Managing cash flow of food processing enterprises listed on vietnam stock market

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INTRODUCTION

1. Imperativeness of the study
In fact, many profitable businesses can go bankrupt if cash flow is not managed
closely. Therefore, the change in perception from considering only the profit to
seeing the money flow management is a necessity for the business financial
managers of Vietnam. However, cash flow management is a relatively new
issue for enterprise in Vietnam in general and food processing businesses in
particular so the embarrassment and arising defects are unavoidable; as a result
cash flow management did not meet the required expectations, the inability to
meet payment needs of businesses is not small. Especially in the context of the
complex changing business environment, competition becomes fiercer, a series
of corporate bankrupt, the survival of enterprises will hardly be sustainable if
the cash flow management is not enhanced towards tighter, more
comprehensive and more effective.

Food processing enterprises in Vietnam are businesses trading essential
products which closely linked to the agricultural economy of Vietnam.
However, the food processing enterprises in Vietnam still operate in terms of
habit, there are no scientific computing in business management in general and
in operating cash flow management in particular. Especially, the operation of
food processing enterprises is characterized by great frequency cash inflows
and cash outflows. Therefore, good cash flow management will help food
processing businesses survive and will overcome the crisis more easily.
From the above fact, the study "Managing cash flow of food processing
enterprises in Vietnam" is very essential.
2. Research Objectives
Based on the perspective of the researcher and the above analysis, the research
goals of the project focused on the following issues:

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- Clarify the reasoning of business cash flow management and build up the
evaluation criteria of cash flow management in accordance with the
characteristics of food processing enterprises listed Vietnam.
- Analyze and evaluate the real situation of the cash flow management of food
processing enterprises in Vietnam.
- Propose some solutions to enhance cash flow management of food processing
enterprises in Vietnam.
3. Object and scope of the research
3.1. Object of study
The subject of the study is cash flow management of the business.
In this study, the author has focused on cash flow management for operating
cash flow of the business.
3.2. Scope of Research
About time: the period of 2007-2012.
About space: 53 food processing businesses listed on Vietnam stock market.
4. Contribution of the research
(1) The author has proposed a new approach in the cash flow management of
businesses. Managing cash flow needs to be understood as a process involving
all business operations of the enterprise.
(2) The author has developed a system of governance indicators evaluating the
cash flow of the business.
(3) The author has outlined the factors (subjective and objective) which have
impacts on the cash flow management of the business; at the same time, used
these factors to assess the situation of weak cash flow management of the food
processing listed businesses.
(4) The author has carried out deep interviews with questionnaires to chief
financial officer, chief accountant, caseworker orders from 8 food processing
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listed businesses on HSX and HNX, and in-depth interviews with financial and
audit experts to provide information in the process of analysis and assessment
of cash flow management of these businesses.
(5) The author has used quantitative research methods through data collection
of secondary finance to construct the study sample with 15 among 53
businesses and use the STATA software for analyzing factors affecting cash
flow management in the food processing listed enterprises.
(6) The author has proposed building cash flow forecasting model with the food
processing listed businesses through analysis, evaluation of 6 cash flow
forecasting models which are widely used in the world and association with
Vietnam conditions. At the same time, the author has shown the positive impact
of cash flow forecast on the cash flow management of food processing listed
businesses.
(7) The author has studied Stone's application to build optimized budget models
for food processing listed businesses, which help cash flow management of
these companies achieve better results.

5. Structure of the research
In addition to the introduction and conclusion, the thesis is structured into 4
chapters, as follows:

Chapter 1: Overview of research and research methods
Chapter 2: The basic theoretical issues of cash flow management of businesses.
Chapter 3: Real situation of managing cash flow of food processing enterprises
listed on the Vietnam stock market.
Chapter 4: Solutions to enhance cash flow management of food processing
enterprises listed on the Vietnam stock market.

