Contents

Introduction.................................................................................................................................................2
1. Company Profile......................................................................................................................................2
2. Evaluating financial performances of Apple, Samsung and Nokia...........................................................3
2.1 Apple’s financial performance...........................................................................................................3
2.2 Samsung financial performance........................................................................................................7
2.3 Nokia financial performance............................................................................................................11
3. Investment recommendation................................................................................................................15
4. Accounting Standards and limitation of financial reporting and analysis..............................................15
Bibliography...............................................................................................................................................16
APPENDIX..................................................................................................................................................18

1
Introduction
Mobile Industry has experienced registered growth and has excellent financial performance
during this pandemic. It is the fastest growing industry in the world today. Being the financial
analyst at Pioneer Capital Company, the three companies that are listed in London Stock
Exchange which I choose to identify potential investment opportunities are Apple, Samsung and
Nokia.

1. Company Profile
Apple was founded by Steve Jobs, Steve Wozniak and Ronald Wayne on 1 April, 1960. It is an
American multinational company whose headquarters are in California, United States. Being
originated in United States it is also listed in New York securities Exchange and London Stock
exchange. It is the world’s biggest company in terms of market capitalization. Later its name
was changed into Apple Computer, Inc. Apple is involved in designing, development and selling
of computer software, electronics and also providing online services. Apple Inc. also designs
hardware products like iPad tablet, Mac computer, iPhone, Apple Watch, iPod, Apple TV digital
media player and many more. Apple has managed to dominate the market by acquiring a
company called Shazam(Conn Faife, 2022).
Samsung was founded by Lee Byung-chul in 1935. It is a South Korean multinational
manufacturing company whose headquarters are in Samsung town, Seoul, South Korea.
Initially it was a trading company, but over the next years, it has been involved into different
areas like food processing, textiles, retails and many more. Its growth was driven when
Samsung entered into electronics, construction and shipbuilding industries. Later on this
company was separated into five different business groups-Samsung Group, Shinsegae Group,
CJ Group and Hansol Group and Joongang Group. Now this company is known by the name
called Samsung Electronics Co Ltd. The products of Samsung are sold almost all over the world
and is listed in London Stock Exchange also(VIVALDI, 2021).
Nokia Corporation was established in 1505 which is listed in New York Stock Exchange, London
stock Exchange and Helsinki Stock Exchange. Its headquarters are in Espoo, Finland and is a
Finnish multinational telecommunications, information technology and consumer electronics
corporation. In 1995, Nokia was the world’s largest vendor of mobile phones and smartphones.
It is serving customers in more than 130 countries. It is divided into four business groups:
Mobile phones, Multimedia, Enterprise Solutions, and Networks(Nokia, 2022).

2
 Figure 1: Selected companies

2. Evaluating financial performances of Apple, Samsung and Nokia

In order to analyze the financial data of different companies, ratio analysis is used to calculate
the success of Apple, Samsung and Nokia by using the financial statements of these three
companies. By using the financial statements of three companies, analyst will be able to predict
the future profits of any organization. The formulas are given in the appendix which is used to
calculate the ratios for analyzing the financial position of the company.
2.1 Apple’s financial performance
Item/Year 2021 2020 2019 2018 2017

Current 134,836 143,713,000 162,819,000 131,339,000 128,645,000

Assets
Current 125,481 105,392,000 105,718,000 116,866,000 100,814,000
Liabilities
Inventories 6,580,000 4,061,000 4,106,000 3,956,000 4,855,000

Cash 18,556,000 17,773,000 12,204,000 11,575,000 7,982,000

Receivables 51,506,000 37,445,000 45,804,000 48,995,000 35,673,000

Total Assets 351,002 323,888,000 338,516,000 365,725,000 375,319,000

Total 287,912 258,549,000 248,028,000 258,578,000 241,272,00

Liabilities
Sales 278,450,000 274,515,000 260,174,000 265,595,000 229,234,000

Cost of 212,981,000 169,559,000 161,782,000 163,756,000 141,048,000

Goods Sold
EBIT 69,879,000 69,559,000 69,313,000 76,143,000 66,412,000

Interest 1,32,000 890,000 1,385,000 2,446,0000 2,878,000

Net Income 94,680,000 57,411,000 55,256,000 59,531,000 48,351,000

Operating 80,458,000 80,674,000 69,391,000 77,434,000 63,598,000

Cash
Flow

Table 1: Financial Data of Apple Source: (APPLE 2021)

The data shown in the above table is the financial data of Apple from 2017-2021. The
calculation of different ratios are as follows:
Profitability ratio

3
 Ratio/Year 2021 2020 2019 2018 2017

Return on Equity 1.50 0.88 0.61 0.55 0.36

Return on Assets 0.26 0.18 0.16 0.16 0.13

Profit Margin 25.88% 20.91% 21.24% 22.41% 21.09%

Table 2: profitability ratio of Apple

Profitability ratio
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2021 2020 2019 2018 2017

Return on Equity Return on Assets Profit Margin

Chart 1: Profitability analysis of Apple

The profits calculated by any company is analyzed by using the profitability ratio which means
the earnings and the margins. The selected ratios include return on assets, return on equity. I
the case of Apple, the revenue of the company is reached at 365,817 in 2021 from 274,515 in
2020 where there is revenue growth of 33.26%. Apple is a profitable company. The growth in
the ROE shows that the company has the potential to grow in profitability.

Liquidity Ratios

Ratio/Year 2021 2020 2019 2018 2017

Current Ratio 1.07 1.36 1.54 1.12 1.28

Quick Ratio 1.02 1.33 1.50 1.09 1.23

Cash Ratio 0.14 0.17 0.16 0.1 0.08

4
 Table 3: Liquidity Ratios of Apple

liquidity ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2021 2020 2019 2018 2017

Current Ratio Quick Ratio Cash Ratio

Chart 2: Liquidity analysis of Apple

The current ratio and quick ratio explains the short term solvency of the companies and their
abilities to operate capital. The current ratio of Apple during 2017 to 2021 is 1.28 to 1.07 as
there was also showing that current liabilities was decreasing year over year.Liquidity ratio of
the Apple are used by managers and investors so that they can assess the ability of the
company. So, Apple has maintained its ratio between 1.28 and 1.07 which means that Apple
has the ability to repay its short-term obligations.
Activity Ratios
Ratio/Year 2021 2020 2019 2018 2017
Inventory Turnover 20.01 20.76 30.17 36.87 31.31
Receivable Turnover 3.13 3.29 2.74 3.13 5.65
Total Asset Turnover 0.41 0.83 0.74 0.72 0.6
Table 4: Activity Ratio of Apple

5
 Activity ratio
40
35
30
25
20
15
10
5
0
2021 2020 2019 2018 2017

Inventory Turnover Receivable Turnover Total Asset Turnover

Chart 3: Efficiency analysis of Apple

The Efficiency ratios shows the ability of the firm to make use of their assets. The efficiency ratios
include Inventory turnover, receivable turnover and total asset turnover. Asset turnover is one of the
most important efficiency ratios which shows that the firm is converting its assets into sales. The
activity ratio of Apple shows that the company has managed to tap more income from the
assets available. According to the graph it is shown that the performance of the Apple is
increasing from 2017.
Leverage Ratios
Ratio/Year 2021 2020 2019 2018 2017
Debt Ratio 0.82 1.07 0.73 0.71 0.64
Times Interest
Earned Ratio 24.56
24.21 19.38 23.5 28.59
Table 5: Leverage Ratio of Apple

6
 Leverage ratio
35
30
25
20
15
10
5
0
2021 2020 2019 2018 2017

Debt Ratio Times Interest Earned Ratio

Series3 Series4
Chart 4: Capital structure analysis of Apple

The leverage ratio shows the level of leverage the companies have on their financial
statements. These ratios include debt ratio, times interest earned ratio which are used to
measure the indebtness of the firm. To calculate the total debt ratio, the total debts are the
numerator and total assets are the denominator. The debt ratio of Apple is 0.64 in 2017, 0.71in
2018, 0.73 in 2019, 1.72 in 2020 and 0.82 in 2021which shows that there is slow growth in total
assets. The graph shows that Apple has good solvency position.

2.2 Samsung financial performance

The data shown in the above table is the financial data of Samsung from 2017-2021.
Item/Year 2021 2020 2019 2018 2017

Current 190,487,123, 186,897,45 181,385,260,00 174,697,424,000 146,982,464,0

Assets 000 6,000 0 00
Current 65,423,456,0 62,546,789 63,782,764,000 69,081,510,000 67,175,114,00
Liabilities 00 ,000 0
Inventories 29,236,546,0 25,532,145 26,766,464,000 28,984,704,000 24,983,355,00
00 ,000 0
Cash 109,231,548, 107,445,74 108,779,703,00 100,939,943,000 83,184,201,00
000 5,000 0 0
Receivables 35,512,691,0 34,456,789 35,131,343,000 33,867,733,000 27,695,995,00
00 ,000 0
Total Assets 340,523,478, 345,523,47 352,564,497,00 339,357,244,000 301,752,090,0
000 8,000 0 00
Total 90,478,639,0 90,478,213 89,684,076,000 91,604,067,000 87,260,662,00
Liabilities 00 ,000 0
Total Equity 278,456,256, 256,478,23 254,915,472,00 240,068,993,000 207,213,416,0
000 4,000 0 00
Sales 245,789,456, 236,521,63 230,400,881,00 243,771,415,000 239,575,376,0

7
 000 9,000 0 00
Cost of 149,215,578, 148,256,45 147,239,549,00 132,394,411,000 129,290,661,0
Goods Sold 000 6,000 0 00
EBIT 51,987,345,0 54,213,569 27,768,509,000 58,886,669,000 53,645,038,00
00 ,000 0
Interest 645,254,000 698,124,00 686,356,000 674,617,000 655,402,000
0
Net Income 45,245,269,0 42,546,021 21,505,054,000 43,890,877,000 41,344,569,00
00 ,000 0
Table 6: Financial Data of Samsung Source: (SAMSUNG 2021)
Liquidity Ratio
Ratio/Year 2021 2020 2019 2018 2017
Current Ratio 2.91 2.98 2.84 2.53 2.19
Quick Ratio 2.46 2.57 2.42 2.11 1.82
Cash Ratio 1.69 1.71 1.70 1.46 1.24
Table 7: Liquidity Ratio of Samsung

Liquidity Ratio
3.5

2.5

1.5

0.5

0
2021 2020 2019 2018 2017

Current Ratio Quick Ratio Cash Ratio

Chart 5: Liquidity analysis of Samsung

,1
$
1$
8
%
$"(

"$
%%$*

$
$*

"$
$
$
(( $"
   
$= 
9
  ($
* $
 
% 
" 8+229'
. ;
<
$*
 $
$ 
"$
%$%
  $"  $
  
"$
10
% $%
$
$=/*
1
$$
1
*%
$
$%
%7%
 "$$
(
$
((

11
$"
  $
%*
/" (
$$
($
$
$"
/ $  8
+229'
+B;
<@
""(
)"$
1"$
12
$$%!
+$*

$%
1
/
$
,1
$
1$
%
$"(

"$
%%$*
13

$
$*

"$
$
$
(( $"
   
$= 
  ($
* $
 
% 

14
" 8+229'
. ;
<
$*
 $
$ 
"$
%$%
  $"  $
  
"$
% $%
$
$=/*
1
15
$$
1
*%
$
$%
%7%
 "$$
(
$
((

$"
  $
%*

16
/" (
$$
($
$
$"
/ $  8
+229'
+B;
<@
""(
)"$
1"$
$$%!
+$*

17
$%
1
/
$
By measuring the liquidity ratio, it is possible to determine how well Samsung can meet its
short term debts without any requirement to raise the capital. Since profitability is an
important factor in making decisions, liquidity is also important in evaluating the financial
position of the firm. The Liquidity ratio of Samsung shows that they have effectively managed
the working capital which depicts effective management of liquidity. The optimal ratio should
be between 1.5 and 2.0 and below 1.0 means that they are insufficient in meeting their current
liabilities and above 2.0 means that they are solvent to run in future.
Activity Ratio
Ratio/Year 2021 2020 2019 2018 2017
Inventory Turnover 5.24 2.83 2.64 2.45 2.39
Receivable 3.51 3.39 3.56 3.20 3.56
Turnover
Total Asset 0.34 0.33 0.33 0.38 0.39
Turnover
Table 8: Activity Ratios

Activity Ratio
6

0
2021 2020 2019 2018 2017

Inventory Turnover Receivable Turnover Total Asset Turnover

Chart 6: Efficiency analysis of Samsung

18
The Activity ratio shows that in the beginning they were less effective in collecting payments
from debtors but later they have shown improvements in inventory efficiency. From 2017 to
2020 the inventory was fluctuating between 2.39 to 2.83 but then in 2021, this value increased
to 5.24 which shows that inventory is effectively managed in 2021. The decrease in the value of
receivable turnover shows that from 2017 to 2021 Samsung faced difficulties in receiving
payments from their debtors.
Leverage Ratio
Ratio/Year 2021 2020 2019 2018 2017
Debt Ratio 2.65 0.26 0.25 0.26 0.28
Times Interest 78.12% 80.72% 40.46 87.29 81.85
Earned Ratio
Table 9: Leverage Ratio

Leverage Ratio
100
90
80
70
60
50
40
30
20
10
0
2021 2020 2019 2018 2017

Debt Ratio Times Interest Earned Ratio

Chart 7: Capital structure analysis of Samsung

Debt ratio of less than 100% is shown by Samsung which is desirable by creditors and investors
also. The above ratios shows the good financial position of the company as they are less reliant
on debts. The ratios also showed that company should be more solvent. By the above
mentioned results, Samsung still shows lesser risks to the investors and creditors so select them
for investment.
Profitability Ratio
Ratio/Year 2021 2020 2019 2018 2017
Return on Equity 20% 15% 8% 18% 20%
Return on Assets 15% 12% 6% 13% 14%
Profit Margin 15% 10% 9% 18% 17%
Table 10: Profitability Ratios

19
 Profitability Ratio
25%

20%

15%

10%

5%

0%
2021 2020 2019 2018 2017

Return on Equity Return on Assets Profit Margin

Chart 8: Profitability analysis of Samsung

The profitability ratios shows that the company has faced problems in generating profits which
increased the operating costs and decrease in sales. The decline in the return on equity shows
that Samsung have slowed down in seeking so that they can generate return on investors which
is discouraging for them as investors will face risk in investing in their company.
2.3 Nokia financial performance
The data shown in the above table is the financial data of Nokia from 2017-2021.

Item/ Year 2021 2020 2019 2018 2017

Current Assets 19,457,000 17,798,000 16,808,000 18,271,000 19,864,000
Current 12,478,000 15,789,000 12,055,000 14,104,000 12,744,000
Liabilities
Inventories 3,741,000 4,578,000 2,936,000 3,168,000 2,646,000
Cash 7,145,000 6,412,000 6,171,000 7,116,000 8,582,000
Receivables 5,987,000 5,231,000 5,025,000 4,856,000 6,880,000
Total Assets 40,854,000 40,125,000 39,128,000 39,517,000 41,024,000
Total 25,782,000 24,235,000 23,727,000 24,146,000 24,806,000
Liabilities
Total Equity 15,879,000 15,546,000 15,325,000 15,289,000 16,138,000
Sales 24,546,000 23,789,000 23,315,000 22,563,000 23,147,000
Cost of Goods 15,456,000 15,213,000 14,989,000 14,117,000 14,008,000
Sold
EBIT 2,321,000 2,154,000 2,124,000 1,377,000 1,590,000
Interest 415,000 401,000 308,000 282,000 509,000
Net Income 9000 8000 7,000 -340,000 -1,494,000
Table 11: Financial Data of Nokia Source: (NOKIA 2021)

20
Profitability Ratios
Ratio/Year 2021 2020 2019 2018 2017
Return on 0.00051 0.00046 0.00045 -0.02 -0.09
Equity
Return on 0.00020 0.00018 0.00017 -0.0086 -0.03
Assets
Profit Margin 0.00036 0.00034 0.00030 -0.01 -0.06
Table 12: Profitability Ratios

The annual revenue of Nokia for 2022 was $26.246B which is a decline of 0.08% from 2021. For
2021, their annual revenue was $26.267B which is again an increase of 5.23% from 2020. In
2020, now the annual revenue was $24.962B which was a decline by 4.41% from 2019.

Profitability ratio
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2021 2020 2019 2018 2017

Return on Equity Return on Assets Profit Margin

Chart 9: Profitability analysis of Nokia

Liquidity Ratios
Ratio/Year 2021 2020 2019 2018 2017
Current Ratio 1.55 1.12 1.39 1.29 1.55
Quick Ratio 1.25 0.83 1.15 1.07 1.35
Cash Ratio 0.57 0.40 0.51 0.50 0.67
Table 13: Liquidity Ratio

21
 Liquidity ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2021 2020 2019 2018 2017

Current Ratio Quick Ratio Cash Ratio

Chart 10: Liquidity analysis of Nokia

The current ratio of Nokia ranges from 1.12 to 1.55 and the quick ratio is 1.35 in 2017, 0.83 in
2020 and then again in 2021 this ratio increased to 1.25. The liquidity ratios are above 1 which
shows that Nokia has good liquidity ratio and is able to meet their current obligations.

Activity Ratio
Ratio/Year 2021 2020 2019 2018 2017
Inventory Turnover 1.89 2.02 2.45 2.42 2.39
Receivable 2.18 2.31 2.35 1.92 1.89
Turnover
Total Asset 0.30 0.30 0.29 0.28 0.27
Turnover
Table 14: Activity Ratios

22
 Activity ratio
3

2.5

1.5

0.5

0
2021 2020 2019 2018 2017

Inventory Turnover Receivable Turnover Total Asset Turnover

Chart 11: Efficiency analysis of Nokia

There has been both increase and decrease in the efficiency level of Nokia with respect to
inventory turnover, receivable turnover and total asset turnover and therefore future cannot
be predicted with certainty.
Leverage Ratios
Ratio/Year 2021 2020 2019 2018 2017
Debt Ratio 0.63 0.60 0.60 0.61 0.60
Times Interest 7.01 6.88 6.89 4.88 3.12
Earned Ratio
Table 15: Leverage Ratio

Leverage ratio
8
7
6
5
4
3
2
1
0
2021 2020 2019 2018 2017

Debt Ratio Times Interest Earned Ratio

Chart 12: Capital structure analysis of Nokia

23
3. Investment recommendation
By studying the financial status of all the three companies, it is better to invest in Apple due to its better
financial position. The mobile companies have to invest massive capital in the market for the
development of new product which requires huge capital in R&D so that they can attain competitive
status. Apple Inc. is a global technology company that designs, manufactures, and sells
smartphones, accessories, computers etc. the company is also growing its business in iCloud
service and its digital streaming. Apple pays regular cash dividend of $0.22 share quarterly
which is a great reward for the investor to get regular returns in it and in its shares apple has
16, 530, 100, 00 shares in outstanding, as mention in above table of apple its net income is
increasing yearly by 10% having $20.2 billion as net income and its earning per share is $1.00.
As I know that the company is penetrating in new markets for growth, the company has a large
capital return in form of share repurchase and dividend increases that rewards the
shareholders. In today’s competitive world apple company is the biggest company to invest in
it, where there is less risk involved and its rewards are safe and higher for the investor and its
stocks are increasing by 0.8%, which is a good news.

4. Accounting Standards and limitation of financial reporting and analysis

The financial statements are important for the stakeholders. This is the report card of the
company. So, it is important that these statements does not provide misleading information.
For this accounting standards are used to regulate the information. The main aim of accounting
Standards is to ensure transparency, reliability, consistency and comparability of the financial
statements. For preparing financial statements, every company follow certain rules and
guidelines which is known as accounting policies. Every company has to follow these policies so
that they can provide consistent financial statements.
While making analysis, the parties who are wishing to invest in any company must know that
financial statement analysis has many limitations:
 The financial statement analysis is just means to reach to the conclusions. Through this
statement sound judgement cannot take place. The decisions should depend on the
intelligence of the analyst.
 The data provided in the financial statement is just the information about the past
which is analyzed to make investments. But this does not provide information about
future estimations and planning.
 There is problem in comparability, as the size of every business is varied. The figures
provided in financial statements may lose characteristics of comparability.
 Sometimes the results and the figures provided in the financial statements are
manipulated and not reliable which can lead to wrong decisions.
 There are various methods of accounting and financing, which an analyst has to keep in
mind. Some of the basic understanding an analyst should have like the closing stock of
raw materials are valued at purchase cost and that of finished good is valued at market
price or cost price whichever value is less.
 Over many years, there are changes in accounting methods. If there are frequent
changes then the values provided in the financial statements may change and become
incomparable. On such cases, analysis becomes baseless.

24
  Due to inflation, the value of money changes, due to which there are problems in the
study of analysis of financial statements.
 There are many different tools available which are used by an analyst for analysis. Nut if
these tools or techniques are not used properly by an analyst then there are chances
the results arrived after analysis may be misleading.
 The comparison and analysis cannot be made between two companies, since every year
the conditions of the businesses change, so analysis becomes difficult.

Bibliography

Business News: Business News Today, Live Business News, Financial News India, Latest Business
News. (n.d.). Retrieved 12 12, 2022, from https://www.financialexpress.com/
Company Overview of Hilton Worldwide Holdings Inc. (n.d.). Retrieved 12 12, 2022, from
http://investing.businessweek.com/research/stocks/private/snapshot.asp?
privcapId=29470
Cooper, W. H., Jurenas, R., Platzer, M. D., & Manyin, M. E. (2011). The EU-South Korea Free
Trade Agreement and Its Implications for the United States. Retrieved 12 12, 2022, from
https://fas.org/sgp/crs/row/r41534.pdf
Microsoft to buy Nokia phones unit. (n.d.). Retrieved 12 12, 2022, from BBC:
https://www.bbc.co.uk/news/business-23940171
Nokia to sell Devices & Services business to Microsoft in EUR 5.44 billion all-cash transaction.
(n.d.). Retrieved 12 12, 2022, from Nokia: http://press.nokia.com/2013/09/03/nokia-to-
sell-devices-services-business-to-microsoft-in-eur-5-44-billion-all-cash-transaction/

APPLE (2022) Apple Reports Fourth Quarter Results - Apple (UK), Website. Available at:
https://www.apple.com/uk/newsroom/2022/10/apple-reports-fourth-quarter-results/
(Accessed: 12 December 2022).
Conn Faife (2022) Lapsus$ gang claims new hack with data from Apple Health partner - The
Verge, Website. Available at: https://www.theverge.com/2022/3/30/23003194/lapsus-gang-
new-hack-apple-facebook-globant (Accessed: 1 May 2022).
Nokia (2021) Nokia Financial Report 2021, Website. Available at:
https://www.nokia.com/system/files/2022-03/nokia-ar21-en.pdf (Accessed: 12 December
2022).
Nokia (2022) Nokia Corporation Financial Report for Q3 2022 | Nokia, Website. Available at:
https://www.nokia.com/about-us/news/releases/2022/10/20/nokia-corporation-financial-
report-for-q3-2022/ (Accessed: 12 December 2022).

25
Samsung (2022) Financial Statements│ Financial Information │ Investor Relations │ Samsung
Global |, Website. Available at:
https://www.samsung.com/global/ir/financial-information/audited-financial-statements/
(Accessed: 12 December 2022).
VIVALDI (2021) Creating a Customer Experience For Samsung | Vivaldi, Website. Available at:
https://vivaldigroup.com/en/works/samsung/ (Accessed: 30 August 2021).

26
APPENDIX
The formulas which are used for calculating the financial performance of Apple, Samsung and
Nokia are as follows:
Current Ratio= Current Assets
Current Liabilities

Quick Ratio = Current Assets – Inventory

Current Liabilities
Cash Ratio = Cash and Cash Equivalents
Current Liabilities

Inventory Turnover ratio = Cost of goods sold

Average Inventory
Average Inventory = Opening Inventory + Closing Inventory
2
Receivable Turnover ratio = Total Credit Sales
Average Receivables
Average Receivable = Opening Receivable + Closing Receivable
2
Total Assets turnover ratio = Total Sales
Average total assets
Debt Ratio = Total Debt
Total Assets
Return on Equity = Net Income
Shareholder’s Equity
Return on Assets = Net Income
Total Assets
Profit Margin Ratio = Net Profit
Revenue

27