Detailed Financial Analysis and CSR Assessment: Samsung & Apple

This report provides a comprehensive comparative financial analysis of Samsung Ltd and Apple Inc., two prominent technology companies. The analysis encompasses a detailed examination of their financial positions and performances over a four-year period, utilizing vertical and horizontal analyses. Key financial ratios, including profitability (gross profit margin, net profit margin), liquidity (current ratio, acid-test ratio), efficiency (inventory turnover ratio, assets turnover ratio), and solvency (debt-equity ratio), are computed and interpreted to assess the financial health and operational effectiveness of both companies. Furthermore, the report includes an assessment of the Corporate Social Responsibility (CSR) sections of both organizations, highlighting their initiatives and contributions to societal and environmental sustainability. The findings offer valuable insights into the financial strategies, market positions, and CSR commitments of Samsung and Apple, providing a holistic view of their business operations and performance.

Financial Analysis
Management & Enterprise

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. Comparative analysis of companies financial position and performance..........................1
2. Assessing CSR sections of organisation and outlining findings......................................33
CONCLUSION..............................................................................................................................34
REFERENCES..............................................................................................................................35

INTRODUCTION
Financial information plays crucial role in the business as management takes better
decisions by effectively analysing it and stakeholders are also benefited. Present report deals
with Samsung Ltd and Apple Inc. which are engaged in technology sector and producing profits.
Financial ratios are computed to show performance of both firms in the market. Along with it,
vertical and horizontal analysis are also outlined for last four years. CSR section for two
companies in last two years is highlighted. Hence, it can be said that overall financial
performance is evaluated for organisations.
1. Comparative analysis of companies financial position and performance
Vertical Analysis of Samsung Ltd – Refer to Appendix 1
Horizontal Analysis of Samsung Ltd Refer to Appendix
Vertical Analysis of Apple Inc. – Refer to Appendix 2
Horizontal Analysis of Apple Inc. – Refer to Appendix
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Illustration 1: Gross profit ratio
Illustration 2: Net profit ratio
Interpretation:
The profitability aspect of the business is required to be assessed so as to carry out
whether firm is performing well or not. In order to arrive at profitable situation, profitability
ratios are computed for both Samsung Ltd and Apple Inc. for last four years. It can be analysed
that gross profit margin of Apple Inc. in 2014 was 0.38 maximised to 0.40 in next year. This
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shows that firm had been successful in controlling costs incurred on manufacturing its products.
It is evident from the fact that operational expenses have been reduced which has provided
increment in gross profit in effectual manner. While, in 2016, figure was decreased to 0.39 and
further more to 0.38 in recent period. It is required that company should try to minimise
expenditures for attaining better profits in the future course of action.
On the other hand, Samsung Ltd had 0.37 in 2014. The trend increased as it reached to
0.38 and 0.40 in next consecutive years. Financial year 2017 was more fruitful because 0.46 of
ratio was attained which is incredible for the company as it sales are maximised and efforts are
provided in order to reduce all expenses incurred on meeting operational requirements. On the
other hand, net profit margin is also calculated which is further extension of above computed
ratio. Net profit after deducting all of operational and non-operational expenses is arrived which
is divided by sales revenue. It can be said that net profit should be increased by minimising
expenses, thereby, beneficial for organisation. Net profit ratio of Apple Inc. was 0.21 in earlier
year i.e. 2014 and elevated to 0.22 in 2015. Moreover, it again decreased to 0.21 in 2016 and
2017 years. On the other side, Samsung Ltd had 0.11 in 2014 which further minimised to 0.09
showing that costs are not handled in effective manner so as to maximise net income. On
contrary to this, 0.17 is attained in 2017 highlighting that firm has reduced costs helping to earn
more profits.
