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ACADEMY OF FINANCE Major Corporate Finance FULL NAME: NGUYỄN QUỲNH ANH CLASS: CQ54/11CL.01 GRADUATION THESIS TOPIC: “FINANCIAL PERFORMANCE - A CASE STUDY OF HANOI TELECOMS ELECTRICITY JOINT STOCK COMPANY” Specialized : Business finance Student code : 16CL3402010005 Instructor : Associate Professor.Dr Vũ Văn Ninh Hanoi – 2020
Graduation Thesis i Academy of Finance ACKNOWLEDGMENTS I wish to express my genuine thanks and gratefulness to the Academy Of Finance and Advanced Educational Programs for granting me this exceptional opportunity to be an intern at Hanoi telecoms electricity joint- stock company. I sincerely respect and appreciate the hard work of Mr. Vu Van Ninh, my Academic Supervisor. Without his thoughtful direction and admirable patience, this work would have never been an accomplishment. In each period, his supervision and support helped this Graduation Thesis to be finished effectively. I also want to acknowledge with much appreciation the important role of the staff of Hanoi telecoms electricity joint-stock company, especially Mrs. Vu Thi Xuan Hoa – Chief of Financial – Accounting Department - who allowed me to utilize every single fundamental record and materials to finish this report. Without their support during the internship period, it would be impossible for me to finish this work. Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis ii Academy of Finance PLEDGE I assure you that this is my own research project, the data and results stated in the graduation thesis are honest and come from the practical situation of the intern. The author Nguyễn Quỳnh Anh Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis iii Academy of Finance APPENDIX ACKNOWLEDGMENTS..................................................................................i PLEDGE...........................................................................................................ii APPENDIX......................................................................................................iii LIST OF ABBREVIATIONS..........................................................................vi LIST OF TABLES..........................................................................................vii LIST OF CHARTS........................................................................................viii PREFACE.........................................................................................................1 CHAPTER 1: OVERVIEW OF FINANCIAL SITUATION OF COMPANY......................................................................................................4 1.1. Corporate finance and corporate finance decisions..............................4 1.1.1. Business finance concept and business finance relationships........4 1.1.1.1. Business finance concept.........................................................4 1.1.1.2. Business finance relationships.................................................5 1.1.2. The financial decisions of the business..........................................6 1.2. Enterprise Financial Management........................................................8 1.2.1. Business financial management concept........................................8 1.2.2. The role of corporate finance management....................................9 1.2.3. Content corporate finance management.......................................10 1.2.4. Corporate value and goals of corporate financial governance.....11 1.2.4.1. Corporate value......................................................................11 1.2.4.2. Goals of corporate financial governance................................13 1.3. Financial situation of the business......................................................13 1.3.1. Concept of corporate financial situation.......................................13 1.3.2. Content and criteria reflect the situation of the business..............14 1.3.2.1. Capital situation of the business.............................................14 1.3.2.2. The situation of capital allocation of enterprises...................16 Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis iv Academy of Finance 1.3.2.3. Business performance of the enterprise.................................17 1.3.2.4. Cash flow situation of the business........................................18 1.3.2.5. The situation of debt and solvency of the business................22 1.3.2.6. Situation of performance and efficiency of business operations of the enterprise.....................................................................................26 1.4. Factors affecting the financial analysis of the business......................30 1.4.1. Objective factor............................................................................31 1.4.2. Subjective factor...........................................................................32 CHAPTER 2: CURENT FNANCIAL SITUATION OF HANOI TELECOMS ELECTRICITY JOINT STOCK COMPANY...................33 2.1. The process of formation and development of Hanoi telecoms electricity joint stock company....................................................................33 2.1.1. Establishment and development process......................................33 2.1.1.1. Basic information about the company....................................33 2.1.1.2. History of formation and development..................................34 2.1.2. Operating characteristics..............................................................35 2.1.2.1. Business lines and areas.........................................................35 2.1.2.2. Business characteristics of the company................................35 2.1.2.3. Overview of financial performance of Hanoi telecoms electricity joint stock