A quantitative evaluation of the financial capacity of the small and medium-sized enterprises in Hanoi, Vietnam

Abstract

This study examines the financial capacity of small and medium-sized enterprises in Hanoi City, Vietnam, using a quantitative set of financial indicators. The research develops a system of fifteen observed indicators grouped into liquidity, operational efficiency, profitability, and financial leverage, based on theory and expert views. Data were collected from 113 enterprises and processed through Cronbach's Alpha, exploratory factor analysis, and multiple linear regression. The results show that all four groups have a positive and statistically significant effect on financial capacity. Liquidity shows the strongest influence, followed by operational efficiency and profitability, while financial leverage has a smaller but still noticeable effect. These findings suggest that steady cash flow, better internal operations, and profit generation remain key elements supporting the financial condition of small and medium-sized enterprises in the current environment. The results also highlight areas that policymakers and business practitioners can consider when designing support programs or adjusting internal management practices. The study adds to the existing literature by applying a structured financial indicator system to evaluate the financial capacity of small and medium-sized enterprises in Hanoi, Vietnam, which has not been examined systematically before.