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CHAPTER 1: OVERVIEW OF THE RESEARCH AND
METHODOLOGY

1.1. Research Overview

1.1.1. Studies abroad
The author has overviewed the research of authors in the world according to 4
contents:
- The role of cash flow management.
- The content of cash flow management and fund management.
- Factors affecting cash flow management.
- Cash flow management model.
It can be seen that the basic research in the world has provided different
approaches to cash flow management as well as evaluated the impact of cash
flow management on businesses. However, no study has evaluated the impact
of total factor group to cash flow management of the business. So we need to
conduct a study of a general nature, combining elements of management affects
the cash flow management of the business. This suggests the study on the
following directions: (i) evaluate all factors affecting cash flow management of
the business; (ii) quantify the factors that impact on cash flow management and
construction of model cash flow management of the business; (iii) appropriate
techniques which are used for cash flow management.
1.1.2. Studies in Vietnam
Cash flow management has an important role and has become increasingly
more important for every business. However, at present, in Vietnam, the
research on the reality of cash flow management is very limited, no study has
yet approached profoundly and completely.
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Through comprehensive research assessment, we need to have a comprehensive
approach project on cash flow management of the business.
1.2. Research Questions
1. Which contents are included in cash flow management of the business?
2. What factors affect the cash flow management of the food processing
businesses listed on the stock market in Vietnam?
3. How does cash flow management influence the operation of enterprises?
4. Do food processing listed businesses use models in the administration of cash
flow? Which cash flow management model fits with these businesses?
1.3. Research Methodology
1.3.1. Approach
Subjects of the research are approached towards a comprehensive way in terms
of the process from the emergence of cash inflows and outflows, cash flow
planning, to forecast cash flow and build the optimal budget.
1.3.2. Variables of the research
Based on these hypotheses, the research focuses on the following variables:
Opportunity costs, transaction costs, the demand for money (based on cash flow
forecast).
Net revenue, receivables, payables, inventory, cash inflows and outflows. These
variables help business to forecast the money needed. Thus helping to
determine the optimal level of reserve money.
1.3.3. Information collection methods
Primary information collection: deep interview with financial managers, chief
accountants, line worker, at the same time consulting experts in the field of
financial management and auditors.
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Secondary information collection: previous financial accounting information
and inheritance studies in the country and in the world which related to cash
flow management.

1.3.4. The sample research
Statistical analysis describes cash flow management situation: 15 out of 53
businesses.
Applied research and build models that predict cash flow and cash optimization:
the data of 53 companies (Overall).
In-depth interviews: 4 food processing businesses listed on HSX and other four
ones listed on HNX.
1.3.5. Synthetic methods and data processing
The method of analysis and synthesis of information are described in detail,
including descriptive statistical analysis method, the method uses econometric
modeling quantitative analysis, comparative analysis of the control and
scenarios analysis and expert method.

Conclusion of Chapter 1

From the synthesis of the research in the country and abroad, the space of the
research is determined. This is a pre-condition to guide the direction for the
research of the author. Accordingly, research objectives, research subjects and
research scopes are defined. The author has developed modeling research
questions and hypotheses, thereby choosing research methods (a combination of
qualitative research and quantitative research through a survey and in-depth
interviews).


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CHAPTER 2: BASIC THEORETICAL PROBLEMS OF
CASH FLOW MANAGEMENT OF BUSINESS

2.1. Overview of cash flow of business
2.1.1. General overview of business
Enterprises can be classified according to many different criteria; in the thesis,
the author uses the classification criteria in the form of business ownership
(including SOEs and private enterprises) and specific criteria for business
(according to the general classification criteria of business classification
systems in Vietnam and around the world, in which the author focuses on how
businesses are classified under the general criteria of ICB).
2.1.2. Cash flow of business
When referring to cash flow of a company, there is not a concept of money flow
in general, we need to understand the concept of cash flow through cash
inflows, outflows and net cash flow. Net cash flow is determined by the total
amount in a period minus the amount spent in the corresponding period. Cash
flow is recorded under actual incurred amount method, which is different from
the target profit of a period calculated according to the accrual method.
Cash flow characteristics of the company are based on three activities
(production business, finance and investments)
2.2. Cash flow management of business
2.2.1. The concept of cash flow
There are many different ways to understand and approach the cash flow;
according to the author cash flow management should be understood in a
comprehensively process.
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Cash flow management is a continuous effort to minimize the negative impacts
during operations and focus on money management principles, "not too much
and not too little money".
As slowly as possible As quickly as possible
Cash
Material

