Financial analysis and solutions to improve the financial situation at Quang Doanh Transport and Trading Services Company Limited

“Factoring” or self-collecting debts requires the following steps in sequence:

Step 1: Collect information, including:

- The discount rate required by the Debt Trading Company, assuming r CK

%/month.

- Factoring fee of the debt trading company, assumed to be r TT %/factoring contract value.

- The opportunity cost of capital of the enterprise, assumed to be r CH %.

Step 2: Use the above information to calculate in 2 cases

a. In case the enterprise uses factoring service, the amount the enterprise receives (V TH1 ) is:

V TH1 = V PT – V PT xr CK xn – V PT xr TT = V PT (1 – nxr CK – r TT )

b. In case the enterprise does not use the "factoring" service, after n months the enterprise will receive (V PT ) VND. If this amount is converted to the present, the enterprise will actually only receive the amount (V TH2 ) of:

V PT

V TH2 =

(1 + r CH ) n

Step 3: Compare V TH1 and V TH2 to make a decision:

- If V TH1 > V TH2, the business decides to use

- If V TH1 < V TH2, the business will wait until the payment deadline.

- If V TH1 = V TH2, decide according to the actual situation.

Specifically, the Company currently has a receivable of 1,672 million VND, the payment period is nearly 4 months, and this receivable is a secured receivable, sure to be paid when due. The Company needs to consider whether to use the form of "factoring":

The relevant information collected is as follows: The discount rate when the bank provides factoring services is 1.1%/month; The bank's factoring fee is 0.5% of the factoring contract value; The opportunity cost of the Company's capital, assumed to be 2%/month. We have the following calculation table:

Table 3.5: Value of receivables when using factoring

Unit: million VND

STT

Item	Amount
1	Accounts receivable value	7,672
2	Bank discount interest [(2) = (1) x 1.1%/month x 4 months)]	337,568
3	Factoring fee [(3)= (1) x 0.5%)]	38,365
4	Amount received by the Company when factoring [(4) = (1) – (2) – (3)]	7,296,067
5	Present value of cash flows [(5) = (1) / (1+2%) 4 ]	7,087,953

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* Effectiveness of the measure

The calculation results show that if the factoring service is used, the Company will immediately collect an amount of 7,296,067 million VND. If the factoring service is not used, the Company will collect 7,672 million VND after 4 months. Thus, when considering the opportunity cost of capital, the amount of 7,672 million VND that the Company collects after 4 months is only worth 7,087,953 million VND at present. Thus, by using the factoring service, the Company will save an additional 208,114 million VND.

- The Company's financial situation has improved significantly, saving business management costs, raising the awareness of the Company's employees, and then increasing after-tax profits.

- Receivables have decreased significantly, causing cash and bank deposits to increase sharply, thereby increasing the following indicators: Instant payment ability and efficiency indicators have all increased.

3.3.3. Measure 3: Brand building and sustainable development

In the current economic situation, transportation companies in Vietnam are developing strongly. Therefore, it is necessary to build, develop, promote and protect the brand to be able to compete with domestic and foreign enterprises. To build a brand that can stand firm in the fiercely competitive environment like today, I think: The company needs to have a correct and complete awareness of the brand from the highest leadership level to the employees including the company's collaborators. The brand building strategy must

is part of an overall marketing strategy, originating from market research, carefully identifying target customers, combined with product development strategies, promotion, pricing policies, and reasonable distribution policies, to create the Company's products with their own image, distinct, unique, affecting the psychology and perception of customers with competitors' products. Continuously improve the quality of products and services and develop a network of agents to bring the Company's brand and products to customers. When creating a brand, the business needs to manage closely, ensuring that the reputation and image of the Company are constantly enhanced.

3.4. Some financial recommendations of Quang Doanh Transport and Trading Services Company Limited

Based on the analysis of the current situation, in addition to the proposed measures, the thesis would like to propose some recommendations to improve the Company's financial work in the following main contents:

- Build and perfect the Company's financial management mechanism in accordance with new economic conditions.

- Invest in facilities, build a team of staff in charge of financial analysis and consider it an indispensable activity in business management.

- Promote the usefulness of information in financial statements, which is the basis for controlling the financial situation as well as making investment decisions, distributing dividends and identifying potential risks of the business in the future.

- Strengthen management, periodically check and control revenue and expenditure and basic financial indicators.

- Upgrade and repair the warehouse system in degraded areas to improve efficiency in storing goods.

- The company should invest in scientific research to produce and manufacture new spare parts, improve transportation capacity and services to meet many customer needs, help improve competitiveness as a basis for increasing revenue and profit as well as business performance of the company.

CONCLUDE

Along with the transformation of the economy and the trend of international economic integration, business performance is increasingly becoming a long-term goal that businesses need to achieve. For each business, business performance is reflected in many aspects, depending on many factors, in which financial issues are one of the most important factors. Analyzing the financial situation will help managers have a comprehensive view of the financial situation of the business, correctly diagnosing the remaining aspects that need to be resolved in financial work. The analysis is not only meaningful for businesses but also very important for investors and creditors in their decisions, meaningful for employees in the business, banks and the State.

Based on the importance of financial analysis in enterprises, with the knowledge acquired at school and practical activities at Quang Doanh Transport and Trading Services Company Limited, I have completed my graduation thesis with the topic: "Financial analysis and solutions to improve the financial situation at Quang Doanh Transport and Trading Services Company Limited". With the dedicated guidance of teacher Cao Thi Thu and the enthusiastic guidance of the uncles, aunts, brothers and sisters of the Finance and Accounting Department, the Business Department in the Company, I have completed my graduation thesis.

Finance is a very broad issue, moreover, due to limitations in level and time, my article is inevitably flawed. I look forward to receiving guidance from teachers as well as comments from you so that my article can be more complete.

Thank you very much!

Student Pham Thi Thanh Huyen

LIST OF REFERENCES

1. Textbook "Corporate Financial Management" - Nguyen Hai San, Statistical Publishing House, 2005.

2. Textbook "Corporate Finance" - Luu Thi Huong, Education Publishing House, 2005.

3. Textbook "Business Analysis" - Statistical Publishing House 1999.

4. Textbook "Reading, preparing and analyzing financial reports" - Ngo The Chi, Finance Publishing House, 2000.

5. Financial reports and data, documents related to production and business activities of Nam Hai Port Joint Stock Company.

6. Graduation thesis of courses IX, X, Hai Phong Private University.

7. Some other documents.