Comparative Financial Analysis of Apple and Samsung

The provided document is an attempt at solving an assignment that involves comparative financial analysis of Apple and Samsung. It covers various aspects such as income statement and balance sheet analysis, ratio analysis, and corporate social responsibility. The document provides detailed information about the companies' performance, including their revenue, liabilities, and assets. It also compares the two companies in terms of their financial strength and position.

Financial Analysis
Management &
Entrepreneurship- FAME

INTRODUCTION
Financial management is the process of planning, organising, controlling and monitoring the
financial resources efficiently to achieve an organisational objective and helps in business decision
making.
Present study is based on the company named Apple and Samsung which deals in variety pf
products as Apple as a multinational technology company which develops, designs, and sells the
consumer electronics which holds a strong brand value and Samsung is a south korean
multinational company. It comprising several businesses and are united under the Samsung brand.
This company also deals in electronic products .
Further, it will include the comparison of the financial statements of both the companies and
explanation of the company which is more financially strong through comparing the ratio analysis,
income statement and vertical and horizontal analysis of balance sheet. Analysis of the corporate
social responsibility sections of couple of years is also included in the report.
Ratio analysis of apple
Ratio analysis of apple
Profitability ratio analysis
GP ratio
Years Formula Apple Samsung
Gross profit / net
sales * 100
2014 38.59%
2015 40.06%
1

2016 39.08%
2017 38.47%
Interpretation:
NP ratio
Years Formula Apple Samsung
Net profit / net sales
* 100
2014 21.61%
2015 22.85%
2016 21.19%
2017 21.09%
Interpretation:
Liquidity ratio analysis
Current ratio
Years Formula Apple Samsung
Current assets /
current liabilities
2014 1.08
2015 1.11
2

2016 1.35
2017 1.28
Interpretation:
Quick ratio:
Years Formula Apple Samsung
Current assets -
(stock + prepaid
expenses)
2014 1.05
2015 1.08
2016 1.33
2017 1.23
Interpretation:
Solvency ratio analysis
Years Formula Apple Samsung
Long-term debt / shareholders’
equity
3

2014 0.26
2015 0.45
2016 0.59
2017 0.73
Interpretation:
Efficiency ratio analysis
Years Formula Apple Samsung
Long-term debt / shareholders’
equity
2014 53.18
2015 62.82
2016 58.64
2017 40.37
Interpretation:
Total assets turnover ratio
Years Formula Apple Samsung
2014 0.79
2015 0.89
4

2016 0.70
2017 0.66
Interpretation:
Fixed assets turnover ratio
Years Formula Apple Samsung
2014 1.12
2015 1.28
2016 1.04
2017 .99
Interpretation:
Investment ratios
Earnings per share
Years Formula Apple Samsung
(Net income - preferred dividend) /
Number of shares outstanding
2014 6.45
2015 9.22
2016 8.31
2017 9.21
5

Interpretation:
Dividends per share
Years Formula Apple Samsung
Annual dividends / Number of
shares
2014 1.81
2015 1.98
2016 2.18
2017 2.40
Vertical analysis of samsung
Particulars 2017
% of
Sales 2016 % of Sales 2015
% of
Sales 2014
% of
Sales
Sales
Revenue 211811887 100.00% 174047940 100.00%
177365
404
100.00
%
18227
3479
100.00
%
Gross profit 97504234 46.03% 70345428 40.42%
682147
65
38.46
%
68882
866
37.79
%
Operating
profit 47428316 22.39% 25211080 14.49%
233478
67
13.16
%
22120
631
12.14
%
Profit 37297884 17.61% 19594260 11.26%
168480
02 9.50%
20679
181
11.35
%
6

Horizontal analysis of samsung
Particu
lars 2017
%
change
in 2017
2016
%
change in
2016
2015 % change
in 2015 2014
Sales
Revenu
e
211811887 21.70% 1740479
40 -1.87% 17736
5404 -2.69% 1822734
79
Gross
profit 97504234 38.61% 7034542
8 3.12% 68214
765 -0.97% 6888286
6
Operati
ng
profit
47428316 88.12% 2521108
0 7.98% 23347
867 5.55% 2212063
1
Profit 37297884 90.35% 1959426
0 16.30% 16848
002 -18.53% 2067918
1
2.
CSR report of Apple
The CSR report of apple includes about tey various programmes and initiatives which
they planning to launch for benefiting the different sections of the society in different fields.
some programmes planned by apple are :-
Apple supporting Local communities-
 This is the program in which Apple encouraged their employees to support and volunteer
local communities. They provide charities to non profit organisation of around more than
72 billion.
Apple educating and empowering workers
 This program of development is offering free of charge to the 18 factories and more than
2,80,000 workers. They also benefit their employees by providing maternity leave to the
women's for specific period.
Labour and Human rights at Apple
 They enforce the supplier code of conduct which is claimed to be the toughest among
electronic industry(Horizontal or trend analysis of financial statements,2018).
Employee health and safety at Apple
7

