Samsung financial analysis on its income statement compared to 2012 outline: - Liquidity Management - Debt Management - Assets Management - Profitability Ratios - Full Analysis

1. Samsung 2013 Financial statements analysis
Omar Sherif 15204143 / Akram Mahmoud 15204105
Summary:
We noticed that the firm has improved its liquidity position in 2013 compared to 2012, however the firm may face a liquidity problem if
they don’t collect their accounts receivable within 1 year
Debt Management 2012 2013
Debt ratio 32%
Each 1$ of TA is financed by 0.32$ of TD
29%
Each 1$ of TA is financed by 0.29$ of TD
Debt 2 equity ratio 49%
Each 1$ of TE meets 0.32$ of TD both of
themused to finance assets
42%
Each 1$ of TE meets 0.42$ of TD both of
themused to finance assets
TIE 46.1x
Each 1$ of Interest is covered by 46.1$ of
Operating Income
58.3x
Each 1$ of Interest is covered by 58.3$ of
Operating Income
Cash coverage 69783x
Each 1$ of Interest is covered by 69783$
of Operating Income
82900x
Each 1$ of Interest is covered by 82900$
of Operating Income
Summary:
We noticed that the firm was depending on using debts in financing its assets in 2012, the firm in 2013 started using another source of
funding which will decrease the business risk, furthermore the firm has enough operating income to cover the cost of debt
Assets Management
TATO 1.11x
Each 1$ of TA generates 1.11$ of sales
1.06x
Each 1$ of TA generates 1.06$ of sales
FATO 2.93x
Each 1$ of FA generates 2.93$ of sales
3.02x
Each 1$ of fA generates 3.02$ of sales
CATO 2.30x
Each 1$ of CA generates 2.30$ of sales
2.06x
Each 1$ of CA generates 2.06$ of sales
ARTO 7.54x
Each 1$ of AR generates 7.54$ of sales
8.20x
Each 1$ of AR generates 8.20$ of sales
Inventory turnover 7.13x
Each 1$ of inventory generates 7.13$ of
sales
7.19x
Each 1$ of inventory generates 7.19$ of
sales
Days sales Outstanding 48.40 Days
The Firm needs 48 days to collect its AR
44.51 Days
The Firm needs 44 days to collect its AR
Summary: we noticed that the firm is inefficient in managing its assets in 2013 compared to 2012 this still has effected its level of sales in
a negative way, accordingly we expect that the firm will have lower returns in the coming years,however we noticed that t he firm has a
strict it is inventory and collection policy which improves its liquidity position
Liquidity Management 2012 2013
Current Ratio 1.85x
Each 1$ of CL covered 1.85$ of CA
2.15x
Each 1$ of CL covered 2.15$ of CA
Quick Ratio 1.48x
Each 1$ of CL covered 1.48$ of CA
excluding inventory
1.78x
Each 1$ of CL covered 1.78$ of CA
excluding inventory
Cash Ratio 0.28x
Each 1$ of CL covered 0.28$ of Cash and
cash equivalents
0.38x
Each 1$ of CL covered 0.38$ of Cash and
cash equivalents

2. Profitability Ratios 2012 2013
1. Gross profit margin 37%
Each 1$ of sales generate 0.37$ of
gross profit
39%
Each 1$ of sales generate 0.39$ of
gross profit
2. Net profit margin 11%
Each 1$ of sales generate 0.37$ of Net
Income
13%
Each 1$ of sales generate 0.37$ of Net
Income
3. ROA 13%
Each 1$ of TA generate 0.37$ of Net
Income
14%
Each 1$ of TA generate 0.37$ of Net
Income
4. ROE 19%
Each 1$ of TE generate 0.37$ of Net
Income
20%
Each 1$ of TE generate 0.37$ of Net
Income
Summary: We noticed that the firm has a good Profitability position in 2013 compared to 2012. In 2013 the firm generated higher return
expected to be received by 2013 stockholders,moreover this profitability position will attract more investors in the coming years
Full Analysis
From the previous statements we concluded that the firm will face a liquidity problems in the coming years the firm also started to
decrease the level of debts that were used to finance assets which lead to a decrease in the business risk, however the firm is inefficient in
managing its assets (Current assets)so the level of sales have dropped compared to 2012. Furthermore the firm tried to maint ain its
expected return to be received by 2013 stockholders,we expect in the future the firm will try to increase its financial position more an d
attracting more investors
Income Statement Analysis
2012 2012% 2013 2013%
Sales 190,565,349 100% 216,708,677 100%

3. COGS 120,015,096 62% 130,480,725 60.2%
Gross profit
D1
70,550,253 37% 86,227,952 39.7%
-sellingand
adm.
43,023,163 22% 51,370,553 23%
- depreciation
exp.
14,835,046 7.78% 15,470,012 7.13%
= Operating
income
D2
27,527,090 14% 34,857,399 16.08%
-interest 546,175 2.86% 412,070 1.90%
Taxable income
D3
28,347,406 14% 36,353,908 16.7%
-taxes 5,751,665 3.01% 7,476,087 3.44%
Net profit
D4
22,595,741 11.85% 28,877,821 13.32%
D1 We notice thatthe saleslevel increasedfrom190,565,349 in2012 to 216,708,677 in2013 and thisdue to applyingan
efficientmarketingplanwhichleadtoincrease the volumeof the sales,onthe otherhandwe foundthe cost of raw
materialsdeclinedfrom62%to 60.2% in2013 whichimpliesthe firmhasanefficientmanagingactiontocontrol these cost
due to the previousresource the grossprofitincreasedfrom37% reaching39, 7% in the currentyear.
D2 by analyzingthe firmexpenses(cash&non cash) we notice that the sellingandadm.Expense increasedfrom22%to
23% andthe depreciationexpensedecreasedfrom7,78% to 7.13% in 2013 andthisindicate thatthe firmdidnotacquire
newassets,buttheyhirednewemployeesandworkers,due tothe previousresourcesthe operatingincome increased
from14% reaching16.08% inthe currentyear.
D3 by receivingthe costof debtpaidwe notice thatthe interest expensedecreasedfrom2.86% in 2012 to 1.90% in2013
whichimpliesthatthe firmismore efficientinmanagingitsdebtslevelandthe firmisusinga new alternative of fund
(equity) tofinance assets,taxable income increasedfrom14% to 16.7% inthisyear.
D4 We notice thatthe taxesincreasedfrom3.01% to 3.44% in2013 and thisdue to increase inthe firmtaxable income in
the current yeardue to previousrecourse ,the firmnetprofitincreasedfrom11.85% reaching13.32% in 2013.
Final comment:-
We conclude thatthe firmisincreasingtheirmarketingefforttogenerate more salesinthe future byincreasingtheir
SellingandAdmistrativeexpenses,inadditionthe firmistakinganeffective managerial actionasthe costsand expenses
have increasedbutthe generatedlevel of saleshave alsoincreased,sothe stockholdersexpectingtoreceive ahigher
returnin the comingyears