samsung history & recent development (1)
Post on 29-Nov-2014
563 Views
Preview:
DESCRIPTION
TRANSCRIPT
School of Architecture, Building & Design Basic Accounting [FNBE0145]
FNBE April Intake
Financial Ratio Analysis on
‘Samsung Electronics Co. Ltd’
Prepared by: Karen Kong Chai Ni (0315480) Lily Then (0313973)
Lecturer: Chang Jau Ho
Table of Content
Content PagesHistory of Samsung Electronics Co. Ltd
1-2
Recent Development of Samsung Electronics Co. Ltd
3-4
Awards and Recognition 5-6
Ratio Analysis of Business 7-10Investment Recommendation 11Appendix 12-16Reference 17
SAMSUNG ELECTRONIC CO. LTD HISTORY
Samsung Electronics Co., Ltd. is the chief subsidiary of South Korea's giant
Samsung Group and the largest electronics producer in Asia. Samsung Electronics
operates four main divisions including Digital Media, Semiconductors,
Information & Communications, and Home Appliances. The company sells
televisions, video, and audio equipment; computers and related products; phones,
cellular phones, and fax machines; home appliances; semiconductors; network-
related products; factory automation products; fiberoptics products; closed circuit
security products; motors and compressors; and solar energy systems.
Samsung Electronics was created in 1969 as a division of the mammoth
Korean chaebol Samsung Group. The unit was established as a means of getting
Samsung into the burgeoning television and consumer electronics industry. From
its beginning as a small export business in Taegu, Korea, Samsung has grown to
become one of the world leading electronics companies. Today, Samsung
Electronics Co., Ltd., a global leader in high-tech electronics and digital media,
holds approximately 20% of the U.S. television market as well as the top global
market share position for 13 of its products, including semiconductors, TFT-LCDs,
monitors, and CDMA mobile phones. By the end of the 1980s, Samsung Group
allowed the combined Samsung Electronics Co., Ltd., to become Samsung Group's
chief subsidiary
1
Samsung Electronics Co., Ltd. mainly engaged in the production of consumer
electronic products. It operates in two divisions: DMC division, which is divided
into consumer electronics (CE) and information technology & mobile
communications (IM) businesses, as well as DS division, which is divided into
semiconductor and liquid crystal display (LCD) businesses. Its CE business
engages in the production of color televisions (CTVs), monitors, air conditioners,
refrigerators and others. Its IM business engages in the production of printers,
computers, handhold phones (HHPs) such as feature phones, smart phones and
others, and network systems, among others. Its semiconductor business engages in
the production of semiconductors, such as memories, system large scale integrated
circuits (LSIs) and others. Its LCD business engages in the production of thin film
transistor (TFT) LCDs and organic light-emitting diodes (OLEDs), among others.
2
RECENT DEVELOPMENT OF SAMSUNG
ELECTRONIC CO.,LTD
Diaxonhit SA Enters into a Distribution Agreement with Samsung
Electronics Co Ltd Health Medical Equipment Division for
Commercialization of Point of Care Diagnostic Tests - Diaxonhit
SA:Says InGen, its commercialization affiliate, has signed a distribution
agreement with the In Vitro Diagnostic Department of Samsung Electronics
Co Ltd's Samsung Electronics France.Says the agreement covers the
marketing of IB10, PT10 and HC10 equipment together with associated
reagents, in France and its overseas territories.
Apple Inc and Samsung Electronics Co Ltd CEOs agree to mediation in
U.S. patent fight – Reuters - Samsung Electronics Co Ltd:Says Apple Inc
and Samsung Electronics Co Ltd have agreed to attend a mediation session
to be held on or before Feb. 19, as they prepare to clash in court in Mar.
2014 over smartphone patents - Reuters.Says Apple CEO Tim Cook and
Samsung CEO Oh-Hyun Kwon will attend the session with in-house lawyers
only.
3
Samsung Electronics Co Ltd issues Q4 2014 guidance in line with
analysts' estimates - Samsung Electronics Co Ltd:Sees Q4 2014 sales of
approximately 59 trillion Won.Sees Q4 2014 operating profit approximately
8.3 trillion Won.Revenues of KRW61.677 trillion and operating profit of
KRW9.670 trillion for Q4 2014 - Thomson Reuters I/B/E/S Estimates.
