‘Transportation and Goods Servi

2s Joint Slock Company

Program: Master Finance — Banking — Tusurance cooperated bebween Nalional University,

Hanoi (Vietnam) and Nantes University (France)

Time for graduation; 2017 - 2018

Student; Neuyen Thi Thanh Nga

Supervisor: Ngayen Plu Hung (PhD)

When conducting a business, entzrprisc must have a ccrtain amount of capital to cstablish the theilities comesponding to the selected business line That advance is calied business capital

in which there is a huge part of working capital Working capital is one of the two components

of productive capilal, In the process of production, working capital plays an important role in the business, Working capital usually accounts for a large proportion of capital in the enterprise Managing and using working capital directly affect the results of production and business activities of the enterprise Therefore, improving the cfficicney of working capilal is always the target of every business

To achieve that target together with to ensure good quality, reasonable price, stable development in competitive environment, enterprises must constantly improve their production and business activities in which managing and ulilizing working capital plays an imporlant rele and attects strongly to the production and business efficiency of enterprises

Improving working capital clficicney, espceially in production and business, is nol a now issue; however, it is always a matter of survival of any enterprise, Thus, for Hanoi

‘Transportation and Goods Services Joint Stock Company, finding solutions to improve working capital cfficicney is extremely essential Base on the analysis of cwrent usage and management

of working capital of the company, this thesis proposes specific solutions with the expectation of helping the company to maximize working capital efficiency

Keywords Capital, working capital, working capital efficiency

ii

Trang 3

ACKNOWLEGDEMENT

First of all, T would like lo extend my sincers thanks lo my supervisor, Dr NGUYEN Phu

Hung ISVNU’s lecturer for his useful comments, remarks and engagement through the

learning process of this master thesis

Next, I would like to acknowledge and express my sincere gratitude to all the lecturers of

Nantes Universily and International School, Vietnam national University, Hanoi for providing,

iue the insight knowledge on all aspects of the major Finance, Banking, and Insurance

Futhermore, my deepest appreciation also goes to the managers and staffs working at Manoi ‘fransportation and Goods Services Joint Stock Company who helped me to collect data

for this research It has been a pleasure working with them

Last bul not least, I would like lo give my deepes! and greatest thanks to my family, Their

Jove and support have kept me going this far

Student Nguyen Thi Thanh Nga

Trang 4

1.1 Problem statements

1.2 The rationale of the thesis ssesseeeseesesesessasasuanisiusinieenesesessnserseenasase

L4 Research Objectives coocereoreoree

1/63 Data Collection ccccecsessesenuaressnaeecssssseessnamecsassnenssnincsesssvasenssarecsaessnn 2

2.3.2 Intenm of role of working capital in business stages - - 18

Trang 5

LIST OF ABBREVIATIONS Hanoi Transportation and Goods Scrvices Joint-Stock Company: HTGS

LIST OF TABLES Table 4.1: Business results of the Company in the period 2014 - 2016

‘Table 4.2: Financial indicators in term of profitability and growth

Table 4.3: Analysis of the siructwe of assets and capital of the company aver the years Table 4.4: Financing Model

‘Table 4.5: Working capital financing model of HIGS in 2016

Table 4.6: Situation on the Quctualion of working capital dimand in 2016

Table 4.6: Fluctuation in short-tarm assets of HTGS

‘Table 4.7: Volatility of cash and cash equivalents

Table 4.8: Indicalors reflecting the overall cfficicney of working capitat

Table 4.9: Fluctuation of receivables in 2016

Table 4.10: Indicators assessing speed of recovering receivables 2015-2016

Table 4.11: Company's debt situation in 2016

LIST OF FIGURES

Figure 1.2: Research process

Figure 4.1: The orgunivalional structure of the company

Figure 4.2: The organizational structure of accounting, divisions of the company

iv

Trang 6

CONCLUSION

REFERENCES

viii

Trang 7

LIST OF FIGURES

iv

Trang 8

LIST OF FIGURES

iv

Trang 9

43.1 General assessment of the company's production and business activities in the period

from 2014 to 2016 - - 44

4.3.3.3 Assess the situation and efficiency of inventory management 66

AA, An overview of the management and use of working capital in the company 64

44.2.1, Weakness in the management and use of vnpLling capHAÍ cceeeoecc.Đ7

CUAPTER 5

SOLUTIONS TO IMPROVE WORKING CAPITAL EFFICIENCY IN HTGS

5.1 Business plan of HTGS in the future

5.2 Sclutions to improve working capital efficiency at ITTGS

5.2.1, Plan working capital cesencesssneseeree se "

5.2.1.1 Determine working capital demand to overcome the limitations in the management and

5.3.1.2 Strengthen management of the wse of capital intemporary idle cash 74 5.2.1.3 lmprov effectiveness in invenLory management, mrinirti2e ÌnvefLory cogks 2373

5.2.1.5 Apply measures to inanage current assets in a scientific way wD

6, Speed up working capital rotation

2 Search and select financial sources for working capital to overcame the limutations of Weakness in the maragemen! and use of working capital - - 3 5.2.3, Regularly monitor, evaluate and adjust dzbtswithin the implementing process 74

5.2.3.1 Monitoring, evaluating, regular adjustment of debt in the implementation process

76 5.2.3.2 Management according {ov business characteristics of the compare co oe FO 5.2.3.3.Improve the financial management capacity of the professional workforce 76

Trang 10

2.3.3 in term of ownership relationship - ¬—

2.3.5 In term of time mobilising and using capital ccc cesses sieve vin seee 20 2.4 "The factors affecting working capital structure - - .20

