Samsung Electronics Co. Ltd is South Korea's largest electronics producer. It has four main divisions: Digital Media, Semiconductors, Information & Communications, and Home Appliances. The document provides a 3-year financial ratio analysis of Samsung from 2011-2012. It found that Samsung's profitability, stability, and ability to pay debts improved over this period. Specifically, its return on equity, net profit margin, and gross profit margin increased. Debt levels and expenses as a percentage of sales decreased. The analysis recommends investing in Samsung as it is profitable, stable, and its shares offer a reasonable price-earnings ratio of 6.65 years.

1. 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

2. Table of Content
Content
History of Samsung Electronics
Co. Ltd
Recent Development of Samsung
Electronics Co. Ltd
Awards and Recognition
Ratio Analysis of Business
Investment Recommendation
Appendix
Reference
Pages
1-2
3-4
5-6
7-10
11
12-16
17

3. 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; networkrelated 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

4. 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

5. 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

6. 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

7. AWARDS 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

8. 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

9. 6
Ratio Analysis of Business
Profitability
2011
2012
Interpretation
Ratios
Net Profit
Margin
(NPM)
During the period 2011 to
[(121480206+101313630)÷
2012, ROE increase from
2] × 100%
15.4% to 26.9%. This means
= (17191918÷111396918)×
100%
= (29915017÷111396918)×
that the owner is setting the
100%
higher return on his capital this
=0.268544 ×100%
year.
26.9%
(17191918÷165001771)×
(29915017÷201103613)×
During the period 2011 to
100%
100%
2012, NPM increase from
=0.10419× 100%
=0.14875× 100%
10.4% to 14.9%. This means
=10.4%
(ROE)
29915017÷
=15.4%
Equity
17191918÷
[(121480206+101313630)÷
2] ×100%
=0.15433× 100%
Return on
=14.9%
that the business is getting
better at controlling expense.
Gross Profit (52856651÷165001771)
(GPM)
During the period 2011 to
×100%
100%
2012, GPM increase from 32%
=0.32133× 100%
=0.37021× 100%
to 37%. This means that the
=32.0%
Margin
(74451682÷201103613)×
=37.0%
business is getting better in
controlling the cost of goods
sold expenses.
Selling
Expense
Ratio(SER)
(18606180÷165001771)
(18606180÷201103613)
During the period 2011 to
×100%
×100%
2012, SER decrease from
=0.11276×100%
=0.09252×100%
11.3% to 9.3%. This means that
=11.3%
=9.3%
the business is getting better in
controlling the selling

10. expenses.
7
General
(18606180÷165001771)
(18606180÷201103613)
During the period 2011 to
Expense
×100%
×100%
2012, SER decrease from
=0.11276×100%
=0.09252×100%
11.3% to 9.3%. This means
=11.3%
=9.3%
that the business is getting
Ratio(GER)
better in controlling the general
expenses.
Financial
(7893421÷165001771)
(7934450÷201103613)
During the period 2011 to
Expense
×100%
×100%
2012, FER decrease from 4.8%
=0.04783×100%
=0.03945×100%
to 3.9%. This means that the
=4.8%
=3.9%
business is getting better in
Ratio(FER)
controlling the financial
expenses.

11. 8
Stability
2011
2012
Interpretation
Ratios
Working
(71502063÷44319014)
(87269017÷46933052)
During the period 2011 to
Capital
=1.61:1
=1.86:1
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.
(54486633÷155800263)×
(59591364÷181071570)×
During the period 2011 to
100%
100%
2012, total debt decrease from
=0.34972× 100%
=0.32910× 100%
34.9% to 32.9%. This means
=34.9%
Total Debt
=32.9%
that the business’s total debt
level has gone down but the
total level is below the
maximum 50% level.
Stock
365÷[112145120÷{(177474
365÷[126651931÷{(177474
During the period 2011 to
Turnover
13+15716715)÷2}]
13+15716715)÷2}]
2012, stock turnover decrease
=365÷[112145120÷1673206 =365÷[126651931÷1673206 from 54 days to 48 days. This
4]
4]
means that the business sell its
=365÷[6.7024]
=365÷[7.5694]
goods faster.
=54 days
=48 days
Debtor
365÷[165001771÷{(266745
365÷[201103613÷{(266745
During the period 2011 to
Turnover
96+24153028)÷2}]
96+24153028)÷2}]
2012, debtor turnover decrease
=365÷[165001771÷2541381 =365÷[201103613÷2541381 from 56.2 days to 46.1 days.
2]
2]
This means that the business is
=365÷[6.4926]
=365÷[7.9131]
faster in collecting debts.

12. =56.2 days
=46.1 days
9
Interest
(644133+17191918)÷644133 (599006+29915017)÷599006 During the period 2011 to
Coverage
=(17836051)÷644133
=(30514023)÷599006
2012, interest coverage
=28 times
=51 times
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.

13. 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.

14. 11
Appendix
Consolidated Statements of Income
Samsung Electronics Co., Ltd. and its subsidiaries
(In millions of Korean won)
Year Ended December 31,
Revenue
2012
2011
201,103,613
165,001,771
Cost of sales
126,651,93
112,145,120
Gross Profit
74,451,682
Selling, general and administrative expenses
45,402,344
52,856,651
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
986,611
1,399,194
Share of profit or loss of associates and joint ventures
Finance income
7,836,554
7,403,52
5
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

15. Profit attributable to owners of the parent
23,185,375
13,382,645
12
Profit attributable to non-controlling interests
659,910
376,398
Earnings per share for profit attributable to the owners of the parent
-Basic
-Diluted
Profit for the year
154,020
153,950
23,845,285
89,229
89,146
13,759,043

16. 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
1,674,428
1,436,288
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
Advances
Prepaid expenses
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

17. Intangible assets
3,729,705
3,355,236
14
Deposits
814,693
Long-term prepaid expenses
Deferred income tax assets
Other non-current assets
Total assets
791,863
3,515,479
3,454,205
2,516,080
1,783,086
727,189
442,092
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
966,374
1,715,070
Accrued expenses
9,495,156
7,823,728
Income tax payable
3,222,934
1,262,798
999,010
30,292
5,054,853
3,514,536
343,951
358,645
Withholdings
Current portion of long-term borrowings
and debentures
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
46,933,052
44,319,014

18. 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
59,591,364
54,486,633
119,467
119,467
Total liabilities
Equity attributable to owners of the parent
Preferred stock
Common stock
778,047
778,047
Share premium
4,403,893
4,403,893
119,985,689
97,622,872
(8,193,044)
(5,833,8
96)
Retained earnings
Other components of equity
4,386,154
4,22
3,24
7
Total equity
121,480,206
101,
313,
630
Total liabilities and equity
181,071,570
155,
800,
263
Non-controlling interests

19. 16
Reference
1. 4-traders (2014) Samsung Electronics Co. Ltd. Retrieved from http://www.4traders.com/SAMSUNG-ELECTRONICS-CO-6494906/news/Samsung-ElectronicsCo-Ltd--Samsung-Receives-49-Awards-Across-Multiple-Product-Categories-at-CES17811844/ [Accessed 22 Jan 2014]
2.FUNDINGUNIVERSE (2001) Samsung Electronics Co. Ltd History. Retrieved
from http://www.fundinguniverse.com/company-histories/samsung-electronics-coltd-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]

20. 17