Financial Management - Samsung Electronics Co Ltd

Added on - 03 Dec 2019

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MANAGING FINANCIAL RESOURCESAND DECISIONS1
Table of ContentsIntroduction................................................................................................................................................3Managing Finance Part 1...........................................................................................................................31.1 Evaluate different sources of finance.........................................................................................31.2 Implications of identified sources...............................................................................................41.3 Appropriate source of finance.....................................................................................................62.1 Assess the costs associated with different sources of finance....................................................62.2 Significance of financial planning..............................................................................................62.3 Information required by different users......................................................................................72.4 Impact of finance on financial statements..................................................................................8MANAGING FINANCE TASK 2.............................................................................................................93.1 Cash, Sales and Production budgets...........................................................................................93.2 Calculation of Unit Costing......................................................................................................103.3 Assessing the viability of investment project...........................................................................114.1 Purpose of financial statements................................................................................................164.2 Formats of different business entities.......................................................................................174.3 Ratio Analysis...........................................................................................................................17CONCLUSION........................................................................................................................................18REFERENCES.........................................................................................................................................192
Index of TablesTable 1: Implications of Sources................................................................................................................6Table 2: Cash Budget...............................................................................................................................10Table 3: Production Budget......................................................................................................................10Table 4: Sales Budget...............................................................................................................................11Table 5: Calculation of unit price.............................................................................................................11Table 6: NPV of Project A........................................................................................................................12Table 7: NPV of Project B........................................................................................................................13Table 8: NPV of Project C........................................................................................................................13Table 9: Payback period of Project A.......................................................................................................14Table 10: Payback period of Project B.....................................................................................................14Table 11: Payback period of Project C.....................................................................................................14Table 12: ARR of Project A.....................................................................................................................15Table 13: ARR of Project B.....................................................................................................................15Table 14: ARR of Project C.....................................................................................................................16Table 15: IRR of Project A.......................................................................................................................16Table 16: IRR of Project B......................................................................................................................16Table 17: IRR of Project C.......................................................................................................................17Table 18: Ratio Analysis of Samsung Electronics Co Ltd.......................................................................183
INTRODUCTIONLooking at the present competitiveness of corporate world it has been identified that, managingavailable resources in an appropriate manner to generate desired results and outcomes. In particular,financial resources play vital role in executing business activities irrespective to the sector. However,these days industry experts rate the success of enterprise on the basis of utilization of financialresources (Burns, Hopper and Yazdifar, 2004). There are several aspects which management has toconsider in the process financial planning such as requirement of funds, economic position, andappropriateness of available resources of funds. In the present report, financial management ofSamsung Electronics Co Ltd has been focused upon and the source required by the company to expandits business for the future contingency. Thereafter, researcher illustrates the major financial statementsand its users for making decisions. Through the help of different appraisal techniques, feasibility offuture investment has been evaluated. Lastly, ratio analysis helps in highlighting the actual economicposition of Samsung Electronics Co Ltd in comparison to past performances and industry standards.MANAGING FINANCE PART 11.1 Evaluate different sources of financeThere are different sources of funds available to the management ofSamsung Electronics CoLtd through the help of which they can raise funds for the expansion of business activities are asfollows:Issue of shares: Listed on Korea exchange (KRX) and London stock exchange (LSE), SamsungElectronics Co Ltd can issue shares and raise adequate amount of funds from the market (Sutter,2006). The main purpose of issuing shares is that, company can involve several investors andthrough these huge funds can be raised and in the form of return, management only has to paydividends whenever firm generates profits.Bank Borrowings: It is also considered as the most common source of fund through the meansof which Samsung Electronics Co Ltd can raise funds. However, it is defined as the debtfinancing in which liability of firm increases. Firm carrying higher reputation in the marketavail wide range of financial institution from which funds can be generated at affordableinterest rates. The main advantage of this source is that, with the brand name of SamsungElectronics Co Ltd and few legal formalities large amount can be raised quickly.Retained earnings: Operating at such a large level it is important for Samsung Electronics CoLtd to maintain the level of retained earnings so that, management can use at the time of future4
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