31 FINANCIAL SITUATION OF VICEM HOANG THACH CEMENT COMPANY LIMITED

MINISTRY OF FINANCE
ACADEMY OF FINANCE
FACULTY OF CORPORATE FINANCE
-------🙡🙡🙡-------

GRADUATION THESIS
TOPIC:
FINANCIAL SITUATION OF
VICEM HOANG THACH CEMENT COMPANY LIMITED

Student: Pham Thi Thuy Chinh
Class: CQ55/11.05
Supervisor: Assoc. Prof. Doan Huong Quynh

Hanoi – 2021


Graduation Thesis
Finance

Academy of

DECLARATION
I declare that this thesis is made by myself, as a result of the threemonth internship at the Department of Accounting of Vicem Hoang
Thach cement company limited. Any ideas, techniques, quotations and
other material from work of other people included in this study are fully
acknowledged in references. I also declare that this thesis is not
submitted to any other organization, thus this is the only published
version submitted to my thesis reviewers.
Author of the thesis
Pham Thi Thuy Chinh

Student: Pham Thi Thuy Chinh

1

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

ACKNOWLEDGEMENT
Although I have tried my best, but because of limited research conditions and
knowledge, my thesis could not avoid errors. I hope that I can receive the bits
of advices from teachers to make my research project more complete. I would
like to express my deepest gratitude to my supervisor, Assoc. Prof. Doan
Huong Quynh, lecturer of Academy of Finance, who has given immeasurable
help, constant guidance with many careful instructions, comments and
valuable advice to me whenever I need. Without her support, I am not able to
complete this thesis. And I appreciate her patience in reading and correcting
my thesis. I also want to show my sincere thanks to all the staff at the
accounting department of Vicem Hoang Thach Cement company limited.

Student: Pham Thi Thuy Chinh

2

Class: CQ55/11.05

Graduation Thesis
Finance

Academy of

TABLE OF CONTENTS
DECLARATION................................................................................................i
ACKNOWLEDGEMENT................................................................................ii
TABLE OF CONTENTS.................................................................................iii
LIST OF ABBREVIATIONS...........................................................................vi
LIST OF CHARTS..........................................................................................vii
LIST OF TABLES.........................................................................................viii
PREFACE..........................................................................................................1
CHAPTER ONE: THEORETICAL BACKGROUND OF FINANCIAL
SITUATION OF A COMPANY........................................................................8
1.1.
1.1.1.

Corporate finance and financial management......................................8
Corporate finance and financial decisions......................................8

1.1.2. Financial management...........................................................................11
1.2. Financial situation of a company.............................................................15
1.2.1. Definition of financial situation............................................................15
1.2.2. Indicators for assessing financial situation of a company.....................16
1.3. Factors determining the financial situation of a company.......................37
1.3.1 Internal factors........................................................................................37
1.3.2 External factors......................................................................................39

CHAPTER 2: FINANCIAL SITUATION OF VICEM HOANG THACH
CEMENT COMPANY LIMITED...................................................................41
2.1. Overview of Vicem Hoang Thach Cement Company Limited................41

Student: Pham Thi Thuy Chinh

3

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

2.1.1. Establishment and Development of Vicem Hoang Thach Cement
Company Limited............................................................................................41
2.1.2 Business characteristics of Vicem Hoang Thach Cement Company
Limited:...........................................................................................................42
2.1.3 General information on financial performance of Vicem Hoang thach
Cement Company Limited..............................................................................48
2.2. The Financial situation of Vicem Hoang Thạch Cement Company
Limited............................................................................................................52
2.2.1. Assets and asset structure of Vicem Hoang Thach Cement Company
Limited............................................................................................................52
2.2.2. Sources of capital and Capital structure of Vicem Hoang Thach Cement
Company Limited............................................................................................60
2.2.3 Revenues, Expenses, Incomes................................................................68
2.2.4 Cash flow................................................................................................74

2.2.5 Liquidity and Solvency..........................................................................81
2.3. Assessment of Hoang Thach financial situation.....................................100
2.3.1. The achievements................................................................................100
2.3.2. Shortcomings and reasons:.................................................................101
CHAPTER 3..................................................................................................104
SOLUTIONS TO IMPROVING THE FINANCIAL SITUATION OF VICEM
HOANG THACH CEMENT COMPANY LIMITED..................................104

