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Introduction

The paper below features the analysis and discussion of various financial activities done in one of the world's foremost companies; The Toyota car manufacturing company in Japan and the Samsung electronics manufacturer in South Korea. The two companies hold a vast world market share in their disciplines, and they have other revenues as well as expenditures and other transactions, which could provide material factors that could influence investments. Each company is described briefly as below.

The Toyota Company is one of the leading automotive companies globally, having its headquarters in Japan and many other assembly companies all over the world. The company's main activity is the production of various machines, although it also has several investment activities from which it derives its revenue. The company is in partnership with other companies such as IT companies, steel, communications, and glass companies, among others which supply it with different equipment that is used in the manufacture of the automotive (CORPORATION., n.d.).

The Samsung Company is a South Korean company the produces electronic devices such as media devices, appliances, memory chips, and integrated chips. Over time, the company has been able to incorporate technology to ensure that its products are up to date and satisfy the consumer needs, and therefore, similar to the Toyota Company, it has also partnered with different companies and invested in other activities that contribute to its revenue ("Samsung," n.d.).

Analysis of the Income Statements

The following is the analysis of the income statement of the Toyota Company for the last three years: 2019, 2020, and 2021. The essential things that are vital to investors and other financial information users. First is the gross profit, which shows the revenue received before deducting the expenses, secondly the costs of the company, including the cost of sales; and lastly, the net profit after removing the tax liability. Investors are interested in such since they show the trends and the profitability of the company: the profit from which their investments would be paid.

Considering the income statement of the company, the sales of the company have been deteriorating since 2019, giving a -1.18% decrease in 2020 and -8.88% in 2021. Consequently, the gross profit for the same had been reducing, with the year 2021 having the lowest. However, the net income for 2021 is highest than the two years, possibly because of the reduction of the expenses and other deductions ("TM | Toyota motor Corp. ADR annual income statement - WSJ," n.d.).

The Samsung Company has the following information regarding its statement. First, its three-year analysis starts in 2018, with higher revenue than the next year, 2019. The year 2020 has the highest income than the two years. Investors also consider the expenses of the company from which the trend is almost stable. To the net income of the company, 2018 has the highest, followed by 2019 and then 2020. The trend shows that the company has a deteriorating net income, possibly because of increased expenses and reduced sales ("Samsung (005930) income statement," n.d.).

Analysis of Balance Sheets

Considering the balance sheet, investors mainly look at the company's capitalization, which is the total amount of assets less the depreciation, the total liability, and the total debt of the firm. The three essential items provide vital information concerning the ability of the company to pay its debt, where it sourced its finances, and how prompt it pays off its obligations.

The Toyota Company has the following information relating to its balance sheet. It is dated 2021, 2020, and 2019. The value of its assets is increasing, with 2019 having the lowest asset value and 2021 having the highest value. Similarly, the firm's liabilities increase, with 2019 having the most down and 2021 having the highest. Also, capitalization amount shows an improving trend over the three years.

On the other hand, the Samsung Company shows the following information on its balance sheet regarding its last three years; 2018, 2019, and 2020. The value of the company's assets offers an improving trend, with 2018 having the lowest value and 2020 having the highest. To the liabilities and obligations, including long-term debts, the amount reduced in 2019 and then increased in 2020. Similar to its long-term debt, the debt reduced in 2019, which then expanded in 2020. To the company's capitalization, the company shows an improving trend in equity, with 2018 having the lowest amount and 2020 having the highest ("Financial Statements│ financial information │ investor relations │ Samsung global," 2021).

Analysis of Investment and Financing Activities

As seen earlier, both companies have invested in different activities that add up to the total revenue of the company. For instance, the Toyota Company has made several investments, both financial and non-financial investments. The value of the company's assets shows an improving trend; however, 2019 has a higher investment value than 2021. The main two investment activities of the company are vehicle and equipment leases and investments in other companies as well.

The company is financed by several sources of finance. There are long-term debts of the company whose value is constant or showing a stable trend. The company is also funded by other financial liabilities, which are also challenging. The company has shares, common stock, and treasury stock as some of its financing activities.

To the Samsung Company, several investment activities contribute to the total revenue of the company. However, the two most significant and central investments are the short-term financial instruments and investment in the Samsung Next project according to its income statements. The trend from the three years shows investment improvement hence the company is earning more from its investments.

The company also has different sources of finances, according to the statements. Some of the financing sources include short-term and long-term debts, debentures, long-term payables as well as shares. The trend shows that the obligation of the company is reducing with the following year having a lower debt amount than the previous year; hence the company is paying off its debts, financers, and creditors at the same time retaining its profits.