 Company has launched a 18 months program which aims to improve the health and
safety of the people in industry throughout the globe.
Apple and gender equality and minorities
 The company has reached up to equal pay to the employees in 2016.
 Employees in the Apple are 32% of females, 9% of black, 12% of Hispanic, and in the
last 12 month period 37% of new hires are women (Samsung Corporate Social
Responsibility,2019[)
Energy consumption by Apple
 Apple is praised because for its environmental records which includes reduction in power
consumption of Apple products by 57% and introduction of the word's most efficient
computer Mac mini and also exceeding the Energy Star guidelines. It is the only
company which is been awarded by the clean energy index of 100.
CSR report of Samsung
Samsung's corporate social responsibility programmes and initiatives consist of 14
departments which are related to each other and they handle issue of 10 different areas.Some
programs offered by Samsung are :-
Waste reduction and Recycling by Samsung
 Samsung has collected total of 2.6 million tons of waste since 5-6 years and aiming to
collect 3.8 million tons of waste products by 2020.
 They have applied a total of 34,322 tons of recycled plastics to monitors, washing
machines, earphone cases etc (Accountable Information Disclosure and Clear
Communication,2019)
Employee health and safety at samsung
 They are trying to operate their productions a and operations in safe working conditions
by continuous monitoring and taking initiatives for improvements at workplace.
 Samsung's priority is building heath nad safety management .they also comply with
OHSAS 18001 for occupational health and safety management system on their workplace
across the globe.
8

 Company ha organises a emergency scenario for occasions of harmful chemical spills,
natural disasters
Samsung educating and Empowering workers
 Their career consulting centre is used b y 5500 people.
 Training time given to employees in one year is amounted to 78 hours.
 They encourage independence and self reliance among young adults through systematic
vocational education.
Samsung supporting local communities
 They encourage independence and self reliance among young adults through systematic
vocational education.
 Samsung's SMART school have covers the gap in global education by improving
educational environment among the students.
 They opened up the sixth house for hope in the year 2015 to facilitate\te and improve the
conditions of local community child centres.
Samsung Educating and Empowering workers
 Their career consulting centre is used b y 50,000 people.
 Training time given to employees in one year is amounted to 78 hours.
Employee health and safety at Samsung
 Samsung's priority is building heath nad safety management .they also comply with
OHSAS 18001 for occupational health and safety management system on their workplace
across the globe.
 They are trying to operate their productions a and operations in safe working conditions
by continuous monitoring and taking initiatives for improvements at workplace.
 Company ha organises a emergency scenario for occasions of harmful chemical spills,
natural disasters
waste reduction and Recycling by sampling
9

 Samsung has collected total of 2.6 million tons of waste since 5-6 years and aiming to
collect 3.8 million tons of waste products by 2020.
 They have applied a total of 34,322 tons of recycled plastics to monitors, washing
machines, earphone cases etc.
Samsung and sustainable sourcing
 Samsung maintaining a supplier consulting team which focuses on manufacturing
product, quality control and development.
 The company operating a shared growth fund to help in improving the business for the
suppliers who find sit difficult to secure the funding.
Carbon emissions by Samsung
 Under the scope of e co management , and planet first initiative is introduced by Samsung
through which greenhouse emissions were reduced by 70%.
 Company operates in green workplace by making reductions in greenhouse gas emission
and as well as increasing the recycling of wastes in its offices.
The section of corporate social responsibility of both the companies is directed towards
benefiting to local community and the environment, there programmes and initiatives help in
optimum Utilisation of all the natural resources. These programmes are benefiting te people and
community by providing and contributing various services. In addition to this they are
contribution highly towards the environment by reducing wastage and recycling the waste
products which is the major contribution towards the society and environment.
10

