The urgency of the topic
In today's open and competitive economy, Vietnamese enterprises have a significant opportunity to expand internationally, essential for their survival and growth The intense competition necessitates that businesses establish a strong market presence, with their performance being a crucial factor in securing this position.
Analyzing business performance is crucial for every organization as it enables companies to evaluate their current situation, identify underlying issues, and uncover potential resources This analysis helps businesses address challenges effectively and develop appropriate strategies for future growth, ultimately enhancing overall performance.
Hoang Long Mechanics Technology Joint Stock Company experienced a revenue increase of over 10%, although this fell short of the planned target Simultaneously, the cost of goods sold rose by the same percentage To enhance business performance and identify effective strategies for the company, I have chosen the topic "Solutions to Improve Business Performance at Hoang Long Mechanics Technology Joint Stock Company" for my graduation thesis.
Overview
Improving business performance is crucial, and numerous studies have been conducted in this area, including analyses of Vietnam Airlines Petroleum Company's performance, evaluations of trading and service companies, and strategies for enhancing the accounting value of small and medium-sized enterprises (SMEs) in Thai Binh province Despite this, research on SMEs in Hanoi remains limited, particularly regarding the production and business performance of Hoang Long Mechanics Technology Joint Stock Company This gap in research highlights the need for a focused study on this specific company.
"Solutions to improve business performance at Hoang Long Mechanics Technology Joint Stock Company”
This thesis integrates knowledge from various fields, including business development management, financial and accounting management, management economics, and human resource management, to analyze the business performance of Hoang Long Mechanics Technology Joint Stock Company over a three-year period from 2016 to 2018 By examining financial statements, internal reports, and observing actual production activities, the analysis aims to evaluate the company's business results, identify potential capabilities, and recognize both strengths and limitations This comprehensive assessment serves as a crucial foundation for the company to make informed business decisions, mitigate risks, and enhance overall performance.
Research objectives
After the research, the author will achieve:
- The author have a system of theoretical, updated knowledge, and research methods for management
This article evaluates the performance of Hoang Long Jsc Company by analyzing its business results from 2016 to 2018 It provides an in-depth investigation into the company's operational efficiency, capital utilization, asset management, and solvency Additionally, the assessment identifies existing limitations within the company, offering valuable insights into areas for improvement.
- Proposing solutions and business orientation for the next period, helping to improve the remaining limitations and promoting the company's potentials, contributing to improving business performance.
Research subjects
The object of the study is the performance of production and business activities of Hoang Long Mechanics Technology Joint Stock Companyany, specifically as follows:
- Business results through revenue, cost and profit targets
- Capital use performance and profitability of capital
- Overview of financial situation through financial coefficie
Scopes of research
- Space: financial statements of Hoang Long Mechanics Technology Joint Stock Company
- Address: No 56, lane 177 Dinh Cong, Hoang Mai, Hanoi
Research method
The method of data collection
Methods of collecting secondary documents for the period 2016-2018 include:
- Information on industries from prestigious State newspapers is a useful source, manualy summarizing business results and reports of enterprises
- Textbooks on specific topics with clear guidance on existing secondary data sources in the economic field
Tertiary documents like index tables and catalogs play a crucial role in locating secondary data The Internet provides access to comprehensive catalogs, allowing users to search for specific information easily Recently published online indexes and catalogs often include direct links to downloadable data files, typically presented in a tabular format.
- Discussions, studies, erudite experts, librarians and instructors who are knowledgeable about the topic
Methods of primary data collection
The observation method is a technique used to monitor and record human behaviors and events, often utilized alongside other methods to ensure data accuracy In scientific research, both primary and secondary data collection methods are commonly employed to gather reliable information.
Moderate economic analysis in analytical enterprises employs various research methods from disciplines such as statistics, accounting, finance, and economic management Each method has its own advantages and disadvantages, which are influenced by specific conditions of application The choice of method is professional and technical, tailored to the type of business, the nature of economic phenomena, and the specific objectives of the analysis, ensuring the selection of the most suitable approach based on the available data and desired outcomes.
Comparison is a widely utilized technique for evaluating outcomes and pinpointing the locations and trends of fluctuations in analytical criteria To effectively implement this method, it is essential to establish appropriate conditions for comparing these criteria.
+ Agree on the content, method of determination, time and unit of comparison criteria
The determination of comparative origin in analysis is influenced by its purpose, which can be based on time or spatial factors Time-based comparisons may involve planning periods, previous periods, or the same period from the previous year, while spatial comparisons can assess performance against the whole, similar units, or specific internal areas The period selected for comparison is referred to as the base period, while the period under analysis is known as the analysis period The values derived from each respective period are categorized as the values of the base period and the analysis period.
Analyzing economic activity often requires comparing sales to costs to assess business performance, as well as evaluating specific criteria against general indicators to understand their relative proportions.
Diagrams and graphs play a crucial role in analyzing the fluctuations of economic indicators across various time periods and their interdependent relationships To assess export performance effectively, it is essential to organize data into tables, utilizing diagrammatic methods alongside other analytical techniques such as comparison, numerical difference, density, and rate This integrated approach enhances the reliability of the analysis, making it a widely adopted practice in economic evaluations.
