GRADUATION THESIS ACADEMY OF FINANCE DECLARATION Signed hereby, certify hereby that this is my own research The content and the figures presented in the thesis reflected a fair and true situation of the internship organization Author Chu Thi Huong Giang CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE ACKNOWLEDGEMENTS First of all, I would like to express my deep gratitude to my supervisor, Mrs Pham Phuong Oanh for her precious advices and close instructions that guide me through this study I also want to send my thanks to Ms Pham Nga, Accountant of Nam Thanh Medical Equipment and Science Technology Limited Company, and staff of Accounting Department for their support during my internship Thanks to them, I had chance to access all necessary documents and financial statements and opportunity to work with the Company Ultimately, I owe my sincere thanks to my family and friends Their continuous assistance and encouragement helped me a lot during time of internship and attempt to finish this study CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE ABSTRACT The thesis is aimed at studying situation and solutions to enhance the financial capacity in Nam Thanh Medical Equipment and Science Technology Limited Company (NTMED) from 2012 to 2014 By analyzing the data collected from the balance sheets and income statements of NTMED from 2012 and 2014, the result revealed that the company gained some achievements in enhancing its financial capacity However, there were still shortcomings including unreasonable assets and capital structure, poor asset management and low liquidity From that, some proposals were given to NTMED including adjusting reasonable financial structure and have effective funded policy, enhancing business efficiency by increasing revenue and reducing costs Furthermore, State and government also should some suggestions such as completing legal document to create equity business environment, making administrative regulatory reform, and decreasing procedures which cause difficulties for enterprises… CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE TABLE OF CONTENTS DECLARATION i ACKNOWLEDGEMENTS ii ABSTRACT iii TABLE OF CONTENTS .iv LIST OF TABLES vi INTRODUCTION CHAPTER 1: LITERATURE REVIEW 1.1 Overview about financial capacity and financial analysis 1.1.1 Financial capacity 1.1.2 Financial statement analysis 1.1.3 Financial statements 1.2 Criteria in financial analysis to evaluate financial capacity 1.2.1 Overview of financial situation of the company .8 1.2.2 Financial ratios analysis 11 1.3 Factors affecting on financial analysis 21 1.3.1 The quality of information using on financial analysis 21 1.3.2 The level of analyst .22 1.3.3 The system of average ratios 22 CHAPTER ANALYSIS FINANCIAL STATEMENT NAM THANH MEDICAL EQUIPMENT & SCIENCE TECHNOLOGY CO., LTD 23 2.1 Introduction about NTMED CO ,LTD .23 2.1.1 General information .23 2.1.2 Organizational structure: .24 2.2 Financial Statements of NTMED CO ,LTD Analysis 25 2.2.1 Overview about financial situation of company 25 CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE 2.2.2 Analysis financial situation of the company through calculating following ratios: 36 2.3 Evaluation about financial capacity of the company through financial analysis: 42 2.3.1 Advantages .42 CHAPTER 3: SOLUTIONS AND RECOMMENDATIONS TO ENHANCE FINANCIAL CAPACITY OF NTMED COMPANY THROUGH FINANCIAL ANALYSIS .45 3.1 Development orientation of the NTMED company in the future 45 3.1.1 The context of Vietnam economy and healthcare industry in the next years .45 3.1.2 Development orientation of the NTMED 45 3.2 Solutions and recommendations for enhancing financial capacity of NTMED 46 3.2.1 Solutions for enhancing financial capacity of NTMED 46 3.2.2Recommendations to implement solutions for enhancing financial capacity of NTMED effectively 49 CONCLUSION .51 REFERENCE 52 CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE LIST OF TABLES Figure 2.1 Organizational structure of NTMED CO , LTD Table 1.1 Structure of Balance Sheet Example Table 1: The business capital of NTMED CO ,LTD Table 2: Capital resources of NTMED CO ,LTD Table The asset allocation of NTMED CO ,LTD Table The capital resources allocation of NTMED CO., LTD Table Net Working Capital Table The business revenue of NTMED CO ,LTD Table The business cost of NTMED CO., LTD Table The business profit of NTMED CO ,LTD Table Liquidity ratios of NTMED CO.,LTD Table 10 Asset and Debt Structure ratios of NTMED CO.,LTD Table 11 Inventory turnover of NTMED Table 12 Receivables Turnover of NTMED Table 13 Total Assets Turnover of NTMED Table 14 The profitability ratios of NTMED Table 15 DuPont Analysis CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE INTRODUCTION Rationale Nowadays, along with the renewal of the market economy, the increasingly fierce competition between economic sectors has caused the difficulties and challenges for businesses In this context, in order to assert their position, every business should understand their financial position and the results of production and business activities To achieve that, businesses must always concern about their own financial situation as it related directly