Student: Pham Thi Thuy Chinh

4

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

3.1. Objectives and strategic development directions of Vicem Hoang Thach
Cement Company Limited............................................................................104
3.1.1 Socio-economic context.......................................................................104
3.1.2 Objectives and strategic development directions of Vicem Hoang Thach
Cement Company Limited............................................................................108
3.2 Solutions to improving financial situation of Vicem Hoang Thach Cement
Company Limited..........................................................................................110
3.3 Conditions needed for implementing the solutions.................................122
3.3.1 The State...............................................................................................122
3.3.2 Vicem Hoang Thach Cement Company Limited.................................123

CONCLUSION.............................................................................................124
REFERENCES..............................................................................................126
APPENDIX...................................................................................................127

Student: Pham Thi Thuy Chinh

5

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

LIST OF ABBREVIATIONS
Abbreviated words

Meanings

COGS

Cost of goods sold

EBIT

Earnings before interest and tax

NI

Net income

NWC

Net working capital

OCF

Operating cash flow

BEP

Basic earnings power

ROA

Return on Assets

ROE

Return on Equity

ROS

Return on

Per

Percentage

VND

Vietnamese dong

Student: Pham Thi Thuy Chinh

6

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

LIST OF CHARTS
Chart 1.1: DUPONT analysis diagram ...........................................................36
Chart 2.1: The structure of Vicem Hoang Thach Cement company limited...43
Chart 2.2: Model of finance-accounting department......................................47
Chart 2.3: Hoang Thach’s assets structure 2019-2020....................................56
Chart 2.4: Capital structure 2019-2020...........................................................63
Table 2.4: Hoang Thach’s Business performance...........................................68
Chart 2.5: Changes of Net Revenue, COGS, NI.............................................73
Chart 2.6: Hoang Thach’s Liquidity ratios 2019-2020....................................83

Student: Pham Thi Thuy Chinh

7

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

LIST OF TABLES
Table 2.1 Hoang Thach’s Asset structure 2019-2020......................................52
Table 2.2 Hoang Thach’s Capital structure 2019-2020...................................61
Table 2.3 Net working capital 2019-2020.......................................................66
Table 2.5 Analysis level of cost used in core operating activities...................72
Table 2.6: Analysis of sources and uses of cash..............................................75
Table 2.8: Cash flow ratios..............................................................................79
Table 2.8 Hoang Thach’s liquidity ratios in 2019 – 2020...............................82
Table 2.9: Hoang Thach’s solvency ratios in 2019-2020................................85
Table 2.10 Asset utilization efficiency 2019-2020..........................................87
Table 2.11: Hoang Thach’s profitability 2019-2020.......................................91
Table 2.12 compare Hoang Thach’s indicator with other companies.............94
Table 2.13: Dupont System 2019-2020...........................................................96
Table 3.1 The change of DFL, ROE when changing ROA in 2021..............115

Student: Pham Thi Thuy Chinh

8

Class: CQ55/11.05

Graduation Thesis
Finance

Academy of

PREFACE

Introduction
1. Rationale of the study
Vietnam's economy is in the process of transformation and operation
under the market mechanism, opening and integrating with the global
economy. In the context of economic crisis, the process brings new
opportunities for market expansion and access as well as a lot of challenges to
Vietnamese companies, effectively using and managing capital is always a
concern of companies that aims to improve business performance.
In the context of globalization, businesses need to be treated equally on the
same playing field. "Strong win, weak lose" is an inevitable rule in today’s
competitive economy. Such harsh challenges and difficulties force
Vietnamese businesses to carefully consider every decision, especially during
the covid-19 pandemic, which greatly affects their competitiveness and the
companies’ overall health.
In the market economy, where the economic relationship comes to, the field
of impact and control of finance will also reach out there. In fact, the more
economic relations have, the more financial activities have. In the business
operations, each enterprise must handle series of financial issues such as:
where to invest, how much, how to raise capital, management and use of
capital, capital conservation and development, debt and repayment, revenue
and profit distribution, ...
Operating in the market economy with dizzying pace of change and many risk

factors, enterprise managers must always be careful when making decisions.
Because only a small mistake can make enterprises pay dearly. So what do
managers depend on to make the most appropriate decision? That requires
managers to collect and process existing information to analyze and assess