In the realm of economic and financial indicators for enterprises, numerous interrelated metrics exist that reflect balanced relationships These relationships can be categorized into two types: general and specific General balance refers to the equilibrium among overarching economic indicators within the enterprise.
The index method is used to assess and analyze the fluctuations and interconnections of economic indicators with various factors Economic indicators are evaluated by comparing their values over different time periods, typically contrasting the current reporting period with a designated base period.
Contents of the thesis
Beside the list of references, the attached annexes, the structure of the thesis consists of 3 chapters:
- Chapter 1: Theoretical and overview of the business performance of the
- Chapter 2: Situation of business performance at Hoang Long Mechanics
- Chapter 3: Solutions to improve business performance at Hoang Long Mechanics Technology Joint Stock Company.
THEORETICAL AND OVERVIEW OF THE BUSINESS
Definition and importance of business performance analysis
1.1.1 Concept of analyzing business performance
In a market economy, businesses prioritize production performance as it is crucial for survival and growth The ultimate goal of any enterprise is to achieve profitability, which is defined as the difference between the results obtained and the costs incurred The effectiveness of business performance is influenced by the organization of production and management practices within each company Thus, understanding and improving these factors is essential for enhancing overall business performance.
Business performance is a key economic concept that highlights the depth of economic development and evaluates the efficiency of human resource utilization and production costs in achieving set business objectives It serves as a crucial indicator of economic growth and provides a foundational basis for assessing how well an enterprise meets its economic goals over time.
Classifying business performance using various criteria significantly impacts management practices This classification serves as a foundation for establishing key performance indicators and levels, while also facilitating the development of strategies to enhance the overall performance of the enterprise.
Business performance and socio-economic performance
This classification evaluates business performance based on the profits generated from activities such as capital and asset utilization, while also considering the broader socio-economic impacts, including job creation and economic development Individual business performance is primarily reflected in the profits earned by each enterprise, whereas socio-economic performance encompasses the overall contributions to production, life improvement, and economic restructuring There exists a reciprocal relationship between individual business performance and national economic performance, with effective enterprise operations being crucial for national growth Although some businesses may experience losses, the economy can still thrive under certain conditions It is essential for enterprises to focus on socio-economic performance, as it lays the foundation for effective operations To achieve this, government policies must harmonize the interests of society, businesses, and individual workers, enabling businesses to assess their performance and allowing authorities to provide better support for operational effectiveness.
Performance of part cost and total cost
The success of any business is intricately linked to its market environment, which influences crucial decisions such as operational strategies, target audiences, and pricing Each supplier operates under unique conditions, including resource availability, technical capabilities, and management practices, which shape their business activities While suppliers aim to offer their products and services at competitive prices, they must adhere to market pricing, particularly when their offerings are comparable in quality.
1.1.3 The require to improve business performance
The open integration of our economy presents both opportunities and challenges for Vietnamese businesses To thrive in this competitive landscape, companies must leverage available opportunities while navigating difficulties and gradually establishing their market position Continuous improvement in business performance is essential for every organization to succeed and adapt to the evolving economic environment.
Enhancing business performance is crucial for the survival and growth of both enterprises and society as a whole Effective operations are essential for businesses to thrive, as performance reflects the efficient use of resources—human, material, and capital—toward achieving their goals Profitability is the ultimate aim for most businesses, enabling them to reinvest in production expansion and ensuring their sustainability As each business acts as a vital component of society, its growth contributes to societal development Thus, improving business performance serves as the foundation for the continued existence and advancement of both businesses and the broader community.
To enhance business performance and gain a competitive edge in the market, companies must identify and leverage their unique advantages, such as product quality, pricing, organizational structure, or design By adopting advanced production technologies and optimizing machinery usage, businesses can produce high-quality products at competitive prices, thereby attracting more customers This proactive approach not only strengthens their position in the competition but also facilitates market expansion, ultimately leading to improved overall performance.
Enhancing business performance is essential for ensuring employee well-being within an organization Employee wages play a crucial role in their livelihood, making it vital for businesses to focus on increasing income as a key objective By leveraging wages as a strategic tool for performance improvement, companies can foster trust and enthusiasm among their workforce Additionally, providing stable and higher incomes, along with bonuses, boosts morale, while implementing measures to address labor violations through salary deductions can enhance overall responsibility among employees.
Criterias to evaluation Business performance
Financial coefficients serve as key indicators of a company's financial health during a specific timeframe Different businesses utilize various financial ratios to accurately reflect their financial status at different periods Consequently, analyzing these financial coefficients is a crucial aspect of corporate financial analysis.
- Current solvency coefficient (current solvency ratio)
Short-term assets Short-term debt
The coefficient indicates how effectively a business can convert its assets into cash to meet short-term obligations, thereby demonstrating the company's capacity to ensure timely payment of its short-term debts.
A low coefficient (below 1) indicates that a company's ability to meet short-term debt obligations is weak, serving as a warning sign of potential financial difficulties Conversely, a high coefficient suggests strong readiness to pay off debts However, excessively high ratios may indicate an overabundance of current working assets that are inactive and unprofitable, reflecting ineffective asset utilization in the business.
The significance of mobile assets varies based on business characteristics, with commercial enterprises typically having a higher proportion of these assets, resulting in a greater coefficient Consequently, when evaluating a company's ability to meet short-term debts, it is essential to consider the standard coefficients of similar businesses.