to the business activities of Assessing regularly the financial situation helps businesses and the managers to see the status of financial activities, the results of production and business activities of enterprises in the period Therefrom, they can assess potential production and business efficiency as well as the risks and future prospects of the business They can find out effective solutions, accurate decisions in order to improve quality of economic management and the efficiency of production and business of enterprises Nam Thanh Medical Equipment and Science Technology Limited Company is one of the leading enterprises in providing medical machinery and equipment in Vietnam However, in the context of the economy in trouble, along with most other businesses, Nam Thanh Medical Equipment and Science Technology Limited Company is also facing many challenges in its operations Lower global growth and the process of integration with the increasingly fierce competition in recent years have caused the consumption of the company's products to be more difficult, which are accompanied by a series of shortcomings in financial capacity Therefore, the company needs to assess accurately its current financial situation and find out appropriate solutions to improve the company's financial capacity in the next years CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE Being awarded of this practical requirements and combining with the internship report in Nam Thanh Medical Equipment and Science Technology Limited Company, I chose the topic: “Financial statement analysis and solutions to enhance financial capacity of Nam Thanh Medical Equipment and Science Technology Limited Company” to study CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE CHAPTER 1: LITERATURE REVIEW 1.1 Overview about financial capacity and financial analysis 1.1.1 Financial capacity According to “Corporate Finance” (2nd Ed.) by Jonathan Berk (2011): The financial capacity of each company is the financial resources of the company itself, the ability to generate cash, organize cash flows reasonably and ensure the solvency reflected in capital scale, the quality of assets and profitability enough to ensure and maintain business operations Criterion for evaluating the financial capacity of the business inclusive: - The quantitative factors are scale and structure of capital sources; quality and structure of asset; the ability to pay short-term debt; profitability… - The qualitative factors are the exploitation and management and use of capital resources which is reflected in organization and management level, scientific and technological level, human resources management 1.1.2 Financial statement analysis Economists give the definition of financial statement analysis as follows: Financial statement analysis is the process of reviewing and evaluating a company's financial situations, thereby gaining an understanding of the financial health of the company and enabling to have more effective decision making The purpose of financial statement analysis is to examine both past and current financial data so that a company's performance and financial position can be evaluated as well as the future and potential risks can be estimated Financial statement analysis can yield valuable information about trends and relationships, the quality of a company's earnings, and the strengths and weaknesses of its financial position Financial statement analysis begins with establishing the objective(s) of the analysis For example, whether the analysis undertaken is to provide a basis for granting credit or making an investment? After the objective of the analysis is established, the data is accumulated from the financial statements and from other CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE sources The results of the analysis are summarized and interpreted Conclusions are reached and a report is made to the person(s) for whom the analysis was undertaken Another definition of financial statement analysis is that an evaluative method of determining the past, current and projected performance of a company Several techniques are commonly used as part of financial statement analysis including horizontal analysis, which compares two or more years of financial data in both dollar and percentage form; vertical analysis, where each category of accounts on the balance sheet is shown as a percentage of the total account; and ratio analysis, which calculates statistical relationships between data There are a number of users of financial statement analysis They are: - Creditors Anyone who has lent funds to a company is interested in its ability to pay back the debt, and so will focus on various cash flow measures - Investors Both current and prospective investors examine financial statements to learn about a company's ability to continue issuing dividends, or to generate cash flow, or to continue growing at its historical rate - Management The company controller prepares an ongoing analysis of the company's financial results, particularly in relation to a number of operational metrics that are not seen by outside entities - Regulatory authorities If a company is publicly held, its