Analyzing Creative Accounting and Cash Flow: Samsung Case Study Report

This report examines the impact of creative accounting techniques and cash flow management on strategic decision-making, using Samsung as a case study. It explores how practices like "smoke and mirrors" affect financial statements and investment strategies, particularly regarding capital expenditure. The report analyzes the limitations of ratio analysis and recommends techniques like ratio evaluation and cash flow management to aid decision-making. The analysis covers financial statements, investment, and the impact of creative accounting on long-term objectives. The report highlights the importance of accurate financial reporting and its influence on strategic choices, including capital budgeting and investment decisions. The conclusion emphasizes the significance of these techniques for effective financial management and strategic planning within organizations like Samsung.

Impact of 'Creative Accounting' Techniques when making strategic decisions
Creative Investment banking is primarily concerned with those management practices that
attempted to buy politicians in economic laws in order to win favour in the sight of their
stakeholders in a false way. Within this restraint one of the influential techniques is recognised as '
Smoke and mirrors'. This method involves presenting and communicating of economic data in a
way that creates an appealing picture of the business. The strategic decision connects with the
capital budgeting with a reason of buy new asset or regenerate the present one. The management of
Samsung focus on the current and past final accounts that provides early feedback as per the
performance effectively. If in the report consist of inflated or influence amounts so may outcomes
come in wrong way regarding to future cash flow. It may become reason for Samsung to incur
potentially heavy losses for longer period as per the business orientation and also focus on the
formation of unreliable objectives for future financial periods to acquire their present objectives.
Limitations of Ratio Analysis as a tool for strategic decision-making
After analysing different types of ratio which connect to liquidity, profitability and leverage ratios
between others that support for important insight in the context of several functional units by a
business manager. With regard Samsung Plc, there are arsing many limitations such as:
 Through ratio analysis only getting numerical figures that cannot provide cautions factors.
Hence, Samsung bring out extra investigation to find out some causes for cover strategic
decision making practices.
 It is one of the methodology to determine company's financial statements for drawing
intervention. Entirely focusing on these principles can aspects in Samsung's business
executives providing a portion of data for choice-making purposes.
Importance of Cash Flow Management when evaluating proposals for capital expenditure
Basically, cash flow management is about identifying cash through a extensive analysis of its
origins and implementation. To determine proposals of Capital expenditure, the particular field
support to detailed break up of operating, investing and financial activities cover in the business. In
respect of Samsung Plc, in 2018 the business had highest capital expenditure (CAPEX) amount
$3.9 million on quarterly basis to provide investment facility. Therefore, the price was flake down
by 60% in 2019 for Q1 to intermediate provides at the time of bust stage. Such a proposition would
consist of evaluation of present and preceding year's financial statements and also extra data linked
to long term plans and their different sections. After determining its cash flow accounts, Samsung's
leadership could assess the sustainability and effectiveness of multiple suggestions with the help
of, amongst others, the implementation of methods such as Net Present Value (NPV) and Payback
Period.
Recommendations and Justifications
It is recommended that in the framework of Samsung PLC, different techniques like Ratio
Evaluation and Cash Flow Management allow the top management to create decisions promptly.
The justification is that the use of such instruments is the capacity to include a coherent and
unequivocal summary of all operations. Through their jobs, the business manager of Samsung will
be able to absolute that in a shorter span of time because they would not be had to stare at every
other variation to obtain data about a specific region that needs to be determine.
FINANCE FOR STRATEGIC MANAGERS