The quick solvency ratio serves as a crucial metric for assessing a company's financial stability, as it excludes inventories from current assets due to their lower liquidity This stricter evaluation provides a clearer picture of an enterprise's ability to meet its short-term obligations.
The solvency coefficient serves as a crucial indicator for assessing an enterprise's ability to meet short-term debt obligations, making it a key focus for short-term creditors This metric allows creditors to evaluate the immediate financial health of a business However, it may not always provide an accurate picture of solvency, particularly for companies with a significant portion of receivables within their total working assets.
Therefore, to better assess the solvency of the enterprise, it is also possible to use the instant solvency coefficient of the enterprise
Money + Cash equivalent Short-term debt
Cash encompasses physical currency, deposits, and money in transit, while cash equivalents refer to short-term investments in securities and other easily convertible assets that can be transformed into cash within three months without significant risk.
The ratio of instant solvency reflects the ability to pay short-term debts at any time, because in the source of debt cover the business is very flexible
Interest payable represents the cost of capital that a business must timely remit to its creditors This payment is sourced from the company's profit before interest and taxes The interest payment ratio illustrates the connection between profit before interest and tax and the interest obligations due.
Profit before tax and interest Loan interests payable in the period
The interest payment ratio indicates a business's ability to cover its loan interest payments with its profit before interest and tax A high ratio signifies strong operational effectiveness and sufficient profitability, ensuring timely payment of loan interests.
Performance of using common assets:
This index reflects the enterprise's ability to generate after-tax profit for business activities, determined by the following formula:
Profit after tax Average assets
This indicator reflects the profit after tax generated by an enterprise for each asset invested A higher value signifies effective asset utilization, enhancing the investment capacity of the business owner.
Total net sales Average assets
The asset turnover ratio measures how efficiently a business utilizes its assets during a specific period A higher ratio indicates that assets are being converted into sales quickly, which can lead to improved profitability Conversely, a low ratio suggests slow asset movement, potentially resulting in excess inventory and reduced business turnover It's important to note that this indicator varies based on the nature of different industries and the unique characteristics of each company.
- Asset depreciation rate compared to net sales
The ability of an asset to generate net turnover is a basic economic indicator for estimating investment capital when an enterprise wants an expected net turnover, which is usually determined:
Asset ratio of assets to net sales =
This indicator indicates how many VND of investment assets an enterprise will earn in a net revenue High net sales for the period
- The depreciation rate of the property compared to the after-tax profit:
Reflecting the enterprise's ability to generate after-tax profit for its business activities, it is determined:
The ratio of depreciation of assets to profit after tax =
Average assets Profit after tax
This indicator reflects the potential increase in property assets a company can achieve for each dong of profit after tax A lower value of this index signifies more efficient asset utilization, making the investment opportunity more appealing.
The number of rotation of inventory =
Cost of goods sold Average inventory
Inventory at the beginning of the period + Inventory at the end of the period
Inventory turnover cycles indicate how often a company's investment in inventory is replenished over a specific period A higher turnover rate signifies efficient inventory management, leading to increased sales and profits for the business.
In order to know how much capital a business wants to have a net revenue, it is necessary to base on the inventory inventory coefficient determined by the following formula:
Average inventory Total net sales
- Production capacity of fixed assets:
Production capacity of fixed assets =
This indicator measures the revenue generated per dong of invested fixed assets, reflecting the production capacity of those assets A higher value signifies better performance, which significantly contributes to enhancing overall business activity efficiency.
Average value of fixed assets in the period =
Value of fixed assets at the beginning of the period + Value of fixed assets at the end of the period
- Loss rate of fixed assets:
Loss ratio of fixed assets =
Average value of fixed assets
This indicator reflects the value of fixed assets in VND required by an enterprise to generate net revenue, serving as a foundation for strategic fixed asset investments aimed at achieving targeted revenue outcomes.
- Return on equity (ROE): The formula for determining:
Factors affecting business performance
When discussing the factors influencing business operations, they are typically categorized into subjective and objective factors Subjective factors are internal elements that the enterprise can manage or modify, while objective factors are external influences beyond the enterprise's control.
Objective factors such as political, legal, cultural, social, technological, economic, natural conditions, infrastructure, and economic relations significantly influence all businesses in the market While these factors are beyond the control of individual enterprises, understanding them is crucial for enhancing adaptability to market trends and improving overall business resilience.
The political and legal environment significantly influences the creation and utilization of business opportunities as well as the achievement of business goals Political stability is crucial for successful business operations, as political changes can either benefit certain enterprises or hinder others A comprehensive legal framework and strict law enforcement foster a competitive atmosphere, minimizing fraud and errors in business practices Moreover, a stable political and legal landscape enables businesses to assess risks and understand the implications of political and legal factors on their operations Consequently, analyzing political and legal elements is essential for businesses entering the market.
Economic factors play a crucial role in shaping market dynamics and industry growth, influencing purchasing power, consumer demand, and sector development trends Key elements include foreign trade activities, where the openness of an economy affects business opportunities and competitive conditions, as well as the utilization of national advantages in technology and capital Additionally, inflation and its management directly impact income, savings, consumption, and investment activities Changes in economic structure can shift the roles and growth trajectories of various sectors, ultimately altering enterprise development directions Lastly, the economic growth rate reflects overall economic trends, which are closely linked to the capacity for business expansion or contraction.