financial statements are examined by the Securities and Exchange Commission (if the company files in the United States) to see if its statements conform to the various accounting standards and the rules of the SEC 1.1.3 Financial statements 1.1.3.1 Balance Sheet  Definition of a balance sheet: A balance sheet is a financial statement that summarizes a company's assets, liabilities and its shareholders' equity at a specific point in time A balance sheet must follow the below formula: CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE b Debt ratio of NTMED This ratio measures the financial leverage of a company The debt ratio of NTMED increased to 0.39 in 2014 from 0.33 in 2013 Company with higher levels of liabilities compared with assets was considered highly leveraged and more risky for lenders However, that a ratio of less than 0.5 while company gained profits means that company used financial leverage effectively c Equity ratio of NTMED In 2012, NTMED’s ratio is 0.77 This means that investors rather than debt are currently funding more assets 77 percent of the company's assets are owned by shareholders Similarity, 67 percent in 2013 and 61 percent in 2014 of assets are funded by equity Equity financing in general is much cheaper than debt financing because of the interest expenses related to debt financing Thus, the NTMED should raise more equity finance by investors than debt finance by creditors In general, asset and debt management shows a company's ability to make payments and pay off its long-term obligations to creditors, bondholders, and banks Better solvency ratios indicate a more creditworthy and financially sound company in the long-term Thus, company has to increase payment ability 2.2.2.3 Asset Management ratios a The Inventory turnover of NTMED Table 11 Inventory turnover of NTMED Year Inventory turnover (times) Day’s Sale in inventory (days) 2012 4.2 84 2013 2014 12.87 2.43 28 149 The trend of inventories is the results of inventory turnover over three years In 2012, NTMED’s inventory turnover was 4.29 times, which means that NTMED sold the inventory slowly and did not have very good inventory control CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE We can see the Days’ Sale in inventory in 2013: NTMED has enough inventories to last the next 28 days However, this ratio increased to 149 in 2014 This ratio can be seen as high compared to average ratio but with the main features of long – term equipment, the Day’s Sale in inventory was high that did not effect on revenue of company b Receivables Turnover of NTMED Table 12 Receivables Turnover of NTMED Year Receivables turnover (times) Day’s Sale Outstanding (days) 2012 2013 2014 8.75 6.89 1.76 42 53 205 In 2012, the receivables turnover of 8.75 means that the company collected its average receivables eight times during the year This ratio fell considerably to 6.89 in 2013 and continuously decreased to 1.76 in 2014 In general, company collected their receivables more slowly throughout the year of 2014, which caused the difficulty for paying bills and other obligations sooner It takes the company 205 days to collect cash from customer in 2014 A high DSO indicates a company with poor collection procedures because of customers who are unable or unwilling to pay for their purchases c Total Assets Turnover of NTMED Table 13 Total Assets Turnover of NTMED Unit: Times Year 2012 2013 2014 Total Assets Turnover 1.99 0.3 0.64 In 2012, one dong of asset in business operation generates 1.99 dong of revenue This is a reason why company used total asset efficiently in this year This CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE ratio had a decrease to 0.3 in 2013 However, it had slightly increased by 0.64 in 2014 It means that the company created 0.64 dong of sales for every dong invested in assets Lower ratios mean that the company was not using its assets efficiently and most likely had problems in total assets management In conclusion, the efficiency ratio in 2013 was lower that shows utilizing company’s asset to generate income was less effective in 2013, compared to other years However, those ratios were improved in the next year then the company should remain this tendency in the future by managing inventory and increasing net sales 2.2.2.4 Profitability ratios Table 14 The profitability ratios of NTMED Unit: Times Year 2012 Profit Margin 0.031 ROA 0.062 ROE 0.074  Profit Margin (ROS) of NTMED 2013 0.02 0.054 0.078 2014 0.027 0.069 0.011 This ratio in general had changed through years In 2012, ROS was 0.031 which means that one VND of revenue creates 0.031 VND of income However ROS in 2013 decreased to 0.02 because business result and expenses control were good ROS in 2014 increased slightly to 0.027 due to the fact that the increase of net profit was higher than the increase of revenue They need generate more revenues by keeping expenses constant or keep revenues constant and lower expenses  Return on Assets (ROA) of NTMED In 2012, NTMED's ratio is 6.2 percent In other words, every VND that NTMED invested in assets during the year produced 0.062 VND of net income This ratio decreased in 2013 to 5.4% but increased to 6.9% in 2014 It could be