(Luận văn thạc sĩ) solutions to improve business performance in hoang long mechanics technology joint stock company

ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

PHAN TIẾN THÀNH

SOLUTIONS TO IMPROVE BUSINESS PERFORMANCE
IN HOANG LONG MECHANICS TECHNOLOGY
JOINT STOCK COMPANY
GIẢI PHÁP NÂNG CAO HIỆU QUẢ HOẠT ĐỘNG
KINH DOANH TẠI CƠNG TY CỔ PHẦN CƠ KHÍ
CƠNG NGHỆ HỒNG LONG

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2020


ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

PHAN TIẾN THÀNH

SOLUTIONS TO IMPROVE BUSINESS PERFORMANCE
IN HOANG LONG MECHANICS TECHNOLOGY
JOINT STOCK COMPANY
GIẢI PHÁP NÂNG CAO HIỆU QUẢ HOẠT ĐỘNG
KINH DOANH TẠI CƠNG TY CỔ PHẦN CƠ KHÍ
CƠNG NGHỆ HỒNG LONG

Chuyên ngành: Quản trị kinh doanh
Mã số: 60 34 01 02
LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS. NGUYỄN XUÂN HUYNH

HÀ NỘI - 2020


DECLARATION

I confirm that the research in the thesis is the result of my independent work
during study and research period and it is not published in other’s research and
article.
The other’s research result and documentation (extraction, table, figure,
formula, and other document) used in the thesis are cited properly and have the
permission of the authors.
I assure in front of the Thesis defense council, Hanoi School of Business
and Management, and the laws for above-mentioned declaration.

Date…………………………..
Author

Phan Tien Thanh


ACKNOWLEDGEMENT
I would like to express my sincere thanks to the teachers and Faculty of
Business Administration who have devotedly taught and imparted valuable
knowledge to me during the course of studying at the school. In particular, I would

like to sincerely thank PhD. Nguyen Xuan Huynh has kindly instructed me to
complete this thesis.
Research results are my best effort in learning and research. However, I
would like to receive suggestions to continue adding and perfecting the Thesis.

Hanoi, ……………………… 2019

Phan Tien Thanh


TABLE OF CONTENTS

LIST OF FIGURES .................................................................................................... i
LIST OF TABLES..................................................................................................... ii
OPENING .................................................................................................................. 1
1.

The urgency of the topic ............................................................................................1

2.

Overview ...................................................................................................................1

3.

Research objectives ...................................................................................................2

4.

Research subjects .......................................................................................................3

5.

Scopes of research .....................................................................................................3

6.

Research method........................................................................................................3

7.

Contents of the thesis .................................................................................................5

CHAPTER 1: THEORETICAL AND OVERVIEW OF THE BUSINESS
PERFORMANCE OF THE ENTERPRISE .............................................................. 6
1.1 Definition and importance of business performance analysis ...................................6
1.1.1

Concept of analyzing business performance ...................................................6

1.1.2

Classification of business performance ...........................................................6

1.1.3

The require to improve business performance ................................................7

1.2 Criterias to evaluation Business performance ...........................................................8
1.2.1

Solvency ratio ..................................................................................................9

1.2.2

Effective in using assets ................................................................................10

1.2.3

Effective in using capital ...............................................................................13

1.2.4

Effective in using cost ...................................................................................14

1.3 Factors affecting business performance ..................................................................15
1.3.1

Objective factors ............................................................................................15

1.3.2

Subjective factors ..........................................................................................17

CHAPTER 2: SITUATION OF BUSINESS PERFORMANCE AT HOANG
LONG MECHANICICS TECHNOLOGY JOINT STOCK COMPANY. ............. 19
2.1 Overview of Hoang Long Mechanics Technology Joint Stock Company
Joint Stock Company .......................................................................................................19
2.1.1 History of establishment and development of Hoang Long Mechanics
Technology Joint Stock Company Joint Stock Company ...........................................19

2.1.2 Functions and duties of Hoang Long Mechanics Technology Joint Stock
Company......................................................................................................................21


