Financial Analysis: Comparative Study of Apple and Samsung Companies

This report conducts a comprehensive financial analysis comparing Apple and Samsung. It examines financial statements, including income statements and balance sheets, employing both horizontal and vertical analysis techniques. The study delves into ratio analysis, covering profitability, liquidity, solvency, efficiency, and investment ratios to assess each company's financial health and performance. Furthermore, it includes an analysis of corporate social responsibility (CSR) sections for both companies over several years. The analysis provides detailed interpretations of the financial data, offering insights into the strengths and weaknesses of each company, and concludes with a comparative assessment to determine which company demonstrates stronger financial stability. This analysis is designed to provide a clear understanding of the financial positions of Apple and Samsung.

Financial Analysis
Management &
Entrepreneurship- FAME

INTRODUCTION
Financial management is the process of planning, organising, controlling and monitoring the
financial resources efficiently to achieve an organisational objective and helps in business decision
making.
Present study is based on the company named Apple and Samsung which deals in variety pf
products as Apple as a multinational technology company which develops, designs, and sells the
consumer electronics which holds a strong brand value and Samsung is a south korean
multinational company. It comprising several businesses and are united under the Samsung brand.
This company also deals in electronic products .
Further, it will include the comparison of the financial statements of both the companies and
explanation of the company which is more financially strong through comparing the ratio analysis,
income statement and vertical and horizontal analysis of balance sheet. Analysis of the corporate
social responsibility sections of couple of years is also included in the report.
Ratio analysis of apple
Ratio analysis of apple
Profitability ratio analysis
GP ratio
Years Formula Apple Samsung
Gross profit / net
sales * 100
2014 38.59%
2015 40.06%
1

2016 39.08%
2017 38.47%
Interpretation:
NP ratio
Years Formula Apple Samsung
Net profit / net sales
* 100
2014 21.61%
2015 22.85%
2016 21.19%
2017 21.09%
Interpretation:
Liquidity ratio analysis
Current ratio
Years Formula Apple Samsung
Current assets /
current liabilities
2014 1.08
2015 1.11
2

2016 1.35
2017 1.28
Interpretation:
Quick ratio:
Years Formula Apple Samsung
Current assets -
(stock + prepaid
expenses)
2014 1.05
2015 1.08
2016 1.33
2017 1.23
Interpretation:
Solvency ratio analysis
Years Formula Apple Samsung
Long-term debt / shareholders’
equity
3

2014 0.26
2015 0.45
2016 0.59
2017 0.73
Interpretation:
Efficiency ratio analysis
Years Formula Apple Samsung
Long-term debt / shareholders’
equity
2014 53.18
2015 62.82
2016 58.64
2017 40.37
Interpretation:
Total assets turnover ratio
Years Formula Apple Samsung
2014 0.79
2015 0.89
4

2016 0.70
2017 0.66
Interpretation:
Fixed assets turnover ratio
Years Formula Apple Samsung
2014 1.12
2015 1.28
2016 1.04
2017 .99
Interpretation:
Investment ratios
Earnings per share
Years Formula Apple Samsung
(Net income - preferred dividend) /
Number of shares outstanding
2014 6.45
2015 9.22
2016 8.31
2017 9.21
5

Interpretation:
Dividends per share
Years Formula Apple Samsung
Annual dividends / Number of
shares
2014 1.81
2015 1.98
2016 2.18
2017 2.40
Vertical analysis of samsung
Particulars 2017
% of
Sales 2016 % of Sales 2015
% of
Sales 2014
% of
Sales
Sales
Revenue 211811887 100.00% 174047940 100.00%
177365
404
100.00
%
18227
3479
100.00
%
Gross profit 97504234 46.03% 70345428 40.42%
682147
65
38.46
%
68882
866
37.79
%
Operating
profit 47428316 22.39% 25211080 14.49%
233478
67
13.16
%
22120
631
12.14
%
Profit 37297884 17.61% 19594260 11.26%
168480
02 9.50%
20679
181
11.35
%
6

