Samsung company
- Address the major reason(s) why choosing Samsung as your company.
The major reason as to why I chose Samsung Company is because it is one of the multinational corporations. The firm is known to be one of the biggest players in the industry in which it falls under, that is, the technological industry, which has giants such as Apple, Techno, to mention a few. This ranking or rather position is based on the market share and the sales volume. The Samsung brand is popular and is found in almost all parts of the globe. Many people use the products from the company as they offer affordable rates in the market compared to their close competitors Apple, which charge premium prices.
- Explain how you think this company might provide value if you were to acquire their stock.
If I were to acquire the stock by Samsung, I would ensure that I set competitive prices as a way of creating value. In this case, I will set the prices of the stocks to be slightly below the market price. This move will help in luring more clients on board. In the process, the firm will be able to raise good money that will in turn be invested. These returns on investments will then be used for expansion purposes. After the expanded firm fetches returns, the proceeds will then be utilized in other value addition activities.
- Assess how the Samsung company appears to approach issues of ethical behavior and social responsibility and how this might affect its value.
Samsung company is one of the entities that is said to operate ethically. This firm, in the course of conducting its day to day activities, recognizes that there are differences in laws, regulations as well as practices. This has been practically applied by it through developing and implementing a global personal data security policy that aims at respecting the privacy of the clients and the employees. Besides, it is also noted that the firm has a compliance policy that ensures that all the employees embrace value judgment when interacting with the clients (Lee, 2006). This has been found to positively affect value.
On the other hand, when it comes to social responsibility, Samsung is one of the firms that is said to be corporate socially responsible and this is evident through its efforts to the surrounding environment where it operates from. For instance, the firm has been able to invest in various social courses such as providing scholarships. This move plays a significant role in value creation in the sense that the community members develop a sense that Samsung is thoughtful, thus increasing their loyalty to it.
- Describe the specific data elements from your evaluation of the financial performance of your chosen company (Samsung) that indicate the company’s performance.
One of the specific data elements that can be used in the evaluation of the financial performance by Samsung is the profits and losses. These elements are important in determining whether the firm is a going concern or not, that is, whether Samsung may close its operations soon or survive in the market. In order to arrive at the profit or loss, two important data elements are involved and these are incomes or rather revenues and expenses. Higher revenues indicate positive performance and vice versa. Higher expenses indicate negative performance and vice versa.
- List your observations from the balance sheet, the income statement, and the statement of cash flow that are unique to your company (Samsung) and could be indicative of any positive or negative trends.
From the balance sheet of the firm, it is noted that the liabilities are less than the assets. The implication of this is that the firm is operating at a profit, and this is one of the most desirable position. On the other hand, when it comes to the income statement, this firm has always been recording positive net incomes, though the trend has been decreasing in the last three years. This shows that there is a decline in the proceeds by the firm. The other cause of a decline in the net income is that the operating expenses has been having an increasing trend over the captured period. Last but not least, from the statement of cash flow, it is noted that the net change in cash flow has been having a decreasing trend. This indicates negative performance.
- Explain your rationale for including the data elements to compare your company (Samsung) within the overall market.
One of the data elements that can be used in comparing the firm’s performance with that of the market is profits. The main goal of any firm regardless of the industry or market in which it falls under is to make profits. Given this case, profitability is an important data element in the determination of performance. Apart from that revenues and expenses are the other important data elements that can be used in making comparisons for a firm. This is because the two are usually involved in the conducting of the day to day operations in a firm.
- Explain what the results of your calculations say about the overall health of the company and its future value.
From the results of my calculation, it is evident that the firm has been having an increasing trend in profitability. The implication of this is that the future value of it will increase. When a firm is making profits, it means that it is able to meet its obligations. Therefore, such entity may not have the intention of closing any soon.
- Describe the data points you found in the annual report that relate to the company’s capital constraints and spending trends.
One of the data points that I found in the annual report that relates to capital constraint for Samsung is the equity that is attributable to the owners of the parent. This element comprised of elements such as preference and ordinary shares, share premium, along with retained earnings. On the other hand, when it comes to the spending trends, the data points that were featured in the firm’s annual report include the advance payments, which are payments that were made to the suppliers before the commodities were delivered. The other data point, in this case, was the prepaid expenses, which are expenses that are incurred on ordering for services.
- Interpret the data points and explain whether or not the company is making appropriate capital expenditure allocations.
From my interpretation of the data points, it is noted that Samsung is making appropriate expenditure allocations. This is because of the fact that much as it has some already incurred expenses, the firm sets a provision that will be used to carter for any additional expenses that are unforeseen. This is well covered in the prepaid expenses element. For the case of capital, it is noted that the firm is also making appropriate allocations to this effect. This is because it captures the needs of all kinds of shareholders in such provision.
- Explain why choosing the market analysts.
The reason as to why market analysts should be used in carrying out the analysis of a firm is because they have an overall overview of how the market operates. Given this case, they are able to provide a sound comparison of the operations of the firm to that of its competitors.
- Explain how the market analysts’ current opinions of the company (Samsung) compare to the picture you have formulated of the company thus far.
The current opinion of the market analysts is similar to the picture that I have so far formulated. The reason for the similarity is because I had also ventured into outside research with the aim of getting to know the overall market outlook. Therefore, my findings are in line with the findings from the market analysts.
- Explain how the 10 ratio analyses of the company’s financial assets you calculated in your draft create a full picture of the overall health of the company (Samsung).
The 10 ratio analyses calculated create a full picture of the firm as it is an indicator of liquidity. Apart from that, the analysis is also a clear portrayal of profitability. Liquidity and profitability are two main factors that can be used to base the performance of the firm.
- Explain your rationale for the elements you provided in your Executive Summary and how they specifically support your recommendation.
One of the elements that I highlighted in the executive summary is profitability. This aspect supports the recommendation whereby a firm is advised on the steps that it should take to ensure that this is maintained by it. The other element that was captured in the executive summary is the net change in cash flows. This element is important in recommendations as it helps in giving insights to the firm on the adjustments that it should make to ensure that such change is favorable.
- Explain how you formulated your recommendation and list the top 3-5 drivers that caused you to come to this conclusion.
The recommendations were formulated based on the key elements that can be used to assess the performance of the firm both at the organizational level and the market level. The highlighted areas of improvement were aimed at increasing the firm’s competitiveness. One of the drivers that caused me to come to the outlined conclusion is that of the need to cut on unnecessary expenses. For there to be increased profitability, there is a need for Samsung to ensure that it only spends on critical areas and should consider cutting the spending on things that it can easily avoid. The other driver that caused me to come to the conclusion is the need to increase revenues. Such can be attained through diversification of the offerings as well as venturing into new markets. Last but not least, the other driver that made me come to the outlined conclusion is profitability. This, as mentioned earlier, is the main goal for the operation of any firm.
Reference
Lee, D. (2006). Samsung Electronics: The Global Inc. Seoul, Korea: YSM, Inc..