company..............................................................40 2.2. Current financial situation of Hanoi telecoms electricity joint stock company.......................................................................................................41 2.2.1. Assets and Asset Structure...........................................................41 2.2.2. Sources of Capital and Capital Structure......................................42 2.2.3. Business results............................................................................45 2.2.4. Cash flows....................................................................................48 2.2.5. Liquidity.......................................................................................50 Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis v Academy of Finance 2.2.6. Asset utilization efficiency and Profitability................................52 2.3. Assessment of the financial situation of Hanoi telecoms electricity joint stock company.....................................................................................59 2.3.1. Achievements...............................................................................59 2.3.2. Shortcomings and reasons............................................................61 CHAPTER 3: SOLUTIONS TO IMPROVE THE FINANCIAL SITUATION OF HANOI TELECOMS ELECTRICITY JOINT STOCK COMPANY....................................................................................................63 3.1. Objectives and targeted performance of Hanoi telecoms electricity joint ............................................................................................................63 3.1.1. Socio-economic situation.............................................................63 3.1.2. The targeted performance of Hanoi telecoms electricity joint stock company....................................................................................................65 3.2. Solutions to improve the financial situation of Hanoi telecoms electricity joint stock company....................................................................66 3.3. Conditions needed for implementing the solutions............................69 CONCLUSION...............................................................................................72 REFERENCES................................................................................................73 Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis vi Academy of Finance LIST OF ABBREVIATIONS ADI: Average days in inventory ADP: Average days in payables ADR: Average days in receivables BEP: Basic earning power COGS: Cost of good sold DSI: Days sales in inventory DSO: Days sales outstanding HATEC: Hanoi telecoms electricity joint stock company ROA: Return on assets ROE: Return on equity ROS: Return on sales Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis vii Academy of Finance LIST OF TABLES Table 2.2.2: Capital fluctuation situation........................................................43 Table 2.2.3. Business results of the company.................................................46 Table 2.2.5. The liquidity ratios......................................................................50 Table 2.2.6.1. DSI...........................................................................................52 Table 2.2.6.2. Working capital........................................................................55 Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis viii Academy of Finance LIST OF CHARTS Chart 2.2.1. The asset structure ratios.............................................................41 Chart 2.2.4. The criteria in business cash flow management..........................48 Chart 2.2.6.1. Inventory turnover....................................................................53 Chart 2.2.6.2. Receivable turnover..................................................................54 Chart 2.2.6.3. Fixed assets turnover................................................................56 Chart 2.2.6.5. Profitability ratios....................................................................58 Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 1 Academy of Finance PREFACE 1. Introduction With the development of the country in the last decade, along with the growing trend of globalization and business both at home and abroad, it has had a great and profound impact on Vietnam's market economy. Nam, especially in management, capital mobilization and capital utilization. Most effective on respect of financial, credit and law enforcement principles. So businesses compete with each other extremely fierce and must constantly change to survive and develop sustainably and have a foothold in the market. Along with the plans and intentions set for the development of the business will also face the risks and limitations in it. Financial situation analysis is also an information tool for administrators, investors, etc. ... Each object is interested in the financial situation of businesses through many different angles to management and investment. Therefore, in order for businesses to achieve the desired effect, analyzing the financial situation will help businesses to clearly see the current financial situation, find out the cause and the degree of influence of the factors affecting the situation. financial picture. From there, there is an effective solution to stabilize and develop the financial situation. Hanoi telecoms electricity joint stock company (HATEC) was established in 2004, the company has been operating for more than 15 years and created a great reputation in the domestic telecommunications industry. The regular analysis of the financial situation will help business managers see the status of financial