(PDF)Financial Analysis Management and Enterprise - Assignment

FINANCIAL
ANALYSIS
MANAGEMENT AND
ENTERPRISE

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1 ............................................................................................................................................1
Comparison of financial performance and position of Apple and Samsung on the basis of
analysing tools.............................................................................................................................1
Swot analysis of Apple and Samsung..........................................................................................4
TASK 2............................................................................................................................................7
CSR analysis of Samsung and Apple over last years..................................................................7
CONCLUSION..............................................................................................................................10
REFRENCES.................................................................................................................................11
APPENDIX....................................................................................................................................12

INTRODUCTION
Financial statement analysis is the process of analysing and evaluating the financial
statement and reports of an organisation. It is necessary to analyse the financial records so that
company can become able to check about the financial condition and position. In addition, it also
beneficial for both to the external parties like shareholders, stakeholders and to the internal
management of company (Dunning and Dunning, 2014). There are too many methods which are
used by the companies to analyse the financial statements. For example vertical method,
horizontal method, ratio analysis etc. In this project report two companies are selected which are
Apple and Samsung. The project report contains analysis of both the company to check financial
strengths and weakness. Main purpose of this report is identify that which company is better
between Apple and Samsung. In addition, report includes CSR analysis of both the companies.
TASK1
Comparison of financial performance and position of Apple and Samsung on the basis of
analysing tools.
Overview of Samsung company: Samsung company was founded in 1938 by Lee Byung chul.
Its headquarter is in Seoul, South Korea. The company is running its business in all around the
world. They are offering various kind of products and services in the market. Their products are
like electronic equipments, home appliances, telecommunication products etc. In addition their
services are like advertising, medical and construction services etc. Company is leading the
market by providing latest products and services on the demand of customers as well as they are
getting sustainable advantage in this tough competition era in all around the world. This
company has significant impact on various country's economic environment, specially on its
origin country's economy (David, 2011). Though company is facing the cut throat competition in
different countries but they are sustain in that.
Financial analysis of company:
On the basis of financial analysis between (2014-2017), company is growing with
significant criteria. They are increasing in their profits and revenue on year by year. In 2014
company was getting the profit percentage of 38.07% which increased by 1% in 2015 and it
become 38.46% in 2015. There after this criteria was increasing on year wise. In 2016 it
increased by 2% in comparison to last year profit and it became 40.42%. In the year of 2017,

company increased their profit with a huge margin at 6% increment of previous year's profit and
it was 46.03% which was a huge profit criteria. In addition, company's revenues are also
increased in period of (2014-17). In this time period company got good revenue. On the basis of
previous year's financial statements, it has been analysed that company's assets are increasing in
compare to last year. Company's assets were increased by 23.63% in the time period of 2014-17.
So on this analysis company's revenues, profits and assets were increased significantly which is a
huge achievement for Samsung (Vogel, 2014).
Ratio analysis of company:
Liquidity/
Financial
Health 2014 2015 2016 2017
Current Ratio 2.21 2.47 2.59 2.19
Quick Ratio 1.73 1.98 2.12 1.71
Financial
Leverage 1.42 1.4 1.41 1.46
Debt/Equity - 0.01 0.01 0.01
The ratios which are shown in above table describes the financial health of the company.
On the basis of this ratio analysis, company's ratios of profitability are increasing continuously.
In 2014, the current ratio of company was of 2.21 which increased by 11.7% in the next year and
it became 2.47. As well as it increased in 2016 and become 2.59 but herein, in 2017 it decreased
by 15.44%. So company's current ratio is increasing respectively except the year 2017.
Generally quick ratio is considered ideal when it is of 1:1 but here company is getting
ratio of 1.73 in 2014, which increased by 14.45% and converted at 1.98% in next year. It also
increased in 2016 and became 2.12 but same as current ratio, it decreased in 2017. It decreased
by 19.33%.