2.1.3 Organizational structure of the company............................................................22
2.2 Overview of business performance in the period of 2016-2018 ...............................23
2.2.1 Overview of business performance in the period 2016-2018 .............................23
2.2.2 Analysis of revenue situation .............................................................................26
2.2.3 Analysis of cost situation ....................................................................................31
2.2.3 Analysis of profit situation .................................................................................40
2.3 Analysis of business performance at Hoang Long Mechanics Technology
Joint Stock Company Joint Stock Company ...................................................................51
2.3.1 Analyze the performance of using labor.............................................................51
2.3.2 Analyze the performance of account receivable management ...........................53
2.3.4 Analyze the performance of using assets ...........................................................58
2.3.5 Analyze the performance in using capital ..........................................................60
2.4 Assess the situation of business performance of Hoang Long Mechanics
Technology Joint Stock Company...................................................................................63
2.4.1 Achievements .....................................................................................................63
2.4.2

CHAPTER

Limitations, weaknesses and causes ..............................................................64

3:

SOLUTIONS

TO

IMPROVE

THE

BUSINESS

PERFORMANCE OF HOANG LONG MECHANICS TECHNOLOGY
JOINT STOCK COMPANY. .................................................................................. 67
3.1 Business direction and strategy of Hoang Long Mechanics Technology Joint
Stock Company in 2019-2020 .........................................................................................67
3.2 Solutions to improve the business operation of Hoang Long Mechanics
Technology Joint Stock Company in 2019-2020 ............................................................68
3.2.1 Solutions to increase revenue .............................................................................68
3.2.2 Solutions to reduce cost ......................................................................................69
3.2.3 Solutions to exploitation the capital ...................................................................69
3.2.4 Solutions to improve marketing performance ....................................................70
3.2.5 Solutions to improve the quality of human resources and retain talents ............71
3.2.6 Solutions to improve data analysis methods of Accounting Department ...........72

CONCLUSION ....................................................................................................... 73
REFERENCES ........................................................................................................ 75


LIST OF FIGURES

Figure 1 Company management diagram .......................................................................... 22
Figure 2: Business performance phase 2016 – 2018 ......................................................... 25
Figure 3: Business performance phase 2016 – 2018 ......................................................... 25
Figure 4: Total revenue 2016............................................................................................. 28

Figure 5: Total revenue 2017............................................................................................. 28
Figure 6: Total revenue 2018............................................................................................. 29
Figure 7: Total revenue and cost from 2016 to 2018 ........................................................ 32
Figure 8: Cost of goods sold 2016 - 2018 ......................................................................... 34
Figure 9: Cost of consulting, design 2016 - 2018.............................................................. 34
Figure 10: Cost of construction activities 2016 - 2018 .................................................... 36
Figure 11: Cost of processing activities 2016 - 2018 ........................................................ 37
Figure 12: Cost of other business activities 2016 - 2018 .................................................. 38
Figure 13: Cost of sales 2016 - 2018 ................................................................................. 38
Figure 14: Enterprise Managing cost 2016 - 2018 ............................................................ 39
Figure 15: Financial operation expenses 2016 - 2018 ....................................................... 40
Figure 16: Profit situation 2016 - 2018 ............................................................................. 41
Figure 17: Profit before and after corporate income tax from 2016 - 2018 ...................... 46
Figure 18: Summary of factors that increase and decrease profit before tax in 2017
compared to 2016 of the company .................................................................................... 49
Figure 19: Summary of factors that increased the profit before tax in 2018
compared to 2017 of the company .................................................................................... 51
Figure 20: Labor structure in the Company....................................................................... 52

i


LIST OF TABLES

Table 1: Business performance phase 2016 – 2018 .......................................................... 24
Table 2: Revenue over 3 years from 2016 - 2018 ............................................................. 27
Table 3: Cost situation in 3 years from 2016 - 2018 ......................................................... 33
Table 4: Profit situation in 3 years from 2016 - 2018 ....................................................... 42
Table 5: Analyze of factors affecting profit over 03 yearsm 2016 - 2018 ........................ 47
Table 6: Analyze of debt situation over 03 years 2016 - 2018 .......................................... 54

