MINISTRY OF FINANCE
ACADEMY OF FINANCE
*

BUI LINH TRANG
CQ55/11.02

GRADUATION THESIS
TOPIC:
“ANALYZING THE FINANCIAL SITUATION AND
MEASURES TO IMPROVE THE FINANCIAL SITUATION OF
HANOI CONSTRUCTION ASSOCIATION ONE MEMBER
LIMITED COMPANY”
Major

: Corporate Finance

Student ID

: 17523402010820

Supervisor

: Master Ngo Thi Kim Hoa


Ha Noi-2021


DECLARATION
I hereby declare that this thesis is my own work and effort. It has not

been submitted anywhere for an award. Where other sources of information
have been used, they have been acknowledged.

Graduation thesis author

Bui Linh Trang


ACKNOWLEDGEMENT
I would like to take this opportunity to express my deepest gratitude
and appreciation to the people who have given me their assistance throughout
my studies during the preparation of this thesis. They are my teachers, my
colleagues, my family and my friends. I would like to express my great thanks
to all of them.
First of all, I would especially like to thank my advisor, Master Ngo Thi
Kim Hoa , for her continuous encouragement and especially for her academic
and creative guidance. She has been my source for inspiration throughout my
thesis. Without her support, I would not be able to complete my thesis. And I
really appreciate her patience in reading and correcting my thesis.
Secondly, I am indebted to all my teachers at Academy of Finance for
their guidance and help with valuable lessons throughout four years of study.
Moreover, I would like to thank especially chief accountant, and the
staffs of Hanoi Construction Association One Member Limited Company, for
their valuable supports during the internship period. Without their helps, it
would be impossible for me to finish this work.
Last but not least, many thanks to my family, friends and classmates for
their great love and care in both spirit and health during preparation for the
undergraduate thesis.



ABSTRACT
This study investigated the factual state of financial efficiency at Hanoi
Construction Association One Member Limited Company from the viewpoint
of a fourth year student of Faculty of Corporate Finance, Academy of
Finance. The paper aims at finding out the drawbacks in the company’s
financial and the reasons, and more importantly suggesting main methods to
improve the efficiency of financial in the company. In achieving these aims,
the graduation paper surveys the current situation of financial and assess that
whether it is effective or not. From received results, the study argues the most
practical implications at Hanoi Construction Association One Member
Limited Company to improve the efficiency of financial of the company in
the year to come.


DECLARATION...............................................................................................
ACKNOWLEDGEMENT................................................................................
ABSTRACT.......................................................................................................
LIST OF ABBREVIATIONS............................................................................
CHAPTER I.....................................................................................................1
OVERVIEW OF FINANCIAL SITUATION OF A COMPANY................1
1.1. Corporate finance and corporate financial management.....................1
1.1.1. Corporate finance and corporate finance decisions.............................1
1.1.2 Corporate financial management...........................................................3
1.2. The financial situation of a company......................................................8
1.2.1. Definition of financial situation of a company....................................8
1.2.2 Indicators for assessing financial situation of a company................15
1.3. Determinants of financial situation of a company...............................39
1.3.1. Subjective factors affecting corporate financial management...........39
1.3.2. Objective factors affecting corporate financial management.............41
CHAPTER II:................................................................................................43

THE FINANCIAL SITUATION OF HANOI CONSTRUCTION
ASSOCIATION

ONE

MEMBER

LIMITED

LIABILITY

COMPANY....................................................................................................43
2.1 Overview of HaNoi Construction Association One Member Limited
Liability Company..........................................................................................43
2.1.1 The establishment and development of HaNoi Construction
Association One Member Limited Liability Company..................................43


2.1.2The business characteristics of the company........................................45
2.1.3. Overview of financial performance of a one-member limited
liability company of Hanoi Construction Association..................................52
2.2. The financial situation of Hanoi Construction Association One
Member Limited Company..........................................................................53
2.2.1. Analyze of assets and Assets structure...............................................53
2.2.2 Analysis of Capital and structure Capital..........................................60
2.2.3 The situation of Revenues, Expenses and Income...............................70
2.2.4 Cash flow situation of the business......................................................75
2.2.5 The situation of debt and Liquidity of the compay:.............................80
2.2.6 The situation of asset utilization efficiency and Profitablity...............89
2.2.7 Profit distribution of a company...........................................................98