Student: Pham Thi Thuy Chinh

1

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

situation, thereby relying on past information and current assessments to help
enterprises make decisions exactly for their companies.
During my internship at Vicem Hoang Thach Cement Company Limited
and being aware of importance of this issue, I chose the topic: “Financial
situation of Vicem Hoang Thach Cement Company Limited''.
2. Overview of the research situation
In recent years, research and solutions to improve the financial situation
of companies, corporations or the whole economy are being focused a lot.
Especially in the two years 2019-2020, The Covid-19 epidemic has
complicated developments, disrupting socio-economic activities of countries
around the world. 2020 is considered a year of great difficulties and
challenges for the world economy in general, including Vietnam. The world
economy is forecasted to have the most severe recession in history, with the

growth of major economies all falling deeply due to the negative impact of
the Covid-19 epidemic.
In the country, natural disasters and epidemics have a significant impact
on the activities of the economy and people's lives; unemployment and
underemployment rates are high. However, with drastic and effective
solutions in realizing the dual goal of "both disease prevention and socioeconomic development", Vietnam's economy still achieved positive results
with maintaining growth. Although our country's economy has had positive
changes in the past period, the great influence from the recession of the world
economy is inevitable. Therefore, it is very urgent to work out measures to
combat the decline and gradually improve the quality of the economy.
The published works, projects and articles both show the current
situation as well as propose solutions to continuously improve the economy,
such as:

Student: Pham Thi Thuy Chinh

2

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

"Financial analysis of Hai Ha confectionery joint stock company",
thesis by author Vuong Thi Tuyet Trang. The thesis proposes some
recommendations to improve the financial capacity of Hai Ha confectionery
joint stock company. Master's thesis "Analysis of financial situation at

PETROLIMEX Hai Phong transport and service joint stock company" by Hoa
Lan Phuong at Hai Phong Private University -2017

Student: Pham Thi Thuy Chinh

3

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

World financial economics in 2019 and prospects for 2020 - Dr. Le
Quang Thuan and Master Tran Thi Quynh Hoa- Financial Policy and Strategy
Institute
Proposing some solutions to improve corporate financial situation Master Hoang Minh Tuan (2019).
Vietnam's financial market in early 2020 and proposed solutions - Dr.
Nguyen Dai Lai (2020)
The problem of solutions to the financial situation is still being
researched and perfected in order to solve the big problems posed by the
economy in each period.
The research requires both depth and breadth, just have to see the actual
situation and based on that to come up with really effective measures. This is
a difficult problem for the Vietnamese economy in particular as well as the
whole economy in general.
Although the Covid-19 epidemic is under control in Vietnam, there are
still complicated developments in the world, production, supply and trade

activities, aviation, tourism, labor and employment have been suspended.
stagnation, interruption. In addition, export growth has not yet ensured
sustainability, labor productivity is still low... Therefore, our country needs to
focus on realizing the dual goal of "effectively preventing epidemics and
taking advantage of them at the same time." good opportunities, efforts to
recover and develop socio-economic in the new normal state”; at the same
time, exploiting the maximum potential and advantages to bring the economy
to the highest growth rate in 2021.
3. Research purposes

Student: Pham Thi Thuy Chinh

4

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

In order to increase financial performance, managers need to pay top
priority to corporate financial management. Therefore, financial work should
be focused, regularly analyze, synthesize and evaluate financial indicators, as
well as forecasting financial situation of enterprises in certain time periods,
thereby giving economic solutions in general and financial solutions in
particular suitably. Financial assessment is a complex, new, unapplied issue
commonly and regularly for Vietnamese enterprises, but its role increasingly
important in enterprise management. Therefore, enterprises need to perform

well the organization and financial analysis, because this is one of the
important factors determining success or failure of enterprises.
The topic deep learns the issues related to the financial situation of the
enterprise such as general theory of corporate finance, the indicators to assess
the financial situation of Vicem Hoang Thach Cement Company Limited.
The topic ‘’Financial situation of Vicem Hoang Thach Cement
Company Limited’’ aims for the following purposes:
+ Systematizing theoretical issues on corporate finance and corporate finance
management.
+ Learning about the company's financial situation, reviewing and assessing
the company's financial situation in 2020 on comparison basis with 2019
through the results achieved in two years.
+ Proposing some solutions to improve the financial situation at the Company
in the near future.
4. Objectives and research questions
- Objectives: The topic deep learns and evaluates the financial situation
and some solution to improve financial situation of Vicem Hoang Thach
Cement Company Limited.
- Research questions:

