Improving business performance of LCI investment and trading joint stock company

In the context of the current economy, enterprises that want to stand firmly in the market need to innovate quickly in which analyzing business efficiency through analyzing several finan

PREFACE

1 The urgency of the research subject

Financial activities have a direct relationship with business activities, it is crucial in the formation and survival of businesses Therefore all business activities influence the financial situation of the business Whether good or bad financial situation has a motivating or constraining effect on the business process In the context of the current economy, enterprises that want to stand firmly in the market need to innovate quickly in which analyzing business efficiency through analyzing several financial indicators to improve business performance is a matter of top concern and directly affects survival for many Vietnamese businesses This can only be done based on analyzing business performance so that enterprises can identify strengths and weaknesses based on which to plan appropriate action plans for the future and at the same time propose effective solutions to stabilize and enhance financial situations to improve business quality

Understanding the importance and necessity of businesses to analyze business activities to improve the business performance, and the advice of instructor Pham

My Hang Phuong, I chose the topic: "Improving business performance of LCI Investment and Trading Joint Stock Company ” to identify some of the strengths

and weaknesses, as well as limitations and difficulties that exist, and then propose solutions to improve the business efficiency of the business

2 Research objectives

The main objectives of this research is to proposing solutions to the company

In order to achieve the main objectives, the following:

- Construct the common theoretical basis of business performance in businesses

- Analyze the business performance of LCI Investment and Trading Joint Stock Company in the period of 2014 - 2018

- Evaluating the business performance of the Company in the past 5 years

- Proposing solutions to improve the business performance of the Company

3 Research objects and research scope

- Research object: Business performance of LCI Investment and Trading Joint Stock Company

- Scope of the research: In-depth report on business performance at LCI Investment and Trading Joint Stock Company for the period of 2014-2018

4 Research Methodology:

Thematic reports using statistical SWOT analysis methods, comparing the ratio method and the Dupont method Data analysis, data collection from newspapers, internet, field research methods Besides that combined with experimental research: practical observations to collate theory

5 Structure of the topic:

In addition to the introduction, conclusions, references, thematic reports are structured including 3 chapters:

Chapter 1: General theoretical basis for business performance of the enterprise Chapter 2: Current situation of business efficiency at LCI Investment and Trading Joint Stock Company

Chapter 3: Assessment of the current situation and orientation to promote the business performance of LCI Investment and Trading Joint Stock Company

CONTENT CHAPTER 1: GENERAL THEORETICAL BASIS FOR BUSINESS

PERFORMANCE OF THE ENTERPRISE 1.1 Definition of business performance of the enterprise

1.1.1 Business performance definition

Business efficiency is an issue for all businesses in a market economy So far economists have come up with many different concepts about business performance

of businesses

In the current market economy of our country, the long-term goal that encompasses businesses is to do business efficiently and maximize profits The changing business environment requires each business to have appropriate business strategies Business is an art that requires quick calculation and recognizes the problem at a strategic level Business performance is always associated with business operations, so it can be considered in many ways To understand the concept of business performance, it is necessary to consider the economic efficiency

of a phenomenon

"The economic efficiency of an economic phenomenon (or process) is an economic category that reflects the level of resources (talent, talent, material resources, capital) used to achieve the exact goal intended "

It shows the correlation between the results obtained and the total costs paid for that result, reflecting the quality of that economic activity

From the definition of economic efficiency of such a phenomenon, we can understand that business performance is an economic category, reflecting the level

of using resources to achieve the set goals It shows the correlation between the results obtained and the costs spent to get those results The greater the difference between these two arguments, the higher the efficiency From this perspective, the effect is consistent with the profitability of the business and the ability to meet the quality of the product with the needs of the market

1.1.2 the essence of business performance

The essence of business efficiency is to improve social labor productivity and save social labor In order to achieve the business goals of enterprises, it is

imperative to focus on internal conditions, promote the capacity and efficiency of business elements and save all costs Therefore, the requirement of improving business efficiency is to achieve maximum results and save all costs Therefore, the requirement of improving business efficiency is to achieve maximum results with certain costs and achieve certain results with minimum costs The cost here is understood in a broad sense: the cost of creating resources and the cost of using resources simultaneously include the opportunity cost The return cost is the value

of the best option that has been overlooked, or the value of sacrificing another business to carry out this business Opportunity costs must be added to the accounting costs and removed from accounting profit to see real economic benefits Such calculations will encourage traders to choose the best business direction

Business performance and business results are very closely related To achieve good business performance, the business must be effective Business results are what an enterprise achieves after a business process, which is an essential goal

in every business activity of the business in each business period The results are reflected by qualitative indicators such as the number of products consumed, enterprises, profits and can also be reflected by quantitative indicators such as prestige and product quality

In this day and age, the production of material goods and services is closely linked to the life of the people, and the production is favorable when the products created are accepted by the market that product In order to do so, the producers that conduct production must be able to do business "If eliminating the different parts of the mode of means and specific results of the business activities, it may indicate that the business is economic activities aiming at the profitability of business entities in the market"

Business performance has the following characteristics:

- Firstly, it is done by an entity and is called a business entity Business entities may

be individuals, households or businesses

- Secondly, business must be tied to the market, business entities have a close relationship with each other, that is the relationship with customers with input suppliers, with customers, with competitors contention, with the state These

relationships help business entities maintain their business activities and help their businesses grow

- Thirdly, business must have capital mobilization: Capital is a decisive factor for a business, without capital, it is impossible to conduct business Business entities using capital to buy raw materials, production equipment, hire labor Finally, the main purpose of business activities is profit