seen from this phenomenon that the company managed its assets more effectively in order to produce greater amounts of net income in 2014, compared to 2012 and CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE 2013 Thus, ROA was relatively low; the company needs to have method increase this ratio in order to limit risks when investing assets  Return on Equity (ROE) of NTMED Return on equity measures how efficiently a firm can use the money from shareholders to generate profits and grow the company This ratio was 7.4% in 2012 and 7.8% in 2013; this means that every dong of equity can create more than 0.07 dong profit This shows that the company is using its investors' funds effectively But ROE of the company in 2014 slumped to 1.1%, which means that the company used equity and raise capital ineffectively In general, although the profit margin ratio was stable, return on asset and equity ratio of the company was not good That results basically show that companies achieved profits from their operation as well as a return on investment in inventory and other assets was not really effective Investors and creditors can use profitability ratios to judge a company's return on investment based on its relative level of resources and assets To attract and create good image to creditors and investors, the company has to solutions to use their assets and equities sufficiently to generate more profits 2.2.2.5 DuPont Analysis Table 15 DuPont Analysis Unit: Times Year Profit margin 2012 0.031 2013 0.02 2014 0.027 Total Asset Turnover 1.99 0.3 0.64 Financial Leverage 0.23 0.33 0.39 ROE 0.074 0.078 0.011 ROE in 2013 reached a peak at 0.078 over three years ROE increased from 2012 to 2013 mainly due to the increase of financial leverage although total asset turnover and profit margin were decreased However, ROE in 2014 decreased to 0.011 compared to 2013 Although total asset turnover ratio increased significantly, the main reason is the slight increase of profit margin and financial leverage So, it’s CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE necessary to increase revenue, decrease expenses in order to promote profit and develop business operation of the company 2.3 Evaluation about financial capacity of the company through financial analysis: 2.3.1 Advantages a Asset and Capital resources In general, the scale of asset was expanded through years due to the increase of cash and cash equivalent: Over years, cash and cash equivalent increased significantly from 240.22 million dong in 2012 to 527.4 million dong in 2014 and tended to be rising in the future This leads the liquidity of the company is quite high, so companies should maintain the amount of money to limit risks in liquidity Fixed assets accounted for a small proportion of total asset of NTMED The situation of fixed assets remained stable at roundly 500 million b Business Operations: Total revenue was a peak of 20,718.09 million dong at 2013 due to net sales came from carrying out some equipment and services providing contracts According to NTMED’s financial statements, the company provided domestic equipment for VINMEX International Hospital with total revenue of approximately billion and maintenance services for with total revenue billion in 2013 In 2014, the company did not carry those services so revenue had a slightly decrease Because of the decrease of revenue, gross profit of company increased steadily from 70.54 in 2012 to 1,316.14 million dong 2014 In general, the EBIT increased because financial income rose significantly of the years 2012 – 2014 due to the fact that the deposit interest in 2014 was more than that in 2013 NTMED had a quite good profitability situation High profit margin indicated that they actually had high earning per each VND of revenue 2.1.3 Disadvantages a Assets and Capital Resources: CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE Firstly, the asset structure of the company was not reasonable The current asset accounted for almost proportion of total asset The company did not consider about investment in non – current asset because main business activity of company is to provide maintenance service, maintenance and technical equipment for health area Secondly, amount of receivables and receivable turnover was in bad level, which shows that the company found difficulty to collect receivables The situation of receivable turnover and days sales outstanding seemed negative Low receivable turnover and high days sales outstanding (compared to the industry average) indicates that a large amount of money was occupied by the customers This caused the company having fewer opportunities to invest in beneficial projects Thus, company needs to speed up the debt collection to avoid occupied capital situation Finally, liabilities of the company was high with the number of over 80% of total capital, showing the ability to self-finance of the companies is low and the working capital of the company depends heavily on external funding Although the proportion of debt in the capital structure reduced during 2013, total liabilities had an upward trend in 2014 In particular, since 2014, amount of advance from customer boomed although trade account