Student: Pham Thi Thuy Chinh

5

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

+ What is financial situation of enterprises?
+ What are the indicators for assessing financial situation?
+ Which factors affect financial situation?
+ How had been the financial situation of Vicem Hoang Thach Cement
Company Limited being during 2019 - 2020? What are the achievements and
limitations?
+ What are the goals and development orientation of Vicem Hoang Thach
Cement Company Limited? What solutions are needed to improve financial
performance of Vicem Hoang Thach Cement Company Limited in the near
future?
5. Scope of the study
- Subject of study: The financial situation of Vicem Hoang Thach Cement
Company Limited
- Space: Vicem Hoang Thach Cement company limited.
- Time range: Collecting statistical data and documents 2019 and 2020 at
Vicem Hoang Thach Cement Company Limited
6. Data and research methodology
Methods that are applied mainly:
+ Methods of comparing and synthesizing actual data collected during the
internship at the company, the 2019-2020 Financial Statements system and
information obtained from the accounting - finance departure to analyze
volatility, development trends. Then, the administrator will give appropriate
solutions to improve, stabilize and develop the financial situation of the
company.
+ In addition, there is a combination among other methods such as balance
method, ratio method, trend analysis ...
7.Thesis Structure:

Student: Pham Thi Thuy Chinh

6

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

Regarding the topic structure, except for the introduction and
conclusion, the thesis layout consists of 3 chapters:
Chapter 1: Theoretical background of financial situation of a
company.
Chapter 2: Financial situation of Vicem Hoang Thach Cement
Company Limited.
Chapter 3: Solutions to improving the financial situation of Vicem Hoang
Thach Cement Company Limited.

Student: Pham Thi Thuy Chinh

7

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

CHAPTER ONE: THEORETICAL BACKGROUND OF FINANCIAL
SITUATION OF A COMPANY
1.1. Corporate finance and financial management
1.1.1. Corporate finance and financial decisions
1.1.1.1 Definition of corporate finance
Under Vietnamese Enterprise Law in 2014, "the enterprise is an
organization
with its name, assets, head office and registered under the provisions
established by law for business purposes”. It also stipulates “Business is the
continuous implementation of one, some or all stages of the investment
process, from production to consumption of products or providing services
on the market for generating profits purposes". Thus, an enterprise is an
economic organization that carries out production and supply goods to
consumers through the market for profit-making purposes.
In essence, corporate finance is economic relations in the form of arising
value associated with the creation and use of monetary funds of enterprises in
course of its operation.
In form, corporate finance is monetary funds in process of creation,
distribution, use and advocacy associated with operation of enterprises.
Some other opinions said that: Corporate finance is a method of mobilizing,
allocating and using financial resources of enterprises to achieve business
objectives.
The main financial relations in enterprises:
- Financial relation between enterprises and the State.
- Financial relations between enterprises and economic subjects and
other social organizations.
- Financial relations between enterprises and labors in enterprises.

Student: Pham Thi Thuy Chinh

8

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

- Financial relations between enterprises and their owners.
- Financial relations within enterprises.
1.1.1.2. Financial decisions
Despite being not unified on the concept of corporate finance, however all
concepts said that: Corporate finance essentially research about three major
decisions, namely investment decision, capital resource decision and profit
distribution decision.


Investment decision: Investment decision: Decisions related to

total value of assets and value of each part of assets (fixed assets and current
assets). The investment decision affects the left part (the assets) of balance
sheet. Major investment decisions of enterprises include:
- Investment decision on current assets: decision on fund reserve,
inventory decision, sales policy decision...
- Investment decision on fixed assets: decisions on purchase of fixed

assets, decisions on project investment, decisions on long-term financial
investment…
- Decision on relationship between investment in current assets and
investment in fixed assets: decision on using business leverage, break-even
point decision.
Investment decision is considered the most important of corporate
financial decisions because it creates value for enterprises. A right investment
decision will contribute to increase value of enterprises, thereby increasing
value of assets for owners, opposite a wrong investment decision will damage
value of enterprise, leading to losses assets for enterprise owners.
 Financing decision: decisions relate to which capital source should be
chosen to supply for investment decisions. Capital source decision impacts on

Student: Pham Thi Thuy Chinh

9

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

the right of balance sheet (the capital). Main capital mobilization decisions of
enterprises include:
- Decision to mobilize short-term capital: decide on borrowing shortterm loan or use commercial credit.
- Decision to mobilize long-term capital: decision on use long-term debt
through long-term bank loans or company bond issues; decision on issuing

share capital (ordinary or preferred shares); decision on relationship between
debt and equity (financial leverage).
In order to make right capital mobilization decisions, financial managers
must have firm grasp of advantages and disadvantages of using capital raising
tools; accurately assessing current situation and properly predicting the
development of market - price in the future ... before making decision on
raising capital.
 Dividend decision: associating with the decision on dividend
distribution or dividend policy of enterprise. Financial managers will have to
choose between using most of profit after taxes to pay dividends, or keeping it
for reinvestment. These decisions relate to how enterprises should pursue the
dividend policy and whether the dividend policy will affect corporate value or
companies's stock price in the market or not.
In addition to the three main types of decisions that are made in corporate
finance, there are many other types of decisions related to business operations
of enterprises such as merger decision, buying and selling decisions, decision
on preventing financial risks in production and business activities of
enterprises...
Based on implementation time, it is possible to divide financial decisions
of enterprises into 2 groups: long-term financial decision and short-term
financial decision.