Table 7: Analyze the performance of solvency over 03 years 2016 - 2018 ...................... 56
Table 8: Profitability analysis over 03 years 2016 - 2018 ................................................. 58
Table 9: Analyze the business performance of the company over 03 years 2016 2018 ................................................................................................................................... 61

ii


OPENING
1. The urgency of the topic
Today, our country is in an open and competitive economy, which is also a
good opportunity for Vietnamese enterprises to develop internationally, in order to
survive and develop in an open environment. Fierce competition requires businesses
to find a foothold in the trade. One of the factors to determine that position is the
business performance of the business.
Analyzing business performance is very important and necessary for every
business. Through the analysis of business performance, it will help businesses
assess their business situation, identify the causes and sources of problems arising,
detect and exploit problems. potential resources of the enterprise, at the same time
take measures to overcome difficulties encountered by the enterprise. From there, it
is possible to propose appropriate business strategies for the next period to help
businesses improve business performance.
Based on the actual situation of the enterprise, Hoang Long Mechanics
Technology Joint Stock Company, the total revenue of the Company increased by
more than 10%, it was not as planned but the cost of goods sold also increased with
the same number. Therefore, I desire to learn more about business performance and
find the right direction for the Company, I chose the topic "Solutions to improve
business performance at Hoang Long Mechanics Technology Joint Stock
Company” for my graduation thesis.
2. Overview
Solutions to improve business performance are very important and there

have been many studies in this field such as: Analysis of business performance of
Vietnam Airlines Petroleum Company, Topical analyze business performance of
trading and service companies, Solutions to improve business performance
according to the accounting value of small and medium-sized enterprises in Thai
Binh province, and many research works other. However, small and medium-sized
enterprises in Hanoi are still limited in research projects and in particular, there is
no specific research project on production and business performance of Hoang
Long Mechanics Technology Joint Stock Company. Therefore, I chose the topic
1


"Solutions to improve business performance at Hoang Long Mechanics Technology
Joint Stock Company”.
The thesis is based on the combined knowledge from subjects such as:
Business development management, Financial and accounting management,
Management economics, Human resource management and talent to complete the
thesis. . The topic also focuses on analyzing business performance of Hoang Long
Mechanics Technology Joint Stock Company through 03 years from 2016 to 2018
based on financial statements, internal reports of enterprises and observing
operational situation. Actual production activities of the author. Through the
analysis of business performance, it will help businesses check and evaluate
business results, detect potential capabilities as well as recognize the strengths and
limitations of the joint-stock mechanical engineering company. Hoang Long
Mechanics Technology Joint Stock Company. That is an important basis for the
Company to make business decisions, prevent risks and improve business
performance.
3. Research objectives
After the research, the author will achieve:

- The author have a system of theoretical, updated knowledge, and research

methods for management.
- Assess the status of Hoang Long Jsc Company. On the basis of analyzing
and evaluating the business results that Hoang Long Mechanical Engineering Joint
Stock Company has achieved through the years 2016-2018, the author accurately
investigates the business performance and the situation of the company. capital
using, asset using situation, solvency of the company, find out the limitations that
exist in the company.
- Proposing solutions and business orientation for the next period, helping to
improve the remaining limitations and promoting the company's potentials,
contributing to improving business performance.

2


4. Research subjects
The object of the study is the performance of production and business
activities of Hoang Long Mechanics Technology Joint Stock Companyany,
specifically as follows:
-

Business results through revenue, cost and profit targets.

-

Capital use performance and profitability of capital

-

Overview of financial situation through financial coefficie

5. Scopes of research
-

Space: financial statements of Hoang Long Mechanics Technology
Joint Stock Company.

-

Address: No. 56, lane 177 Dinh Cong, Hoang Mai, Hanoi.

-

Time range: from 2016 to 2018.