APPENDIX
1. Ratio analysis of Apple over the last four years (2014-2017)
Particulars Formula
Profitability ratio analysis
2014 2015
Gross Profit 70537 93626
Net profit 39510 53394
Sales revenue 182,795 233,715
Earnings before interest and tax or
operating profit 52503 71230
Capital employed
Net income 39510 53394
Average total assets
GP ratio Gross profit / sales * 100 38.59% 40.06%
NP ratio Net profit / sales * 100 21.61% 22.85%
Liquidity ratio analysis
2014 2015
Current assets 68531 89378
Current liabilities 63448 80610
Inventory 2111 2349
Prepaid expenses 0 0
Quick assets 66420 87029
Current ratio Current assets / current liabilities 1.08 1.11
Quick ratio Current assets - (stock + prepaid expenses) 1.05 1.08
Solvency ratio analysis 2014 2015
Long-term debt 28987 53463
Shareholder's equity 111547 119355
Debt-equity ratio Long-term debt / shareholders equity 0.26 0.45
Efficiency ratio analysis
2014 2015
Cost of goods sold 112258 140089
11

Average Inventory 2111 2230
Turnover or sales revenue 182,795 233,715
Average total assets
231839 261159
Average fixed assets
163308 182204.5
Cost of ggod sold
Stock turnover ratio (In times) 53.18 62.82
Total assets turnover ratio .79 .89
Fixed assets turnover ratio 1.12 1.28
Investment ratios
2014 2015
Earnings per share
(Net income - preferred dividend) / Number
of shares outstanding
Dividends per share Annual dividends / Number of shares
2. Horizontal and vertical analysis of apple pertaining to income statement
Income statement
Horizontal analysis of Apple
2014
% change in
2015 2015
% change in
2016 2016
% change in
2017 2017
Revenue
18279
5 27.86%
23371
5 -7.73%
21563
9 6.30% 229234
Cost of revenue
11225
8 24.79%
14008
9 -6.22%
13137
6 7.36% 141048
Gross profit 70537 32.73% 93626 -10.00% 84263 4.66% 88186
Operating
expenses
Research and
development.. 6041 33.54% 8067 24.52% 10045 15.29% 11581
12

Sales, General
and adm. 11993 19.48% 14329 -0.94% 14194 7.52% 15261
Total operating
expense.. 18034 24.19% 22396 8.23% 24239 10.74% 26842
Operating income 52503 35.67% 71230 -15.73% 60024 2.20% 61344
Interest Expense 384 90.89% 733 98.64% 1456 59.55% 2323
Other income
(expense) 1364 47.95% 2018 38.95% 2804 80.74% 5068
Income before
taxes 53483 35.59% 72515 -15.37% 61372 4.43% 64089
Provision for
income t... 13973 36.84% 19121 -17.97% 15685 0.34% 15738
Net income from
contin... 39510 35.14% 53394 -14.43% 45687 5.83% 48351
Horizontal analysis (Apple)balance sheet
2014
%change
in 2015 2015
%change
in 2016 2016
Assets
Current assets
Cash and cash equivale... 13844 52.56% 21120 -3.01% 20484
Short-term investments 11233 82.33% 20481 127.87% 46671
Total cash 25077 65.89% 41601 61.43% 67155
Receivables 17460 -3.50% 16849 -6.50% 15754
Inventories 2111 11.27% 2349 -9.24% 2132
Deferred income taxes 4318 28.44% 5546 -100.00%
Other current assets 19565 17.73% 23033 -5.23% 21828
Total current assets 68531 30.42% 89378 19.57% 106869
Non-current assets
Property, plant and eq
Gross property, plant ... 39015 26.25% 49257 24.34% 61245
Accumulated Depreciati... -18391 45.65% -26786 27.81% -34235
Net property, plant an... 20624 8.96% 22471 20.20% 27010
Equity and other inves... 130162 26.05% 164065 3.88% 170430
13