Apple Inc scores legal victory over Samsung Electronics Co Ltd in
South Korea – Reuters - Samsung Electronics Co Ltd:Samsung Electronics
Co Ltd on Dec. 12 lost its bid to ban sales of Apple Inc's older iPhone and
iPad in South Korea after a court dismissed a lawsuit claiming the U.S. firm
had infringed on three of Samsung's mobile patents - Reuters.A judge at the
Seoul Central District Court said Apple products such as the iPhone 4S,
iPhone 5 and iPad2 did not violate Samsung patents on short message
display methods and messaging grouping features.
4
A WARDS and RECOGNITION
Samsung Electronics has received numerous awards for its environmental practices
and eco-friendly products. Samsung announced that it earned 49 top honors for
innovation and technology excellence from media outlets and organizations such
as CEA, Digital Trends, Reviewed.com, and PCWorld during the 2014
International CES.
Samsung underlined its technology leadership in TVs, mobile devices and home
appliances by launching a range of category- defining products at the show. It
combined deep consumer insight, engineering excellence, software innovation, and
clever design to deliver curves into UHDs, chefs into consumers' kitchens, and the
best viewing and productivity into tablets.
These are some of the awards:
1.) TVs, Audio/Video-CES Innovations Design and Engineering Awards - Best of Innovations: Samsung 65-inch Real 240Hz FHD Smart LED TV with Quad- core Multi-tasking Capability-HD Guru 2014 CES Top Picks Awards - Best in Show: 105-inch Curved UHD TV-HD Guru 2014 CES Top Picks Awards - Best Media Player: UHD Video Pack
2.) Tablets, Wearables-Digital Trends Best of CES 2014 - Tablets: NotePRO 12.2-Expert Reviews Best Tablet at CES 2014: NotePRO 12.2-LAPTOP Best of CES 2014 Awards - Best Large Tablet: NotePRO 12.2
5
3.) PCs, Monitors
-CES Innovations Design and Engineering Awards - Best of Innovations: Samsung Curved LED Monitor-Techlicious 2014 Best of CES Awards: Samsung ATIV One 7-TechRadar Best of CES 2014 - Best All-in-One Computer: Samsung ATIV One 7
Cameras-Reviewed.com CES Editors' Choice Awards: Samsung NX30-Tom's Guide Best of CES 2014 - Best Camera: Samsung NX30
6
Ratio Analysis of Business
Profitability
Ratios
2011 2012 Interpretation
Return on
Equity
(ROE)
17191918÷ [(121480206+101313630)÷2] ×100%
= (17191918÷111396918)× 100%
=0.15433× 100%
=15.4%
29915017÷
[(121480206+101313630)÷
2] × 100%
= (29915017÷111396918)×
100%
=0.268544 ×100%
26.9%
During the period 2011 to
2012, ROE increase from
15.4% to 26.9%. This means
that the owner is setting the
higher return on his capital this
year.
Net Profit
Margin
(NPM)
(17191918÷165001771)×
100%
=0.10419× 100%
=10.4%
(29915017÷201103613)×
100%
=0.14875× 100%
=14.9%
During the period 2011 to
2012, NPM increase from
10.4% to 14.9%. This means
that the business is getting
better at controlling expense.
Gross Profit
Margin
(GPM)
(52856651÷165001771)
×100%
=0.32133× 100%
=32.0%
(74451682÷201103613)×
100%
=0.37021× 100%
=37.0%
During the period 2011 to
2012, GPM increase from 32%
to 37%. This means that the
business is getting better in
controlling the cost of goods
sold expenses.
Selling
Expense
Ratio(SER)
(18606180÷165001771)
×100%
=0.11276×100%
=11.3%
(18606180÷201103613)
×100%
=0.09252×100%
=9.3%
During the period 2011 to
2012, SER decrease from
11.3% to 9.3%. This means that
the business is getting better in
controlling the selling
expenses.
7
General
Expense
Ratio(GER)
(18606180÷165001771)
×100%
=0.11276×100%
=11.3%
(18606180÷201103613)
×100%
=0.09252×100%
=9.3%
During the period 2011 to
2012, SER decrease from
11.3% to 9.3%. This means
that the business is getting
better in controlling the general
expenses.