Inventory
Receivables
Purchasing
Manufacturing
Collection
Sales

Figure 2.1. Cash flow management process
2.2.2. Content of cash flow management
Managing cash flow should be implemented in accordance with the full range
of content from arising transactions, recognition and control to the financial
transactions in order to optimize funds and the handling of funds of enterprises.
So, basically the contents of the cash flow management including determining
cash inflows (revenues), determining cash outflows (expenditures), planning for
cash flow and determining optimal budgets.
Cash inflows and outflows are determined under direct and indirect method.
Scheduling cash flow is based on cash flow forecasts (6 methods of forecasting
cash flows)
Building up optimal funds (studying 3 optimal funding models which are
widely used around the world: Baumol, Miller - Orr, and Stone models).


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2.2.3. Evaluation criteria of cash flow management
Managing cash flow of the business is well assessed when the payment needs of
businesses are met in full. The ratio reflects the cash flow, including:
(i) Full affordability of cash flows: Ability to pay the full fixed costs of cash
flow; Ability to pay total debt; Ability to repay short-term debt; Ability to
reinvest.

(ii) The ability to generate cash from operations of the business: The ratio of
cash flow/revenue; The ratio of cash flow/profit after tax; The ration of cash
flow/assets; The ratio of cash flow/equity; The ratio of cash flow/share.
2.3. Factors affecting cash flow management of the business
2.3.1. Subjective factors

Cost of debt and funding structure, content selection and cash flow management
techniques, the capacity of financial management, commercial credit policies of
the enterprises.
2.3.2. Objective factors:
business characteristics, interest rates and economic
indicators, economic cycles and financial needs of businesses, financial markets
and financial institutions.

Conclusion of Chapter 2
Through chapter 2, the author has outlined the basic content of cash flow
management of the company, from which proposed a more comprehensive
understanding of cash flow management of business by the process.
Besides, the author also generalize the factors affecting cash flow management
of the company.

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Chapter 3
The real situation of cash flow management of food processing companies
listed on Vietnam’s stock market
3.1 Characteristics of the food processing companies that affect cash flow
management
According to the Industry Classification Benchmark structure for sector
analysis, the companies listed on Vietnam’s stock market are allocated to the

subsector based on their source of revenue or where they constitutes the
majority of revenue. Consequently, up to the date of 31
st
May 2013, these food
processing companies have been classified to the third level subsector including
53 companies (there are 26 food companies and 27 aquaculture and seafood
companies).
In Vietnam, under the government’s decree No 56/2009/NĐ-CP dated 30
th
June
2009, most of these companies are large scale ones. Their business activities
closely associate with essential products and agricultural production in
Vietnam. Although the companies’ products serve the essential needs, their
operation decreases considerably due to the influence of economic recession. It
is clearly seen through the falling ratio of ROA, ROE, and ROCE at a low and
significant level.
3.2 The real situation of cash flow management of the food processing
companies listed on Vietnam’s stock market
According to the survey result of 15 food processing businesses listed on the
stock market and in-depth interview with chief financial officer, the cash flows
into and out of these businesses are determined by an indirect method.
Accordingly, the statement of cash flows reflecting cash flow coming in, cash
flow going out and net cash flow of the businesses is incorporated indirectly.
Under this method, the net cash flow of the company is based on the after – tax
profit margin adjusted for some items which are not the incurring cash on the
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balance sheet and show some changes in working capital. Therefore, the real
situation of managing cash flow in and out mainly bases on the administration
of the items which have a significant influence on changing cash flow in, cash

