Only 2/5 interviewed enterprises said that they have made financial plans, specific revenue and expenditure by week and month, while the remaining enterprises only make financial plans by quarter and year. During the production and business process, there are always fluctuations, and the financial plans, revenue and expenditure that have been made may no longer be suitable and need to be adjusted. Therefore, weekly and monthly financial plans need to be made to adjust according to changes in the market, customers and the enterprise itself.
- Information on the debt situation and interest payable of some enterprises is either not reflected objectively and honestly or those enterprises are facing difficulties to the extent that during the research period, they did not pay any interest of previous periods or interest of the current period.
4.8.2. Discuss the results of quantitative research on the impact of control variables on financial performance
The QUYMO and GROWTH indicators have a positive impact on the financial performance of SMEs on the Vietnamese stock market in most models. That is, the scale and growth rate have a positive impact on the financial performance of enterprises. If enterprises increase their scale, it will help them improve their financial performance. The larger the scale of enterprises, the easier it is to access loans, preferential credit and large projects. Therefore, it promotes the growth of financial performance. On the other hand, when an enterprise has a good growth rate, meaning its market share increases, its financial performance also increases. All efforts in the operation of an enterprise are often reflected in the growth of revenue. When an enterprise has a large revenue, it proves that the enterprise's sales policy is effective, goods are circulated on the market easily, with high liquidity, low inventory, thereby saving most of the related costs such as storage, management costs, advertising, ... thereby affecting the efficiency of the enterprise's operations. This result is consistent with the studies of Bibi and Amjad (2017), Eljelly (2004), Bolek and Wili'nski (2011), Carpentier (2006), Chowdhury and Chowdhury (2010), Ahmad et al. (2012).
The industry factor included in the model has shown the difference in the impact of TTK on the financial performance of enterprises in different industry groups. The results are shown in tables 4.23, 4.24, 4.25, 4.26. Thus, the research results show that hypothesis H 2 is fully supported , meaning that between different industries, the impact direction and the impact of TTK on the financial performance of SMEs on the stock market are different.
Financial leverage index has a negative impact on the financial performance of listed companies on the Vietnamese stock market" in most models . Financial leverage is one of the important decisions of financial managers because it affects the benefits and risks of owners as well as the market value of the enterprise. According to the theory of trade-offs when using debt in
The optimal level will balance the benefits and costs of using debt. Therefore, the use of debt by enterprises at a certain level will increase financial efficiency. However, the more debt is used, the more financial risks increase and the costs due to financial pressure increase, leading to a negative impact on financial performance. This result is consistent with the research of Schutte (2018), Bae et al. (2017), Berger and Bonaccorsi di Patti (2005).
4.8.3. Discussion of qualitative research results
The interviewees expressed high agreement with the views on TTK and its impact on HQTC that the thesis mentioned. However, the interviewees belonged to different types of enterprises and different fields of operation, so they also had different opinions.
Enterprises in the construction industry are very interested in measuring liquidity through the CCC index because " Inventory is the works, projects under construction or completed but not yet handed over, or not yet sold and the value of this amount of inventory is very large. The inventory turnover period is long. Therefore, the CCC coefficient is extremely large". Although the construction period is often over 1 year, meaning that there will be works - unfinished assets for a long time, but according to the provisions of the Accounting Standards, those unfinished assets must still be classified as short-term unfinished assets. Therefore, by the end of the fiscal year, the total value of current assets of enterprises in the construction industry is often much larger than the total value of current assets of enterprises in other industries. "The long inventory turnover period and the large value of the CCC coefficient have a negative impact on the financial performance of enterprises because enterprises have capital backlog for too long".
Enterprises in the cement manufacturing industry are very interested in measuring liquidity through the CR index because "For manufacturing enterprises, both inventory and receivables are considered equally important. Enterprises balance liquidity through the entire value of current assets". Most of the asset value of enterprises comes from fixed assets (accounting for 60 - 80% of total assets) while cash and cash equivalents, inventory and receivables are relatively low. Currently, enterprises are still in a state of short-term capital deficit (current assets < receivables), so they may suffer short-term liquidity risks and often have to borrow new debts to compensate for production and business capital in the year. Therefore, "The larger the CR coefficient, the less liquidity risk the enterprise will bear in the short term and the better the financial performance will be".
Enterprises in the livestock, poultry and livestock production and trading industry are more interested in the CFR index because "Inventory rotates periodically, not depending on the selling price because when the livestock grows up, it must be sold. For example, the rotation of breeding pigs is 2.35 cycles/year; the rotation of meat pigs is 2 cycles/year. Enterprises also have no debt.