Financial
Expense
Ratio(FER)
(7893421÷165001771)
×100%
=0.04783×100%
=4.8%
(7934450÷201103613)
×100%
=0.03945×100%
=3.9%
During the period 2011 to
2012, FER decrease from 4.8%
to 3.9%. This means that the
business is getting better in
controlling the financial
expenses.
8
Stability 2011 2012 Interpretation
Ratios
Working
Capital
(71502063÷44319014)
=1.61:1
(87269017÷46933052)
=1.86:1
During the period 2011 to
2012, working capital increase
from 1.61:1 to 1.86:1. This
means that the ability of
business to pay off its current
liabilities with current assest is
getting better. In addition, it
was not satisfy the minimum
working capital 2:1.
Total Debt (54486633÷155800263)×
100%
=0.34972× 100%
=34.9%
(59591364÷181071570)×
100%
=0.32910× 100%
=32.9%
During the period 2011 to
2012, total debt decrease from
34.9% to 32.9%. This means
that the business’s total debt
level has gone down but the
total level is below the
maximum 50% level.
Stock
Turnover
365÷[112145120÷{(177474
13+15716715)÷2}]
=365÷[112145120÷1673206
4]
=365÷[6.7024]
=54 days
365÷[126651931÷{(177474
13+15716715)÷2}]
=365÷[126651931÷1673206
4]
=365÷[7.5694]
=48 days
During the period 2011 to
2012, stock turnover decrease
from 54 days to 48 days. This
means that the business sell its
goods faster.
Debtor
Turnover
365÷[165001771÷{(266745
96+24153028)÷2}]
=365÷[165001771÷2541381
2]
=365÷[6.4926]
=56.2 days
365÷[201103613÷{(266745
96+24153028)÷2}]
=365÷[201103613÷2541381
2]
=365÷[7.9131]
=46.1 days
During the period 2011 to
2012, debtor turnover decrease
from 56.2 days to 46.1 days.
This means that the business is
faster in collecting debts.
9
Interest (644133+17191918)÷644133 (599006+29915017)÷599006 During the period 2011 to
Coverage =(17836051)÷644133
=28 times
=(30514023)÷599006
=51 times
2012, interest coverage
increase from 28 times to 51
times. This means that the
business’s ability to pay its
interest expense is getting
better. In addition, it is satisfy
minimum 5 times
requirement.
Sharing Price Earnings Ratio
Price/Earnings or P/E ratio=Current share price/Earnings per share =1299000.00/195380.94=6.65
With the P/E ratio of 6.65, it shows that the investor will need to wait for 6.65 years to
recoup his investment but it still below the maximum 15 years for a share.
10
Investment Recommendation
Based on my analysis, I think Samsung Electronics Co. Ltd is profitable and stable.
I have to take into three factors:
Profitability
-Based on the profitability ratio, I found that Samsung Electronics Co. Ltd
has good profitability. During the period 2011 to 2012, the business is
setting higher return on his capital. This means that investors can get back
their investment more. Besides that, the company also getting better in
controlling the expense, cost of goods sold expense, selling expense, general
expense and financial expense. This mean that the business can earn more
profit by have a good controlling in all expenses and investors also can get
back more investment.
Stability
-Based on the stability ratio, I found that Samsung Electronics Co. Ltd has a
strong financial stability. During the period 2011 to 2012, the total debt
level of the business is gone down. The business is faster in collecting the
debts and can sell its good faster. Besides that, the ability of business to pay
current liabilities and interest expense is better. This means that the investors
not need worry about when the business will bankrupt.
Price
-P/E ratio of Samsung Electronics Co. Ltd is 6.65. The company share’s is
suitable for investment because investors only need to wait 6.65 year then
investors can recoup their investment. Besides that, the share of the company
also very cheap that is below 15 year.