flow out and net cash flow. The following data reflect the current status of cash
flow management by these food processing companies.
3.2.1. The real situation of managing incoming cash flow
According to the result of data collection and analysis on the status of
receivables, it can be obviously seen that receivables accounted for a large
percentage and tend to increase. As of 31
st
December 2012, the percentage was
even higher in some enterprises, particularly in the field of aquaculture. For
example, the receivable per total assets at Gentraco was 62.07%, and Viet An
Seafood 43.22%.
Agricultural and seafood processing enterprises had a high inventory proportion
of the total assets and increase significantly in 2012. In addition, foreign
exchange losses, billing discounts and provision for credit risk also went up.
3.2.2. The real situation of managing outgoing cash flow
The cash flow out of a company consists of payments for a company’s business
activities in which payables play an important role. They have a vital impact on
the outgoing cash flow. The result of analyzing these food processing
companies’ data showed that the percentage of payables of the total pay was
high and increased rapidly in the period 2007 - 2012. In particular, the number
of enterprises with more than 50% was 31; especially Vietnam Thai Hoa Group
was 94%.
Furthermore, these companies did not use the policy of electronic payments to
balance cash flows in and out.


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3.2.3 The real situation of planning cash flow and building the optimal
budget

As the survey and in-depth interviews showed, planning cash flow was not paid
attention. The process of planning cash flow has not been fully implemented
from preparation, cash flow prediction and determination to establishment of
optimal budget. The companies are planning cash flows based on the balance of
revenue and incurring expenses, and have no plans for forecast. Moreover, cash
flow planning can only be done together with financial planning annually.
Because of not paying adequate attention to planning cash flow, these firms do
not use any model to forecast cash flow, do not really apply the model of
optimizing budgets in cash flow management, and do not overcome the
seasonal forecast and cash flow management.
3.3. Evaluating the real situation of cash flow management of the food
processing companies listed on Vietnam’s stock maket
The result of cash flow management is recognized through some of financial
indicators as follows.
Table 3.14. Cash flow ratios of listed food processing companies
Unit: times
Year 2007 2008 2009 2010 2011 2012
No. Ratio
1
Cash flow fixed charge coverage
0.08
0.27
0.17
0.09
0.07
0.71
2
Debt repayment from operating cash flow
(2.78)
0.03

(30.51)
6.76
1.22
(12.63)
3
Cash flow current ratio
(8.22)
(2.34)
(50.27)
15.00
2.48
(16.34)
4
Devidend payment from operating cash flow
0.10
2.52
0.00
2.14
0.02
(0.93)
5
Cash flow from continuing operations to sales
0.00 (0.01) 0.06 0.01 0.02 0.04
6
Cash to income ration
1.11 (1.53) (7.02) (1.65) (0.33) 6.05
7
Cash return on assets
0.02 0.01 0.07 0.01 0.02 0.09
8

Cash return on equity
0.07
(0.09)
0.05
(0.05)
(0.00)
0.10
(Resource: Stoxplus.com.vn and calculating of author)

3.3.1. Achievements
As can be seen from the table, the affordability is low, often maintain less
than 1.
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The food processing enterprises have covered several contents of cash flow
management such as management of receivable and payable accounts,
provision for bad debts despite the fact that the management is not paid as much
attention as profitability.
These enterprises have applied some measures to deal with temporary surplus
or shortage though funds have not been developed optimally.
Net working capital is maintained stable. Most of the businesses have already
complied the principle of capital allocationis, i.e. short-term capital financing
short-term assets, long-term capital financing long-term assets. Thus, the net
working capital of these companies has always been to maintain stable and
positive (42/53 companies).
3.3.2. Limitations and causes
(1) Limitations
After analyzing the real situation of cash flow management of these food
processing companies, there have existed some of basic limitations including

