Financial Analysis

Running Head: FINANCIAL ANALYSIS 1
FINANCILA ANALYSIS

FINANCIAL ANALYSIS 2
Table of Contents
PART 1........................................................................................................................ 3
Part 2.......................................................................................................................... 5
References................................................................................................................. 7

FINANCIAL ANALYSIS 3
PART 1
Cash conversion cycle
A) The cash conversion cycle is a metric that expresses the time, taken by the company in
converting its inventory, accounts receivables and the accounts payables into the cash.
The cash conversion cycle is also known as the net operating cycle and it attempts to
measure how the value of each dollar is tied up into the cash received. This scenario also
determines how effectively it can manage the working capital and its operations
effectively. After analyzing the cash conversion cycle of Apple and Samsung it can be
stated that the cash conversion cycle of Apple stood at the days of 53 in number for the
financial year 2015. In contrast to the Samsung’s cash conversion cycle it’s was higher
than the Apple and was close to 78 days (Forbes, 2018).
The above situation has been landed because of the following reasons. Apple has a
sizable operation channel via the cash and credit card for the large of the percentage of
sales. In this case the days of the sales outstanding are reduced. Samsung on the other
hand are also dependent on the consumer distributors who hardly require the credit
period. The inventory turnover of Apple is much quicker which is likely driven by its
effective planning in order to streamline the product. Samsung on the other hand offers a
wide range of the products which require huge cash and the inventory. Apple appears to
be the best negotiator at the terms of the credit and the same has been low in case of the
Samsung it sources low in the volume and products are different with each other.
Moreover the life cycle of the Apple is relatively long thereby making the businesses
more valuable to the vendors (Apple Inc, 2018).