Financial Performance and Position Analysis: Samsung vs. Apple Report

This report offers a comprehensive financial analysis of Samsung and Apple, two leading companies in the technology sector. It begins with an introduction to financial statement analysis, explaining its importance in assessing a company's financial health. The report then delves into a detailed examination of Samsung and Apple, analyzing their financial performance using various methods, including ratio analysis, and comparing their financial positions over several years. The analysis includes profitability, solvency, and liquidity ratios. Furthermore, the report incorporates SWOT analyses for both companies, highlighting their respective strengths, weaknesses, opportunities, and threats. The findings provide valuable insights into the financial strengths and weaknesses of both companies, offering a comparative perspective on their market positions and overall financial health. The report concludes by summarizing the key findings and comparing the financial performance of both companies.

FINANCIAL ANALYSIS
MANAGEMENT AND
ENTERPRISE

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1: Comparison of financial Performance and Financial position of given companies........1
TASK 1(B).......................................................................................................................................5
SWOT Analysis of Samsung:.................................................................................................5
SWOT analysis of Apple:.......................................................................................................6
TASK 2............................................................................................................................................7
2.1: Critical analysis of CSR sections over the last couple of years......................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
APPENDIX:...................................................................................................................................11
Financial statement of Samsung:..........................................................................................11
Financial statement of Apple Inc..........................................................................................14

INTRODUCTION
Financial statement analysis is the process related to the analysing and reviewing the
financial statements and reports of the business for making an estimate and analysis about the
company financial health about the present year and comparing it with the past scenario and
making it according to the future trends of the market. The main objective behind the preparation
of financial statements is to find out the issues and problems in the financials of the company and
troubleshoot them (Vernon, and Aharoni, 2014). Financial statement analysis is preformed using
various methods such as analysing the ratios of the company, comparing the statements by using
vertical and horizontal analysis etc.
This project report is done on two listed companies namely Samsung and Apple. The
analysis will be performed using above mentioned methods and proper strength and weakness
analysis is also performed here. Finally, the conclusion is made which company is more
powerful by analysing the Financial grounds.
TASK 1
1.1: Comparison of financial Performance and Financial position of given companies
Introduction to Samsung company: The company was founded in the year 1969,
Samsung electronics has emerged and grown as a global information and a leader in technology.
The company manages a total of 220 subsidiaries all around the globe and it is generating a total
turnover of more than 200 Trillion KRW (Ramdani, Chevers, and A. Williams, 2013). The
company is continuously engaged and is making serious efforts for achieving regular growth and
shaping the future by utilising and generating innovative ideas and technologies. The company is
currently providing the customers home and commercial appliances such as Televisions,
Monitor, Printers, Refrigerators, Air-conditioners and also the most significant appliances of
telecommunication such as Tablet PCs and smartphones. The company provides these services
and products for generating convenience, value creation and encouraging smart lifestyles for its
consumers all over the globe.
In 2014, the company embraced the challenges of the expansion even after the increase in
economic and political problems that emerged in the complex economic and global environment.
Financial analysis of the company:
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The company is continuously growing and gaining profits in the market all over the globe
at the increasing rate. As per the Financial statements of the previous five years it has been
analysed how the company is progressing on yearly basis. From 2014 to 2017 it has been
observed that net profits and the revenues have been increased every year. For the year 2014 the
company has an addition in the profits by 8%. But in the next year it increased by approximately
1% and became 38.46%, then for the coming years it has significantly increased every year as it
has been observed from the financial of the company. In the year 2016 it Increased by almost 2%
and became 40.42%. In the year 2017, it largely increased by 6% and became 46.03%. This has
also been observed that the company's cost of revenue has significantly decreased in the years
which has also assisted in increasing the profitability of the company (Li, 2012). According to
the financial statements of the company it has been seen that the total assets of the company have
also increased over the years. The total assets of the company in the Financial year 2017 were
3,01,75,21,00,000 as compared to the 2,30,42,29,58,000 in the year 2014.
Ratio analysis of Samsung Electronics:
As per the Table that is provided for the company and after the calculation of the
Financial of the company. The various ratios are being calculated by the company for analysing
the financial performance of the company. For this purpose, the company has been calculated the
ratios such as profitability ratios (Gross profit ratio, operating profit margin etc.), solvency ratios
(Debt-Equity ratio, Financial Leverage etc.) and for the purpose of checking the liquidity
position of the company the ratios like Current ratios and quick ratio are being calculated.
