Financial Analysis Management & Enterprise- Assignment

Financial Analysis
Management & Enterprise

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. Comparative analysis of companies financial position and performance..........................1
2. Assessing CSR sections of organisation and outlining findings......................................33
CONCLUSION..............................................................................................................................34
REFERENCES..............................................................................................................................35

INTRODUCTION
Financial information plays crucial role in the business as management takes better
decisions by effectively analysing it and stakeholders are also benefited. Present report deals
with Samsung Ltd and Apple Inc. which are engaged in technology sector and producing profits.
Financial ratios are computed to show performance of both firms in the market. Along with it,
vertical and horizontal analysis are also outlined for last four years. CSR section for two
companies in last two years is highlighted. Hence, it can be said that overall financial
performance is evaluated for organisations.
1. Comparative analysis of companies financial position and performance
Vertical Analysis of Samsung Ltd – Refer to Appendix 1
Horizontal Analysis of Samsung Ltd Refer to Appendix
Vertical Analysis of Apple Inc. – Refer to Appendix 2
Horizontal Analysis of Apple Inc. – Refer to Appendix
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Illustration 1: Gross profit ratio
Illustration 2: Net profit ratio
Interpretation:
The profitability aspect of the business is required to be assessed so as to carry out
whether firm is performing well or not. In order to arrive at profitable situation, profitability
ratios are computed for both Samsung Ltd and Apple Inc. for last four years. It can be analysed
that gross profit margin of Apple Inc. in 2014 was 0.38 maximised to 0.40 in next year. This
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shows that firm had been successful in controlling costs incurred on manufacturing its products.
It is evident from the fact that operational expenses have been reduced which has provided
increment in gross profit in effectual manner. While, in 2016, figure was decreased to 0.39 and
further more to 0.38 in recent period. It is required that company should try to minimise
expenditures for attaining better profits in the future course of action.
On the other hand, Samsung Ltd had 0.37 in 2014. The trend increased as it reached to
0.38 and 0.40 in next consecutive years. Financial year 2017 was more fruitful because 0.46 of
ratio was attained which is incredible for the company as it sales are maximised and efforts are
provided in order to reduce all expenses incurred on meeting operational requirements. On the
other hand, net profit margin is also calculated which is further extension of above computed
ratio. Net profit after deducting all of operational and non-operational expenses is arrived which
is divided by sales revenue. It can be said that net profit should be increased by minimising
expenses, thereby, beneficial for organisation. Net profit ratio of Apple Inc. was 0.21 in earlier
year i.e. 2014 and elevated to 0.22 in 2015. Moreover, it again decreased to 0.21 in 2016 and
2017 years. On the other side, Samsung Ltd had 0.11 in 2014 which further minimised to 0.09
showing that costs are not handled in effective manner so as to maximise net income. On
contrary to this, 0.17 is attained in 2017 highlighting that firm has reduced costs helping to earn
more profits.
Profitability ratios provides clarity regarding financial health of company in terms of
earnings. Apple Inc. and Samsung Ltd are both giants in Hi-Tech sector and customer's base is
also large. It becomes necessary to perform well so that good quantum of profits can be
achieved. It can be assessed that gross margin of Apple Inc. was not good in comparison to
Samsung Ltd. While, in net profit ratio, Samsung Ltd has low performance with respect to other
firm. Hence, overall performance of Apple Inc. is good as net margin is high. However, its' rival
is performing well as net margin is increased in 2017. Thus, profitability aspect of firm should be
enhanced in a better way by which it may be able to conquer over market share and provide
higher level of satisfaction to customers to make them loyal towards brand.
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Illustration 3: Current ratio
Illustration 4: Acid-Test ratio
Interpretation:
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