6. Research method
The method of data collection
Methods of collecting secondary documents for the period 2016-2018
include:
-

Information on industries from prestigious State newspapers is a

useful source, manualy summarizing business results and reports of enterprises.
-

Textbooks on specific topics with clear guidance on existing

secondary data sources in the economic field.
-

Tertiary documents such as index tables and catalogs can also assist

in identifying secondary data. It is possible to access and search the complete
catalogs of this data on the Internet. Indexes and catalogs that have recently
appeared online have direct links to downloadable data files, usually in tabular
form.
-

Discussions, studies, erudite experts, librarians and instructors who

are knowledgeable about the topic.
Methods of primary data collection
The observation method is a method of controlling the recording of human
events or behaviors.This method is often used in combination with other methods to

3


cross-check data accuracy. Data collection In general, primary and secondary data
collection methods are common methods, which are used a lot in scientific research.
Methods of data analysis
-

Methods of detailed analysis:

Stemming from the content, object and task of analytical enterprises,
moderate economic analysis uses the research methods of other science subjects
such as statistics, accounting, finance, economic management, each method has
advantages and disadvantages and specific conditions of application, being
professional and technical, depending on the type of business and the nature of the

enterprise. economic phenomena, economic results, specific objects, sources of
data, data and for the purpose of analysis to select appropriate methods. [3]
-

Comparative method:

Comparison is a commonly used method for assessing results, identifying
locations and trends of fluctuations of analytical criteria. To apply the method of
comparison, it is necessary to ensure the conditions of comparison of the criteria:
+ Agree on the content, method of determination, time and unit of
comparison criteria.
+ Depending on the purpose of analysis to determine the comparative origin.
Comparative origin can choose time base (planning period, previous period, same
period of previous year) or spatial origin (compared with the whole, compared to
other units with similar conditions, compared to the innermost parts). overall the
period chosen as the comparison base is called the base period, and the period
chosen for analysis is the analysis period. The values of the norms calculated in
each corresponding period are the values of the base period and the analysis period.
In addition, in the analysis of economic activity, it is often necessary to compare
sales with costs to determine business results or compare specific criteria with
general indicators to determine its proportion in general criteria.
-

Method of diagram form
Diagrams and graphs used in the analysis to reflect the fluctuations of

economic indicators in different time periods or functionally interdependent
relationships among Economic indicators. When analyzing the situation or export
4

performance, we must make a table to write the data into the selected column lines,
actually we are applying the diagram form method, but this method It cannot be
used alone; it is also combined with other methods such as comparison method,
numerical difference method, density and rate. This is also a commonly used
method similar to the comparative method.

-

Balancing method
In the system of economic - financial indicators of enterprises, there are

many indicators related to each other by balanced relations. Balance relationships in
enterprises are of two types: general and specific. The overall balance is a balanced
relationship of general economic indicators.

-

Index method
The index method is applied to calculate and analyze the fluctuations and

the interrelated effects of economic indicators with one or more other factors.
Indicator indicators are determined by the comparative relation of an economic
indicator at different times, usually comparing the reporting period and the base
period.

7. Contents of the thesis
Beside the list of references, the attached annexes, the structure of the thesis
consists of 3 chapters:
- Chapter 1: Theoretical and overview of the business performance of the

Enterprise.
- Chapter 2: Situation of business performance at Hoang Long Mechanics
Technology Joint Stock Company.
- Chapter 3: Solutions to improve business performance at Hoang Long Mechanics
Technology Joint Stock Company.

5


CHAPTER 1: THEORETICAL AND OVERVIEW OF THE BUSINESS
PERFORMANCE OF THE ENTERPRISE
1.1 Definition and importance of business performance analysis
1.1.1 Concept of analyzing business performance
In the market economy, the issue that businesses are most concerned about
is production performance. Effective production and business can businesses
survive and grow. Under the ultimate goal, business performance is synonymous
with profits, it is the difference between the results obtained and the costs spent to
achieve that result. High or low business performance depends on the level of
organization of production and management of each enterprise. From the different
points of view, we can give the following general concept:
Business performance is an economic category concept that reflects the
focus of economic development in depth, reflecting the level of human resource
exploitation and costs in the production process to achieve the goal. business set
out. It is an increasingly important measure of economic growth and a basic basis
for assessing the implementation of economic goals of the enterprise in each period.