activities, which can identify the strengths and weaknesses of the business as a basis for proper operation. with the economy in the future and propose optimal solutions to improve the financial situation of the business. Although the accounting system is relatively complete, the Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 2 Academy of Finance financial statements of HATEC have never been analyzed, the figures shown in the reports of enterprises are only useless figures. From applying the knowledge learned and fact finding at Hanoi telecoms electricity joint stock company with the enthusiastic help of Mr. Vu Van Ninh and his brothers and sisters in the accounting department of the company, I had an overview and insight. More about the importance of financial situation in the company. Aware of that, I chose the topic: “Financial performance: a case study of Hanoi telecoms electricity joint stock company”. 2. Objectives and research questions Any business at any stage will still have the potential and undetected risks, so it is necessary to go through the analysis of the corporate financial situation to be able to point out the strengths and the weaknesses for businesses to recognize the financial fluctuations of the company in the future and thereby be able to do business most effectively. Assessing the financial situation regularly is extremely important and meaningful. Through analyzing the financial situation, we can fully and accurately assess the stages of the business process, and improve the efficiency in each process. At the same time, financial analysis is also an indispensable tool in the management of superior agencies, financial agencies and banks to assess the state of the state's policies, capital issues. ... Therefore, it is necessary to conduct in-depth research and analysis on costs, revenues and business results in order to give an overview of the achievements and shortcomings in the financial situation of the enterprise, and to answer research questions: - Basic theory about the financial situation of the company like? - What is the reality of the business situation of the business? - Solutions to improve capital efficiency? Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 3 Academy of Finance 3. Scope of study - Research subjects: From the financial statements of the business such as: balance sheet, report of business results, .... will be conducted to synthesize, analyze, compare data to achieve research objectives. - Research scope: Analyze the company's financial statements for at least the latest 3 years 2017, 2018, 2019 to assess the current financial status and development trends of the company. 4. Methodology and Data Collect data through internship reports and documents. Statistical method: A statistical method of collecting collected information and data to compare and produce results. Methods of financial analysis: A method based on figures in financial statements to assess the performance of enterprises, find out the causes and solutions to overcome them. Comparison method: A method based on available data to conduct comparison and comparison of relative and absolute numbers. Graph method. Method of charting. 5. Thesis structure In addition to the introduction and conclusion, the topic content consists of 3 chapters: Chapter 1: Overview of financial situation of a company. Chapter 2: Curent financial situation of Hanoi telecoms electricity joint stock company. Chapter 3: Solutions to improve the financial situation of Hanoi telecoms electricity joint stock company. Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 4 Academy of Finance CHAPTER 1: OVERVIEW OF FINANCIAL SITUATION OF COMPANY 1.1. Corporate finance and corporate finance decisions 1.1.1. Business finance concept and business finance relationships 1.1.1.1.Business finance concept In response to the continuous development of the domestic economy and the increasingly innovative requirements of businesses, the need for corporate financial management is increasingly important. Enterprise is an economic organization carrying out production activities, supplying goods to consumers through the market for profit-making purposes. The business process of the business is also the process of combining the inputs such as factories, equipment, materials ... and labor to create the output of goods and consumption. goods to make a profit. During the operation of an enterprise, it is also the process of creating, distributing and using monetary funds which constitute the financial activities of the enterprise. In the process that has generated, creating the movement of cash flows (cash flows), including cash inflows, cash flows associated with daily investment and business activities of businesses. According to the Corporate finance curriculum (2015) from the above issues, the following comments can be drawn: - In essence, corporate finance is economic relations in the form of arising value associated with the creation and use of monetary funds of the enterprise in the course of its operation. Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 5 Academy of Finance - In terms of form, corporate finance is monetary funds in the process of creation, distribution, use and advocacy associated with the operation of the business. There are other ideas that corporate finance is the method of mobilizing, allocating and using the financial resources of enterprises to achieve business objectives. However, in our opinion, this idea identifies "corporate finance" - an objective economic category - with financial activities (or corporate financial management), a subjective activity of corporate governance. According to the newspaper Ketoan7e.com, it defines: "Corporate finance is the economic relations arising in connection with the process of creation, distribution and use of monetary funds in the course of business operations of the enterprise. In order to achieve a certain goal, corporate finance is a part of the financial system, where financial resources emerge and at the same time, it is the place that attracts an important part of corporate financial resources. Corporate finance has a great influence on social life, the development or recession of production. 