payables had reduction b Business operations Along with the rise of revenue, NTMED’s cost had the same trend when increased in 2013 and 2014 There are many factors effecting the change of total cost Among them, the most important factor and the direct effect of fluctuations in the cost is cost of sales Besides, the general & administration expense of NTMED has increased in recent years and has been predicted to rise in the coming years Therefore, companies should try to manage and use of general & administration expenses effectively, while continuing to reduce cost of goods sold by increasing sales prices But the company needs to consider cautiously because the issue of price is very sensitive to revenue CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE c Asset management Base on the decrease of total assets turnover of NTMED, we can conclude that the efficiency of using capital in this year were not good Although having a huge amount of assets, company wasn’t able to exploit them to make higher revenue Inventory turnover has the increase trend The company remained too much inventories because this is one part of company’s business operations in which company have to storage equipment using for operational and maintenance services However, it also brought many financial difficulties for the company because inventory is illiquidity and can’t be turn into cash in a short time and costs many management expenses d The liquidity Liquidity of the company is not very satisfactory because the company depended heavily on external fund It was reflected by the figure when liquidity ratios of NTMED decreased over years Although the amount of current assets could cover short-term debt, the liquidity risk is relatively high Because, in general most of the current assets was inventory whose liquidity are very low CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE CHAPTER 3: SOLUTIONS AND RECOMMENDATIONS TO ENHANCE FINANCIAL CAPACITY OF NTMED COMPANY THROUGH FINANCIAL ANALYSIS 3.1 Development orientation of the NTMED company in the future 3.1.1 The context of Vietnam economy and healthcare industry in the next years According to assessment of experts, in 2015 and 2016, Vietnam’s economy will develop more sustainable than it in 2014 Especially, Vietnam will join as international organizations such as TPP, FTA, that open new and potential opportunities for the country’s economy The State Bank is responsible for flexible monetary policy management and strives to reduce interest rates for medium – term and long – term from 1% to 1.5% per year with market measures in order to boost credit growth for production and trading In addition, the State also considers and regulates the effect of exchange rate’s change on exportation – importation, inflation, public debt Government also finds out tax solutions matching export and import of goods tax reduction roadmap according to the international commitment to simultaneously achieve an economic integration and contribute to the protection, push up domestic production In addition, healthcare is one of the key industries in Vietnam today The technical conditions of Vietnam showed potential development of this sector in the future With its potential growth, projects related to healthcare sector will be supported by the State in capital and human resources Many plans will be built to meet the increased demand equipment’s consumption This is a huge opportunities for medical companies, especially NTMED 3.1.2 Development orientation of the NTMED Based on the summary of the economy and petroleum sector situation in previous section, there are development orientations of NTMED in 2015 and the next years: Firstly, supported by Ministry of Healthcare, although company had just new established entity, the NTMED made every effort to develop in the field CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE Professionally developing is a company’s strategy to ensure NTMED growing and developing according to the goal of the Corporation as well as the wishes of the entire Board of Directors and staffs of the company Secondly, company signed long-term contracts with Titan Medical Inc contractors as a general contractor Titan Medical Inc was good reputation in the world, in which they supplies system inclusive of machinery, plant and equipment associated with support services to maintain and operate equipment This is an important foundation for the company to experience with advanced and model technology So NTMED should promote this advantage by making more joint ventures with foreign companies to provide equipment’s and training To improve image on the market and learn experience, the management of the company have detailed plans to make partnership with the development companies in Vietnam and in the world Besides, the company also pays attention to the improving knowledge and skills for staffs and employees Thirdly, duration of maintenance contracts for power plants which was signed between the company and partners was usually 8-10 years Over the years, the company continued to record revenue from services provided to the power plant, so the company's revenue is predicted to increase sustainably