Financial Data and Strategic Decision Making for Samsung PLC

Task 1 – Financial Data and Strategic Decision Making
Q1: An evaluation of the sources of financial data which can be used to inform
business strategy.
A business generally has different objectives to work in a market. The main objective is to make
money and be profitable to sustain in the marketplace. The business earns to pay its bills and invest
these funds to earn a return (Bongomin and et.al., 2018). There are different sources of financial
information which is required to be taken into account before formulating the strategies for the
business. The financial performance of the business is summarised in the three main financial
statements which are Balance sheet, Income Statement and the Cash Flow statements. Three of
these statements provides all the necessary information related to finance of the business to the
different users of this information. Following is the detailed evaluation of these financial statements:
Balance Sheet or the Statement of Financial position:
The balance sheet refers to the statement which clarifies the financial position of the business. This
provides information to the users about what the business owns as in its assets and what the
business is obliged to pay as to their liabilities with the net worth which is the owner's equity. The
assets of the business are bifurcated into two types, current and non-current assets. Current assets of
the refers to those assets which can be easily converted into cash (Chiu and Lee, 2020). The non-
current assets of the business include the long term assets which gives return to the business for a
long period of time.
Income Statement or statement of profit and loss:
Income statement of the business shows different incomes and expenses which are covered by the
business in the period of its operations (Craja, Kim and Lessmann, 2020). It shows the net profit or
loss the business has earned or incurred in the business due to these incomes and expenses.
Cash flow statement:
The statement of cash flows highlights the ways and from/ in all the activities where the cash of the
business is inflowing or out flowing in/from the business (Grody, 2018). This information it is ascertain
if the business has net inflow or net outflow of cash in the given period of time.
Q2: An assessment of the need for financial data and information in relation to the
formulation of business strategy.
The financial data is necessary in the business to provide different important information related to the
financial position, cash flows and the performance of the business to the different users of the
financial information. This set of data helps the different users of the financial information to take
decisions which are related to the business (Hussain and Siemiatycki, 2018). The company's
revenue, expenses, profitability and the ability to meet its short term and long term financial
obligations shows the financial performance of the business. Different users of financial information

are investors, management, creditors, directors, shareholders, and many more uses this data to
analyse the fiscal performance of the company.
Q3: An analysis of the risks related to financial business decisions.
The financial risk refers to the danger that may arise in the business that might put a threat on the
financial position of the business. The financial risk for Samsung is discussed below with the help of
ratio analysis of the last two accounting year (Martinez, Scherger and Guercio, 2018). Any business
uses different tools to assess the risks that are associated with the operations of the business. There
can be enormous risks which a business may face. Some of these risks are, financial risks,
operational risks, liquidity risks, legal risks, equity risks. The credit risk arises when the business has
borrowed funds from the investors and the liquidity of the business has tarnished. The ability of the
business to repay the loans may be affected. The external factors of the business affects and puts
different risks in the business which pose a real threat on the working of the business. A detailed
PESTLE analysis is beneficial for the business to determine the degree with which the business may
be affected by these external forces.
Q4: A review of methods that can be used for appraising strategic capital
expenditure projects and strategic direction.
Following are the methods for making strategic decisions for appraising capital expenditure:
Payback Period: The payback period analysis refers to the time which is taken by the project or the
investment to return back the investment which was initially made by the business. It shows in how
much years the business will achieve the cost of investment which was made. Lower the Payback is,
more viable the project becomes for the business (Opperman and Adjasi, 2019).
Net present value technique: this technique refers to the present value of the cash inflows that will be
received in the future by the business over a period of time. This helps the business estimate the cash
flows and their value in the current times. Higher the NPV is, more viable the project becomes for the
business.
Task 2 – Discussion Paper
Q1: An interpretation of the financial statements of Samsung PLC to assess the
current viability of the organisation.
Interpretation of Balance Sheet or Statement of Financial Position of Samsung PLC:
The balance sheet refers to the statement which clarifies the financial position of the business. This
provides information to the users about what the business owns as in its assets and what the
business is obliged to pay as to their liabilities with the net worth which is the owner's equity. The
assets of the business are bifurcated into two types, current and non-current assets. Current assets of
the refers to those assets which can be easily converted into cash (Chiu and Lee, 2020). The non-
current assets of the business include the long term assets which gives return to the business for a