1.1.1.2.Business finance relationships Within the process of creating and using an enterprise's monetary fund, these are subtle relations in the form of value that constitute the financial relations of the enterprise and cover the following major financial relations: - Financial relations between enterprises and the State. This relationship is expressed by the State allocating, supporting capital and contributing equity capital according to certain principles and methods to conduct production and business and share profits. At the same time, this relationship is reflected in the enterprise's fulfillment of financial obligations to the State, such as paying taxes and fees to the State budget as prescribed by law. Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 6 Academy of Finance - Financial relations between enterprises and economic entities and other social organizations. The financial relationship between enterprises and other economic entities is very diverse and rich, which is reflected in the payment and material punishment when enterprises and other economic entities provide goods and services to each other (including financial services). - Financial relationship between the enterprise and its employees. This relationship is reflected in the enterprise's payment of wages, bonuses, and material penalties for employees in the course of its business operations. - Financial relationship between an enterprise and its owners. This relationship shows in terms of payment in borrowing and lending, capital investment, purchase or sale of assets, supplies and goods, and in the distribution of profit after tax of the enterprise. - Financial relations within the enterprise. This is a quite complicated financial relationship, reflecting the financial relationship between the production and business departments, between the management departments, between members of the enterprise, between capital ownership and use rights. capital. To be reflected in the enterprise that pays salaries and wages and pays bonuses and fines to its employees; payment relations among departments in the enterprise, in the distribution of after-tax profits of the enterprise; dividend distribution to shareholders, establishment of corporate funds ... 1.1.2. The financial decisions of the business Enterprise financial decision is an expression of the intention (policy) of the enterprise on the mobilization, allocation and use of its financial resources in association with conditions and circumstances of production and business Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 7 Academy of Finance of the enterprise. enterprise. Depending on the conditions and specific circumstances of production and business activities, business owners make different decisions, usually the owners make basic financial decisions such as: Investment decisions: are decisions related to the total value of assets and the value of each asset part (fixed assets and movable assets). Investment decisions affect the left (the assets portion) of the balance sheet. The major investment decisions of the business include: - Decision on investment in working assets. - Decision on fixed asset investment. - Deciding the structural relationship between investment in movable assets and investment in fixed assets. Capital mobilization decisions (capital decisions): are decisions regarding which capital sources to choose to provide for investment decisions. Determining the capital source that affects the right of the balance sheet (the capital). Major capital mobilization decisions of enterprises include: - Decision to raise short-term capital. - Decision to raise long-term capital. Profit distribution decision: associated with the decision on dividend distribution or dividend policy of the business. Financial managers will have to choose between using most of the after-tax profit to pay dividends, or keep it for reinvestment. These decisions relate to how an enterprise should pursue a dividend policy and whether the dividend policy will affect the firm's value or its share price in the market. Long-term financial decisions: these are strategic decisions that have long-lasting impact on the survival and development of businesses. Each of these decisions requires administrators to carefully consider, methodically and scientifically analyze to ensure to minimize the risks that may occur. Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 8 Academy of Finance Under long-term financial decisions include: - Long-term investment decision: is the decision to choose which businesses should invest in opportunities, or investment projects under limited financial resources to maximize the value for the owner. - Decision on long-term capital mobilization: is a decision on which sources to raise long-term capital from, with what scale to maximize value for owners. - The decision on corporate profit distribution policy: is a decision about how much profit should be allocated to the owner, how much profit is re-invested back to the business to maximize the value for owner. Short-term financial decisions: these are operational decisions, which do not greatly affect the existence and development of enterprises; therefore, it is also known as tactical financial decisions. Under short-term financial decisions included: - Decision to reserve capital in cash. - Decision on receivable debts. - Decision on payment discount. - Decision on inventory reserves. - Other short-term financial decisions. 