1.1.3 The role of business performance

Business efficiency is an effective tool for business executives to perform their business administration tasks: When conducting any production and business activities, enterprises must mobilize and use Using resources that businesses are capable of producing results consistent with the goals that the business set out At each stage of development of an enterprise, there are many different goals, but the ultimate goal covering the entire production process of the business is to maximize profits on the basis of maximum utilization the resources of the business To achieve the goal of maximizing profits as well as other goals, businesses must use many different methods and tools Business performance is one of the most effective tools for executives to perform their governance functions Through the calculation of production and business efficiency, not only allow administrators to check and evaluate the effectiveness of production and business activities of the enterprise (whether or not the operations are effective and effective) To some extent, it also allows the analytical managers to find out the factors affecting the business operations of the enterprise, thereby offering appropriate corrective measures in both aspects reduce costs to increase results to improve the efficiency

of business activities of the business As an effective business management tool, business is not only used to check, evaluate and analyze the general use of input resources throughout the enterprise, but also used to check and assess the level of use of each input element throughout the enterprise as well as each component of the enterprise Therefore, in terms of theory and practice, the category of production and business efficiency plays a very important and indispensable role in checking,

evaluating and analyzing in order to provide the most optimal solutions select the most reasonable methods to implement the objectives of the business

In addition, in many cases, managers consider economic efficiency as the goals and objectives to accomplish Because for managers, when it comes to production and business activities, they are all concerned about its effectiveness Therefore, the production and business efficiency plays a role as a tool to carry out business administration tasks and at the same time is a goal for business administration

1.2 Analyze business performance of enterprises

1.2.1 Analyze business performance of enterprises

Business performance shows the correlation between outputs and input resources used in the business operation of the enterprise To achieve high business efficiency, businesses need to maximize the outputs in the context of their limited resources

Analyzing business performance helps interested subjects measure profitability of enterprises This is a decisive factor for long-term financial potential

- one of the important goals of business operation Analysis of business performance also helps interested parties measure the effectiveness of business management The outcome of a business operation depends greatly on the competence, skills, talents and motivation of the managers

The executives are responsible for the operations of the business making financial investment decisions and building business and executing business strategies of the business The success or failure of operating an enterprise is directly reflected in the analysis of business performance

Business performance analysis is also useful in planning and controlling business activities Business performance is analyzed from different perspectives and aggregated from the performance of each division in the business, so it will be a basis for evaluating and adjusting specific activities and components in the business business and business planning in accordance with the strategic goals for the next period

1.2.2 Objects and objectives of business performance analysis

- Balance Sheet: is a general financial statement used to generally reflect the entire existing assets and sources of assets of the enterprise at the time the report is established The balance sheet is very important in the management, based on which

we can know the entire existing assets of the enterprise, physical form, asset structure, capital structure

- Income Statement: is a general report reflecting the overall situation and results in

a business period of the enterprise

1.2.3 Content of business performance analysis

1.2.3.1 The analytical indicators general assessment of business performance

General assessment of business results of enterprises is conducted by analyzing and examining the fluctuation of each financial indicator on the Income Statement between this period and the previous period based on the comparison of both absolute numbers and each index financial spending At the same time, analyze the indicators reflecting the use of expenses, business results of the business Pay special attention to the fluctuations of net revenue, total profit from business activities, profit before tax and profit after tax In order to make general comments on the company's business performance, financial indicators are indispensable Here are some important indicators:

- Return on Asset (ROA)

Return on asset is the net income on total assets This ratio is calculated by dividing the net profit (or profit after tax) of the enterprise in the reporting period (be it a month, 1 quarter, half a year or 1 year) by dividing the average of total assets in the same period period The figures for net profit or profit before tax are taken from the income statement And the value of assets is taken from the balance sheet

The indicator showing the enterprise's ability to generate after-tax profit for its business activities is calculated as follows:

This indicator shows how much profit after an enterprise income tax profit is collected in an enterprise's investment period of 100 dong of assets The higher this

indicator, the better the efficiency of asset utilization of the business, contributing to improving the investment ability of the business owner

- Return on sales (ROS)

Return on sales is a financial ratio used to track the profitability of a joint stock company It reflects the relationship between the net profit for the shareholder and the company's revenue

Return on sales in a given period is calculated by dividing the profit or profit after tax by the revenue in the period Unit is% Both net profit and revenue can be taken from the company's business results The formula for calculating this indicator is as follows:

This indicator shows what percentage of profits is in revenue This ratio is positive, meaning that the company is profitable; The bigger the ratio, the bigger the profit Negative values mean that the company is losing money However, this indicator depends on the business characteristics of each industry So when tracking the profitability of the company, one compares the company's ratio with the industry average of the industry in which it is involved On the other hand, this indicator and the number of asset turnover tend to be opposite Therefore, when evaluating this rate, financial analysts often learn it in combination with the number

of asset turnover

- Return on Equity (ROE)

Return on Equity is important because it reflects the profitability of the business owner The formula for this ratio is as follows:

Because the net profit divided by net revenue is equal to the profit margin, because the net revenue divided by the average value of total assets is equal to the turnover of total assets, and because the average of total assets divided by the average Ordinary share capital is equal to the financial leverage coefficient, so there

is a second formula as follows:

Return on equity = Margin ratio x Total assets turnover x Financial leverage ratio

On the other hand, because ROA is equal to the profit margin multiplied by the number of rounds of total assets, so:

ROE = ROA x Financial leverage coefficient

The ROE said how much profit the 100 per cent equity of this joint stock company generates If the ratio is positive, the company is profitable; If the company is negative, it will make a loss As well as the ratio of profit to assets, this ratio depends on the business season In addition, it also depends on the size and level of risk of the company To make an accurate comparison, it is necessary to compare this ratio of a company with the average rate of the whole industry or with the ratio of the same company in the same industry Return on equity is often compared to the rate of return on assets If the return on equity is greater than the ROA, then the company's financial leverage has had a positive effect

1.2.3.2 Criteria reflecting the efficiency of using total asset

Effectiveness is a term that refers to the relationship between the outcome of achieving the objective of the subject and the cost spent by the entity to obtain that result under certain conditions The effect reflects the results of the implementation

of the action goals in relation to the costs and effectiveness is considered in a certain context or condition, and also considered from the perspective of the subject research

Enterprises operating in the current competitive market mechanism must pay attention to economic efficiency That is the basis for businesses to survive and grow Economic efficiency is understood as an economic category that reflects the level of the use of enterprise resources to achieve defined goals in the course of production and business

Every business exists and grows for a variety of goals such as: Maximize profits, maximize revenue, maximize the useful activities of business leaders, but all the specific goals It is the most overarching goal of maximizing the value of the property for the owner To achieve this goal, all businesses must strive to fully exploit and effectively use their assets

Thus, the asset efficiency of an enterprise reflects the ability of the enterprise

to exploit and use the assets so that the production and business process proceeds normally with the highest economic efficiency

In which: Average assets in the period are arithmetic average of total assets

at the beginning and end of the period This indicator shows how many units of net revenue are generated by one hundred units of assets The bigger this effect is, the higher the asset efficiency is This higher indicator proves that the assets are moving quickly, contributing to increase revenue and is a condition to improve the profitability of the business If this indicator is low, it indicates that slow-moving assets may cause unfinished product inventories, thus reducing the turnover of enterprises

 Indicators assessing the efficiency of using short-term assets of enterprises

- Liquidity ratios

Because the characteristics of short-term assets are highly liquid, the effective use

of short-term assets is the trade-off between profitability and liquidity Therefore, when analyzing the solvency of an enterprise, the following criteria are usually used:

+ Current ratio: This is one of the measures of solvency of a business, the most widely used is the current ratio

The current ratio shows how much assets the business can convert into cash to ensure payment of its short-term debts This coefficient measures the solvency of the business If the current ratio decreases, the ability to pay is reduced, which is a warning sign of financial difficulties If the ratio is high, it means that the business

is always ready to pay its debts However, if this ratio is too high, it will reduce operational efficiency because the enterprise invests too much in limited assets

+ Quick ratio:

Quick ratio is calculated on the basis of current assets that can be quickly converted into cash Sometimes they are also called liquid assets with liquid assets including all assets Short term minus inventories Therefore, the quick ratio indicates the ability to repay short-term debts regardless of inventory

+ Cash ratio

Cash ratio of an enterprise only indicates the normal level but it is not sufficient to confirm whether the enterprise is able to pay due debts or not Therefore, when analyzing solvency, it is necessary to use the instant solvency coefficient This coefficient indicates whether the enterprise has enough cash and cash equivalents to cover current debts, especially short-term debts due or not

- Efficiency Ratios

These are the factors that measure the performance of the enterprise To improve operating ratios, administrators must know which unused assets are not being used or not generating income for the business So businesses need to know how to use them effectively or eliminate them The operating factor is sometimes also called the efficiency factor or the coefficient of rotation Therefore, when analyzing performance criteria, people often use the following criteria:

+ Current Asset turnover

Current Asset turnover = Net Sales/ Average current asset Days Sale Current Asset = 360/ Current Asset turnover

Short-term asset turnover in the period is an indicator reflecting the rotation

of short-term assets in a given period and usually a year This indicator assesses the effectiveness of short-term assets on the comparative relation between production results (net revenue) and the number of short-term assets spent in a period In other words, the indicator of short-term asset turnover shows how many cycles of a company's short-term assets can rotate, or how much of this turnover is generated

by a short-term asset The higher the number of revolutions, the better for the business

+ Receivables turnover

This is an indicator of the effectiveness of the credit policy that businesses have applied to customers The higher the turnover index, the faster the business is paid by customers But if compared to other companies in the same industry, this index is still too high, businesses may lose customers because they will switch to consuming goods of competitors that have longer credit periods Therefore sales of businesses will be reduced The formula must always use net sales that cannot use sales because it does not accurately represent the number of revolutions

+ Days Sale Receivable

This index shows an average of how many days a business can recover its receivables The larger the receivable turnover cycle, the smaller the collection period and vice versa The average cash collection period is high or low in many cases, it is not possible to have firm conclusions, but it is necessary to consider the goals and policies of the business such as market expansion and credit policy

the inventory index needs to be large enough to ensure production and meet customer needs

+ Days’ Sale in Inventory

This indicator tells us the number of days inventory is converted into sales From this indicator, the number of days needed for stock rotation because inventory has a direct impact on the efficiency of using short-term assets at the reserve stage This coefficient proves that the better the management of inventories, the better the efficiency of short-term assets and vice versa

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– Return on Current asset

Return on Current asset = Net income/ Average Current asset

This entry reflects the profitability of short-term assets It shows how many units of profit after tax each unit of short-term assets has in the period The higher this target, the better the efficiency of using short-term assets, the better business efficiency for enterprises