1.1.2 Classification of business performance
Classifying business performance by different criteria has practical effects in
management. It is the basis for determining business performance indicators and
levels, and at the same time proposing measures to improve the business

performance of the enterprise.
Business performance and socio-economic performance.
This classification is based on the profits that business activities bring to the
company such as profits, performance of using capital, assets ... for the company.
Besides, the company also relies on the performance that the company brings to the
society and economy such as promoting economic development, creating jobs for
workers... Particular business performance is the business performance gained from
the business activities of each enterprise. The common manifestation of particular
business performance is the profit that each business achieves. The socio-economic
performance contributes through the results of serving production, life, economic
6


restructuring, promoting production development and improving people's lives ....
There is a causal relationship and interaction between individual business
performance and socio-economic performance. National economic performance can
only be achieved on the basis of effective operation of enterprises. However, there
may be businesses that do not guarantee performance (suffer losses) but the
economy still gains performance. However, the loss of a certain business is only
acceptable at certain times due to objective reasons. Enterprises must pay attention
to socio-economic performance because it is the premise and conditions for
effective business enterprises. However, in order to achieve that, the State needs to
have a policy to ensure a harmonious combination of the interests of society with
the interests of businesses and individual workers. This classification helps
businesses assess their performance as well as help the authorities can support
businesses to operate more effectively.
Performance of part cost and total cost
The operation of any business is also associated with its environment and
market. Any business must rely on the market to solve key issues: what to do, how
to do business, for whom and for what cost? Each supplier conducts his or her own

business activities in specific conditions of resources, technical equipment,
organization and labor management, business management. They bring to the
market their products and services at a specific cost and every business wants to
consume their goods and services at the highest price. However, when they sell
their goods and services on the market, they can only sell at a market price, if their
products are exactly the same in terms of quality.

1.1.3 The require to improve business performance
Our economy is open for integration, thus creating opportunities and
challenges for Vietnamese businesses. To survive and develop, businesses must
know how to take advantage of opportunities, overcome difficulties and challenges,
gradually determine their position on trade. And it is important for every business to
constantly improve business performance for the following reasons:
Improving business performance is the way to ensure the survival and
development of businesses as well as the whole society. An enterprise wants to
survive and grow, it must operate effectively but its business performance reflects
7


the level of using resources (human resources, material resources, capital) to
achieve the defined goals of the enterprise. . The ultimate goal of most businesses is
profit. When the business is profitable, the business can guarantee the re-investment
process to expand production and also ensure the existence and development of the
business. Every business is a cell of society, so when the business grows, it also
contributes to the development of society. Therefore, improving business
performance is the basis to ensure the existence and development of businesses as
well as the whole society. [1]
Improve business performance to create competitive advantage and expand
market. In a market economy, businesses must compete to survive and grow, which
requires each business to give themselves an advantage to compete. That advantage

can be product quality, price, structure or product design. For example, businesses
can improve production technology, raise the level of using machinery and
equipment to create products of high quality and reasonable prices to attract
customers. Since then, businesses can be proactive in competition and create
favorable conditions for market expansion, contributing to improving business
performance. [2]
Improve business performance to ensure life for employees in the enterprise.
For each employee, wages are a key part of their livelihood. Therefore, striving to
increase the income of employees in the business is always an important goal of
every business. Because businesses can use wages as a tool to improve business
performance. The higher and more stable income together with bonuses will create
trust and enthusiasm for the whole enterprise, and the application of measures to
handle labor violations by deducting Salary will contribute to improving the sense
of responsibility for everyone.

1.2 Criterias to evaluation Business performance
Financial coefficients are considered to be the most typical signs of the
financial situation of an enterprise in a given period. Each different business at a
different time will use different financial coefficients to clearly and concretely
describe the financial situation of the enterprise. Therefore, the analysis of financial
coefficients is an important content in the process of corporate financial analysis.

8


1.2.1 Solvency ratio
-

Current solvency coefficient (current solvency ratio).

