27 SOLUTIONS TO IMPROVE EFFICIENCY OF BUSINESS CAPITAL USE AND MANAGEMENT AT QUANG NINH AGRICULTURAL MATERIAL JOINT STOCK COMPANY

MINISTRY OF FINANCE
ACADEMY OF FINANCE
-------☐☐☐------

STUDENT: DINH THO PHUONG NAM
GROUP: CQ55/51.01

GRADUATION THESIS
TOPIC:
SOLUTIONS TO IMPROVE EFFICIENCY OF BUSINESS CAPITAL USE
AND MANAGEMENT AT QUANG NINH AGRICULTURAL MATERIAL
JOINT STOCK COMPANY

Major
Student code

: English for Finance and Accounting
: 17522202010020

Ha Noi-2021
MINISTRY OF FINANCE
ACADEMY OF FINANCE
-------☐☐☐------


STUDENT: DINH THO PHUONG NAM
GROUP: CQ55/51.01

GRADUATION THESIS
TOPIC:
SOLUTIONS TO IMPROVE EFFICIENCY OF BUSINESS CAPITAL USE

AND MANAGEMENT AT QUANG NINH AGRICULTURAL MATERIAL
JOINT STOCK COMPANY

Major
Student code
Supervisor

: English for Finance and Accounting
: 17522202010020
: M.A. Pham Thi Lan Phuong

Ha Noi-2021


DECLARATION
I hereby declare that this is my own research work, the data and results
stated in the graduation thesis are truthful, derived from the actual situation
of the internship unit.
Graduation thesis author
Đinh Thọ Phương Nam

1


ABSTRACT
This study looks at the operating methods of business capital use and
management at Quang Ninh Agricultural Materials Joint Stock Company. The
article aims to find out the achievements and limitations in the company's
activities and more importantly, propose the main methods to improve the
efficiency of the company's working capital. To achieve these goals, the

graduate paper will examine the status of using business capital and managing
that business capital effectively or not. From the obtained results, the study
gives the most practical meanings at Quang Ninh Agricultural Materials Joint
Stock Company in order to improve the efficiency of management using
business capital and improve business results at the company in the coming
years.

2


ACKNOWLEDGMENTS

First, I would like to express my most sincere thanks to Ms. Pham Thi
Lan Phuong - Dean of the Foreign Language Department of the Academy of
Finance, the teacher who is in charge of guiding me to do the graduation
thesis. The devotion in her comments and suggestions on her essay provided
me with a lot of useful knowledge to apply in the construction of my research.
Without these instructions, comments, this essay will not be complete.
I would also thank the management board in Finance - Accounting
Department, Organization Department of Quang Ninh Agricultural Materials
Joint Stock Company have helped me to complete this thesis.
Finally, thanks goes to my family and friends who have always
supported and encouraged me to complete this thesis.

3


TABLE OF CONTENT
DECLARATION................................................................................................i
ABSTRACT......................................................................................................ii

ACKNOWLEDGMENTS...............................................................................iii
TABLE OF CONTENT...................................................................................iv
LIST OF FIGURES AND TABLES...............................................................vii
INTRODUCTION.............................................................................................1
CHAPTER 1: LITERATURE REVIEW...........................................................3
1.1. Business capital and business capital of the enterprise........................3
1.1.1. Concept and characterization of business capital...........................3
1.1.1.1. Concept....................................................................................3
1.1.1.2. Characterization.......................................................................4
1.1.2. Composition of business capital.....................................................5
1.1.3. Source of business capital..............................................................8
1.1.3.1. Based on equity relations.........................................................8
1.1.3.2. Based on the time to mobilize and use capital.........................9
1.1.3.3. Based on the scope of capital mobilization............................10
1.2. Business capital management of the business.....................................10
1.2.1. Business capital management concept and goals.........................10
1.2.2. Content of business capital management......................................11
1.2.2.1. Working capital management of the business........................11
1.2.2.2. . Managing corporate fixed capital.........................................14
1.2.3. The indicators to evaluate the business capital management
situation of the enterprise........................................................................16
1.2.3.1. The criteria for evaluating the working capital management
situation...............................................................................................16
1.2.3.2. Indicators for evaluating fixed capital management..............17

