Group Members

 Nosheen Memon

Project Report 


Sheeba Ansari
Asad Hussain
Muhammad Osaf
Subject: (Intro To Business Finance)

Submitted to: Sir Asim Sheikh
Company Name: (Samsung Electronics)
Brief Introduction of the Company:
Samsung Electronics Co., Ltd. (“SEC” or “the Company”) was established as Samsung
Electronics Industry Co., Ltd. on January 13, 1969, and held an initial public offering on June 11,
1975. SEC changed its name from Samsung Electronics Industry Co., Ltd. to Samsung
Electronics Co., Ltd. following a resolution passed at the Annual General Meeting (AGM) of
shareholders on February 28, 1984.
The Company (defined below) consists of business divisions that operate independently: CE
(Consumer Electronics); IM (Information Technology & Mobile Communications); DS (Device
Solutions); and Harman (Harman International Industries, Inc. and its subsidiaries), which
produces automotive electronics components.
SEC is a global electronics firm consisting of headquarters in Korea and 228 subsidiaries
(collectively, “Samsung Electronics” or the “Company”) across the world, including 9 regional
headquarters for the CE and IM Divisions, 5 regional headquarters for the DS Division, and the
Harman Division’s subsidiaries.
Key products in each Division are presented below:

[CE Division] The CE Division manufactures TVs, monitors, refrigerators, washing machines
and air conditioners, leading the global digital market with its differentiated technology, designs,
and products, including premium TVs based on leading technologies such as Neo QLED;
Lifestyle TVs that align with the lifestyles of customers who value experiences; and Bespoke
products, which are customized to satisfy various needs of our customers. TV is the core product
of the CE Division and Samsung has maintained its position as the market leader in this category
for 16 straight years. We will continue to strengthen our reputation as a global brand and add to
our market power by continually releasing new products that satisfy the needs of our customers
and reflect the current trends. At the same time, Samsung will continue to innovate in the
premium and Lifestyle TV markets while strengthening global sales of bespoke products.

[IM Division] The IM Division manufactures and sells smart mobile devices, network
systems, and computers. For smartphones, a key product of the business, we have developed a
broad lineup ranging from low-end right through to premium models with the Galaxy series.
Through the Galaxy Ecosystem, we will deliver top-notch Multi-Device experiences, allowing
customers to conveniently and seamlessly use not just the mobile products but also the TV and
home appliance products. At the same time, we will lead the global 5G market based on our end-
to-end solutions, which encompass handsets, chipsets, as well as our commercialization
experience in initial 5G markets.

[DS Division] The Memory Business, System LSI Business, Foundry Business, and Display
Panel (“DP”) Business make up the DS Division. The Memory Business manufactures and sells
DRAM and NAND products; the System LSI Business designs and sells mobile application
processors (“mobile APs” or “APs”) and camera sensor chips; the Foundry Business is in charge
of consignment production of semiconductors; and the DP Business manufactures and sells
display panels

[Harman Division] The Harman Division consists of the automotive component

business, which designs and develops connected products and solutions for automakers; and the
lifestyle audio business, which provides consumer audio products and professional audio
solutions. Harman, as a leader in the automotive component market, supplies car manufacturers
with products that apply innovative technologies. And in the audio market, it has been firmly
establishing the brand reputation among consumers and audiophiles. Harman has established an
internationally renowned brand and offers diverse product lines, using internal development as
well as strategic acquisitions to strengthen its competitiveness in each business area.

Company’s Vision:
“To inspire the world with our innovative technologies, products, and design that enrich
people's lives and contribute to social prosperity by creating a new future.”

Company’s Mission
“To devote its talent and technology to creating superior products and services that
contribute to a better global society.”

Office Locations:
Main Headquarter is in: (Address: 129, Samsung-ro, Yeongtong-gu, Suwon, Gyeonggi-do,
Korea)

Company’s Management:
The company had 3 CEOs

I. Ki Nam Kim
II. Hyun Suk Kim
III. Dong-Jin Koh
from March 2018 until December 2021
Company’s Products:
 LCD
 LED panels
 Mobile phones
 Memory chips
 NAND flash
 Solid-State Drives(SSD’s)
 Televisions (Samsung smart TV’s
 Digital cinemas screen
 Laptops.

Company’s Competitors in the Market:

 Apple
 LG Electronics
 Sony
 HTC
 Huawei Technologies
 Intel
 Electrolux
 Lenovo Group Limited
 Panasonic Corporation

Sources: https://www.samsung.com/pk
https://www.samsung.com/us
Samsung’s official Financial Statement As of December 2021
 Ratio Analysis
(Liquidity Ratio’s)

 Current Ratio
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 218163185
Current Ratio = = = 2.475x
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 88117133

Samsung has 2.475 times of current liabilities in current assets.

 Quick Ratio

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠−𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠 218163185−41384404

Quick Ratio = = = 2.006x
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 88117133

Samsung does not have equal current assets and current liabilities since
it has a quick ratio of 2. It simply means it has double assets in
comparison to its liabilities and can easily pay current liabilities.

(Asset Management Ratios)

 Inventory turnover Ratio

𝑆𝑎𝑙𝑒𝑠 279604799
Inventory Turnover Ratio = = = 6.756x
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠 41384404
Samsung has good inventory turnover ratio, it does not have unsold
goods kept for so long. It can mean that consumers are exceeding
supply.

 Fixed Assets Turnover

𝑆𝑎𝑙𝑒𝑠 279604799
Fixed Assets Turnover =
𝑁𝑒𝑡 𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡𝑠
= = 1.341x
208457973
It shows the efficiency of Samsung to use its fixed assets in order to
generate its sales.

 Days Sales Outstanding

𝑅𝑒𝑐𝑒𝑖𝑣𝑒𝑎𝑏𝑙𝑒𝑠 45210672
Days Sales Outstanding=
𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑒𝑠/365
= 279604799 = 59.018 ~ 59 days
365

Samsung has a high DSO that might mean it has lose credit policy or it faces
delays in receiving payments.

 Total Assets Turnover Ratio

𝑆𝑎𝑙𝑒𝑠 279604799
Total Assets Turnover Ratio = = = 0.6553x
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 426621158
It has low asset turnover ratio that means it does use its assets efficiently
to generate sales.

(Profitability Ratios)

 Operating margin

𝐸𝐵𝐼𝑇 53351827
Operating Margin =
𝑆𝑎𝑙𝑒𝑠
= 279604799
= 0.1908%

(Here we couldn’t found EBIT, but there was only EBT Given in the financial statement, so
that’s why we had written EBT as a “EBIT”)

Samsung earns 19% operating income from its core operations which is
a good rate.
  Profit Margin

Profit Margin =
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 = 49909749
= 0.1785%
𝑆𝑎𝑙𝑒𝑠 279604799

Samsung earns 17% of profit as opposed to its costs and expenses. It

shows that with every sale Samsung earns 17% of profit.

 Return on Total Assets

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 49909749

Return on Total Assets= = 426621158
= 0.1167%
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

Samsung utilizes 11% of its assets to earn income, however it can

improve performance when utilizing its resources in order to generate
income.

 Return on Equity

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 49037912

Return on Equity = = 778047
= 63.02%
𝐶𝑜𝑚𝑚𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦

Samsung has a very high ROE, It means 63% of income is generated by

common equity.

 Basic Earning Power (BEP)

𝐸𝐵𝐼𝑇 53351827
BEP =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
= 426621158
= 0.125%
It shows that Samsung has good BEP ratio, it uses 12% of assets to
generate earnings.

(Debt Management Ratio’s)

 Debt Ratio

𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡
Debt Ratio = 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 = 12721227
= 0.2853%
426621158

This means that Samsung is 28% debt financed.

 Times Interest Earned

𝐸𝐵𝐼𝑇
TIE = 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐶ℎ𝑎𝑟𝑔𝑒𝑠 = 53351827
= 80.39x
663659

The Samsung can pay its interest charges 80 times in terms of its
earnings which is a great score.

(Market Value Ratios)

 Price to Earning Ratio = Price per share/Earning per share = 13.6

It indicates that with every share, of Samsung investor earns 13.6 USD.
 Market Book Ratio = Market price per share/Book value per share = 1.7x
The Samsung stock is overvalued. It means investors are paying more in terms of book
value.

Notes

 All values are in (In millions of Korean won, “ KW”). Because company is basically from
South Korea and their currency is Korean won, that’s why it is in “KW”.
  EBIT (EBIT is EBT, we were unable to find interest charges and there was no interest amount
given in the financial statement).
 Total assets are calculated at fair value.
 Errors and deductions may be accepted
 Report is based on Financial Position of the company as of December 31st 2021

Conclusion and Comparison with Industry Average

Ratio Name: Company Ratio Industry Average
Current Ratio 2.475x 2.07x
Quick Ratio 2.006x 1.74x
Inventory Turnover 6.756x 3.7x
Fixed Asset Turnover 1.341x 1.25x
Day Sales Outstanding 58 Days 37 Days
Total Assets Turnover 0.6553x 0.47x
Operating Margin 19.08% 27.46%
Profit Margin 17.85% 46.6%
Return On Total Assets 11.67% 11.8%
Return on Equity 63.02% 20.83%
Basic Earning Power 12.5% 11.5%
Debt Ratio 28.53% 26%
Times Interest Earned 80.39x 40.36x
Price to Earning Ratio 13.6 10.5
Market Book Ratio 1.7x 2.3x

As an industry averages, we have taken Intel Ratio Analysis (Samsung Top Competitor) to
compare the ratios with Samsung and in which condition it stands in comparison of the entire
industry.
From the comparison, it is concluded that Samsung is working toe-to-toe with the Industry. It is
even more efficiently managing all its operations and resources. However, it needs a little more
efficient utilization on asset management to enhance sales and net income in comparison to
resources.

Conclusion and Recommendation

In perspective of investors, Samsung is a good investing choice as it is only 28% debt financed
which means less interest charges and principal amount and more dividend share. Also, looking
at the P/E ratio, it gives 13.6 value to one share, which is a good ratio figure as compared to the
industry, having 10.5 ratio. The ROE is also greater as compared to the Intel’s ROE in 2021, it
suggest that Samsung earns 63% return on common equity. Moreover, looking at the TIE ratio, it
indicates that Samsung can pay its interest charges 80 times from its current earnings, that either
means it has low debt financing or high earnings, in either cases, it is a good opportunity for
investors to purchase stocks from the company. In conclusion, Samsung performance overall is
very good and efficiently managed, the return on equity is high and earning per share is also
moderate that is, $4.86, which also satisfies the industry average of EPS, investors must invest in
stocks of Samsung.