Financial Reporting Name of the University Authors Note Course ID Task 1: Financial Analysis and Performance

Running head: FINANCIAL REPORTING
Financial Reporting
Name of the Student
Name of the University
Authors Note
Course ID

FINANCIAL REPORTING1
Table of Contents
Task 1: Financial Analysis and Performance.............................................................................2
Company overview:...................................................................................................................2
Ratio Analysis:...........................................................................................................................2
Liquidity Ratios:.........................................................................................................................2
Profitability Ratios:....................................................................................................................3
Efficiency Ratios:.......................................................................................................................4
Capital Structure Ratio:..............................................................................................................4
Investment Ratios:......................................................................................................................5
Cash flow statement analysis:....................................................................................................5
Task 2: Historical cost versus Fair value:..................................................................................7
Introduction:...............................................................................................................................7
Discussion:.................................................................................................................................7
Conclusion:................................................................................................................................9
Reference List:.........................................................................................................................10
Appendix:.................................................................................................................................12
Apple Financial Ratios:............................................................................................................12
Samsung Financial Ratios:.......................................................................................................14

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Task 1: Financial Analysis and Performance
Company overview:
The current report is based on the analysis of the financial position of the electronic
companies operating in the same industry namely Apple and Samsung. Apple is an American
Multinational technology company having its headquarter in Cupertino, California that which
designs, develops and sells consumer electronics devices. Apple is generally known for its
smartphones and tablet computer that witnesses significant growth in revenue and momentum
for the company.
Samsung on the other hand, is a rival company to Apple based in South Korea having
its headquarter in Suwon. It is world’s largest producer of mobile phones and smartphone
with estimated revenue of 1.87 trillion in 2016. The present report would present the financial
performance of the companies through ratios and an additional assessment would be
performed on the statement of cash flow to provide an overview of the selected companies.
Ratio Analysis:
Liquidity Ratios:
Liquidity ratio represents the ratio amid the total assets and the liabilities of a bank or
other institutions (Deegan 2013). Under the liquidity ratios, current ratio is computed for
Apple which stands 1.35 for the year ended 2016. Samsung on the other hand reported
current ratio of 2.59 for the year ended 2016 which is relatively higher than Apple. A higher
current ratio of Samsung can be attributed to the higher amount of cash and cash equivalent
representing a situation where Samsung has the better liquidity position than Apple.
The quick ratio reported by Apple stood 1.05 whereas Samsung reported a quick ratio
of 2.06 for the year ended 2016. A higher quick ratio for Samsung can be attributed to the

FINANCIAL REPORTING3
lower amount of current liabilities in respect of the cash and cash equivalent while Apple
reported a relatively higher current liability that ultimate lead to a lower quick ratio reported
by the company. A higher quick ratio for Samsung represents the company’s is better able to
meet its short term obligations in comparison to Apple. Under the profitability ratio Debt-to-
Worth ratio has been computed for both Samsung and Apple for the financial year of 2016.
The Debt-to-Worth ratio for Apple stood 1.51 for the financial year of 2016 while Samsung
reported a relatively lower debt-to-worth ratio of 0.41 for the same period.
As evident from the analysis a higher debt to worth ratio for Apple is primarily due to
the higher amount of total liabilities reported by the company while Samsung reported a
higher net worth in respect of its total liabilities. A higher debt to worth ratio for Apple
represents that Apple might not be able to derive sufficient amount of cash to meet its debt
obligations whereas a lower debt-to-worth ratio of Samsung indicates the company is not
taking the advantage of the higher profit that financial leverage might bring upon (Williams
2014).
Profitability Ratios:
Profitability ratio are those class of ratios that represents the financial metrics that is
used by the business to assess the ability of the company to generate earnings in comparison
to the expenses (Weil, Schipper and Francis 2013). Under the profitability ratio the gross
margin ratio is computed for both Samsung and Apple for the year 2016. The gross profit
margin for Apple stood 39.08 for the year ended 2016 while Samsung reported a marginally
higher gross profit margin of 40.42 for the year 2016. The industry wide downward pressure
resulted Apple in reporting a lower gross margin ratio than its counterpart Samsung.
While Samsung enjoyed a higher gross margin ratio is primarily due to the increase in
the revenue reported by the company for the year 2016. The net margin ratio on the other