Formula:
Short-term assets
Current payment ratio

=
Short-term debt

This coefficient reflects the ability to convert assets into money to cover
short-term debts. Therefore, this ratio also shows the level of guarantee to pay
short-term debts of the business.
Normally, when this coefficient is low (less than 1), it shows that the ability
of enterprises to pay short-term debts is weak and also a warning sign of potential
financial difficulties that enterprises may encounter in debt payment. This high
coefficient indicates that the enterprise has a high ability to be ready to pay its due
debts. However, this ratio is not as high as possible, because this will reflect a large
amount of current working assets and the fact that these assets are inactive,
unprofitable and prove their effective use of assets. business is not high
However, this factor is large or small, depending on the characteristics of the
business. For example, for commercial enterprises, mobile assets often account for
a large proportion of total assets, so this coefficient is relatively high. Therefore,
when assessing the ability to pay short-term debts, it is necessary to base on the
typical coefficients of the same enterprises.
-

Quick solvency ratio:

Formula:
Short-term assets - Inventories
Quick ratio

=
Short-term debt

Quick solvency ratio is an indicator to evaluate stricter than solvency of the
enterprise. Here, inventories are excluded, because in current assets, inventories are
considered to be of low liquidity.
This coefficient is considered as a measure reflecting the solvency of the
enterprise's short-term debts. This is a target that is very interested by short-term
creditors because through this criterion, creditors can assess at the time of analysis,
whether or not the enterprise is able to immediately pay short-term debts. However,
9


in some cases, this indicator does not accurately reflect the solvency of the
enterprise, especially businesses with receivables accounting for a large proportion
of total working assets.
Therefore, to better assess the solvency of the enterprise, it is also possible
to use the instant solvency coefficient of the enterprise.
-

Coefficient of instant solvency

Formula:
Money + Cash equivalent
Instant payment coefficient

=
Short-term debt

In particular, cash includes: cash, deposits, money in transit. Cash

equivalents are short-term investments in securities, other short-term investments
can easily be converted into cash within 3 months and without major risk.
The ratio of instant solvency reflects the ability to pay short-term debts at any time,
because in the source of debt cover the business is very flexible.
-

Loan interest payment ratio
The interest payable is the cost of capital that the enterprise is obliged to pay

on time to the creditor. The source for paying interest is profit before interest and
taxes. The interest payment ratio reflects the relationship between profit before
interest and tax and payable interest.
Formula:
Profit before tax and interest
Interest payment ratio

=
Loan interests payable in the period

The interest payment ratio reflects the amount of profit before interest and
tax that the business can offset the amount of loan payable in the period to what
extent. If this coefficient is high, it shows that the business is effective, the
profitability of the capital is high enough to ensure payment of loan interests on
time.

1.2.2 Effective in using assets

-

Performance of using common assets:

Profitability ratio of assets:
10


This index reflects the enterprise's ability to generate after-tax profit for
business activities, determined by the following formula:
Profit after tax
Return on assets (ROA)

=
Average assets

This indicator shows how much profit after tax an enterprise invested in 1
asset. The higher this indicator proves the effective use of assets of the business,
contributing to improving the investment ability of the business owner.
-

Number of asset turnover:
Total net sales
Number of asset rotation

=
Average assets

This indicator shows how many rounds of an asset are rotating in a business
period. This higher indicator proves that the assets are moving quickly, contributing
to increased sales and is a condition to improve profits for businesses. If this
indicator is low, meaning that the assets are moving slowly, there may be
inventories and unfinished products, causing business turnover to decline. However,

this index depends on the characteristics of business lines and specific
characteristics of each enterprise.
-

Asset depreciation rate compared to net sales
The ability of an asset to generate net turnover is a basic economic indicator

for estimating investment capital when an enterprise wants an expected net
turnover, which is usually determined:
Average assets
Asset ratio of assets to net sales

=
Net sales

This indicator indicates how many VND of investment assets an enterprise
will earn in a net revenue. High net sales for the period.
-

The depreciation rate of the property compared to the after-tax profit:
Reflecting the enterprise's ability to generate after-tax profit for its business

activities, it is determined:

11


Average assets

The ratio of depreciation of

=

assets to profit after tax

Profit after tax

This indicator shows how much property assets a company will gain after 1
dong of profit after tax. The lower this index, the higher the performance of using
assets, the more attractive investment.
-