2.4.1 Factors affecting working capital structure 20

2.4.2 The meaning of improving the efficiency of working capital sosscansansanneniee BD

2.5 Imdicators for assessing the working capilal effieieney ececceeeooee 75

2.5.1 Indicalors reflecling working capital efficiency - 25

3.5.2 mdicators reflecting the øverall efficieney of working capitd 26

2.54 Capilal savings duz to increasing speed of working capital circulation 28

2.5.5, Average working capital to nat sales ratio

2.5.6 Retum on average working capital rati

3.3.1, Data collection mmethod à cnnieeeeeererrererrerrrreerrri.đđỂ

3.33 Comparative mathod - - - 35 3.3.4 Analytic - synthetic method cciunenmnnennmnaeninmneanenienenmnnanannn 36

CHAPTER 4 RESEARCH RESULT

4.L1The formation and development of the company - 38

4.2, The coonornic and technival chaacteristics of the transpoctation service business 4l

4.2.1 General characteristics of the transport service business 4l

4.2.2 General information about the products of the Iransportalion sarvic business 13 4.2.3 Characteristics of transport service products „44 4.3 Cuxent status of utilizing working capital at HTGS, óc ceooceeoee, 44

vì

Trang 11

Trang 12

CHAPTER 1: INTRODUCTION

1.1 Prohlcm statements

Hanoi Transportation and Goods Services Joint-stock Company has been established over 50 years as a state-owned company with initial capital provided ftom the State budget HTGS specializes in investinents for goods transportation services, logistic service

businesses, leveling urban transportation construction, etc he HIGS’s total capital in 2016

was 23,281 billion VND, of which working capital is 7,026 billion VND

in recent decades, in times of persisting national budget deficits, issues of corporate finance for state-owned crterpri

become a hol lopie of reform, Many Governmental situties found that shortfalls in “soft” state financing are often one of the key factors forcing to start restructuring, and consequently the Government has to accept adopting a more economical approach to help state-owned cntcrprise with financial requirements through better ways to contiol costs to achieve sustainable financial viability

In the pariod 2014 102016, though the HTGS made profits in business, its managing, usages of working capital was assessed to not follow a really effective manner, affecting the company’s business operations in (ho incoming ycars, Working capitat (ic, three most important being accounts payable, accounts receivable and inventory levels) is essentially necessary for a company to maintain its operations on a day-to-day basis in a stable way Managing working capital is one of the most important financial management tasks for state cnfcrpriscs when Victnam moves toward a market cconomy from a command-and-control model, Efficient working capital management involves planning and controlling current assets and current Tiabilities so that ta @) respond to short term obligations and (ii) to avoid excessive investment in assets on the other hand Those that want to survive and prosper in the cuurent market mechanism must improve the efficiency of management and usage of

1

Trang 13

Trang 14

vì

Trang 15

CONCLUSION

REFERENCES

viii

Trang 16

from 2014 to 2016 - - 44

CUAPTER 5

Trang 17

vì

Trang 18

from 2014 to 2016 - - 44

CUAPTER 5

Trang 19

vì

Trang 20

LIST OF FIGURES

iv

Trang 21

1.2 Theratianale of the thests

The fisrt reason revived from the important role of warking capital for enterprises

Working capital is a part of business capital, which is the most important element in the production and business activitics, plays a decisive role in the pradnction and business efficiency, thus determining the existence and development of enterprises For each enterprise, working capital is required to renovate technology and equipment, increase production scale, improve product quality, and enhance competitiveness Therefors, in the

market economy, enterprises that want to survive must pay attention to the creation, management and usage of working capital, so that they can become the most effective in order to achieve prolil naximization

The second reason revived from ihe inefficient management of working capital in

Vietnamese enterprises

1n the context that the world economy and Vietnamese one have many fluctuations nowadays, Vietnamese enterprises have been facing difficulties in both managing and using

working capital effeolively, listed as follows

Efficient usage of working capital and reduced capital

According to a recent assessment of Vietnam Report, the ROE of 500 Viemnamese largest companics (VNRS00) is having the tondoney lo decrease steadily over the past Unce years, The decline in capital usage efficiency is the most severe in telecoms and shipping businesses (with a 50% reduction in capital efficiency according to the VNRS00 ranking chart from 2014 ta 2016)

Especially, while the usage efficiency of working capital and business capital has been decreasing recently, large Vietnamese enterprises still pay more attention to raising capitat and inoreasing the scale of enterprises, instead of emphasizing on improving the efficiency and yrottuctivily of capital al the enterprise

More than 60% of enterprises participating in a survey by Vietnam Report state that

“the difficulty to manage, mobilize and usc working capital as well as business capital” is in the top 3 biggest difficulties of enterprises in the recent years trom 2014 to 2016, Meanwhile, only less than 30% of enterprises think that “the lack of effactive investment projects" is a big difficulty for cntcrprises within the next two years

2

Trang 22

from 2014 to 2016 - - 44

CUAPTER 5

Trang 23

CONCLUSION

REFERENCES

viii

Trang 24

LIST OF FIGURES

iv

Trang 25

vì

Trang 26

2

Trang 27

1

Trang 28

CONCLUSION

REFERENCES

viii

Trang 29

1

Trang 30

Trang 31

CONCLUSION

REFERENCES

viii

Trang 32

vì

Trang 33

vì

Trang 34

2

Trang 35

Trang 36

1

Trang 37

from 2014 to 2016 - - 44

CUAPTER 5

Tiêu đề	Solutions to improve working capital efficiency in Hanoi transportation and goods services jointstock company
Tác giả	Nguyen Thi Thanh Nga
Người hướng dẫn	Nguyen Phu Hung (PhD)
Trường học	Nantes University & Vietnam National University, Hanoi
Chuyên ngành	Finance, Banking and Insurance
Thể loại	Master thesis
Năm xuất bản	2017
Thành phố	Hanoi

Định dạng
Số trang	75
Dung lượng	377,07 KB