the risk of imbalance between revenues - costs, the low ability to pay the full
costs for fixed line money (less than 1), the low solvency for short-term debt,
the low ratio of cash flow / sales and and low rate of meeting the full payment
needs, the less than zero working capital of some companies, and the low ability
to generate cash (receivables> payables).
(2) Cause: There are two fundamental reasons as follows.
Subjective reasons: the cost of debt and capital structure is irrational; the choice
of cash flow management techniques is inconsistent and incomplete; the ability
to forecast cash flow is limited; not really building up optimal budget model is
not really developed; the scale of production is unreasonable; there are not
financial management speaclists; financial executives do not take cash flow
management into account; derived services and risk reduction of exchange rate
are not selected; the trade credit policy is not flexible and not directly linked to
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the changing market conditions.
Objective reasons: First, the interest rate policy of the State has changed and
interest rates on the financial market are unpredictable. Second, economic
cycles affect the operation of the business, and accordingly managing cash flow
is easier or harder based on the economic cycle. Third, exchange rate risk and
exchange rate policies do not facilitate export companies. The products and
services of financial markets and financial institutions are limited. Trading tools
for commercial credit are undeveloped. Besides, the quality of financial
statements, especially statements of cash flows is not high. Supporting services
for public liability do not grow, especially through the establishment and
operation of debt trading companies and commercial arbitration centers.


Conclusion of Chapter 3
On a theoretical basis for cash flow management, definitions of factors

affecting cash flow management, and the results of surveys and in-depth
interviews to analyze the actual circumstances of cash flow management among
these companies, some lessons are drawn besides several certain achievemnts.
The most major limitation is that these companies do not take care of planning
and forecasting cash flow. They have not chosen any model to forecast cash
flows. Cash flow forecasts are often combined with financial planning annually.
It is obviously showed that the demand for money has not been determined
suitably for business operations, so negative cash flow on a quarterly basis is
common in many businesses. In addition, most of the companies have not yet
realized the role of determining optimal budgets and building a suitable model
of optimal budgets.
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Chapter 4
SOLUTIONS TO STRENGTHEN CASH FLOW MANAGEMENT OF
FOOD PROCESSING COMPANIES LISTED ON VIETNAM’S STOCK
MARKET

4.1. Direct Solutions
4.1.1. Cash flow forecast
Developing regression models for multivariate time series is to forecast cash
flows from operations of a group of 53 companies. The regression equation is
constructed as follows:
CFT = a + b1 (CFT-1) + b2 (OIBDt-1) + b3 (rect-1) + b4 (INVT-1)
+ b5(PAYt-1) + Et (4.2)
Dependent variable: CFT is operating cash flow in a year t
Independent variables: OIBDt-i is operating income before depreciation in a
year ti
RECt-1 is receivable in a year t-1
INVt-1 is the inventory in a yeart-1

PAYt-1 is payable in a year t-1
Et is variable
Testing Methodology:
There are three methods of testing and estimating parameter of the regression
equation:
- POOLS (pooled OLS)
- Random effects (random effect factor)
- Fixed effects (fixed effect factor)
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Hypothesis:
H0: bi = 0 (Xi has no relationship with CF)
H1: bi ≠ 0 ((Xi has a relationship with CF)
Using STATA 11 and the data of 53 LPP companies in the period from 2007 -
2012.
The testing and estimation steps are performed as follows:
Step 1: Declare the dependent variable and independent variables of the
equation (4.2).
Step 2: Conduct to test the hypothesis.
The test of chaging error variance for POOLS and random effects methods
showed showed that error variance changes. Thus, to test and estimate the
coefficients of the model, it is necessary to use the fixed effects method. The
results are shown as follows:
Table 4.4. Hypothesis Results

