Financial Analysis of Apple and Samsung

Financial Analysis Management and Enterprise
Samsung and Apple
7 / 2 4 / 2 0 1 8

FINANCIAL ANALYSIS OF APPLE AND SAMSUNG 1
Table of Contents
Introduction................................................................................................................................2
Profile- Samsung....................................................................................................................2
Mission of Samsung...........................................................................................................3
Vision of Samsung.............................................................................................................3
Profile- Apple.........................................................................................................................3
Vision of Apple..................................................................................................................4
Mission of Apple................................................................................................................4
Question 1..............................................................................................................................4
Financial Analysis and Comparison of Apple and Samsung.................................................4
Financial Analysis of Samsung..........................................................................................4
Financial Analysis of Apple...............................................................................................8
Comparative Chart...........................................................................................................13
Question 2............................................................................................................................14
Corporate Social Responsibility of Samsung.......................................................................14
Health and Safety of Employee at Samsung....................................................................14
Minorities and Gender Equality at Samsung...................................................................15
Recycling and Waste Reduction by Samsung..................................................................15
Carbon Emissions.............................................................................................................16
Consumption of Water by Samsung................................................................................16
Samsung and Sustainable Sourcing.................................................................................17
Corporate Social Responsibility of Apple............................................................................17
Minorities and Gender Equality in Apple........................................................................17
Apple’s Energy Consumption..........................................................................................17
Consumption of water by Apple......................................................................................18
Conclusion................................................................................................................................19
References................................................................................................................................20

FINANCIAL ANALYSIS OF APPLE AND SAMSUNG 2
Introduction
The study of the financial statements is essential for the investors and stakeholders of the
company such as lender and government. The investors continuously observe the
performance of the company to recognize its capabilities and future opportunities by
assessing the financial statements (Fridson and Alvarez, 2011). Financial analysis is the
process of evaluating budgets, projects, and businesses to determine their performance.
Generally, financial analysis is used to study whether a firm is steady, lucrative, or wealthy to
do financial investment (Gibson, 2010). This report highlights the evaluation of the financial
performance of two competitors of electronic industry i.e. Samsung and Apple; this will be
done with the help of ratio analysis, horizontal and vertical analysis of both the companies. It
will also highlight the programs and initiatives of Corporate Social Responsibilities of
Samsung and Apple Company.
Profile- Samsung
Samsung is the South Korean Company and operating as the biggest producer of electronic
devices in the whole world. It specializes in creating a broad range of industrial and consumer
electronics, comprising digital media devices, memory chips, integrated systems, appliances,
and semiconductors. Today, Samsung has become the most famous brand in offering advance
technology (Samsung, 2018). Lee Byung-Chull started the company as the trading store in
1938. He commenced his business operations in Taegu, Korea, trading noodles and other
merchandises created in and nearby cities and distributing them to China. After the war in
Korea, Lee expanded his business operations into textiles and initiated the biggest mill of
wool. He majorly focused on industrialization with the objective of supporting his nation in
redeveloping after the war. During this period, the business was profited from the new
protective strategies adopted by the government of Korea, whose purpose was to assist big

FINANCIAL ANALYSIS OF APPLE AND SAMSUNG 3
local conglomerates by protecting them from rivalry and offering them easy funding
(Samsung, 2018).
Mission of Samsung
The mission of Samsung is to apply their technology and talent to making superior services
and products that add to the enhanced global society (Jurevicius, 2013).
Vision of Samsung
“Inspire the World, Create the Future”- The Samsung’s vision 2020 is very important for
their commitment towards making an enhanced world, which is full of wealthier digital
experiences, by innovative products and technology. The objective of the vision is to be an
adored brand, an admired company, and an innovative company (Samsung, 2018).
Profile- Apple
Apple is an American company, which majorly deals in the manufacturing of personal
computers, computer software, and computer peripherals. The headquarter of the company is
located in California. Apple Inc. has its origin in the enduring dream of Stephen G. Wozniak
to create his own computer (Apple, 2018). It was a dream that suddenly became possible in
1975, with the entrance of the first successful microcomputer, i.e. the Altair 8800, which
arrived as a set and used the newly designed microprocessor chip. In 1976, Wozniak was the
engineering intern in the Hewlett-Packard Company, showed the least interest in his creation,
Wozniak then along with this classmate Steven P. Jobs, shifted his operations of production
to the family garage Jobs and the start-up of Silicon Valley garage was born and the
company was named as Apple (Aljafari, 2016).

