Strategic Finance: Samsung PLC Financial Statement Analysis Report

This report presents a comprehensive financial analysis of Samsung PLC, examining various aspects of its financial performance and strategic decision-making. It begins with an introduction discussing the role of financial data in business strategy and risk analysis. Task 1 delves into profitability, capital efficiency, and solvency ratios, emphasizing the importance of external information from suppliers, government, and customers. It explores cash flow management, risk assessment (market, credit, liquidity, operational, and interest risks), and the distinction between capital and operational expenditure. Task 2 focuses on interpreting and comparing Samsung PLC's financial statements using ratios, providing recommendations based on the analysis. Task 3 addresses the impact of 'creative accounting' techniques, the importance of cash flow management in capital expenditure evaluation, and the limitations of ratio analysis. Finally, Task 4 reviews capital expenditure appraisal methods. The report highlights the importance of financial metrics in assessing the company's current viability and making strategic recommendations. It also includes an analysis of investment ratios and the overall growth of Samsung, concluding with the company's financial performance from 2017 to 2018.

Finance for Strategic Managers

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2..........................................................................................................................................13
Interpretation and the comparative of the financial statements of the Samsung PLC so that they
assess the current viability of the organization as the comparative analysis is being done by the
help of ratio................................................................................................................................13
Recommendations to the Samsung PLC....................................................................................15
TASK 3............................................................................................................................................1
The impact of ‘creative accounting’ techniques when making strategic decisions.....................1
Recommends, with justifications, methods and tools that allow businesses to analyse financial
data for strategic decision-making purposes................................................................................1
Importance of cash flow management while evaluating proposals for capital expenditure........1
The limitations of ratio analysis as a tool for strategic decision-making....................................1
Interpretation and the comparative of the financial statements of the Samsung PLC so that they
assess the current viability of the organization as the comparative analysis is being done by the
help of ratio..................................................................................................................................1
Recommendations to the Samsung PLC......................................................................................1
TASK 4............................................................................................................................................1
Please review the following method: capital expenditure appraising methods...........................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
This report is about the Pietro yon who was an Italian born organist and the composer
who has made their career in the United States. Pietro yon born in Settimo Vittone and served for
the time as an organist in the Vatican and at the royal church in the Rome. In the year 1926 he
become the assistant organist of St. Patric Cathedral, New York. He is the local businessman
who owes and manages the retail stores who has been sell the number of home wares and also
become the member of the local business and chamber of commerce and is being asked to chair
the committee for the research and did the research on the success of Samsung PLC. This report
contains the evaluation of the various sources of the financial data that can be used in making the
business strategy and did the analysis of risk that is being related business decision that is being
based on the financial business decision. This report also contains the interpretation of the
financial statements of the Samsung PLC to find out the current viability of the business. This
report also elaborate the limitations of the ratio analysis as a tool for the strategic decision
making (Christensen and et.al., 2015).
TASK 1
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2

3

4

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Profitability ratios:
The organization shall set targets for its profitability ratio, when it is essential to plan for
enhancing the operations' effectiveness and enhancing value-chain activities.
Capital efficiency and Solvency
This reveals the quantum of profits which the company is generated for its investors. High
capital efficiency reflects that company is using the resources with higher effectiveness.
Along with this, for the purpose of decision making and formulation of strategic
framework business unit also requires external information. It includes following:
 Information from suppliers: Firm needs information about cost and availability of raw
material while taking business decisions.
 Information from government: For ensuring smooth functioning of business operations
Samsung requires information about tax, licensing formalities etc.
 Government budget: It includes information about subsidies, concession, contribution of
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government in varied projects etc.
 Customer’s information: Success of the firm is highly depending on the needs, wants
and preferences of customers. Thus, for the purpose of objective attainment Samsung
need to collect information about the same.
Information received by the way of different financial metrics such as cash flow statements,
statement of profit and loss, balance sheet etc., aids the management of Samsung Plc in
anticipating the revenues and incomes for the future accounting period with higher accuracy.
Balance sheet provides the information regarding how conveniently the company can pay
its liabilities with the amount of assets it owns on a particular date.
Cost information or cash flow analysis aid in decision making to the significant level in
the following manner:
 Assessing monetary requirements: Through evaluation business unit can assess funds
needed for performing business activities and functions effectually.
 Obtaining funds / finance: By analysing cash flows manager of the firm can assess
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finance requires for future projects.
 Reporting to shareholders and other stakeholders: It has assessed from the evaluation
that by preparing and publishing report Samsung can provide stakeholders with suitable
information for decision making.
 Setting targets and appraising new projects: Cash flow helps in assessing variances that
take place in existing performance and thereby helps in setting appropriate targets for
near future.
 Risk management: It also helps in assessing position pertaining to cash deficit etc and
thereby offers opportunity in relation to developing competent framework for mitigation
purpose.
Market risk: It involves the risks that arises due to ever-changing circumstances in the
marketplace. Example, changing preferences of customers to shop from online platform.
Credit risk: This risk is associated with company's extension of credit to its customers. Example
is risk of bad debts in the form of defaults made by customers.
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Liquidity risk: It involve asset liquidity risk, funding of operations liquidity risk etc. Asset
liquidity means the degree of convenience with which company can convert its assets into cash.
Operational funding risk are associated with routine cash flow.
Operational risk: Such risks are associated with the routine operations of business such as
lawsuits, personnel issues etc.
Interest risk: This involves changes in the interest rates which could affect the profitability of
Samsung Plc.
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Capital expenditure: It implies for the funds spent business organization for purchasing
and maintaining fixed assets such as plant & equipment, machinery etc.
Difference between capital and operational expenditure is enumerated below:
Basis of difference Capital expenditure Operational expenditure
Meaning It occurs when company
acquires or focuses on the
upgradation of fixed assets.
It refers to the expenses that
firm incurs for performing
daily activities.
Payment mode Whole amount is paid in one
time.
Paid in terms of either
monthly or annual instalments
Time period Long-term Short-term
Profitability In CAPEX, profit is earned
gradually.
Amount is covered within a
short period.
Accounting treatment  Amortization of
intangible assets
In this, expenses fall under the
category of full tax deduction.
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