Financial Analysis of Samsung and Apple
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Added on 2020-10-23
Financial Analysis of Samsung and Apple
Added on 2020-10-23
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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1...................................................................................................................................2Financial Analysis of Samsung and Apple.............................................................................2Horizontal analysis of Income statement and Balance sheet of Apple and Samsung............8Horizontal analysis of income statement of Apple.................................................................8Horizontal analysis of balance sheet of Apple.......................................................................8Horizontal analysis of income statement of Samsung............................................................8Horizontal analysis of balance sheet of Samsung..................................................................8Vertical analysis of Income statement and Balance sheet of Apple and Samsung................9Vertical analysis on income statement of Apple....................................................................9Vertical analysis on balance sheet of Apple...........................................................................9Vertical analysis on income statement of Samsung...............................................................9Vertical analysis on balance sheet of Samsung......................................................................9TASK 2..........................................................................................................................................10Corporate Social Responsibility...........................................................................................10REFERENCES..............................................................................................................................14APPENDIX....................................................................................................................................16Horizontal analysis of income statement of Apple...............................................................16Horizontal analysis of balance sheet of Apple.....................................................................16Horizontal analysis of income statement of Samsung..........................................................17Horizontal analysis of balance sheet of Samsung................................................................18Vertical analysis on income statement of Apple..................................................................18Vertical analysis on balance sheet of Apple.........................................................................19Vertical analysis on income statement of Samsung.............................................................20Vertical analysis on balance sheet of Samsung....................................................................20
INTRODUCTIONFinancial Analysis is used for improving the profit levels, cash flow of a businessorganisation by analysing whether the business, projects or sub - business is stable, solvent,liquid or profitable and also helpful in achieving the business objectives with the availableresources with the relevant financial information of the business organisation. The report hasincluded the financial analysis of Samsung and Apple Inc. companies from the year 2014 - 2017.The report has discussed the financial position of Samsung and Apple Inc. companies with thehelp of income statement and balance sheet. The report has also included the corporate socialresponsibility topic. Furthermore, the report has defined the activities related to corporate socialresponsibility conducted by Samsung and Apple Inc. companies in different different areas(Williams, E.E. and Dobelman, J.A., 2017).
TASK 1Financial Analysis of Samsung and Apple.Financial Analysis is defined as the process of assessing and evaluating the suitability,profitability, viability, solvency and stability of the business performance, projects and finance-related business entities. It is used in improving profit levels, cash flow of a businessorganisation by analysing whether it is stable, solvent, liquid or profitable helpful in achievingthe business objectives with the available resources with the relevant financial information(Williams, E.E. and Dobelman, J.A., 2017).Profitability ratio analysis Company's profitability depicts financial performance of the company. It represents howprofitable the fund of owner has been used in the company (Sayed, S.S.M. and Sawant, P.H.,2015). Profitability ratio used by company to evaluate ability of company to generate income ascompared to cost and expenses associated during a particular period. The profitability ratioincludes -1. GP ratio = Gross profit / net sales * 100 YearsAppleSamsung201438.59%37.79%201540.06%38.46%201639.08%40.42%201738.47%46.03%It is used to find out operational performance of the company. It shows the relationshipbetween gross profit and net sales. Gross profit is derived by dividing gross profit by net sales. Ifnet sales are given then to arrive at gross profit cost of goods sold are deducted from net profit(Sayed, S.S.M. and Sawant, P.H., 2015). Gross profit of companies should be sufficient to meetout its expenses and higher the ratio higher the profit of the company and vice versa. Of Apple isfixed throughout the years. In Samsung the gross profit was stable till 2016 but it increased at ahigh speed in 2017 because Samsung launched products with new technologies and has
expanded its operations in the market which lead to high customer base and increase in grossprofit.2. NP ratio = Net profit / net sales * 100YearsAppleSamsung201421.61%11.19%201522.85%9.32%201621.19%11.10%201721.09%17.26%When net profit divided by net profit after tax it gives net profit ratio. It includes bothcash and non cash items to calculate the net profit of the company (Sayed, S.S.M. and Sawant,P.H., 2015). Thenet profit of the apple in stable and more than Samsung as it has low operatingexpenses. The cost of I phone is too high which gives it a competitive advantage over Samsungwhereas Samsung do not have economies of scale and is still is a close rival to Apple in contextto smart phones.Liquidity ratio analysis This ratio defines the ability of firm to pay its debt without raising capital from outside means.This ratio depicts the ability to convert assets into cash quickly (Sayed, S.S.M. and Sawant, P.H.,2015).1. Current ratio = Current assets / current liabilitiesYearsAppleSamsung20141.082.2120151.112.4720161.352.5920171.282.19
Current ratio shows the proportion of company's assets to its liabilities. Higher thecurrent ratio better the company's ability to convert its assets into liquid form.Apple's current ratio has been stable but decreased in compared to last year as its ability to paydebt decreased but yet its 1.28 which is a good current ratio. On the other hand Samsung hasmaintained great current ratio which shows that its ability to pay debt is more than that of Apple(Sayed, S.S.M. and Sawant, P.H., 2015).2. Quick ratio = Current assets - (stock + prepaid expenses)YearsAppleSamsung20141.051.7820151.08220161.332.2620171.231.73It is company's short term liquidity position which helps to cover current liabilities.Quick ratio is obtained by dividing quick assets to current liabilities. The quick ratio of Samsungis better in comparison to Apple as Samsung has more quick assets and less current liabilitieswhich helps the company in achieving growth (Sayed, S.S.M. and Sawant, P.H., 2015).Solvency ratio analysis It describes the financial position of company that how much a company is financially sound tomake payments and pay off its long-term obligations in long run (Sayed, S.S.M. and Sawant,P.H., 2015).1. Long term debt to equity ratio = Long-term debt / shareholders’ equityYearsAppleSamsung20140.260.0120150.450.0120160.590.0120170.730.01
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