A138872 ZHANG LUWEN
A138900 WANG KETAO
A138876 LU JIAYAO
A138853 HUANG XING
VS
Organization of Apple was established in 1976 as a computer company. However, in the last decade, Apple has expanded into a complex company that specializes in much more than just computers. In 2001, Apple broke the barrier with the iPod, eventually becoming the dominant market leader in music players. In following, Apple joined the phone industry in 2007 with the iPhone, which has also been widely successful.
In 1938, Samsung began as a small business trading produce and consumer goods. Almost 70 years later, Samsung has transformed itself into a global powerhouse whose superior products and services now range from semiconductors and LNG ships to fine chemicals and financial services, just to name a few.
Background-Apple
-Samsung
Apple & Samsung Financial Statements (2009, 2010 and 2011)
-Apple
-Samsung
Apple Ratios and analysis (in thousands of US dollars)
I. Liquiditya) Current Ratio
The primary liquidity ratio is the current ratio, which is calculated by dividing current assets by current liabilities:
Current ratio = Current assets/ Current liabilities
2009 2010 2011
Current ratio 0.40x 2.01x 1.61x
2009 2010 20110
0.5
1
1.5
2
2.5
Current ratio
Current ratio
2009 2010 2011
Quick ratio 0.32x 1.96x 1.58x
b)Quick Ratio The second liquidity ratio is the quick ratio, which is
calculated by deducting inventories from current assets and then using the remainder to divide current liabilities:
Quick ratio = (Current assets-Inventories)/ Current liabilities
2009 2010 20110
0.5
1
1.5
2
2.5
Quick ratio
Quick ratio
2009 2010 2011
Inv. turnover 80.30x 62.06x 139.50x
II. Asset Managementa) Inventory Turnover Ratio
Inventory turnover is calculated by sales dividing inventories.
Inventory turnover = Sales / Inventories
2009 2010 20110
20406080
100120140160
Inv. turnover
Inv. turnover
2009 2010 2011
DSO 33.58 30.83 18.10
b) DSO (Days Sales Outstanding)It is calculated using account receivables to divide the
average daily sales .Thus, the DSO represents the average length of time the firm must wait after making a sale before receiving cash:
DSO= Receivables / Average sales per day
2009 2010 201105
10152025303540
DSO
DSO
c) Asset Turnover Ratioi) Fixed Assets Turnover RatioFixed Assets Turnover = Sales / Net fixed assetsii) Total Assets Turnover Ratio
Total Assets Turnover = Sales / Total assets
2009 2010 2011
FA turnover 0.84x 1.95x 1.52x
TA turnover 0.68x 0.87x 0.93x
2009 2010 20110
0.5
1
1.5
2
2.5
FA turnoverTA turnover
2009 2010 2011
D/A 48% 36% 34%
III. Debt Management RatiosThe use of debt will increase, or “leverage up”, a firm’s ROE if
the firm earns more on its assets than the interest rate it pays on debt. However, debt exposes the firm to more risk than if it is financed only with equity:
Debt ratio = Total debt / Total assets
2009 2010 20110%
10%
20%
30%
40%
50%
60%
D/A
D/A
2009 2010 2011PM 16% 21% 24%BEP 14.8% 24.7% 29.4%
IV. Profitability Ratios:a) Profit MarginThe profit margin, also sometimes called the net profit margin, is calculated
by using net income to divide sales:Profit margin = Net income/Sales
b) Basic Earning Power (BEP) RatioThe Basic Earning Power Ratio is calculated by using operating income
(EBIT) to divide total assets:BEP = EBIT/Total
assets
2009 2010 20110%
5%
10%
15%
20%
25%
30%
35%
PMBEP
C) Return on Assets Return on Assets=Net income/Total assetsd) Return on Equity Return on Equity=Net income/Total common equity
2009 2010 2011
ROA 11% 19% 22%
ROE 20.4% 29.3% 33.8%
2009 2010 20110%
5%
10%
15%
20%
25%
30%
35%
40%
ROAROE
Samsung Ratios and analysis
I. Liquiditya) Current RatioThe primary liquidity ratio is the current ratio, which is calculated by current assets dividing current liabilities:
Current ratio = Current assets/ Current liabilities
2009 2010 2011
Current ratio 1.65x 1.54x 1.61x
2009 2010 20111.48
1.5
1.52
1.54
1.56
1.58
1.6
1.62
1.64
1.66
Current ratio
Current ratio
b) Quick Ratio The second liquidity ratio is quick ratio, which is calculated by deducting inventories from current assets and then using the remainder to divide current liabilities:
Quick ratio =( Current assets-Inventories)/ Current liabilities
2009 2010 2011
Quick ratio 1.38x 1.20x 1.26x
2009 2010 20111.1
1.15
1.2
1.25
1.3
1.35
1.4
Quick ratio
Quick ratio
II. Asset Managementa) Inventory Turnover Ratio Inventory turnover is calculated by sales dividing inventories.
Inventory turnover = Sales / Inventories
2009 2010 2011
Inv. turnover 13.93x 11.57x 10.50x
2009 2010 20110
2
4
6
8
10
12
14
16
Inv. turnover
Inv. turnover
b) DSO (Days Sales Outstanding)It is calculated using account receivables to divide the average daily sales .Thus, the DSO represents the average length of time the firm must wait after making a sale before receiving cash:
DSO= Receivables / Average sales per day
2009 2010 2011
DSO 65.73 50.30 53.43
2009 2010 20110
10
20
30
40
50
60
70
DSO
DSO
c) Asset Turnover Ratioi) Fixed Assets Turnover RatioIt is the ratio of sales (on the profit and loss account) to the value of fixed assets (on the balance sheet). It indicates how well the business is using its fixed assets to generate sales. This ratio is calculated by using sales to divide net fixed assets.
Fixed Assets Turnover = Sales / Net fixed assets
ii) Total Assets Turnover RatioIt measures the efficiency of a company's use of its assets in generating sales revenue or sales income to the company. This ratio measures the turnover of all of the firm’s assets, and it is calculated using sales to divide total assets:
Total Assets Turnover = Sales / Total assets
2009 2010 2011
FA turnover 2.47x 2.12x 1.96x
TA turnover 1.18x 1.15x 1.06x
2009 2010 20110
0.5
1
1.5
2
2.5
3
FA turnoverTA turnover
III. Debt Management RatiosThe use of debt will increase, or “leverage up”, a firm’s ROE if the firm
earns more on its assets than the interest rate it pays on debt. However, debt exposes the firm to more risk than if it is financed only with equity:
Debt ratio = Total debt / Total assets
2009 2010 2011
D/A 38% 33% 35%
2009 2010 201130%
31%
32%
33%
34%
35%
36%
37%
38%
39%
D/A
D/A
IV. Profitability Ratiosa) Profit MarginThe profit margin, also sometimes called the net profit margin, is calculated
using net income to divide sales:Profit margin = Net income/Sales
b) Basic Earning Power (BEP) Ratio The Basic Earning Power Ratio is calculated using operating income
(EBIT) to divide total assets:BEP = EBIT/Total assets
2009 2010 2011
PM 19.2% 21.5% 24%
BEP 14% 11% 18%
2009 2010 20110.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
PMBEP
c) Return on assetsThe (ROA) percentage shows how profitable a company's assets are in generating revenue. This ratio is calculated using net income to divide total assets.
Return on Assets=Net income/Total assets
d) Return on equityThis ratio is calculated using net income to divide total common equity. It measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners, and measures a firm's efficiency at generating profits from every unit of shareholders' equity .ROE shows how well a company uses investment funds to generate earnings growth.
Return on Equity=Net income/Total common equity
2009 2010 2011
ROA 8.6% 12% 8.8%
ROE 14% 18% 13%
2009 2010 20110.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
ROAROE
COMPARISONS OF THE TWO COMPANIES
Samsung(2011) Apple(2011)0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Current ratio
Current ratio
Samsung(2011) Apple(2011)0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Quick ratio
Quick ratio
Liquidity positionLiabilities
Inventory management
Samsung(2011) Apple(2011)0
20
40
60
80
100
120
140
160
Inv. turnover
Inv. turnover
Samsung(2011) Apple(2011)0
10
20
30
40
50
60
DSO
DSO
Inventory Collection of cashCredit policy
Samsung(2011) Apple(2011)0
0.5
1
1.5
2
2.5
FA turnover
FA turnover
Samsung(2011) Apple(2011)0.85
0.9
0.95
1
1.05
1.1
TA turnover
TA turnover
Fixed assetSales Current Assets
Samsung(2011) Apple(2011)32%
34%
36%
D/A
D/A
Samsung(2011) Apple(2011)0%
5%
10%
15%
20%
25%
30%
Profit margin
Profit margin
DebtAccount payable
Net incomeSalesCosts
Samsung(2011) Apple(2011)0%
5%
10%
15%
20%
25%
30%
35%
BEP
BEP
Samsung(2011) Apple(2011)0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
ROA
ROA
EBITNet income
Samsung(2011) Apple(2011)0%
5%
10%
15%
20%
25%
30%
35%
40%
ROE
ROE
Net incomeTotal common equity
Conclusion
• Samsung: good in 2010, decreases in 2011• Apple: upward performance tendency• Assets: Apple bigger• Inventory : Samsung bigger• DSO: Samsung longer• Debt: Samsung bigger• EBIT: Apple bigger• Costs: Samsung bigger
THANKS FOR ATTENTION