2.3. General assessment of the financial status of Hanoi Construction
Association One Member Limited Liability Company..............................99
2.3.1. These achievements..............................................................................99
2.3.2. Limitations exist.................................................................................100
CHAPTER 3:...............................................................................................102
SOLUTIONS TO IMPROVE FINANCIAL SITUATION OF HANOI
CONSTRUCTION ASSOCIATION ONE MEMBER LIMITED
LIABILITY COMPANY............................................................................102
3.1. The strategies of Hanoi Construction Association One Member
Limited Liability Company in the future..................................................102
3.1.1. Socio-economic context......................................................................102
3.1.2. The strategies of Hanoi Construction Association One Member
Limited Liability Company of in the future.................................................110
3.2. Solutions to improve financial situation of Hanoi Construction
Association One Member Limited Liability Company............................113


3.2.1. Strengthen debt management, improve the efficiency of
commercial credit policy...............................................................................113
3.2.3. Enhance the ability of capital appropriation of suppliers and
others.............................................................................................................116
3.2.4. Promote bidding activities, increase revenue and manage
production and business costs in an economical and effective way...........118
3.2.5. Improve operational efficiency, exploitation and use of capital.......122
3.2.6. Improve business performance..........................................................124
3.2.7. Other solutions...................................................................................125
3.3. Conditions needed for implementing the solutions...........................128
3.3.1. On the business side...........................................................................128
3.3.2. On the State side.................................................................................128
CONCLUDE................................................................................................130

LIST OF REFERENCES....................................................................................


LIST OF ABBREVIATIONS
BEP

Basic Earnings Power

CA

Current Assets

CL

Current Liabilities

EBIT

Earnings Before Interest and Tax

EBT

Earnings Before and Tax

ROA

Return on Assets

ROE


Return on Equity

NI

Net income

NWC

Net working capital

ROS

Return on Sales

VND

Viet Nam dong


PREFACE
1. Research background
Currently, the deep changes of the world economy as well as the
domestic economy have posed many difficulties and challenges for
businesses, making the competition among economic sectors more and
more. should be harsh. Besides, globalization has become an inevitable
trend of the world economy, Vietnam is not out of that inevitable trend.
Globalization has opened up new opportunities for businesses and
organizations, but it means that businesses are facing many new
challenges with increasingly fierce competition from the market economy.
. Enterprises not only compete with enterprises in the same industry and

field but also have to compete with many competitors with strong
financial potential both at home and abroad.
In this situation, the urgent requirement for managers is how to
build and maintain a competitive advantage, thereby helping their
businesses survive and develop sustainably. This has forced businesses not
only to rise up in the process of production and business but also to know
how to maximize their potential to achieve the highest business efficiency.
From these practical requirements, enterprises need to understand the
results of their business activities and their financial status in each period
in order to make appropriate decisions to minimize risks in activities,
especially especially in financial management as well as orientation for
the development of the entire enterprise in the future. To do so, the
financial managers must evaluate and analyze the business activities as
well as the financial activities of the enterprises on a regular basis in detail
and efficiency.


Recognizing the importance of analyzing the financial situation and
assessing the financial status of a business, I have researched, researched
and selected to implement the topic: “Analysisuseful financial status and
measures to improve financial status of Hanoi Construction Association
One Member Limited Company ”
2. Research question
Financial size, structure and profitability; Factors affecting the
working capital structure of the business.Regular working capital and
business working capital financing model
Method of determining the working capital needs of the business;
planning order, time and content of the working capital demand of the
enterprise.
Methods of managing inventory capital, determining the enterprise's

need for inventory capital, mechanism of setting up the inventory price
decrease reserve.
Debt management method, debt sale policy, discount payment policy
of enterprises, mechanism of setting up provision for bad debts.
Analyzing and evaluating the indicators reflecting the financial
situation and financial management and measures to enhance the financial
governance of the company.
3. Scope of the research
- Research subjects: Financial situation of Hanoi Construction Association
One Member Limited Liability Company.
- Research scope:


+ About space research: Research on the financial situation of Hanoi
Construction Association One Member Limited Liability Company.
+ Time of research: During the time of 2019-2020
+ Sources of materials: Figures are taken from accounting book, financial
statements in 2019,2020
4. Research Methods
4.1. The method of data collection
Through collecting an overview of the internship unit from relevant
departments, the intern's financial statements over the years 2019 and
2020; current legal documents related to research issues; publications,
books and newspapers inside and outside the Academy ...
4.2 Methods of data analysis
From the collected data, to have the appropriate information to
complete the final thesis, the methods used are:


Evaluation methods: including techniques: comparison, division,


correlation relationship, ranking, graph, ...


Factor analysis method: includes methods: continuous replacement,

number difference, balance, analysis of the nature of the factors


Prediction method: is the corporate financial analysis method used to

forecast corporate finance, including the following main methods:
probability calculation method, sensitivity analysis, regression, linear
planning, using model econometric.
5. Thesis layout:
Chapter 1: Overview of financial situation of a company


Chapter 2: Analyzing the financial situation of Hanoi Construction
Association One Member Limited Liability Company.
Chapter 3: Some solutions to improve the financial situation of Hanoi
Construction Association One Member Limited Liability Company.
Due to the limited knowledge as well as pratical experience, the
limitations and shortcomings in my article cannot be ignored. I look
forward to receiving the suggestions from the company and the teachers in
the Corporate Finance subject to make my final thesis more complete.
Hanoi, May 2020
The author of thesis
Bui Linh Trang


CHAPTER I
OVERVIEW OF FINANCIAL SITUATION OF A COMPANY
1.1. Corporate finance and corporate financial management
1.1.1. Corporate finance and corporate finance decisions
1.1.1.1. Definition of corporate finance
TThe textbook of Corporate Finance of the Academy of Finance
published in 2013 states that:
In essence, corporate finance is the economic relationship in the form of


value arising associated with the creation and use of monetary funds of an
enterprise during the operation of the business.
In terms of form, corporate finance are monetary funds in the process of
creating, distributing, using and mobilizing associated with enterprise
operations.
Thus, it can be understood, the superficial manifestation of corporate
finance is the cash flows arising in the process of creating and using monetary
funds associated with the enterprise's operations. However, the internal
content of those cash flows is economic relations in the form of value
between enterprises and entities in the distribution of financial resources.
1.1.1.2 Financial decisions of the company
Although not completely unified in the concept of corporate finance in
terms of language; However, there is a consensus when different conceptions
about corporate finance are that: corporate finance is actually interested in
studying three main decisions, which are investment decisions, capital
decisions and decide to distribute profits.
+ Investment decision: are decisions related to the total value of assets and
the value of each part of assets (fixed assets and liquid assets). The investment
decision affects the left side (the assets part of the balance sheet). Major
investment decisions of a company include:

- Decisions on investment in liquid assets: decisions on inventory, decisions
on inventory, decisions on sales policies, decisions on short-term financial
investments
- Decision on investment in fixed assets: decision to purchase fixed assets,
decide on project investment, decide on long-term financial investment ...


- Deciding on the structural relationship between investment in liquid assets
and investment in fixed assets: Deciding to use leverage and deciding breakeven point.
Investment decision is considered the most important decision in
corporate finance because it creates value for the business. A correct
investment decision will contribute to increasing the value of the business,
thereby increasing the value of assets for the owner, otherwise a wrong
investment decision will damage the value of the business, leading to damage.
property for business owners.
+ Capital mobilization decision(deciding on capital sources): are decisions
related to choosing which source of capital to provide for investment
decisions. Capital decisions affect the right side of the balance sheet (capital
portion). Major capital raising decisions of businesses include:
- Decision to mobilize short-term capital: decision to borrow short-term or use
commercial credit.
- Long-term capital mobilization decision: Decision to use long-term debt
through long-term bank loans or corporate bonds; decision to issue share
capital (common shares or preferred shares); decide the structural relationship
between debt and equity (financial leverage); decide to borrow to buy or rent
property, ...
To make the right capital mobilization decisions, financial managers
must have a firm grasp of the advantages and disadvantages of using capital
mobilization tools; accurately assess the current situation and properly
forecast market movements - future prices ... before making a decision to

raise capital.
+ Decide to distribute profits: Attached to decisions about the dividend
distribution or dividend policy of the business. Financial managers will have
to choose between using the majority of their after-tax profits for dividends or


withholding for reinvestment. These decisions relate to how a firm should
pursue a dividend policy and whether the dividend policy affects the firm's
value or the company's stock price on the stock market. or not.
1.1.2 Corporate financial management
1.1.2.1 Definition of financial mangement
Corporate financial management is the selection and making of financial
decisions, the organization implementing those decisions to achieve the
financial performance of the business, which is to maximize profits,
continuously. increase the enterprise value and the competitiveness of the
business in the market.
1.1.2.2. The role of corporate financial management
The role of financial governance in business operations is reflected
through the following main aspects:
a) Raising capital to ensure the normal and continuous operation of the
business:
Monetary capital is the money for the operations of the business. During
the operation of the business, there are often short-term and long-term capital
requirements for regular business activities, as well as for investment and
development of enterprises. Failure to promptly and adequately mobilize
capital will make business operations difficult or impossible. Therefore,
ensuring business activities are carried out normally and continuously
depends greatly on the organization of capital mobilization of corporate
finance.
The enterprise's financial manager on the basis of considering the

financial market situation, capital needs and specific conditions of the
business, then makes the best decision in organizing the mobilization of


capital sources (inside, outside) to meet the needs of business activities. A
proper sponsorship policy not only helps businesses minimize financial risks
but also has a great impact on the achievement of the goal of maximizing
business value.

b) Organizing the use of capital economically and effectively, contributing to
improving the efficiency of business operations of enterprises
With the selection of optimal investment projects on the basis of
consideration and comparison between the rate of return, the cost of capital
mobilization and the level of risk of investment projects ... financial managers
have created a premise for the use of capital economically and effectively.
The timely and sufficient capital mobilization will help businesses take
advantage of business opportunities, increase revenue and business profits.
Choosing the right form and method of capital mobilization, ensuring the
optimal capital structure can help businesses reduce the cost of capital,
contribute to increasing profits and return on equity of enterprise.
On the other hand, with the maximum mobilization of existing capital in
business activities can help businesses avoid losses due to capital stagnation,
increase asset turnover, reduce the amount of loans, thereby reducing interest
payments. loans, contributing to increase the profit after tax of the business.

c) Comprehensively inspect and supervise all aspects of production and
business activities of the enterprise
The business operation process of an enterprise is also the process of
mobilizing and transforming monetary capital form. Therefore, by examining



the daily monetary revenues and expenditures, and especially through
analyzing and evaluating the financial position of the business and the
implementation of financial indicators, financial managers. can control in
time and comprehensively all aspects of business activities, thereby pointing
out shortcomings, untapped potentials to make appropriate decisions,
adjusting activities to achieve title out of the business.
1.1.2.3 The contents of financial management in a company
Corporate financial management often includes the following main
contents:
Participate in evaluation, selection, investment projects and business
plans. The construction and selection of investment projects are done jointly
by many parts of the business. From a financial perspective, the main thing to
consider is the main financial efficiency that is to consider and weigh the
costs, the risks that can be encountered and the possibility of profitability,
ability to carry out the project. In the selection analysis, evaluation of optimal
projects, projects with high profitability, the financial manager is the one who
considers how to use investment capital; on the basis of participating in the
evaluation and selection of investment projects, it is necessary to find out the
business development orientation, when considering investing capital to
implement investment projects, attention should be paid to enhancing
competitiveness. to ensure immediate and long-term economic efficiency.
Determine capital needs, organize the mobilization of capital sources to
meet the operation of enterprises. All activities of the business require capital.
Entering into business operations, corporate financial management needs to
determine the essential capital needs for the operations of the business in the
period. Working capital includes long-term and short-term capital, and it is
important to organize the mobilization of capital to fully meet the operating