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1.2.3.3. Base on Corporate finance ( 2014) Criteria to evaluate the
efficiency and efficiency of business capital use................................17

1.2.4. Factors affecting business capital management of enterprises.....18
1.2.4.1. Group of subjective factors....................................................18
1.2.4.2. Group of objective factors......................................................19
CHAPTER 2: THE STUDY...........................................................................20
2.1. Overview of Quang Ninh Agricultural Materials Joint Stock Company. . .20
2.1.1. The formation of Quang Ninh Agricultural Material Joint Stock
Company.................................................................................................20
2.1.2. Business characteristics of Quang Ninh Agricultural Materials
Joint Stock Company..............................................................................21
2.1.2.1. Main functions, business lines and products..........................21
2.1.2.2. Organization structure of the Company.................................22
2.1.2.3. Characteristics of business activities of the company:...........23
2.1.2.4. An overview of the company's financial situation.................25
2.2. Management of business capital at Quang Ninh agricultural material
joint stock company....................................................................................28
2.2.1. Business capital and source of business capital of Quang Ninh
Agricultural Materials Joint Stock Company..........................................28
2.2.1.1. Business capital situation.......................................................28
2.2.1.2. Business capital situation of Quang Ninh Agricultural
Materials Joint Stock Company..........................................................30
2.2.2. Business

capital

management

situation

at

Quang

Ninh

Agricultural Material Joint Stock Company...........................................33
2.2.2.1. Working capital management situation..................................33
2.2.3. General assessment of business capital management of Quang
Ninh Agricultural Material Joint Stock Company...................................38
2.2.3.1. Achievements.........................................................................38
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2.2.3.2. Limitations.............................................................................39
CHAPTER 3: RECOMMENDATIONS.........................................................40
3.1. Recommendations to the Board of Directors of Quang Ninh
Agricultural Material Joint Stock Company...............................................40
3.1.1. Develop appropriate capital structure for the company and
determine capital needs...........................................................................40
3.1.2. Fully and timely mobilize capital to serve production and business...40
3.1.3. Modernizing internal information, paying attention to the lives of
employees in the company......................................................................41
3.2. Recommendations to the Government:...............................................42
3.3. Recommendations to the Company:...................................................42
CONCLUSIONS.............................................................................................44
REFERENCES................................................................................................45
APPENDIX.....................................................................................................46

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LIST OF FIGURES AND TABLE
Table 2.1. OVERVIEW MOVEMENT OF ASSETS AND RESOURCES IN
2019.................................................................................................................25
Table 2.2. MOVEMENT OF SALES, EXPENSES, PROFIT........................27
Table 2.3: CHANGE OF WORKING CAPITAL IN 2019.............................28
TABLE 2.4: CAPITAL MOVEMENT IN 2019..............................................31
Table 2.5: WORKING CAPITAL ALLOCATION SITUATION...................34
Table 2.6: INDICATORS REFLECTING SOLVENCY OF THE COMPANY
.........................................................................................................................36
Table 2.7: SUMMARY OF EFFICIENT USE OF BUSINESS CAPITAL..37Y
Figure 2.1: Proportion of current and current assets over the years................26
Figure 2.2: Proprotion of Liabilities and Equity over the years 2

Diagram 2.1: Business process of Quang Ninh Agricultural Materials Joint
Stock Company...............................................................................................25
Diagram 2.1: Organizational structure of Quang Ninh Agricultural Materials
Joint Stock Company......................................................................................46

7


INTRODUCTION

1. Rationale of the study
To conduct business activities, any business needs capital. Business
capital is considered the most important factor for businesses today. Currently,
when the economy is a market economy and the competition among
enterprises is getting fiercer, the main solutions to enhance business capital
management are vital issues for businesses, because Using capital effectively,
businesses can create profits, accumulate it to develop their capital, create

competition with competitors with financial potential.
So how to use capital effectively is an important content of financial
management Recognizing the importance of the above problem, along with
the theories learned and practical practice at Quang Ninh Agricultural
Materials Joint Stock Company, I decided to choose the topic: “ Solutions to
improve efficiency of business capital use and management at QUANG
NINH Agricultural Material Joint Stock Company” as the subject of my
graduation thesis.