Socio-cultural factors significantly impact consumer psychology and preferences, shaping the behaviors and tastes of customers By understanding these elements, businesses can gain insights into their target audience at various levels, enabling them to select effective marketing strategies and business approaches that resonate with consumers.
Technological factors affect technology innovation requirements in equipment capable of producing products of different quality, labor productivity and competitiveness, selection and technology provision
Natural conditions, including climate and weather, significantly impact regional production and business cycles, as well as the storage and preservation of goods Additionally, the state of technical infrastructure plays a dual role; it can facilitate business operations by leveraging existing economic resources, but it may also hinder investment and the growth of specialized businesses involved in transportation, storage, and distribution.
Customers play a crucial role in the success or failure of businesses in a market economy, as their needs and purchasing power directly influence demand for goods and services With diverse requirements shaped by factors such as age, gender, income level, and personal habits, each customer group exhibits distinct shopping behaviors To thrive, businesses must develop tailored strategies that address the specific needs of these varied customer segments.
Competitors, including manufacturers and businesses offering similar or interchangeable products, significantly impact market dynamics To survive, companies must effectively compete; otherwise, they risk being eliminated from the market This competition drives businesses to enhance their operations and better meet customer needs, fostering innovation and adaptability while constantly facing the challenge of maintaining their market position.
Domestic and foreign production and business enterprises play a crucial role in supplying goods to businesses and suppliers, significantly influencing their operations This impact is evident in the performance of supply contracts, which hinge on factors such as reliability, product quality, pricing, delivery timelines, and location requirements.
The potential of a business is influenced by several key factors, including its financial strength, human resources, intangible assets, and the effectiveness of its management Additionally, the quality of technological equipment and infrastructure plays a crucial role, along with the clarity and soundness of business goals and the ability to maintain control over achieving these objectives.
Financial strength in businesses is determined by total capital, which includes equity and mobilized capital, as well as the ability to effectively manage this capital This strength is also reflected in the capacity to meet both short-term and long-term debt obligations and is assessed through profitability ratios.
Our dedicated staff possesses the knowledge and experience necessary to meet the high demands of the business They successfully complete assigned tasks while focusing on specialized areas These skilled workers excel in collaboration and actively leverage business opportunities for growth and success.
Intangible potential plays a crucial role in empowering businesses within the market by influencing customer choices, acceptance, and decision-making This factor fosters favorable purchasing conditions, enhances competitiveness, and aids in attracting customers while expanding market reach An enterprise's intangible potential may stem from its market reputation, brand image, and effective communication within social relationships.
- Geographical location, facilities of the enterprise:
Businesses can effectively capture customer attention and facilitate purchasing or reservation activities through their material and technical resources These resources, which encompass fixed assets like factory offices and specialized equipment, highlight the company's strength, scale, and competitive advantages in the marketplace.
SITUATION OF BUSINESS PERFORMANCE AT HOANG
Overview of Hoang Long Mechanics Technology Joint Stock Company
2.1.1 History of establishment and development of Hoang Long Mechanics
Technology Joint Stock Company Joint Stock Company
Hoang Long Mechanics Technology Joint Stock Company, established in 1998, specializes in manufacturing high-tech steel structures for key national construction and industrial sectors, including aircraft yards, refineries, bridges, roads, and telecommunications The company offers a range of products, from simple to complex steel structures, including both standard and non-standard items with super heavy weight capabilities To address diverse market needs, Hoang Long also produces steel rebar, rolled steel, and drawn and cut steel products, ensuring they meet all customer requirements Their products have made a significant impact on the domestic market.
The company has implemented works and projects such as:
- Supplying high-tech steel structure products for factories
- Supplying high-tech steel structure products to the airport
- Producing rebar products for wholesale and retail
- Consulting design of factory buildings:
The company commenced operations with an initial capital of VND 5 billion and a workforce of 32 employees, including a Party cell with four members, a grassroots trade union, and a youth union Its head office is situated at 56/177 Dinh Cong, Hoang Mai, Hanoi, covering an area of 118 m² The facilities are equipped with six drawing tables and a scientific and technical team comprising two architects, two construction engineers, two economic engineers, and four intermediate officials, alongside additional technical workers and waitstaff.
Since its inception, the company has consistently expanded its operations and diversified its production lines through technological innovation In 2014, it ventured into additional sectors, including real estate, civil and industrial construction, transportation infrastructure, and the development of residential, commercial, and tourist areas The company's dedication to continuous improvement has led to recognized achievements, enhancing its reputation and the quality of its products.
2.1.2 Functions and duties of Hoang Long Mechanics Technology Joint Stock
The company operates mainly in the field of consulting and construction, with the following industries:
- Producing iron, steel and cast iron
- Producing industrial, agricultural and forestry machines
- Manufacture of machine tools and metal shaping machines
- Repair of machinery and equipment
- Installation of machinery and industrial equipment
- Construction of houses of all kinds
- Installation of the system water supply and drainage
2.1.3 Organizational structure of the company
The company's current number of employees is 55, of which 21 and bachelor degrees are 38% of the total number of employees and 34 are unskilled workers, accounting for 62%
Regarding organizational structure in the company, specifically as follows:
The manager holds the highest authority within the organization, responsible for directing and assigning duties to department heads while ensuring compliance with legal standards Assisting the manager, the vice manager plays a crucial role in the company's operations and can represent the manager when granted power of attorney.
