Financial Analysis Management & Entrepreneurship (pdf)

Financial Analysis
Management &
Entrepreneurship

Contents
Contents...........................................................................................................................................2
TASK 1............................................................................................................................................1
1.1 Compare and contrast the financial performance and financial position of the two listed
companies....................................................................................................................................1
TASK 1(B).......................................................................................................................................4
SWOT Analysis of Samsung:......................................................................................................4
Conclusion...................................................................................................................................7
TASK 2............................................................................................................................................7
2.1 Critical analysis of CSR sections over the last couple of years.............................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
In business scenario, the process of calculating business performance, running projects,
budgets and other finance relevant documents in order to identify the actual efficiency and
suitability (Burns and Dewhurst, 2016). It is mainly used by the management within company so
that proper analyses stability, solvency, liquidity or profitability that support in monetary
investments. The main principle behind financial analysis is utilized to measure economical
trends, fit commercial policy for enterprise, prepare strong long-term plans that aid to run and
manage business activity. This further support to determine projects or companies for investment
to increase overall profit. In this project two company are selected Samsung and Apple that are
classified as two major companies in the telecommunication and Hi tech industry.
The main objective, of this project is to critically compare and contrast the financial
performance and position of these two companies with the support of ratio analysis, vertical and
horizontal analysis to identify the strength and weaknesses. Apart this critical analysis of CSR
sections are done to identify which company is more powerful.
TASK 1
1.1 Compare and contrast the financial performance and financial
position of the two listed companies
Overview of Samsung:
The south Korean multinational company is one of the leading company in the world that
provide large variety of electronic product and services to its customer at global level (About
Samsung. 2019.About Apple. 2019). Samsung has its headquarter in Seoul which was established
in 1938 by Lee Bung-Chul as a trading company. With the passage of time, the company have
adopted the diversification strategy and expand business areas that includes food processing,
insurance, securities, textile and retail. Respective company entered in the electronic industry in
year 1969 and nationalised its operation and electronic in specific mobile phone and other items
such as semiconductor that increases the profit of company during a specific period of time. The
company associate have different sort that includes Samsung electronic, Heavy industries and
engineering and Samsung construction. The very first product introduced by company were
black and white T.V and that company began to export several home purpose electronic product
at global level. With the emergent need of data protection company also established Samsung
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Data system in 1985 to provide other companies with a authentic system so that useful
information can be stored and protected. This company is endlessly occupied in large operation
that ease the process of human and is making sincere attempt to attain regular growth that benefit
for better future by utilising and generating innovative technologies and ideas.
In recent time, the company is facing a huge competition at local and global level but
managed to be a leading company one in electronic industry by continuously modifying its
techniques and technology. Thus, Samsung provides best products and services, create value and
encourage smart lifestyles for its consumers all over the globe.
Analysis of financials status:
Actual strength and stability of an organisation can be determined by proper analysis of
final accounts and yearly statements. From the financial statement between 2014-18, it has been
analysed that company have shown improvement in business and it keeps on growing in some
significant areas. The overall profitability and revenues shows positive changes as revenue keeps
on increasing year by year that help Samsung to expand and diversify their product. In year 2014
the has a profit percentage of 38.07% that keeps of increasing and has shown addition in profit
by 8%. In year 2016 it raised by 2% and in 2017 they business has shown huge addition to the
profit by adding 6% up to 46.03%. From the analysis it is also figure out that cost of revenue has
deceased in there following year helping Samsung to enlarge its business and maximise overall
profitability. The examination of financial statements of company it was also observed that entire
assets for company had also raised by 23.63% between year 2014-17. The value of total assets
in year 2017 were 3,01,75,21,00,000 as compared to the 2,30,42,29,58,000 in year 2014.
Thus, it is stated that Samsung has shows continuous improvement in profit, revenue and
assets that help them to survive in better manner and attain competitive advantages.