 Indicators assessing the efficiency of long-term asset use of enterprises

- Fixed asset turnover

In which: Average term assets in the period are arithmetic average of term assets at the beginning and end of the period This indicator shows how many units of revenue a unit of long-term assets generates in a period The greater this index proves the higher the efficiency of long-term assets, which is a factor that contributes to improving the efficiency of business operations

long Profittability ratio of longlong term asset

Profittability ratio of long-term asset = Net profit after tax/Average longterm asset This indicator reflects the profitability of long-term assets It shows how many units of profit after tax each unit of long-term assets has in the period

- Depreciation rate of long-term asset

Depreciation rate of long-term asset = Average fix asset/Net revenue

This indicator shows how much VND the original price of an enterprise wants to have 1 net revenue in the period That is the basis to invest in fixed assets accordingly to achieve the desired revenue

1.2.3.3 Effective analysis of capital

Investors often attach importance to the efficiency of capital use because they care about the ability to profit from the capital they spend On the other hand, this indicator helps administrators enhance control and preserve capital, helping businesses enhance sustainability When analyzing the efficiency of equity, we use through a number of criteria as follows:

- Working Capital turnover:

Working Capital turnover = Net revenue / Average working capital

This indicator shows the efficiency of the enterprise's capital use in generating revenue: how much revenue a business capital makes The higher this indicator shows that the more capital a company makes, the more deeply reflected the business performance on one business capital

1.2.3.4 Effective analysis of cost utilization

- Net profit after tax/ Total cost (%)

This indicator indicates a co-production cost and consumption in the period generated by how many co-revenues Since then, the higher the goal is that we realize the high turnover and the results of the business increases in the period

- Gross Profit margin

Gross Profit margin = Gross profit/Revenue This indicator indicates how much co-profit the business generates from a co-sales revenue contract This indicator means encouraging businesses to increase revenues, reduce costs but to ensure effective revenue growth must be greater than the rate of increase in costs

1.2.3.5 Analysis of labor efficiency

- Production results on a payroll salary:

Production results on a payroll salary = Revenue of product consumption in the

period / Total salary expense in the period

This indicator shows how much profit a dollar of salary in the period makes

- Labor utilization coefficient

Labor factor = Total employed labor / Total existing labor This indicator indicates the level of labor use of the enterprise: the number of employees of the enterprise has been used up to its full capacity or not, from which the cause and appropriate solutions are sought

1.3 Factors affecting business performance of enterprises

The business environment of an enterprise is a collection of all factors affecting and outside relationships of an enterprise that affect its survival and development It is precisely that, the introduction of measures to improve business performance can not be effective unless we consider the business environment of the business

1.3.1 The objective factors

1.3.1.1 Economic factors

Economic factors have a large and multifaceted impact on the business environment of the enterprise, which can become an opportunity or a risk to the operation of the business Including factors such as the growth rate of the economy, bank interest rates, monetary policy of the state, inflation rate, level of employment and unemployment These are the factors that impact A strong influence on the business activities of an enterprise, the increase or decrease is part of the impact of these factors

- Interest rate: Interest rates on financial markets can have impact on the demand for products of the enterprise When interest rates increase people will tend

to limit consumption to post savings and when interest rates decrease people tend to increase consumption and increase the level of investment in manufacturing business In recent years, despite having been repeatedly lowering interest rates but the interest rates and capital mobilization on our country's financial markets are still high compared to regional and world countries (r > = 12%) These are disadvantages of international competition for Vietnamese businesses

- Exchange rate: The current Vietnamese exchange rate is relatively low, which has facilitated Vietnamese enterprises to expand their export market share of export competitiveness

- Inflation: In recent years the economic situation of our country is relatively stable because less inflation has created for enterprises to invest peacefully

1.3.1.2 Political and legal factors

Viet Nam has an economic stable political background which develops according to the market mechanism of state management Business operations in the single-sided market economy have the advantages of stimulating production development, dynamic, with abundant goods and services but on the other hand contain the risk of crisis, inflation, unemployment Therefore it is necessary to have the management of the State to promote the positive side limiting the negative side At the same time, the business influenced by the culture and customs of society

1.3.1.3 Market factors

The market economy entails competing businesses fiercely to survive and grow Customer factors and customer needs determine the size and structure of the business, helping businesses determine the business strategy Businesses must identify direct competitors and set up a channel that regularly analyzes these activities Besides, the enterprise must study the growth trends of the consumer trends in order to timely establish a reasonable business strategy to dominate the market share

1.3.1.4 Natural elements

Natural elements include natural ecological environment resources Any volatility of the natural element also affects the product that business produces The scarcity and depletion of resources resources is a major issue in terms of costs for businesses in manufacturing business activities How to ensure economic efficiency and ensure no depletion of resources and polluting the environment

1.3.2 The subjective factors

1.3.2.1 Corporate culture

Culture plays an important role in the existence and development of businesses "One of the reasons for the long-term prosperity of American and Japanese businesses is that they have a very unique culture," the researchers conclude Corporate culture is the entire spiritual value that has its own characteristics, it has an impact on the affection, reason, and behavior of all members

Vietnam is considered as one of the countries with stable political economy

in the world This is a favorable condition for domestic enterprises to invest in the long-term development as well as attract investment and business cooperation of foreign investors Although the law is still a bit "confusing", but today with the trend of economic integration, our State is increasingly easing the management to eliminate some unnecessary procedures in order to create favorable conditions for Domestic and foreign investors This is a necessary condition for the development

of the country as well as Vietnamese businesses, but in return we will have to accept direct competition from foreign businesses