- Sales Department: in charge of marketing activities such as advertising, marketing products and goods of the company closer to customers, customer care,
The vice manager is responsible for researching and formulating the company's development strategy in alignment with social trends Additionally, the sales department plays a crucial role in boosting product sales, targeting both retail and business customers effectively.
The Accounting Department is responsible for organizing accounting activities in compliance with current regulations set by the Ministry of Finance It monitors and records the unit's production and business activities, providing the Board of Directors with recommendations to address challenges and leverage potential opportunities for informed decision-making Additionally, the department tracks and reports on revenue and expenses to optimize the company's profitability.
- Design Department: responsible for designing products including: designing workshops, houses or constructions for consulting; designing machines and equipment; component design and many other products
The manufacturing department is responsible for overseeing and managing the production processes within a factory This includes the operation of machinery and equipment, ensuring the effectiveness of safety systems, and organizing personnel to meet production standards efficiently.
Overview of business performance in the period of 2016-2018
2.2.1 Overview of business performance in the period 2016-2018
The company has consistently invested in modernizing its equipment and integrating advanced science and technology into its production processes, significantly enhancing its overall business performance To gain deeper insights into the company's operational status, we present the following table for analysis.
Revenue from goods sold and service 67.585.275.300 77.049.993.860 86.474.447.413 9.464.718.560 12,28 9.424.453.553 10,90
Revenue before corporate income tax 6.213.366.998 7.254.505.456 8.329.522.214 1.041.138.458 14,35 1.075.016.758 12,91
Revenue after corporate income tax 4.970.693.598 5.803.604.365 6.663.617.771 832.910.766 14,35 860.013.406 12,91 ( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)
Through the data table we see:
Over the years, the net revenue from goods and services has shown consistent growth In 2017, revenue rose to 9,464,718,560 VND, marking an increase of 12.28% compared to 2016 This upward trend continued in 2018, with revenue reaching 86,474,447,413 VND, an increase of 9,424,453,553 VND or 10.90% from the previous year These results reflect the company's strong business performance, driven by the dedicated efforts of all employees and effective leadership.
Revenue from goods sold and service
Revenue before corporate income tax
Revenue after corporate income tax
From 2016 to 2018, the company's leadership successfully navigated economic challenges, demonstrating resilience and strategic vision Additionally, the organization boasts a vibrant workforce characterized by youth, knowledge, dynamism, and creativity.
The company consistently prioritizes understanding and swiftly addressing customer needs, while continuously enhancing product quality and design to strengthen its competitive edge and attract a larger customer base.
The company's business performance has shown remarkable growth, evidenced by a significant increase in profit before tax over the years In 2017, the profit before tax reached VND 7,254,505,456, marking an increase of VND 1,041,138,458 from 2016, which is a growth rate of 14.35% By 2018, this figure rose to VND 6,663,617,771, reflecting an increase of VND 860,013,406 compared to 2017, equivalent to a growth of 12.91%.
The company's growth has led to a significant increase in its contribution to the state budget, with corporate income tax rising consistently over the past three years In 2017, the corporate income tax reached VND 1,450,901,091, marking a 14.35% increase from 2016 This upward trend continued in 2018, with the enterprise income tax amounting to VND 1,665,904,443, reflecting a 12.91% increase compared to the previous year.
Profit after tax of the company also increased rapidly over the years In 2017, it was VND 5.803.604.365, an increase of VND 832.910.766 compared to 2016 (up 14,35%), in
2018 profit after tax increased by VND 6.663.617.771 compared to 2017 (up 12,91%)
Between 2016 and 2018, the company demonstrated a strong commitment to enhancing its production and business operations, leading to significant growth in revenue and profits Despite these positive trends, the company faced challenges that hindered its growth To strengthen its competitive position and improve overall business performance, it is essential for the company to leverage its strengths and effectively address these obstacles.
Revenue is the output of the business process Look at the data table below we see that:
Table 2: Revenue over 3 years from 2016 - 2018
1.Revenue from goods sold and service includes:
Total revenue 67.585.275.300 77.049.993.860 86.474.447.413 9.464.718.560 12,28 9,422,453,554 10.90 ( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)
In 2017, total revenue reached VND 77,049,993,860, reflecting an increase of VND 9,464,718,560, or 12.28%, compared to 2016 The growth trend continued in 2018, with total revenue rising by VND 9,424,453,553, marking a 10.90% increase from the previous year and bringing the total to VND 86,474,447,413.
The total revenue of the company consists of 3 main parts:
Revenue of goods and services include:
Processing revenueOthers revenueRevenue from financial activities
Revenue of goods and services:
- Revenue of goods and services are the main source of revenue for the company In
2016, this revenue reached VND 66.902.999.063 and increased to VND 76.349.974.575 in
In 2017, the company experienced a significant revenue increase of 12.37% compared to 2016, with a remarkable growth of 23.26% over two years, totaling 19,130,304,535 VND Achieving such impressive figures in a competitive market is a testament to the continuous efforts of both employees and leadership A closer examination reveals that the primary revenue sources stem from design, construction, and processing consultancy activities, which play a crucial role in shaping the company's overall financial performance.