Goodwill 4616 10.83% 5116 5.82% 5414
Intangible assets 4142 -6.01% 3893 -17.65% 3206
Other long-term assets 3764 47.61% 5556 57.61% 8757
Total non-current asse... 163308 23.14% 201101 6.82% 214817
Total assets 231839 25.29% 290479 10.74% 321686
Liabilities and stockh...
Liabilities
Current liabilities
Short-term debt 6308 74.37% 10999 5.51% 11605 3
Accounts payable 30196 17.53% 35490 5.08% 37294
Taxes payable 1209 -100.00%
Accrued liabilities 6480 288.60% 25181 -12.53% 22027
Deferred revenues 8491 5.29% 8940 -9.62% 8080
Other current liabilit... 10764 -100.00%
Total current liabilit... 63448 27.05% 80610 -1.99% 79006
Non-current liabilitie...
Long-term debt 28987 84.44% 53463 41.08% 75427
Deferred taxes liabili... 20259 18.77% 24062 8.13% 26019
Deferred revenues 3031 19.56% 3624 -19.15% 2930
Other long-term liabil... 4567 105.06% 9365 7.37% 10055
Total non-current liab... 56844 59.23% 90514 26.42% 114431
Total liabilities 120292 42.26% 171124 13.04% 193437
Stockholders' equity
Common stock 23313 17.60% 27416 13.99% 31251
Retained earnings 87152 5.89% 92284 4.42% 96364
Accumulated other comp.. 1082 -131.89% -345 -283.77% 634 -
Total stockholders' eq... 111547 7.00% 119355 7.45% 128249
Total liabilities and ... 231839 25.29% 290479 10.74% 321686
3. Vertical analysis of balance sheet with regards to Apple
Vertical analysis of Apple
2014 % OF 2014 2015
% OF
2015 2016
% OF
2016 2017
% OF
2017
Revenue
18279
5 100.00%
23371
5
100.00
%
21563
9
100.00
%
22923
4
100.00
%
Cost of revenue 11225 61.41% 14008 59.94 13137 60.92 14104 61.53
14

8 9 % 6 % 8 %
Gross profit 70537 38.59% 93626
40.06
% 84263
39.08
% 88186
38.47
%
Operating expenses 0.00%
Research and
development.. 6041 3.30% 8067 3.45% 10045 4.66% 11581 5.05%
Sales, General and
adm. 11993 6.56% 14329 6.13% 14194 6.58% 15261 6.66%
Total operating
expense.. 18034 9.87% 22396 9.58% 24239
11.24
% 26842
11.71
%
Operating income 52503 28.72% 71230
30.48
% 60024
27.84
% 61344
26.76
%
Interest Expense 384 0.21% 733 0.31% 1456 0.68% 2323 1.01%
Other income
(expense) 1364 0.75% 2018 0.86% 2804 1.30% 5068 2.21%
Income before
taxes 53483 29.26% 72515
31.03
% 61372
28.46
% 64089
27.96
%
Provision for
income t... 13973 7.64% 19121 8.18% 15685 7.27% 15738 6.87%
Net income from
contin... 39510 21.61% 53394
22.85
% 45687
21.19
% 48351
21.09
%
Balance sheet
Vertical analysis (Apple)
2014 % of 2014 2015 % of 2015 2016 % of 2016
Assets
Current assets
Cash and cash equivale... 13844 5.97% 21120 7.27% 20484 6.37% 2
Short-term investments 11233 4.85% 20481 7.05% 46671 14.51% 5
Total cash 25077 10.82% 41601 14.32% 67155 20.88% 7
Receivables 17460 7.53% 16849 5.80% 15754 4.90% 1
Inventories 2111 0.91% 2349 0.81% 2132 0.66%
Deferred income taxes 4318 1.86% 5546 1.91% 0.00%
15