According the ratios analysis, it has been interpreted that Gross profit ratio of the
company have increased every year for the company (Wu, Chen, and Olson, 2014.). It has
increased from 37.85 in the year 2014 to 46.00% in the year 2017 which means that company's
profitability has been significantly increased in the years. Similarly, the operating profit margin
of the company is also improved by 12.1 in 2014 to 22.4 in year 2017.
The Earning per share of the company in the year 2014 was 3061 which decreased in the
next year and came to 2526 in 2015 but after that is has significantly increased and has become
5997 in the year 2017 which is the highest till now. The current ratio of the company has been
increasing continuously from the year 2014 but it deceased in the year 2017 in comparison to
year 2016 and became 2.19 in the year. The Debt-equity ratio of the company is consistent in
every year which is 0.1.
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Liquidity/
Financial
Health 2014-12 2015-12 2016-12 2017-12
Current
Ratio 2.21 2.47 2.59 2.19
Quick Ratio 1.73 1.98 2.12 1.71
Financial
Leverage 1.42 1.4 1.41 1.46
Debt/Equity — 0.01 0.01 0.01
Introduction to Apple
Apple Inc. is an American Multinational company which deals in electronic products
which has its headquarters in Cupertino, California. The company was started in the year 1976.
the company is engaged in the production and manufacturing of mobile and media devices,
personal computers, digital media players and it also deals in variety of software, services,
networking solutions, accessories and other party applications and content. The company's
services and products include iPad, iPhone, mac book, Apple watch, Apple TV etc. the company
is engaged in the selling and delivery of digital content and applications by the platforms
designed by them which include App store, iTunes, Mac app store and Apple music etc. Apple
sells its products through their self-made retail stores all over the world. The company also uses
online platform, sales force as well as by way of whole sales, other retailers and value added
resellers.
Financial analysis of the company
By analysing the financial statements of the company it has been seen that revenues of
the apple have increased by 14% and has become 149.43 billion dollars. Net earnings of the
company has been increased by 26% and has become 36.49 Billion dollars. According to the
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financial statements of the company it has been seen that the Gross profit of the company in the
year 2014 was 38.59% of the total revenues of the company which has been observed that it has
increased in the year 2015 by 1.5% and has become 40.06%. After the year 2016 it has been
observed that the gross profit of the company in comparison of the revenues has decreased in the
upcoming years and has become 39.085% in the year 2016 and it has declined more in the year
2017 and has become 38.475 of the total revenues (Lambert, and Davidson, 2013). The
profitability of the company has decreased in the years because of the increase in the cost related
to revenue of the company. The earnings before interest, tax and depreciation has also decreased
in turn for the company.
Ratio Analysis of Apple: According to the Financial statements and the ratios which are
calculated using those statements various things have been analysed. Here the calculation of
various ratios has been done such as profitability ratio (Gross profit margin, Operating profit
margin etc.), solvency ratios (Debt-Equity ratios, Asset turnover ratio etc.) and Liquidity ratios
(Current assets ratio, Financial leverage etc.).
From the calculation of these ratio it has been analysed that Net profit margin of the
company have improved from year 2014 as 21.61% to 22.85% in the year 2015. But the net
profit margin of the company has declined in the year 2016 to 21.16% and then declined more in
the year 2017 to 21.09.
The solvency ratio of the company such as Debt to equity ratio has been shown that in the
year 2014 the ratio was 0.26 and then in the year 2015 it became 0.45 and then it is being
observed that it is increasing every year which has become 0.59 in 2016 and 0.73 in the year
2017. From this, it has been evaluated that the debt of the company is increasing for every year
which is a negative sigh for the company.
Under the head of the liquidity ratios, the current ratio of the company has been
calculated which has shown that the current ratio of the company in the year 2014 was 1.08
which has increased in the upcoming year and has become 1.11 in the year 2015, 1.35 in the year
2016 and it has declined in the year 2017 and has become 1.28. This shown that the ability of the
company to pay off its short term obligations is improving every year and has decreased in the
year 2017.