Ratio analysis:
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
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Financial Leverage 1.42 1.4 1.41 1.46
Debt/Equity - 0.01 0.01 0.01
From the above calculated ratios, it is extracted that overall financial strength of company
is good and Samsung is earning huge profit in the following year. The liquidity ratios has been
calculated and evaluated which includes current and quick ratio that support to analysed the
financial strength and make effective decision for the better growth and financial stability.
Different ratios like profitability in which gross profit and operation ratios are calculated,
solvency ration that includes debt-equity ratio, financial leverage etc. As per the outcome current
it has been interpreted that gross profit ratio of Samsung has increased in each year from 37.85%
to 46% in 2017 that shows company have performed better operation and able to expand
business and gain more profit. Similarly the operating ratio for company also shows
improvement such as it increased from 12.1% in 2014 to 22.4% after four years. But the EPS of
the receptive company in the year 2014 was 30.61 that reduces to 25.26 in year 2015. Later on it
keeps on increasing by a specific ratio as it become 59.97 in 2017 that is maximum for the era.
It was also observed that present proportion of the organization has been expanding persistently
from the year 2014 yet it expired in the year 2017 in contrast with year 2016 and wound up 2.19
in the year. The Debt-value proportion of the organization is predictable in consistently which is
0.1.
Overview Apple:
Apple Inc. is an American company founded by Steve jobs, Steve Wozniak, Ronald
Wayne in the year 1976. the organization has its headquarters located at Cupertino, California,
U.S. The company is engaged in the designing, developing, producing, manufacturing as well as
selling the mobile and media devices, networking solutions, other party applications, consumer
electronics and various software. Such organization provides its services in international market
to various countries. Various hardware products of such company includes the iPad tablet
computer, the Apple digital TV media player, Mac personal computer, HomePod smart speaker,
Apple watch smartwatch, iPhone smart phone, iPod portable media player and many more. The
software services includes iTunes media player, macOS and iOS operating systems, Logic Pro,
iLife and iWork creativity, Safari web browser and distinct professional applications. The online
services of Apple includes iCloud, iTunes Store, Apple music, Mac App store. It provides wide
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range of accessories, various supporting offerings also to its customers. Apple sells its products
through their self-made retail stores all over the world.
Ratio Analysis of Apple:
Liquidity/
Financial Health 2014-09 2015-09 2016-09 2017-09 Latest Qtr
Current Ratio 1.08 1.11 1.35 1.28 1.45
Debt/Equity 0.26 0.45 0.59 0.73 0.8
As per outcomes of these ratio it is clear that overall net profit generation position of the
organisation improves during the year 2014 to 2018 (21.61% to 22.85%). However during year
2016 net profit margin dropped to 21.16% and further it has been declined more in 2017 to
21.09%.
Company’s olvency ratios presents that Debt to equity ratio was .26 in year 2014 which
increased to 0.45 in year 2015 and further it has been analysed that it increased every year. Due
to such increase this ratio is increased to 0.59 in 2016 and 0.73 in the year 2017. This analysis
indicates that debt fund of organisation is continuously increasing year per year creating
unfavourable condition for company.
liquidity ratios of company points out that company's current ratio in the year 2014 was
1.08 which increased to 1.11 in year 2015, 1.35 in 2016 and dropped to 1.28 in the year 2017
which indicates that company's ability of payments of short term obligations is improved every
year and but only decreased in year 2017.
TASK 1(B)
SWOT Analysis of Samsung:
Strength and weakness analysis of an organisation is done to identify various strengths and
weaknesses that is possessed internally in an organisation (De Coning, Goosen and Smit, 2012).
These helps in pre identifying of strengths that can be turned in opportunities in long run.
Strengths, weakness, opportunities and threats of Samsung are as follows-
Strengths:
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 Samsung is one of the largest and settled electronic products manufacturer. It
manufacturers variety of products such as TV, Earphones, Wireless gadgets, LCD panels,
mobile phones, Stereos and smartphones.
