Analysis of Samsung PLC Financial Statements for Strategic Managers

This report provides a detailed financial analysis of Samsung PLC, focusing on its financial statements, including the statement of cash flows, statement of profit or loss, and statement of financial position. It interprets the data to assess the company's current viability. The report includes a comparativ...Read More

Finance For Strategic
Managers

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................1
Interpretation of Samsung PLC Financial Statements to assess its current viability..................1
Comparative analysis of Financial Data related to Samsung PLC.............................................2
Recommendations.......................................................................................................................3
TASK 3............................................................................................................................................3
TASK 4............................................................................................................................................4
Capital Expenditure Appraisal....................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Finance for strategic managers perform a significant role since most companies need
different policies and strategies for the sort of economic information and data accessible to the
company. Firstly managers determine and interpret different information so as to handle resource
planning and predicting to acquire their overall short term and long term objectives (Alkaraan,
2015). The aim of the study to provide detailed information of Samsung PLC's account in regard
of several methodologies which is adopted by manager for strategic planning, evaluation of
capital investment projects and economic information needed for the same purposes. The whole
report is divided into different assignments that provide useful proof for members of the
Chamber of Commerce who want to investigate and explore Samsung PLC's achievement. For
this purpose, the aim of this study is to provide a extensive introduction, data leaflet,
conversation paper and theoretical underpinnings of techniques for assessing capital spending in
broad way.
TASK 1
(Covered in PPT)
TASK 2
Interpretation of Samsung PLC Financial Statements to assess its current viability
Financial statements contribute to the provision of appropriate data not only to operations
management and also to other inner and external participants. There is consisting of financial
data in set format which provides facilities to easily recognised of wealth of firm in the reference
of corporate performance and profitability. In the context of Samsung Plc, the company produce
reports on quarterly basis along with a full year report in a ongoing way (Annual Report, 2018).
Statement of cash flows
The particular statement defines that Samsung Plc focus on its cash flow that developed
through operating, investing and financing activities. On the basis of 2018 report $27,763,038 in
the end of report then amount deducted with $27,577,050. The cause of overall decrease in the
cash flow can be attributed to the higher revenues generated through Samsung in 2018 through
dividend received that were risen by 24.63% in 2017. It is presenting that the financial health of
business is extremely executable from the reason of investors.
Statement of profit or loss
1

As per the framework of Samsung Plc, it is analysed the net profit increase by $1,961,546
in the year 2017 to 2018. In Samsung Plc sale of premium QLED TV increase by 5% after
examine annual report of company. The earning per share improved by 5045 in 2017 and 5.87 in
2018. Hence, it presents a net increment of 7.71% that attract to shareholders.
Statement of financial position
The financial statement of Samsung Plc presents that balance of total assets improved by
12.46% while the total liabilities and equity rose by 4.98% and 15.51% continuously. Hence, it
presenting that the investors feeling that company has grown stronger that has resulted in an
extract of capital in the business in 2018.
Comparative analysis of Financial Data related to Samsung PLC
For conduct comparative analysis of financial data connected with Samsung Plc, the ratio
analysis has been brought out for the year of 2018 & 2017 in the following manner -
Liquidity Ratio:
The particular ratio is higher in 2018 after compare with 2017 by 15.53%. It means
Samsung is able of refund short term responsibilities.
Profitability Ratios
In the year 2018, the gross profit has decreased by 0.74% due to higher supplier costs as
the costs of commodities sale out to improve as company compete with brands to arrange
incomes.
2

The net profit of the company raised by 3.29% in 2018 due to lower gross profit margins.
This can be ascribed to Samsung PLC minimizing overall expenditure in 2018, which allowed
the company to maintain a higher net profit value in the current year.
Leverage Ratios:
From the above table analysed that Debt equity ratio has been decreased by 9.12% in
2018. It can be attributed to the refund of debts, particularly long term borrowings in present
time.
Recommendations
After focus on comparative analysis and explain of financial data by Samsung Plc's final
reports. There are providing recommendations -
 The company required to deduct amount of its current ratio whichever is quite high.
Ideal current ratio is 2:1 need to maintained. When current ratio of the business increase
that time arise m,any problems in the context of resource allocation for long period of
time (Basak and Makarov, 2014).
 Samsung required to improving its income due to assure that cost of sales deducted
coincidental. Presently, the business occurred about 1.75% in cost of sales on a 0.99%
increase in profitability.
TASK 3
(Covered in leaflet)
3

TASK 4
Capital Expenditure Appraisal
Scenario 1
Scenario 2
Assumptions
4

1. In both situations, the firm's Capital cost of 15 percent is drawn as the reduced price rate
in order to accomplish the net current principles of future cash flows.
2. Anticipated request (in units) is presumed to be delivered without further stock being
closed (Bergh, D. D. and et.al., 2014).
In the sense of the provide situation, the most appropriate technique for assessing capital
expenditure is Net Present Value, as it enables to determine the present principles of net cash
flows expected to take place in the years to come. Since executives wishes to determine if the
equipment must be purchased or replaced, this technique would assist them to achieve a
thorough cost estimate and income. After compare of both situations, there is providing
recommendations to the executives should quickly buy the new machinery. The main cause to
provide guidance for the solution that:
 Through savings focus on the tax shield of business entities.
 There are getting NPV for new machinery worth £80,996.14 is significantly raise other
than NPV calculated for the current year machinery worth £58,100.60 (Chatterji and
et.al., 2016).
CONCLUSION
From the above discussion, it has been concluded that finance plays an essential role
throughout the strategic planning process. Therefore, strategic managers allows different
organizations to guarantee that their company is fully aligned with the inner and external
atmosphere. It is also noted that economic data and information plays a key role in determining
how the business practice pertaining to a specific section or organization as a overall is
concerned. This allows the company to assure that the company's management structure is right
or not for its general achievement throughout the years ahead.
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REFERENCES
Books and Journal
Alkaraan, F., 2015. Strategic Investment Decision-Making Perspectives', Advances in Mergers
and Acquisitions (Advances in Mergers & Acquisitions, Volume 14).
Appuhami, R., 2017. Exploring the relationship between strategic performance measurement
systems and managers' creativity: the mediating role of psychological empowerment
and organisational learning. Accounting & Finance.
Basak, S. and Makarov, D., 2014. Strategic asset allocation in money management. The Journal
of Finance. 69(1). pp.179-217.
Bergh, D. D. and et.al., 2014. Signalling theory and equilibrium in strategic management
research: An assessment and a research agenda. Journal of Management Studies. 51(8).
pp.1334-1360.
Chatterji, A. K. and et.al., 2016. Do ratings of firms converge? Implications for managers,
investors and strategy researchers. Strategic Management Journal. 37(8). pp.1597-1614.
Online
Annual Report. 2018. [Online]. Available Through:
<https://images.samsung.com/is/content/samsung/p5/global/ir/docs/2018_con_quarter0
4_all.pdf>
Sales. 2019. [Online]. Available Through:
<https://news.samsung.com/global/samsung-electronics-announces-fourth-quarter-and-
fy-2018-results>
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