Horizontal analysis of samsung
Particu
lars 2017
%
change
in 2017
2016
%
change in
2016
2015 % change
in 2015 2014
Sales
Revenu
e
211811887 21.70% 1740479
40 -1.87% 17736
5404 -2.69% 1822734
79
Gross
profit 97504234 38.61% 7034542
8 3.12% 68214
765 -0.97% 6888286
6
Operati
ng
profit
47428316 88.12% 2521108
0 7.98% 23347
867 5.55% 2212063
1
Profit 37297884 90.35% 1959426
0 16.30% 16848
002 -18.53% 2067918
1
2.
CSR report of Apple
The CSR report of apple includes about tey various programmes and initiatives which
they planning to launch for benefiting the different sections of the society in different fields.
some programmes planned by apple are :-
Apple supporting Local communities-
 This is the program in which Apple encouraged their employees to support and volunteer
local communities. They provide charities to non profit organisation of around more than
72 billion.
Apple educating and empowering workers
 This program of development is offering free of charge to the 18 factories and more than
2,80,000 workers. They also benefit their employees by providing maternity leave to the
women's for specific period.
Labour and Human rights at Apple
 They enforce the supplier code of conduct which is claimed to be the toughest among
electronic industry(Horizontal or trend analysis of financial statements,2018).
Employee health and safety at Apple
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 Company has launched a 18 months program which aims to improve the health and
safety of the people in industry throughout the globe.
Apple and gender equality and minorities
 The company has reached up to equal pay to the employees in 2016.
 Employees in the Apple are 32% of females, 9% of black, 12% of Hispanic, and in the
last 12 month period 37% of new hires are women (Samsung Corporate Social
Responsibility,2019[)
Energy consumption by Apple
 Apple is praised because for its environmental records which includes reduction in power
consumption of Apple products by 57% and introduction of the word's most efficient
computer Mac mini and also exceeding the Energy Star guidelines. It is the only
company which is been awarded by the clean energy index of 100.
CSR report of Samsung
Samsung's corporate social responsibility programmes and initiatives consist of 14
departments which are related to each other and they handle issue of 10 different areas.Some
programs offered by Samsung are :-
Waste reduction and Recycling by Samsung
 Samsung has collected total of 2.6 million tons of waste since 5-6 years and aiming to
collect 3.8 million tons of waste products by 2020.
 They have applied a total of 34,322 tons of recycled plastics to monitors, washing
machines, earphone cases etc (Accountable Information Disclosure and Clear
Communication,2019)
Employee health and safety at samsung
 They are trying to operate their productions a and operations in safe working conditions
by continuous monitoring and taking initiatives for improvements at workplace.
 Samsung's priority is building heath nad safety management .they also comply with
OHSAS 18001 for occupational health and safety management system on their workplace
across the globe.
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 Company ha organises a emergency scenario for occasions of harmful chemical spills,
natural disasters
Samsung educating and Empowering workers
 Their career consulting centre is used b y 5500 people.
 Training time given to employees in one year is amounted to 78 hours.
 They encourage independence and self reliance among young adults through systematic
vocational education.
Samsung supporting local communities
 They encourage independence and self reliance among young adults through systematic
vocational education.
 Samsung's SMART school have covers the gap in global education by improving
educational environment among the students.
 They opened up the sixth house for hope in the year 2015 to facilitate\te and improve the
conditions of local community child centres.
Samsung Educating and Empowering workers
 Their career consulting centre is used b y 50,000 people.
 Training time given to employees in one year is amounted to 78 hours.
Employee health and safety at Samsung
 Samsung's priority is building heath nad safety management .they also comply with
OHSAS 18001 for occupational health and safety management system on their workplace
across the globe.
 They are trying to operate their productions a and operations in safe working conditions
by continuous monitoring and taking initiatives for improvements at workplace.
 Company ha organises a emergency scenario for occasions of harmful chemical spills,
natural disasters
waste reduction and Recycling by sampling
9

 Samsung has collected total of 2.6 million tons of waste since 5-6 years and aiming to
collect 3.8 million tons of waste products by 2020.
 They have applied a total of 34,322 tons of recycled plastics to monitors, washing
machines, earphone cases etc.
Samsung and sustainable sourcing
 Samsung maintaining a supplier consulting team which focuses on manufacturing
product, quality control and development.
 The company operating a shared growth fund to help in improving the business for the
suppliers who find sit difficult to secure the funding.
Carbon emissions by Samsung
 Under the scope of e co management , and planet first initiative is introduced by Samsung
through which greenhouse emissions were reduced by 70%.
 Company operates in green workplace by making reductions in greenhouse gas emission
and as well as increasing the recycling of wastes in its offices.
The section of corporate social responsibility of both the companies is directed towards
benefiting to local community and the environment, there programmes and initiatives help in
optimum Utilisation of all the natural resources. These programmes are benefiting te people and
community by providing and contributing various services. In addition to this they are
contribution highly towards the environment by reducing wastage and recycling the waste
products which is the major contribution towards the society and environment.
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