 Samsung has become a market leader by capturing 21.4% of the world's electrical and
mobile market.
 Samsung has a vital supply and manufacturing chain across the world.
Weaknesses:
 Samsung is severely dependent upon electronics sales for different customers in markets
with inadequate possible growth like United States and Europe for much of its revenue
(Guangrong and Enyan, 2011).
 Samsung use the google android open source operating system in its devices and systems.
Various customers seen to view machine as an inferior product to Apple IOS.
 Marketing efforts of Samsung are not as cultured as Apple.
Opportunities:
 Market of latest gadgets and the smartphones are higher in developing countries like
china, India with larger customer market.
 Growing middle class in developing world will increase market for consumer electronics.
 New technologies are adopted to to boost sales and market image of organisation is
improved.
Threats:
 Intense price competition in the market (Hockerts, Mair and Robinson, 2010).
 Apple could enter in more consumers products that are provided by Samsung that will
leads to reduction in the market share of Samsung and revenue of the company will fall
down.
 Apple has emerged as the dominant smartphone and tablet brand in some markets and
that leads other brands in threat of high competition.
SWOT analysis: It is a strategic tool which is used by managers of the organisations to
determine all its strengths, weaknesses, opportunities and threats. It can help to form appropriate
decisions for the betterment of the company. Apple is large brand which is supplying its services
all around the world. SWOT analysis of the business entity is as follows:
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Strengths: These are the strong points that helps Apple to sustain in the market and
achieve competitive advantage. All the strengths of the company are as follows:
 The organisation have a good brand image in the market that helps it to be on the top of
its industry.
 Larger market share is being captured by Apple which helps it to retain its customers for
long period (Hodgetts and Kuratko, 2013).
 Profit margins of the company are high that helps it to maintain its liquidity.
 Apple is concerned with innovation which is beneficial for it as it helps the business
entity to be the market leader.
 It has an ability to design and develop hardware and software by it self which is a great
achievement for the company.
Weaknesses: All the negative aspects that may affect profitability, productivity and
market image are considered as weaknesses. All of them for Apple are as follows:
 The distribution network of Apple is limited which affects its market share and its
business in geographic locations.
 The selling price of the products of Apple is very high and the the people who belongs to
lower class are not able to buy the items offered by the company.
 The organisation depends upon the sales of high end market segments.
 Apple is not shareholder friendly organisation as various types of disputes regarding
dividend have been recorded by the media.
Opportunities: All the changes that could be grabbed by the organisation and could be
used in future for purpose of organisational development are called opportunities. All of them for
Apple are as follows:
 As the customers of Apple so that organisation may expand its business in more locations
and enhance its distribution channel (Qiang, Yanfu and Jian, 2014).
 Apple has good market image which can help it to overcome all its weaknesses by
finding appropriate solutions for them.
 The organisation is going to launch Apple TV in the market which is a great opportunity
to capture large market area.
Threats: All the negative aspects that may affect Apple in future are the threats. All of
them are as follows:
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 There are various competitors which are willing to capture market share of Apple.
 As the product price of Apple is very high which may leave negative impact upon its
customers.
Conclusion
By analysing strengths, weaknesses, opportunities, threats, financial statements of
Samsung and Apple it has been concluded that the position of Samsung is much better then
Apple because its product range is broad and it has great pricing policies. As the products offered
by Apple are very costly but Samsung offer every type of products higher as well as lower prices
items that states that it has good position.
TASK 2
2.1 Critical analysis of CSR sections over the last couple of years
CSR considered as a business method that pays to sustainable expansion by contributing
towards social welfare by various business organisations (Qijing, 2013). CSR policies are
adopted in Samsung to figure a society where society, community and the environment in
concord. Core focus areas of the company in respect to CSR are as follows-
Education: A low level of education leads to unskilled labours in business that make it
difficult to improve efficiency and productivity of business organisation. Samsung believes in
education and innovation that is being created For better learning and growth in education sector.
this organisation make partnership with government in establishing schools and to train
employees minimum training of 78 hours is provided.