long period of time. The total assets of Samsung plc as on 31st December 2020 were, $ 320,414,624.
Liabilities of the business are also divided into two categories, current and non-current assets. The
current liabilities are required by the business to pay back within a short period of time but the non-
current liabilities of the business put pressure on the business for a long period of time. The total
liabilities of Samsung Plc are $ 86,650,926. The difference of these two is the owner's equity which is
$ 233,763,698 for Samsung plc.
Interpretation of Statement of profit and loss or Income Statement of Samsung PLC:
Income statement of the business shows different incomes and expenses which are covered by the
business in the period of its operations (Craja, Kim and Lessmann, 2020). It shows the net profit or
loss the business has earned or incurred in the business due to these incomes and expenses. The
expenses of Samsung plc fall into different categories like production of different items, research and
development costs for different technologies etc. The net profit earned by Samsung in the year 2020
is $ 22,370,853.
Interpretation of Statement of Cash Flow of Samsung PLC:
The statement of cash flows highlights the ways and from/ in all the activities where the cash of the
business is inflowing or out flowing in/from the business (Grody, 2018). This information it is ascertain
if the business has net inflow or net outflow of cash in the given period of time. The net inflow in
Samsung plc in the year 2020 is $ 2,114,926.
Q2: A comparative analysis of financial data using ratio analysis for Samsung PLC.
You are advised to download consecutive year’s accounts from the Samsung PLC
website.
LIQUIDITY RATIO
Current Ratio = Current Assets ÷ Current Liability
2.621748305 = 167914259 ÷ 64046674
* Ability To satisfy short term needs is 2.621748305
Quick Ratio = (Current Assets – Inventory) ÷ Current Liability
2.197921566 = (167914259 – 27144693) ÷ 64046674
* Ability To satisfy short term needs Or Liability After Excluding the lest Liquid Assets Is 2.197921566
ACTIVITY RATIO
Inventory Turnover Ratio = Cost of goods sold ÷ Inventory
4.5 = 122400294 ÷ 27144693
* Number Of Time In Which The company can finish The Inventory Cycle Which Is Purchasing The
Raw Material And Producing The Product And Selling It Is 4.5 Times Per Year.
Average Age Of Inventory = The number of days Per year ÷ Inventory Turnover Ratio

81 = 365 ÷ 4.5
* Each Inventory Cycle Needs Almost 81 Days Per Year
Average Collection Period = Account Receivable ÷ Average sales Per day
53 = }(26231413 + 3053511) ÷ (200606179 ÷ 365) {
* Company Needs Almost 53 days To collect Account Receivable Per Year
Total Assets Turnover Ratio = Sales ÷ Total Assets
0.626083094 = 200606179 ÷ 320414624
* Ability Of Assets To Generate Sales is 0.626083094
DEBT RATIO
Debt Ratio = Total liability ÷ Total Assets
0.270433743 = 86650926 ÷ 320414624
* Percentage Of Assets Financed By Debt is 0.270433743
PROFITABILITY RATIO
Gross Profit Margin = Gross profit ÷ Sales
0.389847837 = 78205885 ÷ 200606179
Operating Profit Margin = Operating Profit ÷ Sales
0.015201291 = 3049473 ÷ 200606179
Net Profit Margin = Net Profit ÷ Sales
0.110177688 = 22102325 ÷ 200606179
(B)
FINANCIAL RATIO EQUATION Which is
biter 2020 2019 2018
Liquidity Ratio
Current Ratio Current Assets ÷ Current
Liability higher 2.622 2.844 2.529