Case Study on Finance For Strategic Managers Assignment
Produce a presentation on financial data and strategic decision making for Pietro Yon to use at the next meeting of the Chamber of Commerce.
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Added on 2021-02-19
Case Study on Finance For Strategic Managers Assignment
Produce a presentation on financial data and strategic decision making for Pietro Yon to use at the next meeting of the Chamber of Commerce.
Added on 2021-02-19
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Finance for StrategicManagers
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3Financial data and strategic decision making.........................................................................3Assessment of the need for financial data and information...................................................4Risks related to financial business decisions..........................................................................5Review of methods that can be used for appraising strategic capital expenditure.................5TASK 2............................................................................................................................................6Interpretation of the financial statements of Samsung PLC...................................................6TASK 3............................................................................................................................................7Impact of ‘creative accounting’ techniques............................................................................7Limitations of ratio analysis...................................................................................................7Importance of cash flow management....................................................................................8TASK 4............................................................................................................................................8Capital Expenditure Appraisal..............................................................................................8CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11APPENDIX....................................................................................................................................12
INTRODUCTIONStrategic management is an effective tool which helps in efficient planing, organizing,assessing, analysing and monitoring the necessary activities to attain desired goals and objectivesin a systematic and timely manner (Almazan, A., Chen, Z. and Titman, S., 2017). Strategicmanagement focuses on evaluating the market data, profitability and strategic project managersfor long term sustainability growth (Abor, J.Y., 2017). This study will highlight, financial data which helps in strategic decision making. It alsohelps in assessing financial information which helps in formulating various business strategy.This study will also further evaluate risks related to financial business decisions and reviewingmethods that can be used for appraising strategic capital expenditure. This study will furtherinterpret the financial statements. Furthermore, this study will analyse effect of creativeaccounting techniques and capital expenditure appraisal. Samsung plc. is one of the leading company founded in the year 1969. It issemiconductors, consumer electronics and home appliance company.TASK 2Interpretation of the financial statements of Samsung PLC.Balance sheet statement: The cash and cash equivalent of the company for the financialyear 2018 is USD 26,983,729 and for the financial year 2019 is USD 23,724,693. Cash and cashequivalents means cash which are readily available to meet short term requirements of thebusiness. This states that, cash and cash equivalents are reduced by USD 3,259,036. Cash mightbe reduced due to liquidity payments, asset acquisition, dividend payments, prepaid expenses,etc. Decrease in cash and cash equivalent of Samsung plc. Adversely affect the liquidity positionof the business. This eventually affects the operational performance and productivity (MinnisandSutherland, 2017). Trade receivables of the company for the financial year 2018 is USD 30,120,716 and forthe financial year 2019 is USD 32,647,858. Trade receivables of the company is increasingwhich states that the sales of the company is increasing at a faster pace which usually states thatthe debtors are increasing. The more goods are given on credit which means there is anincreasing issue of collecting money within a stipulated period of time. The inventories of thecompany are increasing which is a good sign that the company is growing and increasing its sale
in the next financial year. The total assets of the company is increasing sales, lower production,increase in gross margins, increase in new equipments, controlled expenses and higher profitmargins for the Samsung plc.Trade payable of the company is increasing for the financial year 2018 is USD 7,541,725and for the financial year 2019 is USD 8,718,260. The trade payable increases because ofincrease in inventory which eventually decreases the net income of the Samsung plc. The shortterm borrowings of the company is decreasing which mainly comprises of invoice financing,lines of credits, payday loans, etc. which are for the period of 1 year. This indicates that thecompany is in good position (Ansoff and et.al., 2018). Long term borrowings of the companywhich are for more than 1 year mainly includes bank loan, debentures, bonds, etc. It is increasingwhich leads to higher interest payable and expenses for the company. This eventually hampersthe profitability of Samsung plc. The total liability of the company is increasing with minimalchanges. Profit and loss statement: The revenues of the company is decreasing from financial year2018 which is around USD 53,863,139 and it comes down to USD 46,589,778. the main reasonfor decrease in revenue is due to lower sales margin. Increase in raw material, higher productioncost, increase in labour cost also adversely affect the revenue of the Samsung plc. The cost ofgross profit is decreasing due to lower sales and revenue. Comparative analysis of financial data using ratio analysis for Samsung PLC. Liquidity ratio analysis 20192018Current assets 157.7155.36Current liabilities 59.961.43Inventory 27.9725.77Prepaid expenses3.973.67Quick assets149.76148.02Current ratio Current assets / current liabilities 2.632.53Quick ratio Current assets - (stock + prepaidexpenses)2.502.41Solvency ratio analysis
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