2. Aims of the study
This study aims to identify problems related to business capital, thereby
offering solutions to enhance business capital management of enterprises,
through indicators to assess the current situation of business capital
management at Quang Ninh Agricultural Materials Joint Stock Company.

3. Methods of the study
To collect data for this study, tools as observation, document review,
questionnaire are used.

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4. Scope of the study
Due to the limited internship time, the study focuses on business capital
and solutions to improve business capital management at the accounting
department of Quang Ninh Agricultural Materials Joint Stock Company.
The data collected from 2018 and 2019 financial statements of the
company.

5. Organization of the study

The thesis is divided into 3 chapters:
Chapter 1: Literature review
Chapter 2: The Study
Chapter 3: Recommendations

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CHAPTER 1: LITERATURE REVIEW
1.1. Business capital and business capital of the enterprise
1.1.1. Concept and characterization of business capital
1.1.1.1. Concept

According to Corporate finance textbook (2013): “Business capital of the
enterprise An enterprise wants to operate production and business, it must
have the basic elements such as labor materials, labor object and labor force.
In the market economy, to get those factors, businesses have to spend a
certain amount of monetary capital in accordance with the size and business
conditions of the business. This monetary capital in advance to make
investments to purchase, form necessary initial assets such as construction of
factories, procurement of equipment, materials, ... is called business capital of
the enterprise.” (Corporate finance textbook ,2013).
The production process of the enterprise takes place regularly and
continuously, so the business capital of the business also moves constantly
and exists in many different forms in the stages of production and business
activities.
And Paul A. Samuelson, a typical representative of modern economic
theory, said that: “Land and labor are the initial factors compared, while
capital and capital goods are the result of the production process. export.
Capital consists of durable goods that are produced and used as useful inputs

in subsequent production. Some capital goods can last for several years, while
others can last for a century or longer. The most basic feature of capital goods
is that they are both an output and an input to the production process.”( Paul
A. Samuelson, 1947)
In Economics by David Begg, capital is divided into two forms:
“Physical capital and financial capital. Thus, he identified capital with the
assets of the enterprise. In which: In-kind capital: It is the reserve of goods

3


sold at the floor that is used to produce other goods. Financial Von: Is the
money and paper assets of the business.”( Economics,1994)
From the above analysis, it can be drawn: "Business capital of the
enterprise is the entire advance that the enterprise has spent to invest in
forming necessary assets for production and business activities of the
enterprise" .
Business capital is not only a prerequisite for the establishment of an
enterprise, but it is also one of the factors that play a decisive role in the
operation and development of an enterprise.
1.1.1.2. Characterization

Capital is considered a special commodity: “Unlike ordinary goods, the
sold capital goods will not lose ownership but only sell the right to use, the
buyer is entitled to use the capital for a certain period of time and Paying the
owner a sum is called interest. Thus, the interest rate is the price paid for the
right to use capital for a certain period of time. The purchase and sale take
place in the financial market, the capital purchase and sale price is also
subject to the supply-demand relationship in the market. And the price of the
right to use business capital is the opportunity cost of using business capital in

the financial markets.” (Basic business finance, 2013)
Capital is always moving and attached to a certain owner: there is no
owner capital because it will lead to wasteful and inefficient spending.
Depending on the type of business, the owner is also the user of capital or not.
However, in either case, capital is tied to a certain owner and there are
different costs of capital. Deciding how to handle capital relates to the close
benefits of each business. Aware of this, new capital is exploited and used in
the most effective way, avoiding capital loss. Capital has time value (due to
the effects of profitability factors and risks): a capital today is worth more
than a capital in the future, because it is possible to invest. money of today to
4