1.2. Enterprise Financial Management 1.2.1. Business financial management concept In business activities, investment activities of businesses, there are many financial problems that arise requiring managers to make financial decisions - right and implementation to stand firm and develop. Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 9 Academy of Finance In order to survive and develop in business activities, the activities of the business must be based on the planning work both strategically and strategically. Strategically, business objectives, long-term activities must be clearly defined to develop the business and its financial policies. In terms of tactics, it is necessary to identify the short-term work, specific operations to serve the strategic plan of the business. Corporate financial management is the selection, decision making and organization of financial decisions to achieve the operational objectives of the business. Because the financial decisions of an enterprise are associated with the creation, distribution and use of monetary funds during the operation of the enterprise; therefore, corporate financial management is also seen as the process of planning, implementing, adjusting and controlling the creation process, distribution and use of monetary funds to meet business operations needs. Corporate finance management includes the activities of managers (managers) related to three main types of decisions: investment decisions, capital mobilization decisions, and decisions on how to distribute profits. for the most beneficial to the business owner. Corporate finance management is a part, the most important content of corporate governance, it has close relationship and affects all aspects of business operations. 1.2.2. The role of corporate finance management The role of financial governance in enterprises has changed dramatically over time, with the role of financial management becoming increasingly important for its operations, because: Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 10 Academy of Finance - The financial position of the business concerned and affecting all activities of the business. - Business scale and capital needs for business activities are growing. Along with the development of the financial market, financial instruments for raising capital are becoming richer and more diverse. Therefore, financial management decisions, investment decisions ... of financial administrators greatly affect the business situation and efficiency of the business. - Information about the financial situation is an important basis for business managers to control and direct the activities of enterprises. The role of financial governance for the operation of enterprises is reflected in the following main aspects: - Raising capital ensures business activities take place normally and continuously. - Organizing the use of capital in an economical and efficient manner, contributing to raising the efficiency of business operations of the enterprise. - Check and comprehensively supervise the business production activities of the enterprise. 1.2.3. Content corporate finance management Corporate finance management covers the following main contents: - Participate in the evaluation and selection of investment decisions. - Identify capital needs and organize the mobilization of capital to meet promptly and adequately the capital demands of the enterprises' activities. - Effectively use the existing capital, strictly control the revenues and expenditures, and ensure solvency of the enterprise. - Profit distribution, deduction and use of enterprise funds. - Regularly control the operations of the business. - Implementation of financial planning. Nguyễn Quỳnh Anh Class: CQ54/11CL.01
Graduation Thesis 11 Academy of Finance 1.2.4. Corporate value and goals of corporate financial governance 1.2.4.1.Corporate value Enterprises are economic organizations with their own names, assets, stable transaction offices, and are allowed to register their business according to the provisions of law for the purpose of conducting business activities. According to Vietnam Valuation Criterion No. 02, "Enterprise value is the value of an enterprise's entire assets. The value of each asset constituting the enterprise's total assets cannot be separated from each other and cannot be assessed on the basis of market value. Enterprise value must be considered on the whole of assets, not the value of each separate asset, including tangible and intellectual property assets of the enterprise. An asset, if separated, may not promote its use value, but when combined with another asset, it may promote its use value. The value of each individual asset is determined based on its contribution to the operation of the entire enterprise so it is not relevant to the market, regardless of the optimal and best use value of the asset. that asset, as well as the amount it brings when sold. The value of assets in use of an enterprise tends to be higher than the market value of the asset when the enterprise is doing business efficiently, earning higher profits than the enterprise producing the same product. self; conversely, they tend to be lower than market value when enterprises are inefficient. The value of assets in use also tends to be higher than the market value when businesses have patents, licenses, contracts for the production of special products, or businesses of particular prestige, or other forms of intellectual property which other businesses of the same type of business do not have. " Nguyễn Quỳnh Anh Class: CQ54/11CL.01
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