In 2017, consultancy and design revenue reached VND 5.91 billion, marking a modest increase of 0.24% from 2016, primarily due to a slowdown in demand for real estate and auxiliary services By 2018, the revenue saw a slight rise to VND 6.06 billion, reflecting a mere 2.56% growth compared to the previous year.
In 2017 and 2018, despite the completion of design consultancy work, revenue for the company saw only minimal growth due to the partial settlement of construction budgets allocated by the province each year To enhance competitiveness and attract more clients, the company must prioritize the quality of its consultancy and design services This focus will not only boost future revenue but also facilitate the expansion of operations into additional provinces.
Processing revenueOthers revenueRevenue from financial activities
The construction revenue of the company has shown a consistent upward trend, reaching VND 67.58 billion in 2017, marking a 13.34% increase from the previous year This growth is primarily driven by the rising development of apartment complexes and auxiliary works in large urban areas, with renowned contractors like Vingroup, Sungroup, and Aeon leading the charge These large-scale projects create significant opportunities for smaller contractors and subcontractors, who, despite lacking the resources to handle entire projects, excel in smaller categories when given the chance Hoang Long Mechanics Technology Joint Stock Company exemplifies this, having successfully participated in notable projects such as the Noi Bai-Lao Cai Expressway, Hanoi-Hai Phong route, and various residential complexes including Timecity, Vinhome Long Bien, and CocoBay Da Nang over the past three years.
2018, the total revenue from the construction of the Company reached VND 76.078.536.453, an increase compared to 2017 of VND 8.796.012.809, equivalent to 11,56
% However, this increase is not yet a reflection of the strong growth of construction revenue due to a few works are in the pre-acceptance stage before revenue recognition
Processing is a lucrative yet unstable business that demands significant labor, facilities, and quick turnaround times, which has hindered the company's expansion efforts The primary revenue streams come from painting, plating, welding, and aesthetic finishing, with materials sourced from strict outsourcing partners Despite these challenges, outsourcing revenue has seen a slight increase over the past three years, with processing revenue rising from VND 3.158 billion in 2017 to VND 3.891 billion in 2018, marking increases of 14.42% and 18.82%, respectively However, timely delivery of quality products remains a challenge, particularly with a limited workforce of about 30 employees primarily focused on construction Resource allocation for processing contracts requires careful consideration, and recruiting additional staff poses difficulties due to the sporadic nature of contracts and potential oversupply Additionally, expanding outsourcing revenue is complicated by the need for a larger workshop equipped with machinery, particularly in plating and painting, as relocating to suburban areas to accommodate this can significantly raise transportation costs The Board of Directors is actively seeking solutions to these challenges.
2019 to increase revenue instead of 3-5% of total sales of goods and services at this time
The company's revenue from goods and services has experienced significant growth, primarily driven by construction activities However, certain areas, including consulting, design, and processing services, have seen a decline in revenue, negatively impacting the overall growth rate To enhance sales and improve overall business performance, the company must address these challenges and implement corrective measures.
In addition to revenue generated from goods and services, financial income plays a role in a company's total revenue Although financial revenue constitutes a small percentage of the overall income, its significant growth positively impacts total revenue The company's financial income primarily consists of interest earned on bank deposits.
Analysis of business performance at Hoang Long Mechanics Technology
Stock Company Joint Stock Company
2.3.1 Analyze the performance of using labor
The company came into operation with 32 employees There is a Party cell including 04 members, a grassroots trade union organization and a youth union scientific and technical staff including 02 architects, 02 construction engineers, 02 economic
Revenue from goods sold and service
+ 9.424.453.553 Cost of sales + 73.111.698 Financial activities + 2.186.655
Factors that increase pre-tax profit include a skilled workforce, comprising 21 individuals with university and bachelor's degrees among the 55 employees, including engineers and intermediate officials Conversely, factors that decrease pre-tax profit often stem from the costs associated with technical workers and service staff.
Figure 20: Labor structure in the Company
The company boasts a young, knowledgeable, and dynamic workforce, but its urban location leads to high labor costs, particularly in wages Recognizing that wages are crucial for employees' livelihoods, the company prioritizes increasing staff income as a fundamental goal Competitive and stable salaries, along with bonuses, foster trust and motivation among employees, while implementing measures to address labor violations through salary deductions enhances accountability This approach ultimately boosts labor productivity and contributes to improved business performance.
The company's administrative expense is quite high, including expenses such as managerial expenses and technical engineers General and administration expenses in 2017 were 1.181.837.272 VND, down 392.453.468 VND, equivalent to 33,25% compared to
In 2016, the Company faced challenges due to staff salary reductions, leading to the loss of three talented design engineers to larger firms like Viettel and VCTV in early 2017 This highlighted the importance of providing a reputable and stable work environment to attract and retain skilled employees To address this issue, the Company focused on recruiting new engineers in 2018 and enhancing its incentive policies to prevent brain drain It is crucial for the Company to offer competitive remuneration for skilled engineers to ensure job security and foster dedication among its workforce.