gain future earnings. The interest rate is a measure of the time of money,
reflecting the opportunity cost users of capital have to spend to make a profit.
This has important implications in accurately assessing the effectiveness of an
investment.Capital characteristics show that capital is a limited resource that
needs to be used sparingly and effectively. This is a principle issue, is the
basis for effective business capital management policy making.
1.1.2. Composition of business capital
Based on the role and rotation characteristics of business capital when
participating in the business and production process, business capital is
divided into two categories: fixed capital and working capital.
Fixed capital of an enterprise: is the amount of capital invested in the
construction or procurement of fixed assets used in business. Fixed assets of
an enterprise are the main labor materials of great value, have a long use time
in the enterprise's production and business activities and must satisfy all the
standards of fixed assets (Corporate finance textbook, 2013, p452)
Standard time: Have a use time from 1 year or more.
Standard of value: Must be of great value, the specific value level shall

be stipulated by the Government in accordance with the economic situation of
each period.
According to manifestations and economic uses, fixed assets are divided
into two categories: tangible fixed assets and intangible fixed assets.
Tangible fixed assets: Are fixed assets with a specific physical form used
by enterprises for production and business activities. Under this category,
based on economic uses can be divided into groups: Buildings, architectural
objects; devices; means of transport, transmission equipment; equipment,
management tools; perennial garden. Intangible fixed assets are assets that
have no specific physical form but have determined value, managed and used
by the enterprise in production and business activities, providing services or
5


to other entities. other lease in accordance with standards of intangible fixed
assets. Usually intangible fixed assets include the following types: land use
rights with definite term; brand; publishing rights; computer software; patent
copyright,...( Basic business finance, 2013)
This classification method helps the enterprise manager to see the
structure of investment in fixed assets in the form of manifestation, which is
the basis for deciding long-term investment or adjusting investment structure
accordingly and taking measures. management is appropriate for each type of
fixed asset.
According to the usage situation:
Base on Basic business finance ( 2013), fixed assets of enterprises are
divided into 3 categories:
Used fixed assets are fixed assets being used for production and business
activities or other activities of the enterprise such as welfare activities, career,
security and national defense. Unused fixed assets are fixed assets that are
necessary for production and business activities or other activities of the

enterprise, but which are not currently in use, are being reserved for later use.
Fixed assets that are not used and awaiting liquidation are assets that are
unnecessary or incompatible with the production and business tasks of the
enterprise, and need to be liquidated or sold to recover the initial investment
capital.
This classification helps managers see how effective they are to use fixed
assets of the enterprise, thereby taking measures to further improve their
efficiency.
Working capital of the enterprise The concept and characteristics of
working capital In order to conduct production and business, in addition to
fixed assets, businesses also need liquid assets. Based on the scope of using

6


working assets of the business is usually divided into 2 parts: production
assets and circulation assets.
Production assets: including main raw materials, auxiliary materials,
fuel, spare parts in the process of stockpile production and unfinished
products, semi-finished products in progress. manufacturing.
Circulation assets: including assets in circulation such as finished
products in storage waiting for consumption, accounts receivable, cash
capital.
In the business process, production assets and circulation assets always
move, transform, replace each other, ensuring smooth and continuous
production and business process.
In order to form working assets, the enterprise must apply a certain
amount of monetary capital to purchase those assets. This amount of capital is
called the working capital of the business. Thus, it can be said: working
capital is the total amount of advance that an enterprise invests to form liquid

assets necessary for production and business activities of the enterprise.
In the process of participating in business activities, because working
capital is a monetary expression of working assets, the moving characteristics
of working assets determine the rotation characteristics of working capital.
Working capital of an enterprise has the following characteristics:
Working capital in the process of rotation always changes its
manifestation form: from the initial monetary form to materials, goods to
reserve production, to unfinished products, semi-finished products, finished
products and eventually returned to monetary capital.
Thus, at a certain point of time, working capital of a business is
distributed across all stages of the business process and exists in many
different forms in the stages through which capital goes through. Therefore, in
order for the process of continuous reproduction, the enterprise must have
enough working capital to invest in these different forms to ensure that all
forms have a reasonable and synchronous level of existence. This makes the
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transformation of capital morphology in the process of rotation to be
favorable.
1.1.3. Source of business capital
1.1.3.1. Based on equity relations