Step 3: Write the regression equation.
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Based on the results of running the model in Table 4.4, the regression equation
is defined as follows:
CF
t
= - 87.512,43 + 0,4210556 (OIBD
t-1
) + 0,4276063 (REC
t-1
)
+ 0,6955193 (INV
t-1
) – 0,4129928 (PAY
t-1
) + e
t
(4.3)
The meaning of the model:
The model is used to forecast cash flows based on financial data related the
history.
According to the regression equation (4.3) on cash flow which has been
developed in conjunction with the data of listed food processing enterprises in
the period of 2007 - 2012, the cash flow of these businesses will be predicted.
4.1.2. Setting up a precondition for building optimal budget

Case Study: Applying the Stone model for building optimal to NTACO JSC,.
Step 1: Set the lower limit for the fund balance. This limit is related to the level
of spending security.
Based on the fund balance (cash and cash equivalents) quarterly for the period
from 2007 to 2012, combined with the demand for cash during the next year
and interviewed the chief accountant / chief financial officer, the amount of
minimum reserve is determined.
L = 23935.2 million VND
Step 2: Estimate the standard deviation of the cash flow
According to the historical data of NTACO cash flow, revenue and expenditure
budget variances are defined as: Vb = 7221778859.1 million VND.
Step 3: Decide the interest rate to determine the opportunity cost
NTACO does not make short-term investment in securities for the purpose of
ensuring safety for payment activities. Hence, the opportunity cost is based on
the interest rate prescribed by the central bank to commercial banks’s capital
raising activities. As discussed above, the interest rate is 10.05% / year.
Step 4: Estimate transaction costs related to selling or buying short-term
securities
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NTACO does not trading short-term investment in securities for the purpose of
ensuring liquidity and transaction costs of deposits are negligible (in the
interviews). Therefore, the transaction costs are tiny too. (Cb = 1)
Thus, the optimal cash reserves =
Optimal cash reserves = 29,931.25 million VND
In sum, optimal cash balance = 29.931,25 tr.đ
High cash balance: H = 3Z - 2L = 41.293,38
Chart:
Cash
Cash at bank/ Buy Securities

H1 = 41.293,38
Z*= 29.931,25
L1 = 23.935,18
Cash at bank/ Sell Securities
Time

4.2. Mô hình quản trị dòng tiền của Công ty NTACO
Step 5: Handling the budget surplus or deficit
a. Assumptions: NTACO use a credit line for 2013.
Credit limits are determined as follows: (in Appendix 1)
Credit Limit Demand in 2013 = 279 billion VND
b. Handling the budget surplus or deficit
The cash flow forecasted for 2003 as in the forecast equation 4.2 was 23,621.94
million VND.
Compared with optimal cash reserve Z * = 29,931.25 million VND
From this, it is easily seen that NTACO company will have budget surplus.
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Surplus amount = 6,309.31 VND.
Due to the fact that Vietnam's stock market is potentially at short-term risk and
NTACO cannot make short-term investments in the stock market, so the most
appropriate thing to do is that NTACO should make short-term cash
investments in short-term deposits at An Giang Vietcom bank. The three –
month period interest rate for deposit was 6.8% / year (according to the bank's
interest rates).
Hence, the interest that NTACO obtained from short-term investments of idle
cash is: 6309.31 x 6.8% / 4 = 107.26 million VND
(Detailed assessment of the impact of cash flow forecasting, optimal budget
building on operating efficiency of NTACO JSC, see Appendix 1)
4.1.3. Strengthening governance debt

- Assign decentralization workers who are in charge of receivables,
payables, cash separately.
- Enhance the recovery of receivables.
- Extend the time of payable payment.
- Balance the revenue - expenditure on the level of importance and
reconciliate with cash accounting.
- Change the appropriate sales policy.
4.2 Supplementary solutions
4.2.1. Developing human resources
- The separation of the chief accountant and chief financial officer is
needed in the financial management of enterprises.
- Increase awareness of leadership and management about cash flow.
- Raise awareness of employees about the importance of cash flow for
businesses.