Employability: Unemployment has been one of the biggest challenge plaguing each
economy over the world (Sonfield and Lussier, 2017). Shortage of skilled labours that are
required to perform various activities is faced by each business organisation. For this Samsung
Technical Schools are established by company to assist the youth of today in designing the
future.
Health and medical care: Diseases are increasing day by day and together with this as
technology is growing there is chances of health diseases and uncertain accidents are increasing
at workplace. Samsung is continuously attempting to secure business environment and health
and safety precautions are taken by company for its employees. Together with this to care and
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maintain healthy environment blood donation camps are organised by Samsung to provide
required blood to cure various individuals.
Sports: Samsung is engaged with scope of games including household and global
challenge gatherings and competitors. Samsung has its origin all inclusive added to the headway
of games culture and finding and developing games gifted HR consistently. Various games at
international and national level and their athletes are sponsored by organisation so that country
can grow in each field (Xinchun and Wenzhuo, 2016).
Results of this CSR:
 Samsung Tech Institute provides benefits to 39,659 beneficiaries.
 Samsung SMART school is attended by 224753 students.
 Average number of Samsung employee volunteering hours to 11.3 hours.
 Samsung career consulting centre is used by 5500 people.
Apple CSR programs and Initiatives
CSR programs and initiatives are led by Lisa Jackson, Vice President of Environmental
Initiatives, reporting directly to CEO Tim Cook in Apple organisation.
Support to local communities:
 A program named as “Global Volunteer Program” was launched in 2011 to encourage
employees to volunteer in local communities. For this launch more then USD 78 billion
is donated by Apple.
 The program was revised in the year 2015 that provides employees an opportunity to
choose the project in which they wants to contribute.
Labour and Human Rights:
 Apple has attained an regular 95 percent acquiescence amongst suppliers to have
maximum 60 hours workweek (Zahra and Covin, 2015.).
 The company has helped labours to get reimbursement of “External bond workers USD
3.9 million in extreme charges rewarded to effort advisors”.
Employee health and safety:
 A 18 month programme is launched by Apple to emphasise health and safety within the
organisation during the sphere.
 Research has been conducted in Apple's ergonomics department on about 75 jobs within
supply chain to identify ergonomic risk.
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Gender Equality and Minorities:
 Apple employees are 32 percent female, 9 percent black and 12 percent Hispanic. When
information from the past year data is gathered then it can be seen that there is 37 percent
of women's are hired in the company in the last 12 months. Out of the U.S. Workforce of
80000 employees, 27 percent belongs to minority group.
 As Tim Cook is the openly gay ECO of a Affluence 500 company has been acclaimed as
a stout victor of the labour force variety (Zahra, 2016).
Water Consumption:
 Organisation introduced Clean Water Program in 2013 to provide water supply to 8
billion of the water saved by suppliers.
 In 2015 the company converted about 120000 square feet of previously grass laws to
drought-tolerant landscape that saves water of up to 6 million gallons per year (Zahra,
2014).
CONCLUSION
From the above financial analysis report, it has been concluded that proper analyses of
financial resources and statements support company to figure out total productivity and
profitability within an specific period of time. The project is based on analysis of Apple and
Samsung to find out the actual stability and sustainability in an accounting year. With the proper
use of tools such as ratio analysis, financial statements analysis overall financial conditions and
status is disused. In addition, for analyses it is concluded that Samsung have better financial
status than Apple because profit for companies are increasing continuously. Corporate social
responsibility is also discussed of both company that demonstrate the social responsibilities of
these companies towards employees and society.
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REFERENCES
Books and Journals:
Online
About Samsung. 2019. [Online] Available Through:
<https://www.britannica.com/topic/Samsung-Electronics>
About Apple. 2019. [Online] Available Through:
<https://www.britannica.com/topic/Apple-Inc>
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