Graduation thesis Faculty of finance and banking
FOREWORD
In the market economy, capital plays an important part for enterprises. It has a
significant meaning to identify its following steps in the process of producing.
Therefore, enterprises want to exist for developing sustainably have to focus on
capital management activities in utilization to gain optimum profitable target.
Business capital is divided into 2 parts : Fixed capital and working capital.
Enterprise management in increasing effectively. In fact, Petrrolimex Asphalt
commercial limited company is a enterprise which is doing business in trading
field have been making efforts in capital using and management, especially
working capital occupied a large proportion in the total capital.
Stem from appreciating of working capital in reality as well as to meet
increasing demand effectively in every enterprise, for the past probrationary
period, I`ve decided to chose this subject for my thesistation.
“Working capital and some solutions to increasing capital in utilization at
Petrolimex Asphalt commercial limited company”
The graduation thesis`s content consists of 3 parts
Chapter 1: Overview of producing activities in Petrolimex Asphalt limited
company
Chapter 2: The real state of working capital management and utilization in
the company
Chapter 3 : Some primary solutions to increasing effective capital in utilization
and management
Pham Thi Mai Huong MSV:04D02811
Graduation thesis Faculty of finance and banking
CHAPTER 1
THEORY OF WORKING CAPITAL AND ITS EFFECTIVE
UTILIZATION IN ENTERPRISE
1. Theory of working capital
1.1. The notion of working capital
Any enterprise wants to carry out its produce and business process, it needs a

For commercial enterprises, the repeated cycle of working capital process
always mobilises under the following formula :
T – H – T’
Therefore, Working capital is under the monetory, it is an expressed form of
working capital or in other words, it is monetory on prepaid account to take shape
of working assets for producing and working assets for circulating to ensure
process of produce and business are going on smoothy.
1.2.Working capital and the classification
1.2.1. The classification under expressed form
According to the classification, working capital is divided into 2 parts :
- Capital in cash and accounts receivable : It consists of monetory in funds,
bank`s deposit, capital in payment, short-term investment in securities …
- Capital in materials, goods : They are working capitals which are under the
expressed forms such as raw materials and materials, unfinished products, half of
finished products, finished products …
The classification will help enterprises to evaluate the level of inventory and
ability of payment.
1.2.2. The classification under the working capital`s role in produce and business
process
Under the classification, working capital are divided into 3 parts :
- Working capital in producing reserved : Including of prime materials, sub
materials, fuels, alternative marterials, tools.
- Working capital in producing process : Value of unfinished products, semi-
finished products and other costs.
Pham Thi Mai Huong MSV:04D02811
Graduation thesis Faculty of finance and banking
- Working capital in circulating process : Value of finished products, capital
in cash, short-term investment, mortgages, pay a security, pay earnest money in
short-term and accounts capital in payment.
1.3. Working capital`s structure and driving factors behind

capita is stable and can use for along time. Enterprises use it for investment,
buying Fixed assets or using all or part of regular working capital which is
necessary for business activities.
- Current capital : Including of short-term loans from banks and other credit
organizations, long-term debts fall due, Accounts receivable from suppliers,
Accounts payable for workers, Accounts payable for the State budget … This is
short term capital that enterprise can use it to meet the temporary working capital
demand in produce and business activities.
The classification will help managers to evaluate the mobilised capital which
is suitable to quality and in the time to use necessary factors for business activities.
1.5.Working capital demand and the driving factors behind
Working capital demand always changes and depend on many factors. In
there, we need to care about following the fomula and the main factors :

- The factors related to Business features such as : Business period, Business
scale, it is temporary Business activities, The changes of producing technology …
Pham Thi Mai Huong MSV:04D02811
Working
capital
demand
= Inventories +
Custo
mer accounts
receivable
-
Suppli
ers accounts
prepaid
Graduation thesis Faculty of finance and banking
The factors have affected directly to the level of working capital that enterprise has