Comparison of the Two Companies’ Statements

Some items have been omitted in both companies' statements. The Toyota Company's income statement lacks the proper information regarding the investments and other income-generating activities. For example, the Toyota Motor Company only gives the totals of the investment activities and the financial services that generate revenue. Nevertheless, the statement doesn't show the amount that arose from each activity and the description of each exercise. The balance sheet also omits the same information.

Similarly, the Samsung income statements also lack detailed information concerning the number and the details of the other investments; the words only give the total revenue from the investment activities. Also, the balance sheet omits the information regarding the type of shares granted to shareholders. The omitted information by the two companies can be crucial in decision-making by the investor if available since it could influence the decision made by the investor.

Although the companies are different, producing different products and located in other locations, some of their data can be compared, such as the revenue, debt, liability, and performance. Now comparing the information from the two companies, the Samsung Company shows a higher income than the Toyota Company due to the diversification of its products and improved technology. The Samsung Company also has a higher amount of sales than its counterpart. However, Toyota Motor Company has a lower debt than Samsung Company, as shown in the statements. It has fewer financers than those of Samsung and smaller amounts than those of Samsung.

Recommendation

I would recommend investing in the Samsung Company over the Toyota Company. The company has a higher net income; hence for investors, this would result in a higher dividend payout than the Toyota Company. Also, Samsung has a higher debt than Toyota, and this shows that the company is capable of paying off its debts. Additionally, Samsung has diversified its products; hence an investor can choose his desired area of investment. Therefore, I would select investing in the Samsung Company.

References

Yen in millions

Transition date

April 1, 2019

March 31, 2020

March 31, 2021

Assets

Current assets

Total property, plant and equipment, at cost 24,944,551 24,486,156 25,977,791

Less - Accumulated depreciation and impairment losses (14,260,446) (13,952,141) (14,566,638)

Total property, plant and equipment, net 10,684,105 10,534,016 11,411,153

Total non-current assets 34,237,955 35,009,043 39,490,339 Total assets 53,416,405 53,972,363 62,267,140

Yen in millions

Transition date

April 1, 2019

March 31, 2020

March 31, 2021

Liabilities

Current liabilities

Total non-current liabilities 14,278,833 14,491,142 16,518,344

Total liabilities 32,761,195 32,633,351 37,978,811

Total Toyota Motor Corporation shareholders’ equity 19,907,100 20,618,888 23,404,547

Non-controlling interests 748,110 720,124 883,782

Total shareholders' equity 20,655,210 21,339,012 24,288,329

Total liabilities and shareholders’ equity 53,416,405 53,972,363 62,267,140

TOYOTA MOTORS COMPANY Consolidated Statement of Income

Yen in millions

Sales revenues

Sales of products

Financial services

Total sales revenues

Costs and expenses

Cost of products sold

Cost of financial services

Selling, general and administrative

Total costs and expenses

Operating income

Share of profit (loss) of investments accounted for using the equity method Other finance income.

Other finance costs

Foreign exchange gain (loss), net

Other income (loss), net

Income before income taxes

Income tax expense

Net income

Net income attributable to

Toyota Motor Corporation Non-controlling interests

Net income

Diluted

720.10

794.67

Consolidated Statement of Comprehensive Income

Yen in millions

For the year ended For the year ended

March 31, 2020 March 31, 2021

Total of items that may be reclassified subsequently to profit (loss)

(283,961)

328,305

(508,645)

1,012,476

1,602,480

3,294,854

Total other comprehensive income, net of tax

Comprehensive income

and its subsidiaries

Total assets 353,385,985 339,357,244 304,199,903 292,123,754

The above interim consolidated statements of financial position should be read in conjunction with the accompanying notes.

Net defined benefit assets

11

,506

29

562,356

25,399

484,084

Deferred income tax assets

,461,996

5

,468,002

5

4,701,767

4,706,937

Other non

-

current assets

3

,

25

,750,220

7

7

,683,168

6

,671,

505

,613,

6

786

WorldReginfo - 1556f396-5f82-4ccc-9682-ffc7b074a63d

and its subsidiaries

on, in thousands of US dollars (Note 2

WorldReginfo - 1556f396-5f82-4ccc-9682-ffc7b074a63d

September 30

,

December 31

,

September 30

,

December 31

,

Notes

2019

2018

2019

2018

KRW

KRW

USD

USD

The above interim consolidated statements of financial position should be read in conjunction with the accompanying notes.

and its subsidiaries

on, in thousands of US dollars (Note 2