Hiệu quả quản lý vốn lưu động của các công ty nhựa niêm yết tại Việt Nam

ABSTRACT:

This study is to analyze the working capital management efficiency of plastic companies in Vietnam by analyzing financial statements of 31 listed plastics companies from 2015 to 2019.  In this study, working capital management effectiveness is evaluated by three indexes including Performance index of working capital management (PI), Utilization index of working capital management (UI), and Efficiency index of working capital management (EI). The study’s results indicate that the majority of listed plastic companies had good Utilization index of working capital management. Meanwhile, only nearly half of businesses had good Performance index of working capital management and Efficiency index of working capital management in this period.

Keywords: Performance index of working capital management, utilization index of working capital management, efficiency index of working capital management.

1. Introduction

Working capital management is one of the important financial management activities of firms. Researchers Amajad & Hussain (2014) emphasized the importance of working capital management by stating: “Many companies fail due to lack of appropriate working capital management methods”. This implies that working capital management policies are precisely what is required for the survival of a company. Adu (2013) argued that proper working capital management is essential for any company and that is the reason why it has become a metric for determining a company's performance. Mun and Jang (2015) stated that working capital plays an important role in the day-to-day operation of the business to ensure that the business operates smoothly. Similarly, Mwangi et al. (2014) suggested that the important elements of working capital should be managed in parallel by organizations if they are successful. Other researchers believe that working capital plays a key role compared to capital budget and financial decisions (Agyei & Yeboah, 2011; Mun & Jang, 2015). This means companies must have effective working capital management in order to improve the company's performance. Additionally, many empirical studies explored the relationship between working capital management and the profitability of businesses. Moreover, effective working capital management improves firm’s performance.

In Vietnam, the plastic industry is increasingly playing an important role in the life. Plastics or polymers are used as materials to produce many kinds of items as well as serving the development of many other economic sectors such as electricity, electronics, telecommunications, transportation, fisheries, and agriculture. By 2019, the scale of the plastic industry is estimated at USD 15 billion, equivalent to 6.7% of Vietnam's GDP in the same period (FPTS,2019). However, previous studies on working capital management conducted in food and pharmaceutical companies and there is no research on working capital management in plastic enterprises. In addition, in previous studies, authors usually used conventional ratios to evaluate the effectiveness of working capital management such as: working capital ratio, current ratio, quick ratio, cash conversion cycle, inventory conversion period and receivables conversion period. Performance index of working capital management, utilization index of working capital management and efficiency index of working capital management have not used to evaluate the effectiveness of working capital management in Vietnam. For these reasons, the purpose of this paper is to analyze working capital management efficiency in selected plastic companies with these three indexes.

2. Literature Review

Many studies have shown that effective working capital management contributes to firms’ success. Deloof (2003) found a significant negative relationship between the receivables turnover ratio, the inventory turnover ratio as well as the payables turnover ratio of Belgian firms and profitability. Similarly, Eljelly (2004) found a negative relationship between firms' profitability and liquidity. Moreover Padachi (2006) studied small manufacturing enterprises in Mauritius for the period 1998-2003 and the analytical results showed that accounts receivable, accounts payable, and cash conversion cycle were negatively related to ROA (statistical significance at the 5% level). Lazaridis and Tryfonnidis (2006) also found a significant relationship between profitability and the cash conversion cycle as well as its components (accounts receivable, payables and inventories).

Afza and Nazir (2011) used the Bhattacharya’s indexes (1997) to examine the working capital management efficiency of the cement firms in Pakistan for the period from 1988 to 2008. The study found that the cement firms under this study have good working capital management efficiency during the period. After that, Press, Valipour and Jamshidi (2012) also used the Bhattacharya’s indexes to evaluate working capital management efficiency. The study found that there is positive relationship between performance index, efficient index, and utilization index with the efficiency of the asset. However, the results show that cash conversion cycle inversely significant relationship on efficiency of the assets.

The research is motivated by previous studies and limited research from the plastic enterprises in Vietnam. This study thus examines working capital management effectiveness of plastic firms in Vietnam by using the Bhattacharya’s indexes.

3. Methodology

In order to analyze working capital management efficiency of plastic companies in Vietnam. A sample of 41 listed plastic companies was taken from HOSE and HNX stock exchanges databases for the period 2015-2019. However only 31 companies with complete financial data were selected for analysis. Data are extracted from the company's annual financial statements.

To measure the effectiveness of working capital management, this study used the index developed by Bhattacharya (1997). This study differs from previous research by using a sample-based index that has not been previously tested in Vietnam.

Bhattacharya developed a model for measuring and monitoring the efficiency of working capital management which is similar to cost management. If there is a more than proportionate rise in current assets with the increase in sales, the costs of an enterprise also increase, both in terms of blockage of additional funds and the interest. A firm cannot be said to have an efficient working capital management if it is registering a more than proportionate rise in current assets. Modern day financial management aims at reducing the level of current assets without, of course, ignoring the risk of stock outs, etc. This is similar to that of cost management, where quality cannot be sacrificed at the expense of reducing costs. The model for measuring the efficiency of working capital management is as follows:

Table 1: 3 indexes of working capital management

Source: Total management by ratio (Bhattacharya (1997))

4. Discussion and results

Table 1 shows the working capital management efficiency ratios of selected plastic listed companies. The indicators include: Performance Index (PI_WCM), Usage Index (UI_WCM) and Performance Index (EI_WCM).