To integrate well, overcome challenges that require businesses we must have the best competitiveness The competitiveness of an enterprise is made up of many factors, the core of which is the competitiveness of its products and brands The goal of culture is to build an effective management style that brings business activities into order, builds friendly cooperative relationships among members, and makes enterprises become a community working in the spirit of cooperation, trust in

a close relationship and a progressive spirit On that basis, forming a common belief

in collective success However, culture cannot solve every problem of the business,

it only promotes its role in the interaction with other means and resources such as strategies, business plans, etc If the business efficiency is high, it is necessary to know how to combine cultural factors with other factors in order to bring the highest efficiency in business

1.3.2.2 Human Resources

Human resources of an organization are formed on the basis of individuals who have different roles and are linked to each other for certain goals Effective

business operations require the management of human resources to be at the forefront, and must consider the human resource as the property of the enterprise How businesses can effectively use human resources to increase labor productivity and improve the effectiveness of the organization

1.3.2.3 Technology

Enterprises equipped with relatively modern technology machines are a great competitive advantage Competitive advantage in increased production capacity, or raw material costs for a single product helps to lower production costs, enabling businesses to compete in the market

1.3.2.4 Marketing element

Marketing can be understood as a process of identifying, forecasting and satisfying a customer's desires for a product or service This factor greatly affects business performance

1.3.2.5 Information system

Information links all business functions together and provides a basis for decisions in governance activities Enterprises with good information systems will have the advantage of production costs, meeting high expectations of customers Thanks to the information, the functional departments of the business have been integrated into the most effective operating system to help businesses stand firm in a market economy

The company needs to establish an effective information processing tools information system so that it can detect opportunities and risks as soon as possible and make timely business and administrative decisions fit In which, attaching great importance to the evaluation and forecast of possible situations, it is necessary to quickly apply information science and technology to business management and analysis Information is a very important field, linking information between consumption and production in order to satisfy consumers' needs A business strategy that needs to adapt to the company's internal and external environments requires information Therefore, collecting information quickly and accurately will help the company to improve the efficiency of its business operations

1.4 Methods to evaluate the business performance of enterprises

1.4.1 Ratio Analysis

- Definition: Ratio analysis is a quantitative method to better understand a company's liquidity, performance and profitability by studying its financial

statements Proportion analysis is the basis of fundamental equity analysis

- Advantages of ratio analysis

Investors and analysts use ratio analysis to assess the financial capacity of companies by looking at past and current financial statements Comparative data can demonstrate how a company operates over time and can be used to predict future performance

This data can also compare a company's financial situation with the industry average, and measure how one company operates compared to other companies

in the same field

- Limitations of ratio analysis: The method of index analysis also contains some limitations Understanding these limitations will help the analyst adjust his or

her judgment accordingly

 Only based on historical data:

Any information you use to analyze the metrics are historical This means they may not be repeated in the future for you to use However, you can use the indices to forecast financial statements pro pro methoda and compare with past data to ensure consistency and reasonableness

 Differences between historical cost and current price at the time of arising:

The information on the income statement is recorded at the time of the transaction (or nearly the time) while some items in the balance sheet are recorded according to the cost principle This discrepancy may lead to erroneous analysis of the indexes for values derived from these two financial statements

 Inflation:

If inflation continues to change drastically during the analysis period, we cannot compare numbers across periods For example, if inflation is 100%, sales will double, however, when in fact the business situation does not change at all

 The information on the financial statements is a collection of many past

operations:

The information used for index analysis can be aggregated according to different historical principles so the comparison of indexes over years may not be reasonable

 Change in business activities:

The company can change its operating structure so much that comparing the index calculated many years ago with this index at the present time will bring wrong conclusions

 Differences in the application of accounting standards:

Each company will apply different accounting standards in different business contexts, leading to deviations in the index comparison analysis between the two companies For example, there will be a difference in analyzing the index if a company uses Accelerated depreciation method compared to a company using straight line depreciation method

 Different business conditions:

You need to put index analysis into the context of the business environment For example, a 60-day sales turnaround may be slow during a period of rapid growth but it may be an acceptable level in an unfavorable general business situation when the customer is experiencing financial difficulties and late payment

 Difficulties in conclusions index:

It will be difficult to explain and conclude when considering the index For example: If you calculate the Curent ratio of 2:1, you will soon conclude this company is good However, you need to take a closer look to realize that the company has just sold a large number of investment stocks to finance cash, leading

to a surge in short-term assets In this case, the short-term liquidity index is abnormally high and may decrease in the future

- Types of ratio analysis

 Liquidity ratio analysis

Liquidity ratios measure the ability of a company to pay its short-term debts when they are due, using current assets or current short-term assets Liquidity ratios include short-term payout ratios, quick payout ratios and working capital ratios

 Solvency ratio analysis

Also known as a financial leverage ratio, the ratio of solvency compares the debt level of a company and its assets, equity and income to assess the ability of the company to maintain its operations in the long run, by paying off long-term debt as well as interest rates Examples of solvency ratio include: debt to equity ratio, debt

to total assets ratio and interest payment ratio

 Profitability analysis

These ratios show how well a company can make a profit from its operations Profit margins, return on assets, return on equity, return on capital use and gross profit margin are all examples of profitability ratios

 Effective ratio analysis

Also known as the operating rate, the efficiency ratio measures the effectiveness of

a company using its assets and liabilities to generate revenue and maximize profits Key performance ratios include: turnover ratio, inventory turnover and daily sales in stock

 Analyze interest rate ratio

These ratios measure a company's ability to make interest payments and other obligations related to its debts Examples include interest rate and solvency ratio