Liquidity/
Financial
2014-09 2015-09 2016-09 2017-09 Latest Qtr
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Health
Current
Ratio 1.08 1.11 1.35 1.28 1.45
Debt/Equity 0.26 0.45 0.59 0.73 0.8
TASK 1(B)
SWOT Analysis of Samsung:
Strength:
 The company has hardware integration with the many of the Open source operating
systems and various software.
 The company is involved in product Innovation and designs (Golicic and Smith, 2013).
 Samsung focuses on implementation of low cost on the production of goods.
 The company has strong skills of manufacturing and capabilities of marketing.
 Company maintains long term relationship with the retailers and in the united states of
America and Europe that assist them in supplying their products in the company in an
efficient manner.
 Samsung has largest shares in the market of smart phones and is in first position in the
sales of the smartphones.
Weaknesses:
 The company has low margin of the profits as lot of expenses are incurred in advertising
and research and development.
 Samsung provides a lot of products in the market and hence the focus is not
implemented on any particular products.
 There is cut throat competition in the current market as lots of Chinese companies have
introduced their products in the market.
 Some of the consumers identify Apple products as much advanced and dependable as
compared to the products offered by Samsung.
Opportunities:
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 The markets for the smartphones are increasing every day in the countries like India.
 The advertisements provided by the mobile is growing on the regular basis.
 There is a growth in the demand for the quality application processor.
 Obtaining the patents by way of acquisition.
Threats:
 The smartphone market has come at a point of saturation in the developed countries.
 The changes in the technologies now a days are very rapid which leads to outdated
technologies.
 There is price war in the market with the other players.
SWOT analysis of Apple:
Strengths:
 There is loyalty among the customers for the products offered by Apple.
 Apple is one of the leading company in providing innovative smartphones technology
on the regular basis (Gates, Nicolas, and Walker, 2012).
 The company's financial performance is very strong.
 Apple has strong teams of marketing and advertising.
Weaknesses:
 The prices of the products are very high.
 The products of Apple are not compatible with other operating systems.
 The market share of the company is gradually decreasing.
 Defects have been deducted in the newly launched products of the Apple.
 The company has seen a decline over the long term Gross profit margin.
Opportunities:
 Products of the Apple are in high demand.
 The company has obtained many patents by way of acquisition.
 The strong growth for the mobile advertising.
 Growth in the sales of the laptops and mobile phones.
Threats:
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 These are rapid changes in the technologies makes the products outdated firstly.
 There is subsequent increase in the tax charges.
 The pay levels of the employees have increased.
 Significant growth in the Android operating systems.
 There is prices pressures and wars with the Samsung.
Conclusion of the reports:
By analysing the financial statements of both the companies with the help of ratio
analysis and by using strength and weaknesses, it has been concluded that the financial position
of Samsung is much better than the Apple as it has been seen from the ratios which are
calculated for both the companies. The profitability of the Samsung has been increasing every
year whereas the profitability of the Apple is gradually decreasing every year, which shows that
financial grounds of Samsung are more strong as compared to the Apple.
TASK 2
2.1: Critical analysis of CSR sections over the last couple of years
The corporate social responsibilities that is adopted by Samsung include following
activities:
Samsung supporting local communities:
 Samsung company encourages self-reliance and independence among the young
generation via systematic vocational education (David, 2011).
 The average number of hours for which each employee of Samsung has volunteered has
amounted to 11.3 hours during the year 2014
Samsung Educating and empowering workers:
 The benefits provided to the employees of Samsung in Korea and abroad in the year 2015
totalled to KRW 3.853 billion.
 The average number of hours for which the training is provided to the employees in 2015
was 78 hours.
Labour and Human rights at Samsung
 The company has conducted inspection in various areas for the prevention of child
labours in China in 2015.
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Employee health and Safety:
 The company have made several attempts to make the workplace of the employees safe
and secure. Regular monitoring and improvement has been done in the company, and the
company also performs drills for the purpose of occasional emergencies that may occur
in the company such as chemical substance spill, Explosion, Fires and natural disaster.
 Samsung Supports health and safety precautions for the employees by the construction of
ergonomic applications in the workplace and prohibition of the trips of the business to the
regions with high risk of infectious diseases such as Ebola and MERS.