Inventory turnover count:
Cost of goods sold
The number of rotation of inventory

=
Average inventory

Inside:
Inventory at the beginning of the period
Average
inventory

=

+ Inventory at the end of the period
2

The number of turnover cycles of inventory shows how many times the

investment capital for inventory has been rotated in the period, the higher this
indicator, showing that the inventory is moving well. It is a factor that contributes to
increase sales and profits for businesses.
Formula:
360
Time 1 rotation of inventory

=
Inventory turnover count

In order to know how much capital a business wants to have a net revenue,
it is necessary to base on the inventory inventory coefficient determined by the
following formula:
Average inventory
Coefficient of inventories

=
Total net sales

-

Production capacity of fixed assets:
Revenue

Production capacity of fixed assets

=
Average fixed asset

This indicator shows how much revenue per 1 dong of fixed assets invested.

This indicator shows the production capacity of fixed assets, the higher the target,
12


the better the performance of fixed assets, which is a factor contributing to
improving the performance of business activities.
Formula:
Average value of fixed
assets in the period

=

Value of fixed assets at the beginning of the period
+ Value of fixed assets at the end of the period
2

-

Loss rate of fixed assets:
Average value of fixed assets
Loss ratio of fixed assets

=
Net sales

This indicator indicates how much VND is worth of fixed assets for an
enterprise to want a net revenue, which is the basis for appropriate fixed asset
investment in order to achieve the desired revenue.

1.2.3 Effective in using capital

-

Return on equity (ROE): The formula for determining:
Profit after tax
Return on equity (ROE)

=
Equity

This indicator shows how much profit after 1 dong of equity is generated.
The higher this indicator, the more positive the trend is, helping administrators to
raise new capital in the financial market to finance the growth of the business.
-

Efficient use of loan interest:
Profit before tax + Interest expense

Efficient use of loan interest

=
Interest expenses

This indicator reflects the safety, solvency of enterprises. The higher this
indicator proves the profitability of the loan as possible.
-

Loan interest rate:
Profit after tax x 100
Profitability ratio of the loan

=
Average loan amount
13


This indicator shows how much profit the enterprise uses after 100 VND of
loan money for its business operation. The higher this indicator proves good
business performance, this is an attractive factor for managers to make decisions to
borrow money to invest in production and business activities. This indicator also
proves the growth of enterprises.

1.2.4 Effective in using cost
-

Profitability ratio of cost of goods sold:
Gross profit on sale

Return on cost of goods sold

=
Cost of goods sold

The profitability ratio of the cost of goods sold indicates how much gross
profit the company invested in 1 cost of goods sold, the higher this indicator
indicates the higher the cost of goods sold. As a result, the company has increased
its sales volume. This indicator usually depends on the business characteristics of
each specific industry.
-

Profitability ratio of selling expenses:

Net profit from business activities

Profitability ratio of selling expenses

=
Selling expenses

This indicator shows how much profit the enterprise spends on 1 dong of
selling expenses. The higher this indicator proves that the greater the profit in
selling expenses, the business saves on selling costs.
-

Profitability ratio of enterprise management expenses:

Profitability ratio of enterprise
management expenses

Net profit from business activities
=
Enterprise Cost Management

This indicator shows how much profit an enterprise spends on 1 dong of
administrative expenses, the higher this indicator shows the greater the profitability
of its management expenses. Save on management costs.

14


1.3 Factors affecting business performance
Normally, when mentioning factors affecting the business operations of an

enterprise, it is classified factors affecting subjective and objective factors. More
specifically, subjective factors are those within the enterprise itself, and the
enterprise can control or adjust it. In contrast, objective factors are factors that
cannot be regulated and controlled by the enterprise.