Other current assets 19565 8.44% 23033 7.93% 21828 6.79% 3
Total current assets 68531 29.56% 89378 30.77% 106869 33.22% 1
Non-current assets 0.00% 0.00% 0.00%
Property, plant and eq 0.00% 0.00% 0.00%
Gross property, plant ... 39015 16.83% 49257 16.96% 61245 19.04% 7
Accumulated Depreciati... -18391 -7.93% -26786 -9.22% -34235 -10.64% -
Net property, plant an... 20624 8.90% 22471 7.74% 27010 8.40% 3
Equity and other inves... 130162 56.14% 164065 56.48% 170430 52.98% 1
Goodwill 4616 1.99% 5116 1.76% 5414 1.68%
Intangible assets 4142 1.79% 3893 1.34% 3206 1.00%
Other long-term assets 3764 1.62% 5556 1.91% 8757 2.72% 1
Total non-current asse... 163308 70.44% 201101 69.23% 214817 66.78% 2
Total assets 231839 100.00% 290479 100.00% 321686 100.00% 3
Liabilities and stockh...
Liabilities
Current liabilities
Short-term debt 6308 2.72% 10999 3.79% 11605 3.61% 1
Accounts payable 30196 13.02% 35490 12.22% 37294 11.59% 4
Taxes payable 1209 0.52% 0.00% 0.00%
Accrued liabilities 6480 2.80% 25181 8.67% 22027 6.85% 2
Deferred revenues 8491 3.66% 8940 3.08% 8080 2.51%
Other current liabilit... 10764 4.64% 0.00% 0.00%
Total current liabilit... 63448 27.37% 80610 27.75% 79006 24.56% 1
Non-current liabilitie... 0.00% 0.00% 0.00%
Long-term debt 28987 12.50% 53463 18.41% 75427 23.45% 9
Deferred taxes liabili... 20259 8.74% 24062 8.28% 26019 8.09% 3
Deferred revenues 3031 1.31% 3624 1.25% 2930 0.91%
Other long-term liabil... 4567 1.97% 9365 3.22% 10055 3.13%
Total non-current liab... 56844 24.52% 90514 31.16% 114431 35.57% 1
Total liabilities 120292 51.89% 171124 58.91% 193437 60.13% 2
Stockholders' equity 0.00% 0.00% 0.00%
Common stock 23313 10.06% 27416 9.44% 31251 9.71% 3
Retained earnings 87152 37.59% 92284 31.77% 96364 29.96% 9
Accumulated other comp.. 1082 0.47% -345 -0.12% 634 0.20%
Total stockholders' eq... 111547 48.11% 119355 41.09% 128249 39.87% 1
Total liabilities and ... 231839 100.00% 290479 100.00% 321686 100.00% 3
16

Horizontal analysis of Apple states changes in amount of corresponding income statement or
balance sheet items over a period .it is very useful tool in the organisation to evaluate the trend
and difference over a period. This statement shows four periods from 2014 to 2017.this analysis
is used to compare the historical items with preset year items to measure the change in trends .
The previous year is used as base year and the items of the financial statements are than
compared to the items of the statement of previous year.(base period).changes can be shown in
percentage or in dollars.
Change can be measured by using the formula:
Percentage change=amount of the item of current year- amount of the item of previous year/ base
year Or Dollar change/amount of the item in base year*100.
In the above income statement of Apple the years taken are 2014, 2015, 2016,2017.which how
different items included in income statement of the company. The Revenue of the year 2014
shows 182795 which increases to 233715 in one year period and the horizontal analysis of these
two years represents as 27.86% which shows the change in next year. Similarly, net income of
the company in 201 si 39510 which rises to 53394 representing the rise of 35.14% which
encourager the company to continue their performance in efficient way to get continuous rise in
income over the years. This analysis can be use by the company to evaluate that what changes
they are required to made in the company. Whereas assets on the balance sheet depicts of
321686 in year 2016 and changes to 375319 in year of 2017 which represents the rise of 16.67%
in the asset value which is benefit for the organisation and need to continue their performance
through long run whereas total liabilities depicts 321686 in year 2016 and which also increase to
375319 in 2017 which reflects that company needs to pay off their liabilities to be in a better and
strong position.
Vertical analysis of the Apple will represent the relative sizes of different accounts in the
financial statements .it can be done in income statement and balance sheets as on every account
it will show as a percentage of total sales number. The vertical analysi of apple incomne
statement represents the 100% change in year 2014 and 2015 and the assets shows the 100% of
total sales number .the analysis can be done for finding the financial strength through income
statements and liabilities.
17

Conclusion
From the above report, it can be conclude that Apple and Samsung company which deals
in electronic products have a greater and vertical role in corporate social responsibility it also
concludes the vertical analysis of income statement and balance sheet of apple company and
horizontal analysis of the same.
The horizontal and vertical analysis is done to understand the comparison between the
financial statements of Apple and Samsung through income statement, balance sheet and ratio
analysis to ascertain the position of the company which has strong financial position on the
ground of finance.The income statement and balance sheet reflected the companies position and
Corporate Social Responsibility towards to society also reflects the contribution of the company
towards society and environment. The comparison helps to measure the financial performance of
the companies and will also help their users to communicate their working and contribution
through financial reports, with the help of these reports companies are able to tail correct
decisions at right time in order to improve their performance.
18