The outstanding receivables, because customers are forced to pay before receiving the goods, can be shipped. And almost every day, there are breeding barns exported, so the amount of cash flowing into the enterprise every day is relatively large". Because of doing business in such conditions, enterprises base on the established financial plan to maintain the optimal cash balance, the rest will be deposited in savings for a term of 1-6 months depending on the amount and depending on the stage. "If enterprises do not manage cash flow well, enterprises will either lose the opportunity cost of depositing money in the bank if they retain too much cash, or will lose new investment opportunities if they put all their deposits into savings, thereby negatively affecting financial performance".
Enterprises in the commercial sector, operating in the retail sector in the form of supermarkets, are also interested in measuring liquidity through the CCC indicator. "With a market with many competitors, if you are slow compared to your competitors, it is easy to lose customers. Therefore, supermarkets always have to diversify their products, ensuring timely supply to customers, while ensuring that goods are not stagnant or damaged, or lost. Therefore, the inventory of the supermarket has increased sharply". "Enterprises do not use many forms of increasing short-term loans to finance increased working capital needs, but increase the use of payables to sellers". This can be considered a fairly safe form for enterprises. Currently, enterprises may not be under too much pressure to pay debts, but in the long term, enterprises can easily lose financial balance. Therefore, if the enterprise does not balance the inventory reserve and payment plan for suppliers well, the fact that: "The CCC coefficient is getting bigger and bigger will bring many risks to the supermarket. The supermarket can also easily fall into a state of insolvency if it maintains too much debt to suppliers, affecting the reputation and financial management of the supermarket".
Although the level of interest in financial performance measures is different, the interviewees all agree with the view that liquidity has a positive impact on the financial performance of the enterprise. A company with good liquidity, that is, a company with good financial health, will always take advantage of investment opportunities, and reduce the cost of raising external capital, leading to good financial performance. However, maintaining liquidity also depends on the business situation in each period. If the enterprise is developing strongly and has great financial potential, liquidity will be maintained at a high level, but if the enterprise is in difficulty, if it still tries to maintain a high level of liquidity, the enterprise will not have money to cover daily activities, pay bills, salaries, taxes, interest, etc., which will affect the reputation of the enterprise, thereby affecting financial performance. Enterprises also said that, in addition to using traditional indicators to measure liquidity as before, enterprises are also very interested in cash flow indicators. “A business can have a very large CR coefficient, demonstrating its ability to pay
The NNH debts can be paid, but in fact the net cash flow in the enterprise is very low, even "negative", so it cannot pay the debts when necessary.
CONCLUSION OF CHAPTER 4
In chapter 4, the author has outlined the Vietnamese stock market and the listed companies on the Vietnamese stock market with data and indicators focusing on the period 2015-2019, which is the research period of the thesis.
Through the data collected in chapter 3, the author calculated and analyzed the current situation of TTK of SMEs on the Vietnamese stock market in the period of 2015-2019. The analysis of the current situation is shown through data tables and diagrams showing the trend of TTK changes of the manufacturing, construction, trade and service industry groups.
Then, the author performed descriptive statistics of the data of the variables, BPT and BKS in the model. Correlation analysis was performed to find the linear relationship between the variables and BPT. To check whether the variables in the model are interdependent or not, the author conducted VIF test to check for multicollinearity.
Finally, the author selects the appropriate regression model for each BPT ROA, ROE, ROS, Tobin'Q in the REM, FEM and GLS models. The GLS model is a model that overcomes defects such as heteroscedasticity and autocorrelation. Then, the author analyzes the results obtained from running the selected models. From the results of the quantitative research method, the author conducts in-depth interviews to verify the quantitative research results. Most of the interviewees agree with the thesis's viewpoint.
CHAPTER 5. LIQUIDITY MANAGEMENT SOLUTIONS TO IMPROVE THE FINANCIAL PERFORMANCE OF NON-FINANCIAL ENTERPRISES LISTED ON THE VIETNAMESE STOCK MARKET
5.1. Orientation for development of Vietnam's stock market to 2025
Orientation for stock market development until 2025, Vietnam continues to comprehensively restructure to make the stock market an important medium- and long-term capital channel for the economy; build a reasonable and balanced structure between the money market and the capital market, between the stock and bond markets, between government bonds and corporate bonds; actively support the process of restructuring enterprises; actively support the process of restructuring state-owned enterprises, innovate the economic growth model and promote the development of the private economic sector; increase openness and integration with regional and world markets.