Financial leverage states that how many amount company have to pay their liabilities.
Samsung's financial leverage ratio was 1.42 in 2014 which decreased by a low margin and
became 1.4. In addition, it increased by 0.71% in next year and it became 1.41. It increased by
big criteria in 2017 and it became 1.46 which was highest in the time period of 2014-2017.
Debt to equity ratio refers the relationship between debt and equity of company. In the
table company's ratio is constant in the years continuously which is of 0.1.
Overview of Apple company:
Apple company was founded in 1976 by Steve jobs, Steve Wozniak and Ronald Wayne.
Its headquarter is in California, (U.S.A) and currently chief executive officer is Cook Tim. This
company is offering their products and services worldwide. It is one of the biggest multinational
company in USA. They started their first product Apple computer in 1977. Company is
providing both hardware and software products. In hardware products they are offering iPhone
smartphone, iPad tablet computer, Mac personal computer, apple watch, apple digital media
player etc. In the software products they are providing iOS operating system, apple play store,
safari browser, I cloud system and many more. Their products are known for best quality as well
as company never compromise the price. They sell their product at the constant rate without any
option of negotiation. In addition, they give option to buy their products only from selected
retailers which shows the status of the company and their products are also available on the
online platform (Golicic and Smith, 2013).
Financial analysis of Apple company :
On the basis of financial reports and statements of year 2014-2017, company's profits,
revenues and incomes are fluctuating in particular time periods. The gross profit of company in
year 2014 was about 38.49% which increased by 1.5% and became 39.06% in 2015. Further, in
next years it decreased continuously, it reduced by significant percentage and became 39.00% in
2016 and finally in the last year it decreased at 38.475% so company's gross profits were
decreased respectively in the last two years in 2016 and 2017. In addition, company's net
earnings and revenues increased in the given time duration which shows the strong financial
position of the company. Apple's revenues increased by 14% in the given time period and net
earnings increased by 26%.
Ratio analysis of company :
Financial or 2014 2015 2016 2017

liquidity position
Current ratio 1.08 1.11 1.35 1.28
Debt-Equity ratio 0.26 0.45 0.59 0.73
From above ratio analysis it has been seen that company's ratios are showing the financial
condition and position of the company. Their ratios are fluctuating in all the years, these are
increasing and decreasing continuously. In 2014, company's current ratio was of 1.08 which
increased in next year by 2.77% and became 1.11 in the 2015. Further, in 2016 it increased again
by 21.62% which was the big growth in that time period and it became 1.35. Herein, 2017 the
current ratio decreased by 5.18% and reduced at 1.28.
Company's debt-equity ratio increased in the years respectively. In year 2014 it was of
0.26 which increased by 73.07% and became 0.45 in 2015. In addition it converted at 0.59 in
2016 and further more it increased more with 23.72% and became 0.73. So from ratio analysis,
company's current ratios and debt-equity ratio increased and decreased at significant rate.
Though company's current ratio fluctuated but debt-equity ratio increased continuously which
shows that company has sufficient debt to pay the debt or liabilities.
Swot analysis of Apple and Samsung.
Swot analysis is necessary for the comparison of financial position of companies because
this tool analyse the organisations in all the way which effects the financial position and
conditions (Lambert and Davidson, 2013). For this purpose Swot analysis of Apple and Samsung
discussed below:
Swot analysis of Samsung:
Strength: It is a positive factor which gives advantage to the companies. Samsung has following
strength:
 It is one of the world's largest manufacturing company for electronic gadgets.
 They offers their products globally all around the world.
 Company has strong relationship with retailers of different countries like Europe, USA.
Etc.
 Their smartphones are unique in the specification and quality..
 They have different research and design capabilities for their new innovative products.

Weakness: It is a negative aspect which effect business as disadvantage. The selected company
has following weaknesses-
 Company is facing tough competition from competitors like Xiomi, apple etc.
 They are dependent on the other companies for software products because they produce
only hardware material for smartphones.
 It has weak position the personal computer market. There are a lot of better companies in
the PC market.
 Company is too much dependable on the European and American markets.
 Their marketing efforts are not sufficient in compare to other companies.
Opportunities: These are the elements in the external environment which may effect positively.
Company has following opportunities-
 Company can expand their business in the mid class customers segment because this
segment consists a large number of customers.
 They are producing new innovative air-conditioners which may help them in sustainable
growth.
 Company is offering their products at the online sites which may result positive in future.
 Their products demands are increasing on year by year that can result in the higher
growth (Li, 2012).
 Company's financial condition is good which can help them in entering diversification.
Threats: It is a negative factor which may impact business as loss. The selected company is
facing following threats-
 Company is facing the issue of changing customers loyalty, today's customers are not
loyal towards a particular brand.
 Increase in the growth of Chinese companies like oppo, vivo which are impacting
company's smartphones selling.
 Retail chains like bigbazar, wallmart are selling electronic products at lower price which
effect negatively to Samsung