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4.2.2. Developing a suitable production and business plan
It is necessary to combine doing market research and developing a production
plan to help these businesses plan an appropriate capital budget, select funding
channel as well as construct funds with the aim of not affecting solvency.
4.2.3. Developing flexible sales policies and enhancing marketing activities
Sales policy should be developed consistantly and steadily, decentralized
markedly among agent groups to create a partition (North, Central, South),
urban and rural areas.
According to the BMI overview report about food processing enterprises
(2013), Vietnam has a large income gap between urban and rural areas, so the
consumption pattern of these companies should change based on income. They
need to make the products in accordance with the tastes and incomes of each

type of market. Therefore, marketing policies should be developed to suit each
market segment.
4.2.4. Using a variety of products and services of commercial banks
The survey resultsc show that most of the companies only use international
payment operations as basic as L/C or T/T and are not interested in the
derivatives business. Meanwhile, rates have a huge effect on foreign trade
transactions. Exchange rates of currency pairs are constantly fluctuating.
Therefore, the exchange rate risk is inevitable. To reduce the negative impact of
exchange rate risk, the companies should choose the derivative transactions of
commercial banks.
4.2.5. Some other solutions
- Picking up to build cash flow management software.
- Combining a portion of cash flow management and other parts of the
accounting software.
- Managing order automation.
- Use additional indicators reflecting the quality of the cash flow of the
businesses apart from indicators reflecting traditional solvency which is
being widely used in the financial analysis in Vietnam.
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4.3. Recommendations
4.3.1. Recommendations for the Government
Tools of trade credit transactions
The Government should issue decrees guiding the implementation of the Law
on Negotiable Instruments dated 28 November 2005, whereby the Ministry of
Finance and Ministry of Industry and Commerce jointly issued the necessary
documents to guide the implementation in detail. Accordingly, the businesses
easily access and use the tools in this Law for payment operations. Moreover,
commercial banks will provide banking products associated with these tools for
these businesses.

The Government should officially set up the market to create favorable
conditions for the enterprises in order to enhance the use of bills of exchange.
This law should be split into two rules: (i) A draft law; (ii) A check law. Such
separation is consistent with international practices in general because many
countries in the world have law of drafts and checks.
Supporting services for debt management
The Government should create a legal framework and favorable conditions for
the formation of DATC and activities to help the businesses handle existing
debts and clear cash flow.
The Government should implement promotional activities to change the
companies’ perception, which commercial arbitrating operation will be trusted
by many companies.
4.3.2. Recommendations for the Ministry of Finance
The ministry should have rules and detailed guidelines for each sector, so the
disclosure of mandatory information for the listed companies is more complete
and thorough. In addition, this information will be useful when the businesses
approach suppliers, customers as well as domestic and international capital
suppliers.
4.3.3. Recommendations for State Bank
Interest rate policies and exchange rate policies have a close relationship and
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direct impact on the operation of businesses in general and food processing
enterprises in particular. Therefore, in the transition of post-recession period,
State bank should consider the liberalization of controling mechanisms of
interest rates to ensure the benefits of both commercial banks and enterprises,
and stabelize the operation of the economy.
4.3.4. Recommendations for commercial banks
Through these transactions, the banks need to strengthen the introduction of
products and services, such as:

- Products that help the businesses prevent exchange rate risks as Swap,
Options, and Futures.
- Products that help the businesses manage cash flow through the accounts
of managing working capital. Accordingly, these accounts play a role as a
place of regulating the cash flow of the businesses.