Some of the targets set are as follows:
Table 5.1. Stock market development orientation to 2025
Target
2025 | |
Stock market size | 120% GDP |
Bond market size | 55% of GDP |
Number of investors in the market | 5% of the population |
Quality of corporate governance in SMEs | ASEAN-6 |
Upgrading Vietnam's stock market | Emerging Markets |
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Source: Decision No. 242/QD-TTg dated February 28, 2019 of the Prime Minister
The Government has directed the Ministry of Finance, the State Bank of Vietnam, the Ministry of Labor, War Invalids and Social Affairs, the Ministry of Planning and Investment, the Ministry of Health, the State Securities Commission, and relevant ministries, branches and localities to focus on implementing synchronous solutions according to a developed roadmap to restructure the stock market, bringing Vietnam from a marginal stock market to the list of emerging stock markets before 2025. Solutions to restructure the stock market must be synchronous, comprehensive with a specific plan and roadmap, cautious, public and transparent; Enterprises must do it themselves and take responsibility according to market principles; not disrupt the operation of the stock market, specifically:
The first is to perfect the legal basis related to the stock market.
Second is Restructuring the commodity base on the stock market.
Third is Restructuring the investor base in the stock market Fourth is Restructuring the securities business organization Fifth is Restructuring the market organization
Sixth is Capacity Building, Management, Supervision and Enforcement
Saturday is Market Upgrade Solution
Eighth is Strengthening the role of professional associations
The restructuring of the stock market is carried out in the direction of focusing on development in both scale and quality; developing and increasing the competitiveness of organizations participating in the market, creating connectivity between the activities of the stock market and the monetary - credit market to develop a balance between the components of the financial market in the direction of approaching the best international standards and practices, suitable to actual conditions, focusing on innovation, application of advanced science and technology and effectively exploiting the 4th industrial revolution. At the same time, improve risk management capacity; strengthen management, supervision, inspection and examination by management agencies; strictly handle violations of the law on the stock market; ensure the legitimate rights and interests of investors, customers and the safety of the whole system; reduce social costs; ensure the market operates safely, healthily and sustainably.
5.2. Requirements and principles for improving liquidity management to improve financial efficiency of non-financial enterprises listed on the Vietnamese stock market
5.2.1. Completion requirements
To effectively complete the management of TTK in DNPTCNY on the Vietnamese stock market, it is necessary to ensure the following requirements:
- Completing the management of TTK must take into account the orientation and future development of the enterprise, in accordance with the production and business characteristics of the industry, the market and the economy.
- Completing the management of TTK must be synchronous, starting from the stage of making long-term financial plans for 5-10 years, then the stage of making detailed, specific plans for the short term, and then being consistent with the reality of production and business activities. TTK management ensures complete and timely information for business managers, contributing to increasing the value of benefits for shareholders.
- Completing TTK management must be placed in the context of applying information technology, the Internet and computers to ensure the speed and efficiency of the process of collecting, entering, processing and providing information, as well as being consistent with the development of the world.
On the other hand, information on the liquidity status of enterprises is a part of the accounting information system and is a component of the management information system in enterprises, so when completed, it is necessary to orient the integrated management system to include many systems that have close relationships with each other, have exchanges and support each other in the process of forming the initial database of information as well as the process of providing information later.
5.2.2. Principle of completion
Based on the actual development of the stock market in general and listed companies in particular, the management of stock market in listed companies on the Vietnamese stock market needs to ensure the following principles:
- Compliance principle: With the task of providing internal management information to enterprise managers, the management of TTK must strictly comply with the principles, standards, and current accounting regimes of the State. At the same time, to ensure that the information collected is accurate to help make the right decisions, the management of TTK must comply with the policies and regulations of the law on economics, finance, business in general and the internal regulations of each enterprise in particular.
- Inheritance principle: Completing the management of TTK at the SMEs on the Vietnamese stock market does not mean building it from scratch, but rather requires analyzing, selecting and inheriting experience from existing models and studies at home and abroad. On the basis of selectively inheriting experience in managing TTK, along with creatively and appropriately applying it to the SMEs on the Vietnamese stock market, it will be a solid foundation for success in corporate governance.
- Principle of suitability: TTK management must originate from the actual situation of the enterprise, be consistent with development goals, financial plans, organizational and management level, material conditions, characteristics of production and business activities and management staff capacity to improve management efficiency throughout the enterprise.
- Principle of innovation and adaptation: Information on the liquidity status of enterprises is information provided by accounting. Accounting is one of the leading areas in applying information technology and is greatly influenced by the industrial revolution.
4.0. That context is posing the need to innovate the accounting process in the digital age. This revolution will completely change the process of implementing accounting organization work, thereby affecting the way to build the management information system of enterprises, including TTK management. Modern advanced equipment, digital technology applications in the field of accounting will be used more and more frequently and powerfully.
- Principle of saving and efficiency: Investment in machinery and accounting software
The costs of training and developing human resources will cost the business a lot of money.