Waste reduction and recycling by Samsung:
 Samsung has indulged in the collection of waste and has collected a total of 2.26 million
tons of wastage from 2009 to 2015 and aims to collect 3.8 million (in total) by the year
2020.
 In 2015, the company applied in total of 34322 tons of recycled plastics (6.3 percent of
total plastic use) to monitors, Washing machines, refrigerators, earphones cases.
Carbon Emission by Samsung:
 The company has undertaken initiative for the green communication that aims to share
the impact of Samsung green management implemented various open project around the
world. This will involve environmental educational courses and events and supporting
interest of employee in participating such events.
The corporate social responsibilities undertaken by the Apple are as follows:
Apple CSR programs and Initiatives
Apple Supporting Local communities
 Global volunteer Program is being launched in 2011 for the motivation of employees so
that they volunteer in local communities. Since the inception of the program the
company has Donated more than USD 78 billion to the charities and NPOs all over the
globe (Chapman, 2011).
 This program has again been revised in March 2015 for allowing the employees the right
to choose the projects in the communities they are looking and willingly want to
contribute.
Apple Education and Empowering Workers:
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 Apple has offered various education and development programs which is being initiated
in almost 18 factories which have been undertaken by more than 280000 workers in the
year 2016.
Labour and Human right at Apple:
 Company has almost achieved an average of 95 percent compliance for not more than 60
hours per work week.
Employee Health and Safety at Apple:
 Apple have implemented the Apple supplier EHS academy, a one and half year program
which focuses on the health and safety of the employees who are working in the
organisation. Around a total of 240 suppliers and 270000 employees have participated in
this initiative launched by company.
Gender equality and Minorities:
 Out of the total employees of the company 32 percent are Female, 9% Black and 12%
percent Hispanic. Recently out of the workforce which the company have hired, the 375
of it was females (Bromiley, and et. al., 2015).
 Apple has also reached the target of equal pay in the year 2016.
Energy consumption by Apple:
 The company is involved in sourcing and generating enough renewable energy for
covering 96% of the electricity which is used by the company all over the globe.
 The technology which the company has adopted has committed to generate 4 Gigawatts
power online by the year 2020.
CONCLUSION
It has been concluded from the above report that how financial analysis management
helps in identifying the performances of the company. Here this project has done the financial
analysis of two listed companies namely Apple and Samsung. It has been seen as per the ratio
analysis of the financial statements of both the companies and the analysis of strengths and
weaknesses that Samsung currently have good financial grounds then Apple. Finally, the
corporate social responsibilities of Samsung and Apple has also been done separately.
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REFERENCES
Books and Journals:
Bromiley, P., and et. al., 2015. Enterprise risk management: Review, critique, and research
directions. Long range planning. 48(4). pp.265-276.
Chapman, R. J., 2011. Simple tools and techniques for enterprise risk management (Vol. 553).
John Wiley & Sons.
David, F. R., 2011. Strategic management: Concepts and cases. Peaeson /Prentice Hall.
Gates, S., Nicolas, J. L. and Walker, P. L., 2012. Enterprise risk management: A process for
enhanced management and improved performance. Management accounting quarterly.
13(3). pp.28-38.
Golicic, S. L. and Smith, C. D., 2013. A meta‐analysis of environmentally sustainable supply
chain management practices and firm performance. Journal of supply chain
management. 49(2). pp.78-95.
Lambert, S. C. and Davidson, R. A., 2013. Applications of the business model in studies of
enterprise success, innovation and classification: An analysis of empirical research from
1996 to 2010. European Management Journal. 31(6). pp.668-681.
Li, L., 2012. Effects of enterprise technology on supply chain collaboration: analysis of China-
linked supply chain. Enterprise Information Systems. 6(1). pp.55-77.
Ramdani, B., Chevers, D. and A. Williams, D., 2013. SMEs' adoption of enterprise applications:
A technology-organisation-environment model. Journal of Small Business and
Enterprise Development, 20(4), pp.735-753.
Vernon, R. and Aharoni, Y., 2014. State-Owned Enterprise in the Western Economies
(Routledge Revivals). Routledge.
Wu, D. D., Chen, S. H. and Olson, D. L., 2014. Business intelligence in risk management: Some
recent progresses. Information Sciences. 256. pp.1-7.
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