needs of the business. The mobilization of capital sources has a great
influence on the performance of an enterprise. In order to decide on the
appropriate form and method of capital mobilization, enterprises need to
consider and consider in many aspects such as: capital structure, costs for the
use of capital sources, advantages and disadvantages. benefits of capital
mobilization.
To well organize the use of existing funds, strictly manage revenues
and expenditures, and ensure the solvency of the enterprise. Corporate
financial management must find ways to contribute to maximum mobilization
of existing capital in business operations, freeing up stagnant capital sources.
Closely monitor and implement well the sales and other revenues, strictly
manage expenses arising during the operation of the business. Find ways to
restore the balance between revenue and expenditure in money to ensure that
businesses are always able to pay. On the other hand, it is also necessary to
clearly define the expenses in the business of the enterprise, the taxes that the
enterprise must pay, determine which expenses are the costs for the business
operation and the expenses belonging to the other activities.
Perform well the distribution of profits, setting up and using the funds
of the business. The proper distribution of profit after tax as well as
appropriation and good use of corporate funds will make an important
contribution to the development of the business and to improve the lives of
employees. Profit is the goal of business operation is an indicator that
enterprises must pay special attention to because it is related to the existence
and expansion of the business. It cannot be said that a good enterprise has
high efficiency while operating profit is reduced. Enterprises need to have
optimal methods in distributing corporate profits. In determining the rate and
form of the enterprise's funds such as development investment fund, financial
reserve fund, bonus fund and welfare fund.



Ensure regular inspection and control over the business operations of
the business and perform well financial analysis. Through the situation of
daily money collection and spending, the implementation of financial
indicators allows to regularly check and control the operation of the business.
On the other hand, periodically need to conduct analysis of corporate financial
situation. Financial analysis to assess the strengths and weaknesses of the
financial and business performance of the business, thereby helping business
leaders in overall assessment of the performance of the business. enterprises,
strengths and weaknesses in business operations such as solvency, material
rotation, capital, business performance, from which right decisions can be
made. in terms of production and finance,
Perform well financial planning. The financial performance of the
business should be foreseen in advance through financial planning. Good
implementation of financial planning is an essential tool to help businesses
proactively come up with timely solutions when there are market fluctuations.
The financial planning process is also the appropriate financial decisionmaking process to achieve the business goals.
1.2. The financial situation of a company
1.2.1. Definition of financial situation of a company
a) Definition of financial situation of a compay
Assessment of corporate financial situation is a combination of methods
that allow assessing the past and present financial situation, predicting the
future financial situation of the business, helping managers to make the
Effective management decisions, consistent with the goals they care about.
b) Objective of corporate financial assessment


The goal of assessing the financial position of a business is different for
each audience. Specifically:
- For business managers: need information about the financial situation of the
business to control and direct the business and production situation of the

business, to orient decisions on investment and structuring financial
resources, distributing profits, assessing business performance to take
measures to adjust accordingly, implementing financial balance, profitability,
solvency and forecasting risks Risk risk, especially financial risk signals in
the business, from which to make financial forecasts and plans and
appropriate financial decisions, to easily conduct inspection and control.
management in the business.
- For investors: need information about the financial assessment of the
business to clarify the development prospects of the business, estimate the
value of shares on the financial market to make a major investment decision.
corpses bring high profits in the future.
- For lenders: for short-term loans, the lender is interested in counting the
immediate solvency of the business (also known as the enterprise's ability to
respond to the maturity of the loan); For long-term loans, lenders are
concerned with the profitability of borrowed capital, invested capital and
factors causing payment risks and long-term financial risks to determine their
repayment capacity. pay capital and interest and make loan decisions.
- For people with salary in the business: the benefits of this group of people
are the income and promotion opportunities that the business gives them, so
assessing their financial situation helps them orient their jobs and invest.
finance for the future.


- For state management agencies: State management agencies (tax agencies,
financial inspection agencies, Statistics ...) use the results of corporate
financial assessment to inspect and supervise the business performance of
enterprises in the economy, thereby proposing policies, management
mechanisms and financial solutions suitable to the actual situation of the
business, creating Favorable legal corridor environment contributes to helping
enterprises improve production and business efficiency.

Thus, assessing the financial position of the business is a useful
management tool that helps to provide information to management entities, as a
basis for making useful management decisions to preserve and increase. your
interests at the business.
c) The sequence of steps to conduct corporate financial analysis
To accurately analyze corporate financial situation, analysts need to
follow 3 main steps: Information gathering, information processing,
prediction and decision.
- Collect information:Financial analysis uses all sources of information
capable of explaining and disclosing the current financial status of the
business, serving the financial prediction process. It includes inside
information to outside information, of which accounting information is
concentrated in the corporate financial statements are particularly important
sources of information.
- Information processing:Information collected must be handled in a
systematic and scientific manner. Depending on different analytical
objectives, information users have analytical angles and apply different
analytical methods to calculate, compare, explain, evaluate, and determine the
cause for the process. process prediction and decision-making.


- Prediction and decision making:It can be said that the goal of financial
analysis is to make financial decisions. For business owners, financial
analysis aims to make decisions related to the business goals of growing,
developing, and maximizing business value. For lenders and investing in a
business, it's about making financing and investment decisions, ...
d) The sequence of steps to conduct corporate financial analysis
To accurately analyze corporate financial situation, analysts need to follow 3
main steps: Information gathering, information processing, prediction and
decision.

Collect information:Financial analysis uses all sources of information
capable of explaining and disclosing the current financial status of the
business, serving the financial prediction process. It includes inside
information to outside information, of which accounting information is
concentrated in the corporate financial statements are particularly important
sources of information.
Information processing:Information collected must be handled in a
systematic and scientific manner. Depending on different analytical
objectives, information users have analytical angles and apply different
analytical methods to calculate, compare, explain, evaluate, and determine the
cause for the process. process prediction and decision-making.
Prediction and decision making:It can be said that the goal of financial
analysis is to make financial decisions. For business owners, financial
analysis aims to make decisions related to the business goals of growing,
developing, and maximizing business value. For lenders and investing in a
business, it's about making financing and investment decisions, ...
e) Documents used in corporate financial analysis
In order to be able to accurately and comprehensively assess an enterprise's
financial position, analysts need to use a combination of documents including
external and internal documents:


* Documents outside the enterprise: are financial ratios, industry
averages, legal documents prescribing the accounting regime, management
regime for each business line.
* Internal corporate documents: are quarterly and annual financial
statements, detailed accounting books that track accounts, business plans for
each period of the company. In which the main and most important
documents are the financial statements of the unit. Specifically
Accounting balance sheet: is the main financial statement, which

generally reflects the entire situation of assets and sources of asset formation
at a given time.
Reporting business results: means a general financial report, generally
reflecting the situation and results of business activities in an accounting
period of the enterprise in details for each production and business activity
(sales and service provision; activities). financial activities and other
activities).
Statements of cash flows: is an integral part of the corporate financial
reporting system, providing information to help users evaluate changes in net
assets, financial structure, ability to convert assets into money, liquidity and
the ability to generate cash flows during the operation.
Notes to the financial statements: is a detailed explanation of some
general indicators reflected in other financial statements and at the same time
a statement of the applied corporate accounting policies to record economic
transactions arising in the enterprise. The report reader has additional
information necessary for evaluating the financial position of the business
The above documents are the basis for analysts to get data and
information, correctly determine the financial indicators of the business and
make reasonable comment
f) Analytical method


To analyze corporate finance, one can use one or a combination of different
methods in the corporate financial analysis methods system. Here, the writer
would like to present some basic methods as follows:
 Evaluation method
The evaluation method is always used in corporate financial analysis,
and is also used in many stages of the analysis process. Usually when
assessing people often use the following techniques:
Comparative method:This is a widely used method in economic

analysis in general and financial analysis in particular. When using the
comparison method, it is necessary to pay attention to the problems of
comparison conditions, the basis for comparison and the commonly used
comparison technique is absolute numerical comparison, relative numerical
comparison, vertical comparison, horizontal comparison ...
Method of division (details): This is a method of breaking down the
financial performance and process according to certain criteria to serve the
purpose of process awareness and that result under different aspects consistent
with the target of interest of each. subjects in each period.
Contact method for comparison and ranking:is an analytical method
used to study and evaluate research objects based on economic and financial
relationships of phenomena, processes and results of corporate financial
operations with related parties. The ranking of research subjects should be
based on quantitative and qualitative information that reflects the average
basic financial characteristics of the subjects of the same type, the main
environmental impacts on research subjects.
Graphical method: visually reflect the analyzed data graphically, graph,
thereby describing trends, fluctuations level of research indicators or showing
structural relationships of parts in a whole. Graphical method includes many
forms such as bar graph, circle ... This method clearly, visually shows the
increase or decrease or the relationship between the indicators.