 Globalisation is becoming an issue for the company because it forces to change in
technologies regularly which is not easy.
Swot analysis of Apple:
Strength: Company has following strengths which are described below-
 Unique design of products is becoming a strength for the company.
 Company has strong brand image which increase in the selling and revenue of the
company.
 Their customers are loyal towards apple products and services.
 They have large and strong distribution channels across the countries which make
availability of their products anywhere in the world.
 They always focus on the consumer's satisfaction which impact the loyalty of customers
effectively as well as it increase the goodwill of the company.
Weakness: Apple has following weaknesses-
 Company is depended on the few products. They produce new products in huge time gap
and their products portfolio is small.
 It is not easy for the company to match the customers the expectation the globalisation
era and it effects customers satisfaction level negatively.
 Another weakness for company is that premium pricing and because of this middle class
group can't afford the apple's product and this reduce their selling area.
 Their products are incompatible to use for third party because its product's system has
totally different features (Chapman, 2011).
Opportunities: Company have below opportunities in future-
 Their products are suitable in the globalisation environment, they have all the features
which are according to the changing in technologies.
 They are thinking to launch apple cars which can be a great innovative idea to expand
their business.
 Apple watches are recently launched in the market which can be beneficial for company
in upcoming years with high profitability.
 Company has opportunity to increase in the distribution network in more countries which
may result positively.
Threat: They have following threat-

 Company is getting competition from the different companies specially in the
smartphones fields.
 They are facing the issue of market penetration in the smartphones because android is
increasing with higher percentage.
 In different countries, company's product's labour cost is increasing which is effecting the
prices.
 Availability of cheap products in the market effecting the selling.
Conclusion: After analysing of different ratios, financial statements of both the companies, it
has been analysed that both the companies are similar in some manner but in broad sense
Samsung is far away from the Apple because of large market area, products and higher growth.
Though apple is also good competitor but somehow Samsung is ahead then Apple. In addition
Apple's revenues and ratios are fluctuating among 2014-2017 but Samsung's profits and revenues
are increasing continuously which is making difference. Further, Apple is dependable on few
products which is a major issue for lower capabilities in compare to Samsung. So Samsung is
better then the Apple.
TASK 2
CSR analysis of Samsung and Apple over last years.
CSR- Corporate social responsibility is a kind of model which is run by the organisations
to complete their responsibilities towards social environment including public, shareholders,
stakeholders etc (Ramdani, Chevers and Williams, 2013).
CSR of Samsung company is discussed below
For employees health and safety-
 Samsung have health research institute for their employees and workers which helps in
improving the health of employees at the work place. This enables the regular check-up
of the health of employees which result in high efficiency in productivity as well as
beneficial for the employees.
 Company has system of disease prevention system which is beneficial for the employees.
This system also helps those employees who travels into different countries for business
purpose, it helps them if they suffer from any disease during travel so Samsung is too
much focused for health of employees.

Labour and human rights protection at Samsung-
 They are too much aware about the rights of human and labour. Company strongly
prevent the child labour at their workplace. To ensures this they organised a inspection to
check labour age group at china in year 2015.
 Company is focused to work for the welfare of the labours.
Working hours for employees-
 The working hour at Samsung workplace is about 11 hours in a day as according year
2014. They engage their workers less then 12 hours in working process.
Company is supporting to the local communities-
 Company supports to the local communities where they works. They try to introduce new
generation in the workplaces as well as the communicate with the local authorities in the
area of working.
Waste reduction and recycling system -
 In the protection of environment, company supports fully. They uses recycled plastics to
produce the new products which save the environment. They used 3422 tons plastic in
manufacturing of new products in 2015. It is a great by company to save the environment
because production of new plastic increase too much pollution (Gates, Nicolas and
Walker, 2012).
 Company is continuously involved in the collection of wastage which may help in
production of new products. They have target to collect 3.8 million tons of wastage till
2020 and for this they are working with full of force. In addition, they collected about 2.6
million tons of wastage during year 2009-15. It is a huge quantity of wastage.
Samsung is focusing on less carbon producing by manufacturing-
 Company is focusing on producing less CO2 in the environment to protect the
environment. For this purpose they are implementing various plans and policies like
Samsung green management system which runs various plans to save environment.
CSR of Apple company:
Focus on gender equalities and minorities-