1.4.2 SWOT analysis

The SWOT analysis model is a useful tool used to understand Strengths, Weaknesses, Opportunities and Threats in a business project or organization Through SWOT analysis, businesses will clearly see their goals as well as factors inside and outside the organization that can positively or negatively affect the goals set by the business In developing a strategic plan, SWOT analysis serves as the most basic, highly effective tool to help you have an overview not only of the business itself but also the factors that always influence and determine Determine the success of your business

 Strengths are the actors within the business that are positive or beneficial to help you achieve your goals

 Weaknesses are the actors within the business that are negative or make it difficult

to achieve your goals

 Opportunities are external agents (business market, society, government, etc.) that are positive or beneficial in achieving the goals

 The risk is that agents outside the business (business market, society, government ) are negative or make it difficult to achieve your goals

Having correctly answered 4 things about your organization: Strengths, weaknesses, opportunities, risks, now is the time to come up with the right strategies And here are four basic strategies you can refer to to achieve your goals:

 SO Strategy (Strengths - Opportunities): pursue opportunities that match the company's strengths

 WO Strategy (Weaks - Opportunities): overcome weaknesses to make good use of opportunities

 ST Strategy (Strengths - Threats): determine how to use advantages and strengths to minimize risks caused by the external environment

 WT Strategy (Weaks - Threats): establish a "defense" plan to avoid weak points more heavily affected by the external environment

1.4.3 Comparative method

Comparison between current period performance and previous period performance number: To clearly see the financial change trend of the enterprise, see how the financial situation has improved or worsened to take remedial measures in the next period

- Compare performance numbers with plans: To clearly see the level of striving of the business

- Comparison between current period performance and industry average: To see whether the financial position of the enterprise is in good or bad condition, whether or not compared with other enterprises in the same industry

- Vertical comparison: To see the proportion of each total in each report And thereby showing the relative meaning of the types of items Facilitate the comparison

- Horizontal comparison: To see the fluctuations in both absolute and relative numbers of an item over successive accounting years

1.4.4 Dupont analysis

a Definition

The Dupont model is a technique that can be used to analyze the profitability of

a business using traditional effective management tools

The Dupont model integrates many elements of the Income Statement with the Balance Sheet With this method, analysts will identify the causes of good and bad phenomena in the operation of enterprises

b Essence:

The essence of this method is to divide an aggregate ratio that reflects the profitability of the enterprise such as Return on Assets (ROA), Return on Equity (ROE) ) the numerical performance of the sequence of ratios is causally related That allows analyzing the effects of these ratios on the aggregate ratio

c Dupont model application

The model can be used by the purchasing department and sales department to investigate or interpret ROA results

- Compare with other companies in the same industry

- Analyze regular changes over time

- Show the impact of professionalizing purchasing functions

d Advantages and limitations

- Advantages of using the Dupont method

 Simple calculation: This is a very good tool to provide basic information and assessment to help positively impact the business results of the business

 Can easily connect with remuneration policies for employees

 Can be used to persuade management to take some reforms to professionalize purchasing and selling functions

 Sometimes the first thing to do is to look at the situation of the business, instead of trying to annex other businesses to increase sales and take advantage of scale, to compensate for the weak profitability

- Limitations of the Dupont analysis method

 Based on basic accounting data but may not be reliable

 Excludes capital costs

 The reliability of the model depends entirely on hypotheses and input data

CONCLUSION OF CHAPTER 1

Chapter 1 provides the common theoretical basis and business performance

of the business The theoretical content includes financial indicators to analyze asset use efficiency, capital efficiency, cost efficiency and find out the factors affecting business performance of an enterprise This is the basis for evaluating and making general comments and specific details for LCI Trading and Investment Joint Stock Company in chapter 2 Those comments and comments are the premise for proposing solutions improve business performance for the company

CHAPTER 2: CURRENT SITUATION OF BUSINESS PERFORMANCE IN LCI TRADING AND INVESTMENT JOINT STOCK COMPANY 2.1 Overview of LCI Investment and Trading Joint Stock Company 2.1.1 The process of formation and development of JSC Investment and Trade LCI

LCI Investment and Trading Joint Stock Company were established on December 6, 2008, under the business registration license No 5300250296 issued by Lao Cai City Department of Planning and Investment Business Registration Office Trading Name: LCI INVESTMENT AND TRADE JOINT STOCK

COMPANY

Address: Group 8 - Dong Tuyen Village - L Cai City - Lao Cai Province

Place of management registration: Lao Cai Tax Department

Phone / Fax: 0915896399

Business license: 5300250296 Issued date: 06-12-2008 Fiscal year: January 1, 2014

Charter capital: VND 12,000,000,000

Total number of shares: 120,000

Par value of shares: 100,000 VND

Chapter Level Item type: 2-554-160-161

Method of calculating VAT: Deduction

Owner: Vu Van Thang

Chief Accountant: Do Thi Hong Nhung

Main business: Building houses of all kinds

Taxes to be paid: Fees, charges, import and export, corporate income, personal income, business license, value-added

2.1.2 Mission ,functions and scope of operations of the company

2.1.2.1 Mission

Building and implementing well the tasks and business directions of the company Renew the equipment and always improve the qualifications and skills for employees Managing and using capital effectively Investing in large projects, contributing to improving business efficiency

Always put credibility on the top, create trust and high trust in customers It is also the company's top priority motto