Student: Pham Thi Thuy Chinh

10

Class: CQ55/11.05


Graduation Thesis

Finance

Academy of

 Long-term financial decision: Strategic decisions have long-lasting
influence on survival and development of enterprises. Each of these decisions
requires administrators to carefully consider, methodically and scientifically
analyze to ensure to minimize risks that may occur. Long-term financial
decision includes:
- Long-term investment decision: decision on choosing investment
project, opportunities of investment which enterprises should invest under
limited financial resources to maximize value for owners.
- Decision on raising long-term capital: the decision on choosing
sources to raise long-term capital and how much scale to maximize value for
owners.
- Decision on profit distribution policy of enterprise: It is a decision to
choose how much profit should be spent to owners, how much profit should
be spent to re-invest in enterprises to maximize value for owners.
 Short-term financial decision: These are operational decisions, which
do not greatly affect existence and development of enterprises; so they are
also called tactical financial decisions. Some short-term financial decisions:
- Decision on reserving capital in cash.
- Decision on receivable debts.
- Decision on payment discounts.
- Decision on inventory capital reserves.
- Other short-term financial decisions: decisions on depreciation of
fixed assets, decisions on provisioning…
1.1.2. Financial management
1.1.2.1. Definition of financial management
Corporate finance management is selecting, making decision and

organizing implementation of financial decisions to achieve the operational

Student: Pham Thi Thuy Chinh

11

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

goals of the business. Because financial decisions are associated with the
creation distribution and utilization of the monetary funds during the
operation, corporate financial management is considered as the process of
planning, implementing, adjusting and controlling the monetary funds to meet
the enterprise’s demands.
Corporate finance management involves three main types of
decisions: investment decisions, capital mobilization decisions, and dividend
decisions so as to be most beneficial to business owners.
Corporate finance management is a part, the most important content
of corporate governance, closely related and affecting all aspects of business
operation. Most corporate governance decisions are based on the results that
are drawn from the financial evaluation of corporate governance. This comes
from the role of corporate finance management.
1.1.2.2. The role of financial management in a company
Financial management has always played an important role in business
management activities. Financial management determines the success or

failure of enterprises in business process because: the financial situation of
enterprises is related and affects all activities of enterprises; The greater
enterprise scale is, the greater decisions of managers affect the business
situation and business performance; Financial situation information is the
important basis for business managers in controlling and directing activities of
enterprises.
The role of financial management for operations of enterprises is
expressed through the following main parts:
 Mobilizing adequately and timely capital for business activities of
enterprises: during operation of enterprises, there usually arise short-term and
long-term capital needs for regular business operation as well as development

Student: Pham Thi Thuy Chinh

12

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

investment of enterprises. The role of corporate finance is primarily reflected
in the proper determination of capital needs for enterprise's business
operations during period and timely responding to capital needs for its
operations. Today, along with the development of economy, some new forms
have been arised to allow enterprises to raise capital outside. Therefore, role
of financial management is more and more important in proactively selecting

forms and methods of capital mobilization to ensure smooth and continuous
operation of enterprises with capital raising costs at low level.
 Organizing the use of capital economically and effectively
contributing to improving business performance of enterprises: The
selection of optimal investment projects on the basis of consideration and
comparison among profitability ratio, cost of capital mobilization and level of
risk ... administrators has created premise for save and high efficiency of
capital use. The organization of timely and sufficient capital mobilization will
help enterprises take advantage of business opportunities, increase their
revenue and profit. Choosing appropriate form and method of capital
mobilization, ensuring optimal capital structure can help to reduce cost of
capital use, contribute to increase profits and ROE of enterprises. In addition,
mobilizing maximum amount of existing capital to business activities can
help enterprises avoid losing due to capital stagnation, increase asset turnover,
reduce borrowed capital, thereby reducing loan interest payment to contribute
to increase profit after taxes of enterprises.
 Comprehensively inspecting and supervising all sides of business
activities of enterprises: through daily review of currency collection and
spending, through analysis and assessment of financial situation and
performing financial indicators, financial managers can control promptly and
comprehensively all sides of activities of enterprises, thereby pointing out