Finally, to make the maintenance and overhaul service professional, the NTMED needs to have many efforts in both human and technological development in this area 3.2 Solutions and recommendations for enhancing financial capacity of NTMED 3.2.1 Solutions for enhancing financial capacity of NTMED From the analysis in previous section, we can see that though the company had many efforts but they still had some disadvantage in financial management which affecting to business performance Thus, some solutions for NTMED were made to have better control in their financial issues and enhance profit CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE a) The NTMED need to adjust reasonable financial structure and have effective funded policy  About Assets Firstly, the company needs to increase cash and equivalents assets in order to enhance liquidity and reduce risks about interest rate, exchange rate The company has to calculate reasonable cash and equivalents reserve, manage input – money sources and output – money sources in company’s budget; manage use of spending and collecting by cash because this activity always happens On other hand, cash is high liquidity asset which has high payment ability and may be transformed to other asset easily Secondly, the company needs to increase the proportion of accounts receivables and decreasing amount of receivables by tightening the policy of debt collecting, managing credit policies, limiting capital misappropriation of customer, monitoring bad debt to create impairment of inventory provision for them to boost revenue Thirdly, inventory control is very important work for any enterprise because inventories always account for large proportion of total asset Good inventory control helps to minimize storage costs and improve using current asset efficiency Although the increased amount of inventories of the company did not show the bad performance but the management team still has long – term strategy to accelerate inventory turnover, restrict inventories as few as possible by creating inventories provision if it’s excess causes extra costs, always checking storage situation, choosing suitable suppliers,… Finally, using the fixed – assets for the most reasonable way in order to maximize long – term benefits and emphasizing on more long – term investment  About Liabilities and Equities Firstly, the purpose of reducing the proportion of liabilities is to save interest costs and minimize financial risk, increase the self – finance and reduce debt burden of the company CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE Secondly, the company needs to reduce external debt by raising capital from owners’ equity such as issuing shares or bonds to use capital resource which was more stable and less risk than banks loans Thirdly, the company should use equity for investment in fixed assets, avoid financial imbalance and reduce the short – term debt payments burden Fourthly, the company should consider to taxes and amount payable to the State budget: such as: calculating accurate amount of tax such VAT tax, corporate income tax, personal income tax… and finishing tax payment obligation to the State budget Fifthly, trade payables of NTMED were paid for foreign supplier about importation of equipment’s The company needs to monitor and track trade payables according to each supplier, specific period of time to pay in order to create good impression and reputation, attract more other prestige suppliers in the world then NTMED will improve quality of services to bring best benefits for customers Sixthly, instead of using the high – cost debt, company should find other long – term debt sources with lower cost to reduce financing costs Finally, company needs to increase amount of equity by issuing shares and bonds in the stock market b) The NTMED should enhance business efficiency by increasing revenue and reducing costs  Increasing revenue Company needs to enhance the search for customers which were in healthcare area in Vietnam such as: using advertising, marketing and promotion to introduce the image as well as the quality of services of the company to customers Recently, the development of Vietnam economy means that there are many potential customers for increase revenue of NTMED Also, company needs to ensure providing the best equipment’s in order to promote good image and reputation to customer for using products, investor, shareholder for investment in the company and lender for borrowing loans CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE Company should focused on the quality of staffs and employees, open many trainings for them to improve knowledge and skills in order that they can experience with model and advanced equipment’s  Reducing cost Company should decrease the proportion of liabilities with purpose of reducing the financial cost in business operations The company needs to make specific business plan for each year to establish specific sales goal and determine appropriate amount of inventory Although the increase of inventories did not effect on revenue and profit, it’s necessary to avoid the issue of excess inventory that leads to high inventory costs and increase interest