Business capital of enterprises is formed from many different sources,
each source often has certain advantages and disadvantages. In order to
organize and choose an appropriate form of capital mobilization and effective
business capital management, corporate financial managers must see capital
sources according to different criteria and ways.
Liabilities
Equity

Assets

Equity: Is the capital owned by the business owner, including the equity
spent and the additional capital from business results, capital from the
enterprise's funds, raised capital (Corporate financial analysis course, 2014,
35).
Equity at a time can be determined as follows:
Equity = Total asset value – Liabilities
Equity is an important source of capital with high stability,
demonstrating the financial autonomy of the business. The larger the
proportion of this capital source in the capital structure, the higher the
financial independence of the business, and vice versa.
Liabilities of the enterprise: “Is shown in money the obligations that the
enterprise has the responsibility to pay to other economic agents such as:
Debts, payables to sellers, to the State, for employees in the enterprise.
Liabilities are characterized by a maturity, fixed interest, and creditors do not
have the right to participate in the management of the business.” (Corporate
financial analysis course,2010).
To ensure high efficiency in business operations, normally an enterprise
must combine both sources: equity and liabilities. The combination of these
8


two sources depends on the characteristics of the industry in which the
business is operating, depending on the decision of the manager on the basis
of consideration of the business and financial situation of the business. This
classification helps managers determine the level of safety in capital
mobilization to ensure normal business operations and financial security.
1.1.3.2. Based on the time to mobilize and use capital

Business capital of the enterprise is divided into temporary capital
sources and regular capital sources.
Temporary funding Temporary capital resources: are short-term capital
sources (less than a year) that the enterprise can use to meet the temporary
requirements arising in the business operation of the enterprise. Funding
sources usually include short-term loans from banks and credit institutions,
and other short-term debts.
Regular funding Regular capital: is the sum of stable capital sources that
an enterprise can use in its business activities. This capital is often used to
purchase and form fixed assets and a part of fixed assets is often necessary for
business operations of enterprises.
Base on Corporate finance (2014) The company's regular capital source
at a time can be determined by the formula:
Recurrent capital = Equity + Long-term debt
Regular material source of the business at a time can be determined by
the formula:
Regular working capital = Total regular capital of the business - Longterm assets
1.1.3.3. Based on the scope of capital mobilization

If the scope of mobilization, business capital is divided into two
categories: internal capital source and enterprise external capital source.
Internal capital: “A source of capital that can be raised from the owner or
from the business itself. Internal capital sources represent self-financing of the
business, including: Retained earnings for reinvestment; fixed asset
9


depreciation; proceeds from sale of unused assets or supplies or liquidation of
fixed assets.” (Coporate finance textbook, 2013, p354)

External capital:
Capital source: “Enterprises can mobilize from external sources to
increase financial resources for business production and business activities of
enterprises. This is a very important source to help increase business capital
for businesses, including: borrowing from relatives, loans from commercial
banks and other financial institutions, calling for capital contribution to joint
ventures, home commercial credit, providing, leasing assets, mobilizing by
issuing securities (if permitted by law).” (Corporate finance textbook, 2013,
p359)
Internal capital is very important but often does not meet the capital
needs of the business, requiring businesses to seek external capital.
Depending on the type of business doing business in different industries, there
are ways to combine different funding sources. Since then, it proposed
proactive solutions in exploiting different capital sources to meet the needs of
production and business of enterprises which took place on a regular and
continuous basis.
1.2. Business capital management of the business
1.2.1. Business capital management concept and goals
According to the “Business finance textbook” (2010), “The concept of
business capital management Capital is an important factor determining the
existence and development of an enterprise. Therefore, any business that
wants to survive and develop must pay attention to creating capital, managing
capital effectively, in order to bring the highest profit to the business on the
basis of respecting the principles of financial and credit management and
strict compliance with state laws. Business economic development with an
increasingly large scale of businesses requires an increasing amount of
capital. On the other hand, today the advancement of science and technology
10

is made at a high speed and enterprises are operating in the conditions of an
open economy with an increasingly expanding internationalization trend.
Requiring businesses to mobilize capital sources inside - outside and to use
capital in the most effective way.”
From there, it can be drawn:

Business capital management in an

enterprise is the process of planning, organizing, operating, checking the use
of business capital of the enterprise, thereby contributing to the allocation of
business capital appropriately. management, thrift and efficiency to meet the
business production process in the enterprise.
Business capital management goals
Ensuring the mobilization of enough business capital with minimum
costs to meet the business production process of enterprises
Allocating business capital appropriately to ensure regular and
continuous production and business process.
Control activities on the use of capital properly to avoid waste and loss
affecting the business development of the business.
1.2.2. Content of business capital management
1.2.2.1. Working capital management of the business

The need for working capital is required to be the minimum required
number of working materials to ensure the normal and continuous operation
of the business and production activities of the business. Below this level,
business production will be difficult, even delayed or interrupted. But if it is
above necessary, it causes capital stagnation, wasteful use of capital and
inefficiency.
The formula determines:
Working capital requirements = Equity + Inventory + Accounts

receivable - Liabilities to suppliers (Corporate finance,2014)
Depending on the business characteristics and specific conditions of the
business in each period, it is possible to choose to apply different methods to

11


determine the needs of the labor force. Currently, there are two main methods:
direct method and indirect method.
a. Direct method
Content of the method: directly determine capital needs for inventories,
accounts receivable, and payables to suppliers and then aggregate them into
the total demand for labor of the business.
b. Indirect method
Content of the method: based on the analysis of the actual use of
working capital of the enterprise in the reporting year, the change in business
size and working capital turnover rate in the plan year, or the fluctuation of
demand. Working capital needs according to the revenue made in the
reporting year to determine working capital needs in the planning year.
Specifically: Method of adjustment according to the percentage of working
capital needs compared to the reporting year:
Working capital in the planning year = Average working capital in the
reporting year x
In which: t%: Shortening rate of working capital rotation period in the
plan year
Method based on total capital turnover and plan-year turnover rate:
Working capital in the plan year =
Percentage-based method of sales:
Increased need for working capital = Increased revenue x Percentage of
demand for working materials compared to revenue

Treasury stock management Inventory is assets that an enterprise stores
for production or later sale and is divided into the following three categories:
inventory of raw materials, inventory of unfinished products, semi-finished
products, inventory, finished products.
These costs are related and interact with each other. If the enterprise
reserves a lot of materials and goods, the cost of storing and preserving goods
will increase, on the contrary, the cost of implementing the supply contracts
will decrease relatively due to the decrease in the number of supplies. So in
inventory management it is necessary to consider the tradeoff between the
12


benefits and costs of maintaining high or low inventories, minimizing the total
cost of inventory by determining the most cost-effective.
Acording to Business finace textbook (2010), “In enterprises, the need
to keep capital in money is usually due to 3 main reasons: To meet transaction
requirements, daily payments such as payment for purchases, salaries, wages,
dividends or payment. tax ... of the enterprise; help businesses capture
profitable investment opportunities or do business to maximize profits; from
the need for provisioning or overcoming unexpected risks that may affect the
production and business activities of the enterprise.”
Receivable is the amount of money that a customer owes the business
due to purchase of goods or services. If the accounts receivable are too large,
that means the capital of the business is appropriated, or uncontrollable, it will
adversely affect the production and business activities of the business.
Therefore, accounts receivable management is an important content in
the financial management of the business. Accounts receivable management is
also related to the trade-off between profits and risks in selling goods and
services: If the business is not sold on credit, the business will lose the
opportunity to consume the product, thus also lose. profit opportunities.