 Company is moving forward towards the gender equalities in the pay system and in
responsibilities providing. In their workforce about 32% are the female workers. In
addition they are hiring now female staffs to bring equality in workforce (Wu, Chen and
Olson, 2014).
 They are making attentions to pay equal to male and female at same designation. In 2016,
they achieved the target of paying equal at same designation which is a huge success in
the context of equality.
 Company is having the staff of all different culture and colours, they have 9% black
people in their staff.
Employees health and safety in Apple-
 Apple is known for their employees welfare and safety. They implements various plans
and policies for the protection of employees. For example they started EHS(environment
health and safety) academy to protect the employees health. In this programme about
270000 employees participated to get its advantage.
Labour and human rights at Apple-
 Company focuses on the protection of labour and human rights at workplace. They
engage their workers for less then 12 hours at workplace. Their employees works on an
average of 60 hours in a week. It shows that company is aware for their employees health
and safety (Vernon and Aharoni, 2014).
Education and empowering of employees -
 Apple is working for the improving skills and knowledge of employees for this they starts
various plans. For this they initiated development programme and about 280000
employees involved in this programme to get education about the functions and for
improvement in skills. Eventually, it gives benefits both to the employees with increased
efficiency in working and to the company with higher production.
Energy used by apple:
 Company is involved in the re producing of energy which they consumes. They
effectively reproduce about 96% of total energy which they use
Supports to local communities:
 Company supports to the local communities all around the working place. For this
purpose they started a programme in 2011 named by Global volunteer programme whose

main objective was to motivate the employees to involve in the local communities. After
the 2011 this programme was also started again in 2015 with same objective.
CONCLUSION
From the above report it has been concluded that analysis of financial statements is too
much crucial in the context of examining financial position of companies. In the report, two
companies apple and Samsung's financial condition and position discussed with the help of
various analysing tools like ratio analysis, financial statement analysis. In addition, Samsung is
far ahead from Apple company because its financial records of 2014-17 is better in comparison.
Apart from this CSR(Corporate social responsibility) is also discussed of both company which
shows the social responsibilities of both the companies towards society and employees.

REFRENCES
Books and journals:
Dunning, J. H. and Dunning, J. H., 2014. Economic analysis and multinational enterprise.
Routledge.
David, F. R., 2011. Strategic management: Concepts and cases. Peaeson /Prentice Hall.
Vogel, H. L., 2014. Entertainment industry economics: A guide for financial analysis.
Cambridge University Press.
Golicic, S. L. and Smith, C. D., 2013. A meta‐analysis of environmentally sustainable supply
chain management practices and firm performance. Journal of supply chain
management. 49(2). pp.78-95.
Lambert, S. C. and Davidson, R. A., 2013. Applications of the business model in studies of
enterprise success, innovation and classification: An analysis of empirical research from
1996 to 2010. European Management Journal. 31(6). pp.668-681.
Li, L., 2012. Effects of enterprise technology on supply chain collaboration: analysis of China-
linked supply chain. Enterprise Information Systems. 6(1). pp.55-77.
Chapman, R. J., 2011. Simple tools and techniques for enterprise risk management (Vol. 553).
John Wiley & Sons.
Ramdani, B., Chevers, D. and A. Williams, D., 2013. SMEs' adoption of enterprise applications:
A technology-organisation-environment model. Journal of Small Business and
Enterprise Development, 20(4), pp.735-753.
Gates, S., Nicolas, J. L. and Walker, P. L., 2012. Enterprise risk management: A process for
enhanced management and improved performance. Management accounting quarterly.
13(3). pp.28-38.
Vernon, R. and Aharoni, Y., 2014. State-Owned Enterprise in the Western Economies
(Routledge Revivals). Routledge.
Wu, D. D., Chen, S. H. and Olson, D. L., 2014. Business intelligence in risk management: Some
recent progresses. Information Sciences. 256. pp.1-7.
Bromiley, P., and et. al., 2015. Enterprise risk management: Review, critique, and research
directions. Long range planning. 48(4). pp.265-276.

APPENDIX
Financial statement of Samsung:

Financial statement of Apple Inc: