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Intheoverallmarket.edited.docxRunning head: SAMSUNG FIRM 1
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Samsung Company Analysis
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Executive Summary
Samsung company is a firm established in 1969 with headquarters located in Suwon. Lee Byung founded the company. The company mainly deals with electronic elements like lithium-ion, smartphones, together with smartphones. The firm also deals in tablets and other forms of products. Samsung company has been investing in the best product, which is the Samsung Galaxy. Since 2009, the company has been investing in Galaxy products. Products in this line of Galaxy are Galaxy S4, Galaxy tab of model S2, Galaxy Gear, Note, and Nexus. The company invests in other products like Galaxy S2, S3, Note, among many more (Hensiek, 2016). These products are in line with the company's production line. The company makes a lot of profits from them, given that several people love them. The products follow the high-end model and form the core products of the company. The outcomes of the mobile phone made the company to become the globe's best in the year 2007. The company's revenues summed to a total of US$117.4, which made it overtake HP firm and took position one when considering the world's best technology provider as per sales. The company's stock market price is increasing despite the covid-19 pandemic that has hit most of the firms globally.
Synopsis of finding
From market analysis, financial analysis, and trends in stock, Samsung is on the rise. Samsung is on the increasing trend; it manages its assets, and other company resources well. From the financial analysis, the company enjoys current ratios of the above one. Samsung's acid test ratio is also above one, and that means that the company is managing its assets well when it comes to balancing with its liabilities. The company stock prices are on the rise despite this corona pandemic. The current stock price is poised to rise, and if one has access to overseas, then it is the best stock to purchase at the moment. It is highly recommended that if an investor has access to the overseas market, then consider purchasing the company's stock because it is on the rising trend.
Comparison of Samsung and the overall market
In the overall market, Samsung can be said to be influential in the marketing mix. Samsung has so many rivals like Xiaomi, Sony, Huawei, and other unknown companies like Oppo. It is indisputable that Apple firm is the most significant competitor of the firm. Currently, the Samsung company is doing much better in creating more value in the market than its competitors. Its brand value rose from position twenty-five in 2003 to position seven in Interbrand’s ‘Best Global Brands in 2014 (Knopfle, 2016). The market standpoint for Samsung is pretty good since, in the first quarter of the year 2016, the organization's market share was 24.5%. Again, Samsung has been and is still spending vast amounts of money on research plus development, and hence, it can have the capability to release new phones in the market annually.
Three to five market analysts’ views on Samsung
Many market analysts have various views. Some analysts say that the high-end smartphone section is slowing, quoting lackluster scenarios in Europe and South Korea in specific. They say that Samsung S4 lacks any real factor in reality. They say “The Street, counting Goldman Sachs, admittedly inferred the first-quarter incomes momentum through the year,” Goldman Sachs analyst Michael Bang said in a report. “This resulted in very optimistic earnings expectations.”
Some analysts have said that there is a potential loss in sales of five million phones, the S4 brands that would reduce about $1 billion in the operating profit of the Samsung firm. J.K Shin, the head of Samsung mobile devices, told some reporters that the sales of Samsung S4 were solid. Still, only a few analysts who had very high expectations lowered their expectations and eventually, the loss (Kim, 2013). In the previous months, seventeen out of forty-three analysts have reduced their income approximations for Samsung, resulting in a drop of 0.6 percent when considering the mean prediction for the corporation's earnings of between April and June to 10.4 trillion won, as per Thomson Reuters StarMine.
Financial Ratios for Samsung
Samsung’s financial analysis for the last three fiscal years include ratios such as liquidity, leverage ratios, profitability ratios, asset management as well as market value (Samsung, 2019) (Samsung2018, 2018). Liquidity ratios display Samsung's ability to settle the company's short and long-term debts. Some of the most used liquidity ratios include current ratios, which is given by the formula current assets/ current liabilities. For the last three years, Samsung's current ratios are as follows.
Liquidity ratios
|
|
2019 |
2018 |
2017 |
|
CA |
155634050 |
149895684 |
133595101 |
|
CL |
54727544 |
59274029 |
61056713 |
|
Current ratio |
2.8437974 |
2.5288594 |
2.1880493 |
From the above table, the company's current ratios have been increasing from 2.188 in 2017, 2.528 in 2018, and 2.843 in 2019. Current ratios for Samsung are exceptional since they are above one for 2017, 2018, and 2019. Current rates of more than one show that the firm is capable of covering the current obligations without exhausting the existing assets (Kenton, 2020). Any ratio below one shows that the firm's debts due in a period of one year are more than the company's assets. The greater ratio, it means the venture is likely to meet its dues.
Acid-test ratio
The acid test ratio for Samsung company is another test ratio that shows Samsung's ability to settle short-term debts using the available quick assets. The ratio is under the liquidity ratios, and its formula is subtracting inventories of the firm from the current assets. The final value is then divided by current liabilities to find out the ratio. The company's acid-test ratios for the three years are as follows
|
|
2019 |
2018 |
2017 |
|
CA |
155634050 |
149895684 |
133595101 |
|
CL |
54727544 |
59274029 |
61056713 |
|
Inventories |
22966437 |
24869754 |
22707837 |
|
Acid test ratio |
2.424147 |
2.1092869 |
1.8161355 |
From the acid test ratio above, it is evident that the value for 2019 was 2.424, which for 2018 was 2.109, and that for 2017 was 1.816. The three values show that the acid-test ratio for the company has been on the rise for the past three years. The proportion is more significant as it ignores the company's inventory that could be so difficult when the company tries liquidating it (Hayes, 2020). A ratio of below one indicates that the organization lacks enough liquid assets to meet its present dues. Samsung's acid test ratios have been above one for the past three years, as shown in the table above, indicating that the company can meet its current debts.
Leverage ratios
Leverage ratios indicate the value of a venture that comes from its debt. Leverage financial ratios indicate an analysis of the firm's debt levels. Some of the financial leverage ratios include debt ratio, the obligation to equity ratio, among many more.
The debt ratio
The debt ratio refers to the ratio that shows Samsung's relative amount of available assets, which end up being offered from the debt. The ratio is found by dividing the enterprise's total liabilities with its total assets. For the three years, that is 2019, 2018, and 2017, Samsung's debt ratio is as indicated in the table below.
|
Debt Ratio |
2019 |
2018 |
2017 |
|
Total Liabilities |
76951655 |
78599066 |
79312842 |
|
Total Assets |
302511023 |
291178800 |
274268098 |
|
Debt ratio |
0.2543764 |
0.269934 |
0.28918 |
From the above debt ratio, it is evident that Samsung's debt ratio has been decreasing for the past three years, even though by a small value. The corporation's debt proportion was 0.289 in 2017, decreased to 0.2699 in 2018, and 0.254 in 2019. A debt ratio that is <1 shows that the business owns more assets when compared to liabilities (Adam, 2020). Since Samsung’s debt ratios are below one for the three years, it is a clear indication that Samsung’s assets are more than what the company owes the other people and firms. The higher the ratio, the more it is risky financially for the investors in the firm.
Debt to equity ratio
The debt to equity proportion is an indicator which defines the firm's value of total debt, together with its obligations, and compared it with equity from shareholders. The value is found by dividing an organization’s total liabilities by the company’s equity obtained from shareholders.
|
Debt to equity ratio |
2019 |
2018 |
2017 |
|
Total Liabilities |
76951655 |
78599066 |
79312842 |
|
Shareholder's equity |
225559368 |
212579734 |
194955256 |
|
|
0.3411592 |
0.3697392 |
0.4068259 |
The company's debt to equity ratios has been on the decreasing trend in the three years. The value for 2017 was 0.4068, that for 2018 was 0.3697; the value for 2019 was 0.3411. Debt ratio values that lie between 0.3 and 0. Are considered as very ideal for the industry or firm. If firms are considered pure risk firms, then debt values from 0.4 and below are seen as perfect. Debt to equity ratios that are less than 0.5 indicates that Samsung's assets are financed via shareholder's equity. From the values calculated above, the company's assets get funded from what the shareholders have for the company.
In summary, the Samsung Company stays on top of the industry in terms of performance and products. The company analysts state that it is a company one would consider investing his or her funds. Financial analysis indicates that the firm performs well, as could be observed from liquidity and leverage ratios discussed above. It is thus recommended that investors consider purchasing shares in the company.
References Adam. (2020). Debt Ratio. Retrieved from https://www.investopedia.com/terms/d/debtratio.asp#:~:text=The%20debt%20ratio%20measures%20the,has%20more%20assets%20than%20debt. Hayes. (2020). Acid Test Ratio. Retrieved from https://www.investopedia.com/terms/a/acidtest.asp Hensiek. (2016). The Top 10 Samsung Galaxy Products Of All-Time. Retrieved from https://moneyinc.com/top-10-samsung-galaxy-products-time/ Kenton. (2020). Current Ratio. Retrieved from https://www.investopedia.com/terms/c/currentratio.asp#:~:text=The%20current%20ratio%20is%20a,current%20debt%20and%20other%20payables. Kim, M. (2013, June 17). Retrieved from Samsung analysts ask hard questions as S4 marketing charm wears off: https://www.reuters.com/article/us-samsung-analysts/samsung-analysts-ask-hard-questions-as-s4-marketing-charm-wears-off-idUSBRE95F0H220130616 Knopfle, G. (2016). Retrieved from Samsung Electronics and the Global Market. The History and the Competitive Advantage: https://www.grin.com/document/324000 Samsung. (2019). Samsung Electronics Co., Ltd. and its subsidiaries. Retrieved from https://images.samsung.com/is/content/samsung/p5/global/ir/docs/2019_con_quarter04_bs.pdf Samsung2018. (2018). Samsung's Annual Report 2018. Retrieved from https://images.samsung.com/is/content/samsung/p5/global/ir/docs/2018_Business_Report_vF.pdf
Running head: SAMSUNG
FIRM
1
Samsung Company Analysis
Student Name
Institution Affiliation
Course
Due Date
Running head: SAMSUNG FIRM 1
Samsung Company Analysis
Student Name
Institution Affiliation
Course
Due Date