Student: Pham Thi Thuy Chinh

13

Class: CQ55/11.05


Graduation Thesis

Finance

Academy of

shortcomings and untapped potentials to make appropriate decisions, regulate
activities to achieve the set goals of enterprises.
1.1.2.3. Contents of the financial management of a company
The contents of financial management includes the following main
contents:
Participate in the process of appreciation and selection of investment
decisions
Prospects of a business in the future depend heavily on large-scale
and long-term investment decisions such as decisions on investment in
technological innovation, production and business expansion, new products ...
To make investment decision requires businesses to take economy, technology
and finance into consideration. Particularly, in term of finance, the capital
expenditures for investment and the estimated return of investment must be
considered. In other words, cash outflows and cash inflows related to the
investment should be considered to assess financial investment opportunities.
It is the process of making an estimate of the investment capital and assessing
the financial efficiency of the investment.
Determine capital needs and organize capital mobilization promptly
to meet the operation’s need
Administrators have to determine capital requirements necessary for
the enterprise’s operation within the period (long-term capital and short-term
capital) Next is organization the mobilization of capital sources promptly,
fully and favorably for the operation of enterprises.
Use the existing capital effectively, manage the revenues and
expenditures strictly and ensure the enterprise’s liquidity
Administrators seek every solutions to mobilize the enterprise’ s

current capital into the operational activity, timely release of stagnant capital,

Student: Pham Thi Thuy Chinh

14

Class: CQ55/11.05


Graduation Thesis
Finance

Academy of

closely monitor and implement well the payment, recovery of sales proceeds
and other revenues as well as strictly manage all expenses incurred during the
operation process; regularly seek measures to establish a balance between
revenue and expenditure with money, ensuring that the business is always
able to pay due debts.
Implement profit distribution, budget and utilize enterprise’s funds
Implementing after-taxed profit distribution sensibly as well as setting
up and making good use of enterprise’s funds will contribute to the
development of the enterprise, improve the material and spiritual life of
workers, harmoniously resolve the immediate interests of the owner with
long-term benefits - the growth of the business.
Regularly control enterprise’s operational activity
Through

daily

revenue

and

expenditure

situation,

financial

statements, the implementation of financial ratios that allow control of the
enterprise’s operation. On the other hand, through periodic analysis of
business’s financial situation, evaluate the efficiency of capital use, the
strengths and weaknesses in the management process, forecast the financial
situation of the business, thereby help leaders make appropriate decisions
timely to adjust business and financial operations of the business in the
following period.
Implement financial planning
Enterprise’s financing activities should be scheduled through
financial plan, a superior financial plan would help entity administrators make
proper financial decisions in order to achieve enterprise’s goals.
1.2. Financial situation of a company
1.2.1. Definition of financial situation

Student: Pham Thi Thuy Chinh

15

Class: CQ55/11.05

Graduation Thesis
Finance

Academy of

The financial situation of a company is measured by the performance it
takes in company financial statements: a positive and growing cash flow
statement; growing profits in the profit and loss statement; and a balance of
assets, liabilities, and owner's equity in the balance sheet.
Objectives of studying corporate financial situation
The primary roles of the study of corporate financial situation is to
help corporate administrators and subjects that are concerned with business
operation make proper decisions in business. Studying corporate financial
situation needs to meet the following objectives:
Firstly, study enterprise’s financial situation on different aspects
namely capital mobilization, capital investment and utilization, debt situation
and liquidity measures… in order to provide information to related subjects
that are concerned with enterprise’s operation such as investors, creditors,
enterprise administrators, tax company, employees…
Secondly, orient the decisions of subjects in the direction suitable to
the actual situation of enterprises such as funding decisions, investment
decisions, profit distribution decisions ...
Thirdly, become the basic of financial forecast, help administrators
forecast financial potentiality of the enterprise in the future.
Fourthly, studying financial situation is the base of controlling
enterprise’s operational activities based on testing, evaluating, comparing the
actual outcome with rejected outcome. Then, the strengths and weaknesses
are determined to help make proper decisions and solutions to ensure the
business’s efficiency.

1.2.2. Indicators for assessing financial situation of a company
1.2.2.1. Assets and Asset Structure
What Is an Asset?

Student: Pham Thi Thuy Chinh

16

Class: CQ55/11.05