Value of current assets – Value of Inventories
The quick ratio = –––––––––––––––––––––––––––––––––
Short-term debts
This ratio reflects accounts debts in the fastest time.This ratio provides
information regarding the firm`s liquidity and ability to meet its obligations. It
indicates a company financial strenghts (or weaknesses) but this ratio can be good
or bad, this depends on character of every business field.
* Current ratio
Cash and cash equivalent
The cash ratio = –––––––––––––––––––––––––––––––––
Short-term debts
The current ratio measures whether or not a firm has enough resources to pay its
debts over the nest 12 moths. It compares a firm`s current assets to its current
liabilities.
A comparison with the industry of the firm`s current ratio, and a comparison
with average, can help determine if the current ratio is high or low at this period in
the time`s comparison. These comparisons do not indicate why the current ratio is
higher or lower than industry. For some possible reasons of the current ratio is out
of line, which can be found from analysis of the individuals account that has been
usually performed for Accounts receivable and Inventories.
2.1.2. The number of Inventory cycle
The number of inventory cycle are the times of average inventory, which is
mobilised in term.

Costs of goods sold
The number of Inventories cycle = ––––––––––––––––––––––––
Average Inventories
Pham Thi Mai Huong MSV:04D02811
Graduation thesis Faculty of finance and banking
The number of inventory cycles are more and more higher, the business will

enterprises` operations. In each policy has 2 effects, may be positive and may be
not positive to Business activities in their fieds.
* Subjective factors
+ We can recognize enterprises` weak points in quality of management. It
causes the redundant or shortage of capital.
+ Ability of penertration and enlargement the market of enterprise : the
speed of consumptionis better, the Working capital is higher, therefore its efficient
in utilization will grow.
2.3. some solutions aiming to increase the utilization effects of working capital
2.3.1. Secification of the level necessary working capital demand for business
operation
Specification of necessary Working capital regularly, this will ensure the level
enough capital to meet the demand of Business process amd avoid unliquided
capital or short of capital, leading to interrupted production situation.
Business activities have to ask for capital to come into operation. When starting to
produce and do business, enterprise has to calculate the level of necessary capital
demand and one of the most important is that enterprise has to calculate accurately
in line with developing period in general and in produce process in particular.
Because of this will help enterprise`s business operation go on smoothy and
efficiently.
2.3.2. To push up the working capital` s rotate speed highly
The effects of Working capital are evaluated by its rotate speed. If Working
capital has a highly rotated speed, it shows that the effect of working capital
utilization is very good. So, it is necessary to hasten speed of liquided Working
capital in 3 processes : reserve , produce and circulation.
2.3.3. Carry out of checking, analysing, surpervising Business activities tightly
and regulary.
Pham Thi Mai Huong MSV:04D02811
Graduation thesis Faculty of finance and banking
Executing of check activities regularly and consecutively will help

concluded 3 main sectors : lubricant , chemical, asphalt fields and some sectors
related to them.
- Doing business with import and export material products, Asphalt
equipments.
- Doing business with services related to : Shipping, stocks, mixtrure,
alnalysis, consultancy and technical services.
- In the coming time, the company will take part in doing business with
buildings and real estate.
 Main products : Asphalt, chemical, lubricant.
1.3. Organization of management
Management` structure : Including, chairman, director, duty director .
- Chairman: cotrol Business activities as well as making regulations, priciples
and the organization model and and have the authority to appoint director of
Petrolimex Asphalt limited company.
- Director : Director is a person who is resposible for Business operations to
chairman and directly running Business activities and has to report them to
chairman.
- Duty director : Duty is a person who is intitled to help director and along with
director to run Business operations and to take the regulations and priciples of
mother company given into practice. Duty director is also responsiblity to director
and chairman for given responsibility.
1.4. Accounting`s structure
Accounting department : responsible to financial accounting activities to
director. Always updating and giving accurated figures in time. The department
has to give balance sheet, financial report … calculate expensives such as : profits,
make loss, taxes, salary, bonus, other policies for staffs.
At the being time, Accounting department has 9 people concluded : 1 chief
accountant, 2 deputy chief accountants and 6 accountants (accountant take
Pham Thi Mai Huong MSV:04D02811