11
AppendixConsolidated Statements of Income
Samsung Electronics Co., Ltd. and its subsidiaries
(In millions of Korean won)
Year Ended December 31, 2012 2011
Revenue 201,103,613 165,001,771
Cost of sales 126,651,93 112,145,120
74,451,682 52,856,651
Selling, general and administrative expenses 45,402,344 37,212,360
Operating profit 29,049,338 15,644,291
Other non-operating income 1,552,989 2,251,019
Other non-operating expense 1,576,025 1,612,690
Share of profit or loss of associates and joint ventures 986,611 1,399,194
Finance income 7,836,554 7,403,525
Finance expense 7,934,450 7,893,421
Profit before income tax 29,915,017 17,191,918
Income tax expense 6,069,732 3,432,875
Profit for the year 23,845,285 13,759,043
Profit attributable to owners of the parent 23,185,375 13,382,645
12
Gross Profit
Profit attributable to non-controlling interests 659,910 376,398
Earnings per share for profit attributable to the owners of the parent
-Basic 154,020 89,229
-Diluted 153,950 89,146
Profit for the year 23,845,285 13,759,043
13
Consolidated Statements of Financial Position
Samsung Electronics Co., Ltd. and its subsidiaries
(In millions of Korean won)
December 31 2012 2011
Assets
Current assets:
Cash and cash equivalents 18,791,460 14,691,761
Short-term financial instruments 17,397,937 11,529,905
Available-for-sale financial assets 1,258,874 655,969
Trade and other receivables 26,674,596 24,153,028
Advances 1,674,428 1,436,288
Prepaid expenses 2,262,234 2,329,463
Inventories 17,747,413 15,716,715
Other current assets 1,462,075 988,934
Total current assets 87,269,017 71,502,063
Non-current assets
Available-for-sale financial assets 5,229,175 3,223,598
Associates and joint ventures 8,785,489 9,204,169
Property, plant and equipment 68,484,743 62,043,951
Intangible assets 3,729,705 3,355,236
14
Deposits 814,693 791,863
Long-term prepaid expenses 3,515,479 3,454,205
Deferred income tax assets 2,516,080 1,783,086
Other non-current assets 727,189 442,092
Total assets 181,071,570 155,800,263
Liabilities and Equity
Current liabilities:
Trade and other payables 16,889,350 18,509,490
Short-term borrowings 8,443,752 9,653,722
Advance received 1,517,672 1,450,733
Withholdings 966,374 1,715,070
Accrued expenses 9,495,156 7,823,728
Income tax payable 3,222,934 1,262,798
Current portion of long-term borrowings
and debentures999,010 30,292
Provisions 5,054,853 3,514,536
Other current liabilities 343,951 358,645
Total current liabilities 46,933,052 44,319,014
Non-current liabilities
Long-term trade and other payables 1,165,881 1,024,804
Debentures 1,829,374 1,280,124
15
Long-term borrowings 3,623,028 3,682,472
Retirement benefit liabilities 1,729,939 1,119,188
Deferred income tax liabilities 3,429,467 2,333,442
Provisions 408,529 363,223
Other non-current liabilities 472,094 364,366
Total liabilities 59,591,364 54,486,633
Equity attributable to owners of the parent
Preferred stock 119,467 119,467
Common stock 778,047 778,047
Share premium 4,403,893 4,403,893
Retained earnings 119,985,689 97,622,872
Other components of equity (8,193,044) (5,833,896)
Non-controlling interests 4,386,154 4,223,247
Total equity 121,480,206 101,313,630
Total liabilities and equity 181,071,570 155,800,263
16
Reference
1. 4-traders (2014) Samsung Electronics Co. Ltd. Retrieved from http://www.4-
traders.com/SAMSUNG-ELECTRONICS-CO-6494906/news/Samsung-Electronics-
Co-Ltd--Samsung-Receives-49-Awards-Across-Multiple-Product-Categories-at-CES-
17811844/ [Accessed 22 Jan 2014]
2. FUNDINGUNIVERSE (2001) Samsung Electronics Co. Ltd History. Retrieved
from http://www.fundinguniverse.com/company-histories/samsung-electronics-co-
ltd-history/ [Accessed 22 Jan 2014]
3. REUTERS (2012) Samsung Electronics Co. Ltd. Retrieved from
http://www.reuters.com/finance/stocks/005930.KS/key-developments [Accessed
22 Jam 2014]
4. Yahoo! Finance (2014) Samsung Electronics Co. Ltd. Retrieved from
http://uk.finance.yahoo.com/q?s=005930.KS [Accessed 23 Jan 2014]
17
top related