TABLE OF CONTENTS

INTRODUCTION

For centuries, economists have been preoccupied with the growth of nations. However, it seems that they can never reach a consensus on the recommendations for governments to promote economic growth. However, their efforts provide us a better understanding of the sources of economic growth, in which, one of the most important factors is the growth of enterprises. In other words, the growth of enterprises is one of most important motivation to promote the growth of economy.

To survive and prosper, any company must produce and sell products and services at a profit. Therefore, it needs many assets, plant, equipment, offices, computers, technology and so on as well as other necessary current assets. The company also has to decide which assets to buy and how to pay for them. Therefore, the company must deal with an unavoidable problem of how to raise money for such purchases. That is the problem of corporate financing, an avoidable problem for any enterprises in the modern economy.

When a company needs financing, in general, it can invite investors to put up cash in return for a share of profits or borrow the money from investors. In the first case, the investor receives newly issued shares of stock and becomes a shareholder, a part-owner of the firm. In the second case, the investor becomes a lender who must one day be repaid, usually with interest. The decision in the source of financing determines its capital structure, consequently greatly effect its profitability and risky level of the company. Therefore, the financing, together with the capital budgeting are the vital decisions made by financial managers. Any company must solve the problems for during its growth and development.

Recognizing the importance of corporate financing, this essay focus on the theory and reality of the problems in Vietnam in five parts as follows:

Part I: Introduction 3

Part II: Background – General Concepts

Equity

Debt

Other sources

Part III: Development – Theories in Vietnam realities

Economics

Legal and customary aspects 12

Part IV: Conclusions and recommendations 18

Part V: Appendix

Appendix 1: Number of acting enterprises as of annual 31 Dec.by type of enterprise

Appendix 2: Annual average capital of enterprises by type of enterprise

Appendix 3: Value of fixed asset and long term investment of enterprises as of annual 31 Dec. by type of enterprise

Appendix 4: Net turnover of enterprises by type of enterprise

Appendix 5: Number of enterprises as of 31 Dec. 2005 by size of employees and by type of enterprise

Appendix 6: Capital resources of enterprises

Appendix 7: Gross domestic product constant 1994 prices by ownership and by kind of economic activity

Appendix 8: State budget revenue final accounts 20

Reference