2.1.2.2 Function

To coordinate with other domestic and foreign organizations to organize the transportation, delivery, and receipt of import and export goods, diplomatic, transit, private, documents and related documents, express documents

Entrusting the services of forwarding, warehousing, warehousing, trading of freight vehicles (cars, ships, containers .) perform other services related to the above goods such as: consolidating goods, dividing retail cargo, carrying out export and import procedures, customs clearance, purchasing insurance for retail goods, carrying out import and export procedures, customs procedures, buying cargo insurance and handing it over to specialists to transport to the designated place Providing consulting services for forwarding, warehousing and other related matters at the request of domestic and foreign organizations and individuals Carry out the task of forwarding, transporting import and export goods and transit goods through the territory of Vietnam and vice versa by different means of transportation Joint venture with domestic and foreign organizations in the field of transportation, delivery, warehousing, chartering

2.1.2.3 Business operation characteristics

Lci Investment and Trading Joint Stock Company with the function of production, business, investment and import and export of goods The main businesses of the company are specified in the business license:

• Construction of public works: Construction of civil works, transportation, irrigation, power transmission works under 110KV

• Inland waterway passenger transport: Waterway transport

• Transporting railway goods

• Producing and trading paper materials, wood, furniture, stationery, and household appliances

• Rental of machinery and equipment trading companies

• Hotel, motel, restaurant business

• Transporting goods by road

• Import and export of agricultural products, food, food, chemicals, coal, and industrial materials, agriculture, ores of all kinds Mining ore of all kinds; Import and export of civil electricity, lighting, spare parts, accessories and machines of all kinds

• Invest in farming industrial crops, agriculture, and biotechnology

• Manufacture and sale of construction materials

• Mechanical processing, installing products and mechanics, serving industry, steel frame houses with a large aperture

• Repair, maintenance, and management of road traffic, ecological sanitation

• Importing, exporting, manufacturing, trading and installing energy equipment

• Inland water transport; investment in import and export infrastructure, warehousing and logistics

• The import-export service

2.1.3 Organizational structure and personnel structure of the Company

2.1.3.1 Organizational chart of the Company

Currently, the company has 20 employees working in different departments and divisions The organizational structure of the company is organized in an online manner to each department and business division through the heads, ensuring

accurate information about the market situation as well as the ability to the financial capability of the company

The organizational structure of Lci Investment and Trading Joint Stock Company is described in the following figure:

2.1.3.2 Functions of the departments

* Company Director: The head of the Company who has full power to make decisions on all production and business activities of the Company

* Deputy Director: Is the person who runs the commercial business activities

of the company and manages the departments

* Chamber of Commerce: Develop business strategies and directions to use capital efficiently and buy cheap goods, find new partners for the company to expand and develop Developing the market to update the number of goods purchased and sold and customer debt

* Accounting Department: Prepare original documents to record the arising business operations proving the legality of the formation and use of assets for business purposes

* Transportation services department: Performing passenger transportation of goods or products of the company to customers and introducing products to

customers who understand the use of the product

- Classify documents, organize document circulation, synthesize arising economic operations by the prescribed principles and regimes

- Open the necessary accounting books to reflect, monitor and synthesize the situation of mobilization and use of assets suitable to the mobilization characteristics of assets in business activities

- Organizing, preserving and archiving books and vouchers and other documents related to the company's accounting and statistical finance

- Discover wastefulness and ineffective actions affecting business results in the period to propose to the director solutions to promote strengths and overcome weaknesses

=> In general, employees at the company always have a close connection with each other, each person is assigned a clear, specific task, connecting each person's work into a job

2.1.4 Advantages, difficulties and experience in the process

2.1.4.1 Positive results achieved from internships

After an internship with the "Accounting" section of LCI Trading and Investment Joint Stock Company, with a professional working environment and enthusiastic guidance from everyone in the company, I had the opportunity to practicing the knowledge from the field to apply in practice as follows:

- Income from processing accounting information and data according to the content of the job

- Record, calculate and reflect the current number, situation of rotation and use

of assets, supplies, capital,

- Checking and supervising financial revenues and expenses, debt collection, payment, and payment obligations; checking the management and use of assets and the sources of property formation, etc

- Calculating expenses, giving advice to other departments

- Providing data, documents, checking and analyzing economic and financial activities of the company

These are very useful jobs, creating opportunities for friction before being a

full-time employee at the company after graduation The internship process helped

me realize that my knowledge is still limited Besides, I have practiced and applied

the theory from a number of subjects in assigned work such as accounting

principles, financial accounting, investment principles, financial statement analysis

at LCI Trading and Investment Joint Stock Company, is a very serious working

environment, helped me to form office manners and communication, follow the

regulations in different environments, develop soft skills that I learned during the

internship

2.1.4.2 Difficulties

When participating in the internship process, I encountered some specific

difficulties:

+ Unable to adapt immediately to the new working environment, it is difficult

to communicate with people around

+ Not enough practical knowledge and experience to solve unexpected

situations at work

2.1.4.3 Lesson learned

- Be flexible in applying knowledge, not applying mechanically the

knowledge learned in school in practice because it depends on the specific situation

for each situation in the job

- Always be humble, progressive and constantly learning to improve

knowledge in work and life

- Must know how to help and get along with everyone around

- Need to learn soft skills such as behavioral communication, time fund

management in a scientific way, proficient in computer skills, especially

administrative documents,

- Other skills applied in the job such as comparing skills with real data,

analyzing and synthesizing information

- Understand more about professional skills, must master the knowledge;