Number of employees in the company
University degreeHigh school level
The Company effectively utilizes its existing equipment to maximize performance and enhance labor productivity, while also investing in the training and retraining of employees in professional and technical skills With a strong commitment to environmental sanitation, the workplace is free from noise, dust, and heat, ensuring the safety and health of all workers Additionally, the solid and spacious infrastructure supports the company's growth and provides a comfortable working environment, further contributing to improved labor performance.
As a consultancy unit specializing in engineering and construction, it is essential to organize seminars focused on architectural and construction works to enhance visibility and facilitate knowledge exchange These initiatives will support employees, particularly scientific and technical staff, in improving the quality of design consultancy services This, in turn, will strengthen the company's professional reputation and the trust of project owners and clients, ultimately boosting competitiveness and expanding market presence.
2.3.2 Analyze the performance of account receivable management
• Effective division of receivables management
The state of liabilities indicates the dynamics of payment appropriation within an enterprise When reserve assets are inadequate for compensation, the business taps into its capital; conversely, if there are excess assets, capital is appropriated If the appropriated capital exceeds the required amount, the enterprise will allocate the surplus into its production and business activities Conversely, a shortfall in capital will lead to a reduction in the business's capital.
Short-term liabilities are a primary concern for companies, necessitating a careful analysis of both allocated and outstanding amounts that remain within the debt payment period It is crucial for businesses to actively pursue the collection of overdue debts while ensuring timely settlement of due obligations to maintain financial discipline.
In order to clearly assess the situation of liabilities, the receivables must be compared with the payables fluctuating over the years
Table 6: Analyze of debt situation over 03 years 2016 - 2018
Total short-term receivables 15.506.657.021 24.206.899.886 20.975.314.892 8.700.242.865 35,94 -3.231.584.994 -15,41 Total short-term payables 9.709.391.994 23.793.266.060 26.159.043.043 14.083.874.066 59,19 2.365.776.983 9,04 Net revenue 67.578.786.933 77.043.364.858 86.465.631.757 9.464.577.925 12,28 9.422.266.899 10,90
The ratio of receivables to payables
( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)
The analysis of the company's debt situation reveals a significant decline in the proportion of accounts receivable to accounts payable, with a sharp decrease of 56.98% in 2017 and 26.88% in 2018 compared to 2016 This trend indicates an increase in the capital the company has appropriated, which has risen by 100% over three years, suggesting that the company is acquiring more capital from other units than it is distributing However, a comprehensive assessment cannot be made solely from balance sheet figures; it is essential to consider the nature, duration, and causes of receivables and payables, as well as the company's strategies for debt recovery and payment, to achieve an accurate evaluation.
This indicator can be understood as the speed of converting receivables into money in a fiscal year
In 2017, the company experienced a significant increase in receivables, rising by 35.94%, yet the total number of receivables decreased by approximately 36.93% compared to 2016, indicating improved debt collection efforts By 2018, the company made substantial progress in settling agreements with state partners, resulting in a receivable turnover of 4.12 rounds, a 22.79% increase from the previous year This higher turnover cycle reflects a gradual improvement in converting receivable debts to cash However, to prevent capital stagnation, the company must implement effective strategies for debt recovery and ensure the safety of its production capital.
The turnover cycle reflects the duration required to collect receivables In 2017, the receivable turnover days increased from 82.61 in 2016 to 113.11, marking a rise of 26.97% due to lower turnover rates However, in 2018, the company improved its collection efficiency, reducing the receivable turnover days to 87.33, a decrease of 25.52% compared to 2017 This improvement is evident as short-term receivables decreased from VND 24,206,899,886 at the end of 2017 to VND 20,975,314,892 by the end of 2018.
2.3.3 Analyze the performance of solvency
Table 7: Analyze the performance of solvency over 03 years 2016 - 2018
( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)
The company primarily faces short-term debts, resulting in minimal long-term liabilities; therefore, the focus is on assessing its current solvency This short-term solvency analysis evaluates whether the company's current assets can effectively cover its short-term obligations.
The solvency coefficient measures an enterprise's ability to cover short-term debts with its short-term assets, including cash, receivables, and inventories A higher coefficient indicates better solvency However, the Company's current solvency has been declining, as evidenced by a drop from 1.39 times in 2017—down 41.06% from 2016—to 1.32 times in 2018, marking a 5.47% decrease from the previous year This decline is primarily due to a rapid increase in short-term debt, stemming from a shortage of production capital If the Company continues to struggle with its production and business capital, it may face further solvency challenges in the future.
The quick ratio is a key indicator of a company's solvency, reflecting its ability to convert movable assets into cash to meet payment obligations Over the past three years, the quick ratio has declined significantly, dropping to 0.83 in 2018, which represents a 32.60% decrease from 2017 A quick ratio below 1 indicates potential difficulties in meeting debt obligations Therefore, it is crucial for the company to undertake a serious restructuring of its debt and asset ratios to establish a robust financial foundation, particularly in the near future.