charges The company needs to create cost management policies in order to control the General and Administration Cost effectively For example, the company has to save cost in non – business activities, monitor amount of money in receipt voucher or payment voucher, remind employees paying back advanced account on time by determining clearly person received, check amount of advanced money and time pay back… 3.2.2 Recommendations to implement solutions for enhancing financial capacity of NTMED effectively a) For the State In the context of globalization, then Vietnam’s companies faced many challenges from the competitiveness Thus, the Government, Line Ministry… needs to have protective methods including priority policies about price, tax…for domestic enterprises Moreover, the State needs to complete legal document to create equity business environment for local enterprises and foreign enterprises In addition, the State should make administrative regulatory reform, decreasing procedures which cause difficulties for enterprises For example, reducing custom procedures when importing goods and materials, CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE Also, the State needs to build the average ratios system fully and standard in order to use them as a base for assessing financial situation and looking for solutions b) For the NTMED Firstly, the company should always consider workforce element in business operations to have huge advantages and increase the competitiveness:  Training staffs with specialized knowledge, goods and services knowledge, ability to negotiate with suppliers and clients to take potential contracts  Paying salaries, bonuses and many awards for implementation achievement to encourage them  Considering organizational structure of the company, offloading abundant human resources and using each people for each work reasonably, recruit qualified persons, especially management positions Secondly, the company should increase equity by raising more shares in the market Thirdly, the company needs to build closely relationship and a good image with the suppliers because they play the important role in supplying good materials supporting company’s business activities Fourthly, the company should performed synchronous solutions to overcome disadvantages in management, inventories monitoring, debt payment on time, receivables, accelerate rotation capital speed… Fifthly, the company should review customer categories to give priority for potential and important customer Sixthly, the company needs to make detailed business plan and strategy strictly Finally, the company should analyze periodic financial situation to review advantages and disadvantages in financial management and find out the solutions CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE CONCLUSION Enhancing financial capacity is very important role over the activities of a company It is the leading determinants of the size and position of a company in the market Realizing the importance of financial capacity, the companies are trying to enhance it as well as possible However, this process is becoming harder than ever because of the difficulty of economic as well as the completive condition in healthcare sector nowadays Thus, for NTMED, without a doubt, also have some certain difficulties NTMED in recent years has raised its profit from 2012 to 2014; however, there were some restrictions that the firm has been stuck in, such as unreasonable assets and capital structure, poor asset management and low liquidity From that, the writer suggests some personally recommendations to help the firm to improve the current financial situation more effectively and efficiently The recommendations mostly suggest that the company needs to adjust reasonable financial structure and have effective funded policy, as well as enhance business efficiency by increasing revenue and reducing costs Capable of doing that, along with the help of State and government in helping the economy recovers from difficulty, the writer believes that NTMED will have a better result in financial capacity in the near future CHU THI HUONG GIANG CLASS: CQ50/51.02 GRADUATION THESIS ACADEMY OF FINANCE REFERENCE Jonathan Berk (2011), “Corporate Finance” (2nd Ed.), Pearson Education Limited, Edinburgh Gate, England Stephen Ross (2010), “Fundamentals of Corporate Finance” (5th Ed.), McGraw-Hill Australia, Australia Vu Van Ninh and Bui Van Van (2013), “Tài Doanh nghiệp” (1st Ed.), Hung Ha Ltd, Ha Noi, Vietnam Financial statements of NTMED CO , LTD in 2012, 2013 and 2014 CHU THI HUONG GIANG CLASS: CQ50/51.02 ... report in Nam Thanh Medical Equipment and Science Technology Limited Company, I chose the topic: Financial statement analysis and solutions to enhance financial capacity of Nam Thanh Medical Equipment. .. FINANCE CHAPTER ANALYSIS FINANCIAL STATEMENT NAM THANH MEDICAL EQUIPMENT & SCIENCE TECHNOLOGY CO., LTD 2.1 Introduction about NTMED CO ,LTD 2.1.1 General information Name of the company - Name: Công... using on financial analysis 21 1.3.2 The level of analyst .22 1.3.3 The system of average ratios 22 CHAPTER ANALYSIS FINANCIAL STATEMENT NAM THANH MEDICAL EQUIPMENT & SCIENCE TECHNOLOGY