Profitability ratios provides clarity regarding financial health of company in terms of
earnings. Apple Inc. and Samsung Ltd are both giants in Hi-Tech sector and customer's base is
also large. It becomes necessary to perform well so that good quantum of profits can be
achieved. It can be assessed that gross margin of Apple Inc. was not good in comparison to
Samsung Ltd. While, in net profit ratio, Samsung Ltd has low performance with respect to other
firm. Hence, overall performance of Apple Inc. is good as net margin is high. However, its' rival
is performing well as net margin is increased in 2017. Thus, profitability aspect of firm should be
enhanced in a better way by which it may be able to conquer over market share and provide
higher level of satisfaction to customers to make them loyal towards brand.
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Illustration 3: Current ratio
Illustration 4: Acid-Test ratio
Interpretation:
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Liquidity ratios are another crucial way to analyse liquidity position of company in the
best possible manner. Basically, current assets should be more in quantum than current liabilities
so that firm can easily pay off without any difficulties. Current assets are those which can be
easily converted in the form of cash and as such, it is required that firm may initiate proper
control over it so that current obligations can be paid within stipulated time. Current ratio of
Apple Inc. in 2014 was 1.08 which maximised to 1.11 in 2015. It reached to 1.35 in 2016 and
again declined to 1.27 in next year. This clearly shows that firm will face difficulties in making
out payments of short-term basis. On the other side, Samsung Ltd had 2.23 current ratio in 2014
increased to 2.47 in 2015. It further maximised to 2.58 in 2016. However, decreased to 2.18 in
2017. It can be said that firm has good ratio as it is more than ideal ratio of 2 : 1.
Acid-Test ratio is also calculated which means whether from liquid assets, current
liabilities can be met or not. Inventory and prepaid expense is deducted from it to get extreme
current assets or liquid assets. Samsung Ltd had acid-test ratio of 1.81 in 2014, increased to 2.03
in 2015 and further to 2.18 in 2016. However, it decreased in 2017 to 1.75. The ideal acid-test
ratio is considered to be 1 : 1 means that for current asset, current liability is available. Samsung
Ltd has better ratio which is more than standard one. Furthermore, ratio of Apple Inc. was 1.04
in 2014, maximised to 1.07 and 1.32 in consecutive years. It reduced to 1.22 in 2017 which
shows that company has also good liquidity position as it will be able to pay liabilities from
liquid assets in the best possible manner. Current ratio of Apple Inc. is low and is required that
current assets should be converted into cash on quick basis so as to pay off obligations.
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Illustration 5: Inventory Turnover ratio
Illustration 6: Asset Turnover ratio
Interpretation:
Efficiency ratios are computed for last four years for Samsung Ltd and Apple Inc. It
provides clarity whether firm is generating sales by effectively using resources in a better way.
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This is essentially required so that firm's performance was better or not in attaining efficiency for
maximising sales. Inventory turnover ratio of Samsung Ltd was 7.1 in the financial year 2014
and decreased to 6.7 in 2015. It further decreased to 5.47 and 5.17 in 2016 and 2017. Inventory
turnover ratio of Apple Inc. was 50.33 in 2014 and increased to 62.52 in 2015. However, it
reduced to 37.6 in 2016 and further reduction was observed in 2017 to 29.05 (Apple Inc annual
reports. 2017). This highlights that stock is effectively used by both the organisations in
generating sales in the best possible manner. Ideal stock turnover ratio is as such nothing but fast
usage of inventory should be there in generating sales. This shows that organisation is able to
produce more and effectively sales revenue is increased.
Assets turnover ratio of Apple Inc. was 0.69 and increased to 0.76 in 2014 and 2015.
However, it decreased to 0.61 in 2016 and remained constant in next year. This means that ratio
is being reduced and shows that firm is not properly using assets in producing sales revenue. On
the other hand, Samsung Ltd had ratio of 0.87 in 2014 which decreased to 0.80 in 2015. It
decreased to 0.70 and further increased to 0.79. This means that firm is performing well to
produce sales as assets turnover ratio is maximised. Collectively, Samsung Ltd has good
performance because assets are utilised by it in appropriate manner.
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