2.3.4 Analyze the performance of using assets
Table 8: Profitability analysis over 03 years 2016 - 2018
Profit before coporate income tax 6.213.366.998 7.254.505.456 8.329.522.214 1.041.138.458 14,35 1.075.016.758 12,91 Profit after coporate income tax 4.970.693.598 5.803.604.365 6.663.617.771 832.910.766 14,35 860.013.406 12,91 Total revenue 67.585.275.300 77.049.993.860 86.474.447.413 9.464.718.560 12,28 9.424.453.553 10,90 Total assets 19.544.169.943 33.852.440.756 36.388.264.698 14.308.270.813 42,27 2.535.823.942 6,97
Profit before tax / revenue ratio
Profit before tax / Total assets ratio (%) 31,79 21,43 22,89 - 10,36 - 48,35 1,46 6,38
Profit after tax / equity ratio (%) 49,92 57,20 65,14 7,28 12,73 7,94 12,19
( Source: Financial reports of Hoang Long Mechanics Technology Joint Stock Company from 2016 to 2018)
For the ratio of profit before tax to revenue
In 2016 of 100 VND revenue, there was 9,19 VND profit before tax, 2017 of 100 VND revenue was 9,42 VND profit before tax (increased by 2,36% compared to 2016), and
2018 Of the VND 100 revenue, there was VND 9,63 profit before tax, an increase of 2,25% compared to 2017
The company's profit-to-revenue ratio is relatively low, highlighting an urgent need to address the management of cost of goods sold and overall enterprise management.
The ratio of profit before tax to total assets
In 2016, every 100 assets generated a profit before tax of VND 31.79 billion, but this figure dropped to VND 21.43 billion in 2017, marking a 48.35% decline However, in 2018, profits rebounded slightly to VND 22.89 billion, reflecting a growth of approximately 6.38% compared to the previous year.
Assess the situation of business performance of Hoang Long Mechanics
An analysis of the Company's business performance and financial indicators from 2016 to 2018 reveals key insights into its operational effectiveness This overview highlights both the achievements and limitations of the Company during this period, providing a comprehensive understanding of its business results.
Despite facing challenges from both the domestic market and foreign competitors, the Company has achieved significant results by implementing reasonable business plans For three consecutive years, it has maintained profitability, building trust with customers and solidifying its position in the industry Furthermore, the Company has leveraged its advantages to attain the desired business performance.
Hoang Long Mechanics Technology Joint Stock Company boasts a stable customer base and long-term business partnerships, ensuring a consistent flow of cooperation contracts throughout the year This reliability means that the company rarely faces idle workers or equipment With over 20 years of experience, the company has built a strong reputation for product quality, earning prestigious awards in sound system and pile driving technology, making it a preferred choice for customers who prioritize high standards in their purchases.
The company boasts an extensive production and processing area of 2,483 m², featuring three state-of-the-art facilities It is equipped with over 130 advanced machines and equipment, meeting the high standards of the mechanical engineering industry.
The company's financial ratios indicate a strong solvency position, with sufficient assets to cover public debts, primarily relying on short-term liabilities.
We are committed to enhancing our highly regarded quality management system by obtaining safety certifications in the third group of the mechanical engineering industry Our initiatives include providing staff training and acquiring extended mechanical and construction licenses, as well as advancing our design and construction engineering techniques.
To align with the company's growth objectives, the Board of Directors and professional departments are committed to establishing and refining hierarchical regulations, vertical management protocols, and performance evaluation systems.
The company consistently meets its budget obligations to the State, ensuring timely and full payments, including billions of dong in import and export taxes, value-added taxes, and corporate income taxes annually Its continued growth not only enhances the State budget but also generates employment opportunities for workers in Hanoi and across the country.
In recent years, the company has significantly enhanced its workforce by recruiting a substantial number of scientific and technical experts, while also investing in modern production equipment This proactive approach has established the company as a leading enterprise in the province By applying advanced science and technology to its operations, the company has strengthened its staff in both quantity and quality The team's extensive experience and expertise span various sectors, including transport design consultancy, irrigation, civil engineering, industrial operations, and bidding processes.
The Company is committed to becoming an "Enterprise for Workers" by continuously enhancing the quality of life for its employees, with next year's average salary projected to exceed that of the previous year Additionally, the Board of Directors is actively initiating a charitable fundraising campaign to support disadvantaged areas and assist low-income families, both within and outside the organization.
Despite recent achievements in utilizing corporate capital, business performance remains subpar, revealing significant limitations that adversely affect overall development.
The quality of certain products is lacking, leading to slow progress and failure to meet delivery deadlines, which impacts customer satisfaction and results in contract violations that increase costs and reduce profits The company is passive in competing and expanding into new markets, and management solutions to reduce production costs are not effectively implemented Most partners remain traditional customers, with new contracts primarily acquired through referrals Additionally, import and export activities heavily depend on intermediaries, further contributing to cost inefficiencies.
Despite the establishment of a standards-based system for materials use and consumption norms, cost management remains ineffective due to limitations in the implementation process These shortcomings have resulted in norms that do not align with the actual conditions of the enterprise, leading to inefficiencies and redundancy in resource allocation.
The management of receivables has been inadequately addressed, resulting in persistent bad debts and overdue accounts Despite the Company's efforts to categorize debtors and monitor debt groups, an effective strategy remains elusive, causing potential economic losses and wasting valuable time and resources Consequently, a significant portion of corporate capital is tied up in receivables, highlighting the need for improved management practices.
Inefficient inventory management can significantly harm a company's performance by restricting marketing forecasts, resulting in excess inventory and capital Additionally, stagnant mobile operations directly reduce capital utilization efficiency.