Table 2: Working capital management efficiency indexes of listed plastic companies

Source: Indexes calculated by the author

Utilization Index: According to the results in table 2, most companies were selected (24 out of 31 companies) effectively used their existing assets. The utilization indexes are greater than 1. For instance, An Tien plastics company’s average utilization index is 1.53 (>1). Only 7 companies have bad utilization index such as Pha Le plastics company, Sadico Can Tho company, Plastic bags company with their utilization indexes are less than 1. However, the lowest index is approximately 1.

Performance Index: In general, in the period 2015-2019, there are 14 companies which working capital management is managed properly with the performance index greater than 1. Notably, Tan Phu plastics company has average performance index of 1.79 (> 1) and the highest index that the company gained is 5.5. However, there are some companies with low performance index like Danang Plastic company with the mean value of PI is 0.62. These figures indicate that the revenue generated by this company is less than the amount of working capital used.

Efficiency Index: According to the table 2, the results show 15 out of the total 31 selected companies have effective working capital management with efficiency index greater than 1. Typically, Tan Phu plastics company, Tan Tien plastics company and Saigon plastics company have highest efficiency index (1.82, 1.28 and 1.22 respectively). The remaining companies have bad efficiency index with EI less than 1 such as Danang plastics company (EI is 0.62), Dong A plastics company (EI is 0.73) and Hanel plastics company (EI is 0.74). The results show that these companies are not using working capital effectively.

In general, the three indexes of working capital management efficiency show that listed companies in the plastic industry have uneven efficiency levels. While there are many enterprises with very good working capital management efficiency such as Tan Phu plastics company, Tan Tien plastics company and Saigon fishing net company (All these firms have 3 indexes PI, UI and EI greater than 1). In contrast, there are also companies have poor working capital management with all 3 indexes less than 1 like Vinh Khanh Plastics company.

5. Conclusion

This study analyses the efficiency of working capital management in the listed plastic companies for the period from 2015 to 2020. Working capital management efficiency is assessed by the working capital management efficiency index. For analysis purposes, 31 out of 40 listed plastics companies were selected. The analytical results show that UI indexes of listed plastics companies are very good in this study period with the average value of 24 out of 31companies greater than 1. PI index shows that 14 out of 31 companies achieve a mean value greater than 1. In terms of the EI, the results show that 15 out of 31 companies achieve a mean value greater than 1. Actual results have shown that the efficiency of working capital management is very different between companies in the plastic industry (about nearly 50% of enterprises achieving good results while the remaining companies have not achieved the expected results). This result may provide alarming signals for many plastic enterprises in Vietnam and these enterprises have to improve their working capital management to enhance their firm performance.

REFERENCES:
1. Afza T., Nazir, M.S. (2007). Is it better to be aggressive or conservative in managing working capital? Paper presented at Singapore Economic Review Conference (SERC) on August 02-04, 2007, Singapore.

2. Bhattacharya, H. (1999). Total Management by Ratios. New Delhi: Sage Publication In- dia Pvt. Ltd.,.
3. Eljelly, A. M. A. (2004). Liquidity-Profitability Tradeoff: An Empirical Investigation in an Emerging Market. International Journal of Commerce and Management 14(2), 48-61.
4. Deloof, M., (2003). Does Working Capital Management Affect Profitability of Belgian Firms? Journal of Business Finance & Accounting, 30, 0306-686X.

5. Padachi, K. (2006). Trends in Working Capital Management and its Impact on Firm's Performance: An Analysis of Mauritian Small Manufacturing Firms. International Reviewof Business Research Papers, 2, 45-58.

6. Lazaridis, I. and Tryfonidis, D. (2006). Relationship between Working Capital Managementand Profitability of Listed Companies in the Athens Stock Exchange. Journal of Financial Management and Analysis, 19, 26-35.

Hiệu quả quản lý vốn lưu động của các công ty nhựa

niêm yết tại Việt Nam

Trần Thị Thu Trang

Đại học Thương mại

TÓM TẮT:

Nghiên cứu này nhằm phân tích hiệu quả quản lý vốn lưu động của các công ty nhựa tại Việt Nam thông qua phân tích báo cáo tài chính của 31 công ty nhựa được niêm yết trên sàn chứng khoán từ năm 2015 đến năm 2019. Trong nghiên cứu này, hiệu quả quản lý vốn lưu động được đánh giá thông qua ba chỉ số bao gồm Chỉ số năng lực quản lý vốn lưu động (PI), Chỉ số hiệu dụng quản lý vốn lưu động (UI) và Chỉ số hiệu quả quản lý vốn lưu động (EI). Kết quả cho thấy phần lớn các công ty nhựa được niêm yết có chỉ số hiệu dụng quản lý vốn lưu động ở mức tốt. Trong khi đó, chỉ có gần một nửa số doanh nghiệp được phân tích có chỉ số năng lực quản lý vốn lưu động và chỉ số hiệu quả quản lý vốn lưu động ở mức tốt trong giai đoạn này.

Từ khoá: Chỉ số năng lực quản lý vốn lưu động, chỉ số hiệu dụng quản lý vốn lưu động, chỉ số hiệu quả quản lý vốn lưu động.

[Tạp chí Công Thương - Các kết quả nghiên cứu khoa học và ứng dụng công nghệ, Số 29+30, tháng 12 năm 2020]