1.3.1 Objective factors
Objective factors include political, legal, cultural, social, technological,
technical, economic, natural conditions, infrastructure and economic relations
factors, these are the factors. Factors that businesses can not control and have a
common impact on all businesses in the market. The study of these factors is not
aimed at controlling the enterprise's business, but it creates the best adaptability to
the movement trend of the business.
-

Political and legal factors:
Factors in the political and legal environment have a strong impact on the

formation and exploitation of business opportunities and the fulfillment of business
objectives. Political stability is an important premise for business activities, political
changes can affect one group of enterprises in a beneficial way or inhibit the
development of another enterprise. The complete legal system and the rigor in law
enforcement will create a healthy competitive environment for businesses, avoiding
fraud, smuggling and mistakes in business. In addition, the political and legal
stability of a country allows businesses to predict the level of risk, the business
environment and the impact of politics and law on businesses. how. Therefore,
researching political and legal factors is an indispensable requirement when
businesses enter the market.
-

Economical factors:

Economic factors can create favorable conditions for penetrating and

expanding markets and industries, but limiting the development of other industries.
Economic factors affecting purchasing power, changes in consumer demand or
development trends of industries include:
o Foreign trade activities: the open and close trend of the economy influences
business development opportunities, competitive conditions, and the ability
to use national advantages in technology and capital.
15


o Inflation and its ability to control inflation: affect income, accumulation,
consumption, stimulate or restrict investment.
o Changes in economic structure: affecting the position, role and development
trend of economic sectors leads to a change in the development direction of
enterprises.
o Economic growth rate: showing the general development trend of the
economy related to the ability to expand or narrow the size of business of
each enterprise.
-

Social and cultural factors:
The socio-cultural factors that have a great influence on customers as well

as business activities of enterprises, are the factors that form the psychology and
tastes of consumers. This factor allows businesses to understand at different levels
of the target audience so that they can choose the appropriate business methods.
-

Technological and technological factors:

Technological factors affect technology innovation requirements in

equipment capable of producing products of different quality, labor productivity
and competitiveness, selection and technology provision.
-

Natural conditions and infrastructure:
Factors of natural conditions such as climate and weather affect the

production and business cycle in the region, or affect the goods storage and
preservation activities. For technical infrastructure, the conditions for production
and business on the one hand create a basis for favorable business when exploiting
the existing infrastructure of the economy, on the other hand, it can also cause
limiting the ability to invest and develop special businesses with commercial
enterprises in the process of transportation, storage and distribution.
-

Customer factor:
Customers who have the needs and solvency of goods and services that

businesses do business. Customers are an important factor determining the success
or failure of businesses in the market economy. Customers have very diverse and
different needs depending on each age, gender, income level, and habits. Each
customer group has a unique feature that reflects their shopping process. Therefore
businesses must have policies to meet the needs of each customer group
accordingly.
16


-

Competitors:
Competitors include manufacturers, businesses that sell the same products

of the business or trade interchangeable products. Competitors have a great
influence on businesses and businesses that are able to compete to be able to
survive otherwise will be pushed out of the market. Competition helps businesses to
improve their operations to better serve customers, improve their dynamism, but
they are always in a state of being pushed back.
-

Supplier:
They are domestic and foreign production and business enterprises that

supply goods to businesses and suppliers, which affect the business activities of
enterprises not small, which is reflected in the performance of supply contracts. and
reliability, quality of goods, price, time, location as required.

1.3.2 Subjective factors
Factors of the potential of the business include: financial strength, human
potential, intangible assets, management and management level, technological
equipment, infrastructure, and soundness of business goals and control over the
course of their goals.
-

Financial strength:
Expressed on the total capital (including equity, mobilized capital) mad

businesses can mobilize into business, the ability to effectively manage the capital
in business. Financial strength is reflected in the ability to pay short-term, long-term

debt, profitability ratios of businesses.
-

Human potential:
Demonstrated in knowledge and experience capable of meeting high

requirements of the business, successfully completing the assigned tasks, the staff
of loyal businesses always focus on highly specialized businesses. , good workers
have the ability to unite and actively take advantage of and exploit business
opportunities.
-

Intangible potential:
As the factors that create the power of businesses in the market, the

intangible potential manifests itself in the ability to influence the choice, acceptance
and decision making of customers. In the trade relationship, the intangible potential
factor has created favorable conditions for the purchase, creating sources as well as
17