FINANCIAL ANALYSIS OF APPLE AND SAMSUNG 4
Vision of Apple
The vision reflects that the firm understands that they are the face of the earth to create
valuable products and services. They are regularly concentrating on innovations. They
believe in offering simple solutions rather than complex (Center Forics, 2016).
Mission of Apple
Apple Company creates Macs that is considered the best personal computers all around the
globe, along with iWork, OS X, professional software, and iLife. Cited firm is the leader in
the digital music revolution by the virtue of its products like iPods, iTunes etc. This firm has
again invented the cell phone devices with its innovative iPhone and App store and is
describing the future of computer devices and mobile phone (Rowland, 2017).
Question 1
Financial Analysis and Comparison of Apple and Samsung
Financial Analysis of Samsung
Horizontal Analysis 2017 2016 2015 2014
Net sales
21181
2 16.2%
17847
3 -2%
17736
5 -3%
18227
3
Cost of sales
11430
8 0.8%
10633
9 -6%
10915
1 -4%
11339
0
Gross profit 97504 41.6% 72134 5% 68214 -1% 68883
Selling and administrative expenses 50076 7.1% 46282 -1% 44867 -4% 46762
Operating profit 47428
114.4
% 25852 17% 23347 6% 22121
Other non-operating income 2662 -20.8% 2863
-
15% 1490 -56% 3360
Other non-operating expense 1255 -37.2% 2178 9% 3291 65% 1997
The share of profit of associates 178 -41.3% 17
-
94% 974
221
% 303
Financial income 8609 17.9% 10066 38% 9295 27% 7301
Financial expense 7938 23.1% 9466 47% 8867 38% 6447
Profit before income tax 49684
101.6
% 27154 10% 22948 -7% 24641
Income tax expense 12386
212.7
% 7062 78% 6100 54% 3961
Profit for the period 37298 80.4% 20092 -3% 16848 -19% 20680
Vertical Analysis

FINANCIAL ANALYSIS OF APPLE AND SAMSUNG 5
Income Statement 2017 2016 2015 2014
Net sales
21181
2
100.0
%
17847
3
100
%
17736
5
100
%
18227
3
100
%
Cost of sales
11430
8 54.0%
10633
9 60%
10915
1 62%
11339
0 62%
Gross profit 97504 46.0% 72134 40% 68214 38% 68883 38%
Selling and administrative
expenses 50076 23.6% 46282 26% 44867 25% 46762 26%
Operating profit 47428 22.4% 25852 14% 23347 13% 22121 12%
Other non-operating income 2662 1.3% 2863 2% 1490 1% 3360 2%
Other non-operating expense 1255 0.6% 2178 1% 3291 2% 1997 1%
Share of profit of associates 178 0.1% 17 0% 974 1% 303 0%
Financial income 8609 4.1% 10066 6% 9295 5% 7301 4%
Financial expense 7938 3.7% 9466 5% 8867 5% 6447 4%
Profit before income tax 49684 23.5% 27154 15% 22948 13% 24641 14%
Income tax expense 12386 5.8% 7062 4% 6100 3% 3961 2%
Profit for the period 37298 17.6% 20092 11% 16848 9% 20680 11%
Balance Sheet 2017 2016 2015 2014
Assets
Current asset
Cash and cash equivalents
2700
5
10.1
%
2839
0 12%
2000
9 9%
1488
6 7%
Short-term financial instruments
4371
7
16.4
%
4635
6 20%
3909
6 18%
3685
1 18%
Short-term available 2821 1.1% 3216 1% 4090 2% 2905 1%
Trade receivables
2448
6 9.2%
2146
6 9%
2224
7 10%
2182
9 11%
Non-trade receivables 3632 1.4% 3113 1% 2964 1% 3129 2%
Advances 1550 0.6% 1273 1% 1508 1% 1759 1%
Prepaid expenses 3390 1.3% 3096 1% 2803 1% 2958 1%
Inventories
2208
8 8.3%
1622
7 7%
1662
8 8%
1530
8 8%
Other current assets 1256 0.5% 1163 1% 915 0% 1587 1%
Assets held for sale 739 0.3% 68
0.03
% 571
0.3
%
Total current assets
1299
45
48.7
%
1250
39 54%
1103
28 51%
1017
83 50%
Non-current asset
Long-term available-for-sale 6854 2.6% 6016 3% 7635 4%
1119
7 5%
Held-to-maturity financial asset 94 0.0% 0% 0%
Investment in associates 6014 2.3% 5161 2% 4664 2% 4625 2%
Property, plant and equipment
9872
5
37.0
%
8087
3 35%
7644
1 36%
7148
7 35%
Intangible assets 1305 4.9% 4723 2% 4770 2% 4230 2%