Conclusion of Chapter 4
From the theoretical basis, analysis and evaluation of the real sitauation of cash
flow management of the food processing companies in chapter 4, the writer has
proposed direct solutions (3 solutions for forecasting cash flow, building up
optimal budgets and managing the inventory), complementary solutions (consist
of 7 solutions) and recommendations for the implementation of these solutions
to enhance cash flow management of the business on Vietnam’s stock market.
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CONCLUSION

1. Theory
The author outlined the basic theoretical issues of cash flow management of the
enterprise including: an overview of the cash flow of the business, overview of
cash flow management of the business from concept, objective and content,
assessment criteria for cash flow management, to the factors affecting the cash
flow management of the business.
The author introduces the concept of comprehensive management of corporate
cash flow, cash flow management which need to be understood as a process of
management. In addition, the author has constructed the evaluation criteria
system for cash flow management of the business. On the basis of these
indicators, the authors evaluated the administration of the cash flow of the
processing food businesses in Vietnam either good or bad.
2. Research Methodology

The author has collected data from both primary and secondary sources. The
secondary sources are through the financial statements of the processing food
listed companies which have financial year ended annually on December 31
st

for the period from 2007 to 2012. Primary sources are through in-depth
interviews with processing food listed businesses, financial experts and
auditors.
The author has used a combination of qualitative and quantitative research
methods, especially the author uses the case study method to analyze and
assess the situation and proposes solutions to clarify the contents of the thesis.
Qualitative research methods are demonstrated through statistics and primary
data analysis and in-depth interview performance. Quantitative research
methods are used to quantify the impact of several factors on cash flow
management of the business. From there, the author analyzes and assesses the
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real situation, and constructs econometric models which with the aim of helping
businesses forecast cash flow and design the level of optimal cash reserves
through statistical methods and correlative regression methods (using STATA
11 software). In addition, the author has proposed a number of new indicators to
reflect the quality of the cash flow of the business beside the indicators reflect
the ability to pay (payment) in a traditional way which is being widely used in
the corporate finance analysis. Since then, the author has basis to propose
solution as well as propose the conditions for solutions to enhance cash flow
management of the food processing companies listed on the stock market of
Vietnam.
3. Results of the survey, interviews and analysis
The author has carried out a survey to get data from 2007 to 2012 of 15 among
53 food processing listed businesses for descriptive statistics and analysis.

The author has used the data of 53 food processing listed companies to build the
regression equation to determine the cash flow forecast of these companies (as
ARIMA forecasting method).
The author has done in-depth interviews with 4 food processing listed
businesses on HSX and 4 food processing listed businesses on HNX, and
consulted financial experts and the auditors who audited food processing listed
businesses to support the information for analysis and evaluation of cash flow
management of these businesses.

The results of statistical analysis and evaluation showed that cash flow
management is not adequately concerned by food processing listed businesses
reflected by the content of management which has not yet been fully and
comprehensively implemented.
4. Proposed Solutions
Based on statistics, in-depth interviews, analysis, testing and assessment of real
situation of the cash flow management of food processing listed businesses, the
author has proposed ê direct solutions (3 solutions of cash flow forecast,
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building up optimal fund and receivables and payables management), the
complementary solution (5 solutions) and has proposed the conditions for the
implementation of these solutions to enhance cash flow management of the
food processing businesses listed on Vietnam's stock market.
In the given solutions system, applied research for cash flow management
situation at the NTACO company are illustrated as practical solutions.
5. Limitation of the Research
Limitation of this study is that the author has not been fully quantified objective
factors affecting the content of cash flow management of the business. This
problem is a suggestion for further research.
The research scope is limited to the cash flow management of the food

processing listed companies. Therefore, it can be expanded for food processing
businesses in Vietnam (including listed and unlisted food processing ones).
This is also a controlled study to compare the administration of the cash flow of
the listed and unlisted food processing businesses. Also, we can assess the
impact of cash flow management of the business on business performance of
these businesses.

The author has tried to research, generalise, analyze, assess the cash flow
management of the food processing listed companies, and boldly applied
research methods; however, the shortcomings of the thesis is inevitable. The
author of the thesis hopefully to receive valuable comments from scientists, the
interested readers to help the thesis become more complete.

The author would like to thank sincerely!