However, if sold or sold over-bear will lead to an increase in accounts
receivable administration expenses, increase the risk of bad debts or the risk
of not being able to recover debts. Therefore, enterprises need to pay special
attention to measures to manage receivables from the sale of goods and
services: The profitability is greater than the risk, the business can expand to
sell and vice versa.
1.2.2.2. . Managing corporate fixed capital

Bases on Corporate finance (2014) : Fixed capital is an important part of
investment capital in particular and business capital in general. The size and
level of fixed capital management are factors affecting the size and level of
equipment of technical facilities of the enterprise. Therefore, it affects the
13


production and business processes of enterprises. Fixed capital management
is a key part of corporate financial management.
The use of Fixed Capital usually takes place over a long period of time,
capital recovery is slow and potentially risky. That requires managers how to
have fixed capital when participating in the production and business process
to create many products with high quality to meet market requirements, get
capital back early, create to make a profit for the business.
Select an appropriate depreciation method.
Depreciation of fixed assets: To recover depreciation in order to
reproduce fixed assets, the depreciation is calculated into the cost of the
product by depreciation. Depreciation is a cost factor or cost item.
Implementing a rational depreciation of fixed assets is important to the
business production process of the enterprise. Depreciation of fixed assets is
the systematic allocation of the value to be recovered of a fixed asset into
production and business costs over the useful life of a fixed asset.

In principle, depreciation of fixed assets is the method of recovering
fixed capital of an enterprise. If the enterprise is well organized and managed,
depreciation not only has a simple reproductive effect, but also can reproduce
and expand fixed assets. Fixed asset depreciation methods:
Straight-line depreciation: Is the average depreciation method over time.
Under this method, the depreciation rate and the annual amortization rate are
averaged over the useful life of fixed assets. The formula is determined as
follows:
Annual depreciation expense=
Cost of the asset is the purchase price of the asset
Salvage value is the value of the asset at the end of its useful life
Useful life of asset represents the number of periods/years in which the
asset is expected to be used by the company
Straight line depreciation rate=
(Corporate finance, 2014)
Fixed asset management principles:

14


Each fixed asset in the enterprise must have its own set of records,
classified, numbered and have its own card, tracked in detail for each fixed
asset and reflected in the fixed asset monitoring book.
Each fixed asset must be managed according to its historical cost,
accumulated depreciation and residual value in accounting books: Residual
value in accounting books of fixed assets = Historical cost of fixed assets Accumulated depreciation design of fixed assets
For fixed assets that are not in use, awaiting for liquidation but not fully
depreciated, the enterprise must manage, monitor and preserve according to
current regulations and depreciate in accordance with regulations.
The enterprise must manage fixed assets which have been fully

depreciated but still participate in business activities as normal fixed assets.
1.2.3. The indicators to evaluate the business capital management situation
of the enterprise
1.2.3.1. The criteria for evaluating the working capital management

situation
The speed of working capital rotation: reflects the fast or slow rotation
of working capital, through the following 2 criteria:
Number of working capital turnover: reflecting the number of working
capital revolutions in a given period of time, usually a year.

Working capital rotation: Reflect how many days it takes to implement a
working capital cycle. The shorter the rotation period, the faster working
capital is circulating and vice versa.
Working capital content: reflects how much working capital is needed. The
lower the working capital content, the more efficient it is to be used and vice
versa.
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(Corporate

finance,

2014)
This target reflects how many dong of profit before (after) tax can be created
on an average working capital in the period. And is a measure to evaluate the
efficiency of working capital of the business. In addition, depending on the
research purpose of the indicators of working capital turnover, one can
calculate separately for each type of working capital:

For inventory:
For receivable debts:
1.2.3.2. Indicators for evaluating fixed capital management

Performance of using fixed capital: reflects how much net revenue is
generated by a fixed capital used in the period.
Fixed capital content: is the inverse of the efficiency index of using fixed
capital, reflecting how much fixed capital is required to make one DTT.

1.2.3.3. Base on Corporate finance ( 2014)

Criteria to evaluate the

efficiency and efficiency of business capital use
Coefficients reflecting the solvency of the enterprise :

1.2.4. Factors affecting business capital management of enterprises
1.2.4.1. Group of subjective factors

16