Understanding accounting must be quick, accurate, honest and objective

2.2 Current situation of business performance in LCI Trading and Investment

Joint Stock Company

Overview of business activities of the enterprise

As one of the small and medium-sized enterprises in the Lao Cai city, LCI

Investment and Trading Joint Stock Company mainly operates in the field of import

and export business,, with the main business lines: Xuất nhập khẩu hàng hoá

Trong những năm vừa qua công ty đã có những hoạt động như

- Nhập khẩu, mua bán hoá chất phục vụ cho luyện kim như:

- Cung cấp thiết bị viễn thông, cho thuê cơ sở hạ tầng đặt trạm phát sóng cho

các công ty viễn thông

- Xuất khẩu gạo, phân đạm,…

Trong đó, hoạt động xuất nhập khẩu hàng hoá là hoạt động chính mang lại

doanh thu cao nhất cho doanh nghiệp Tiếp đến là hoạt động cung cấp dịch vụ

cho công ty viễn thông

Table 2 1 Những mặt hàng công ty xuất kho trong giai đoạn 2015 - 2019

fertilizer

Total 65,451 100% 514,827 100% 705 100% - - 1,277 100%

Business results of the company is showed in the following table

Table 2 2: Income statement of the company in 2014 - 2019

Profit before tax - 1,899,832,623 - 1,768,659,872 1,666,933,126 -248,821,398 -147,224,842 - 423,825,006

Based on the data of Table 2.1, we can see that from 2014 to 2015 and from

2016 to 2017, Lci Investment and Trading Joint Stock Company has consistently had negative profits The negative level gradually decreased in business activities from 2014 to 2018 Specifically, the level of loss decreased from (1,899,832,623) in

2018 to (147,224,842) VND In the only 5-year period of 2016, there was a positive profit and the growth rate of 2016 compared to 2015 was 194.25% Growth rates for 2015/2014, 2017/2016 and 2018/2017 are (6.9)%, (114.93)% and (40.83)%, respectively The analysis of factors that increase funerals or reduce profits and consider the effectiveness of the company's operations will be discussed later

General and

admin expenses (118,868,937) (8.03) (324,974,165) (23.86) (415,912,463) (40.11) (59,317,650) (9.55)

Net profit 165,939,963 (8.73) 3,866,667,563 223.01 (2,381,460,412) (111.66) 111,714,608 (44.92)

Other incomes 181,818,182 - 698,181,818 384.00 (880,000,000) (100) - - Other expenses 216,585,394 - 1,129,256,383 521.39 (1,345,705,888) (99.99) 10,118,052 7445.82 Other profits (34,767,212) - (431,074,565) 1239.89 465,705,888 (99.97) (10,118,052) 7445.82

Profit before tax 131,172,751 (6.90) 3,435,592,998 194.25 (1,915,754,524) (114.93) 101,596,556 (40.83)

Through the Company's business results report for the period of 2014-2018 table 2.1 shows that:

Total revenue: During these 5 years, the company's revenue decrease sharply

Especially from 2015 to 2016, total revenue in 2015/2016 decreased by VND 1404 billion, equivalent to 83.3% Five enterprises in the industry face great challenges Specifically, the market continued to be quiet, so it had a strong impact on the performance of enterprises in the industry Besides, preferential policies on taxation and protection of domestic goods have led Chinese merchants to mainly import and export Vietnamese goods through non-quota ways to save them taxes and expenses involved This led to the unstable import and export of goods with China, causing damage to Vietnamese enterprises because China could suddenly change the border policy such as increasing or decreasing the fee for each period without notifying Vietnamese enterprises or stagnating our exports to reduce import prices Therefore, LCI Company was also significantly affected, leading to a sharp decrease in the total revenue in 2018 compared to 2017 by 99%, namely VND 23 billion

Figure 2 1: Net revenue of the company in the period of 2014 – 2019

Sales deductions: In 5 years, sales deductions are zero because there is no

return of goods sold during the year and no discount is made to the sale price This

proves that the good management of the Company's goods over the years, most of the works in use have been accepted by the investor, ensuring the requirements given by the investor

Net revenue: At the company, there is almost no deduction (discount, returned goods, special consumption tax, import, and export tax .), so the net

revenue is also the total revenue

(Net revenue = Total revenue - Deductions)

We realize that in 05 years, total revenue plummeted, namely:

2015 compared to 2014: 32,841,469,335 VND Reduction ratio is 1.9%

2016 compared to 2015: 1,404,618,724,377 VND The reduction rate is 83.3%

2017 compared to 2016: VND 258,024,950,556 The reduction rate is 91.7%

2018 compared to 2017: VND 23,223,270,532 The reduction rate is 99%

It can be concluded that during the above 5-year period, one was a decrease in sales; second is the reduction in prices of goods and services The reason is that the Chinese market has changed and the demand for chemical products has decreased,

so the Chinese company has cut down the amount of production, focusing on supplying to their domestic market, leading to the Vietnamese company can not importing goods for business Especially in 2015, the Chinese side restricted exports

to Vietnam, goods which are difficult to import are even more scarce This led to a large reduction in imports from China, LCI company did not have goods to supply

to other units, which reduced the company's net revenue

Cost of goods sold: Reduced sales revenue leads to lower cost of goods sold

The company was surprised by the recent sharp increase in input prices that the Company has not anticipated and has not mastered the situation and has not had a good plan in stocking goods

In 2013, the cost of goods sold increased an amount of VND 3,331,715,649, equivalent to an increase of 12% because the Company in particular and the whole industry generally encountered difficulties when transport companies increasingly lost costs because of the sudden increase in gasoline prices