1.

0 Introduction
1.1 Background of Samsung Electronics Co., Ltd. and Its Subsidiaries

Samsung started in 1938 as a small trading company located in Su-dong near Daegu
city. It was founded by Lee Byung-chul. (Successstory.com, 2020) Samsung entered the
electronics industry in 1960s with the formation of several electronics-focused divisions such
as Samsung Electronics Devices, Samsung Electro-Mechanics, Samsung Corning, Samsung
Semiconductor & Telecommunications. (Burris, 2020) Ever since, Samsung has been one of
the world’s largest producers of electronic devices that specializes in the production of a wide
variety of consumer and industry electronics, including appliances, digital media
devices, semiconductors, memory chips, and integrated systems. (Bondarenko, 2018) As of
2019, the Galaxy S smartphone line is still running strong with the Galaxy S9 launched in
2018. (Burris, 2020) Samsung mobile devices are run by Android system which is different
from Apple Inc. Samsung has work together with many companies to create more electronics
devices that not only specialised in their smartphones. The latest new is 8K Ultra HD TV. In
May 2019, for the first time in Europe, 8K demonstration content was received via satellite
without the need for a separate external receiver or decoder using a Samsung TV.
(En.wikipedia.org, 2020)

1
 1.2 Background of Apple Inc.

Apple was founded in April 1976 by Steve Wozniak, then 26 years old, and Steve Jobs, 21,
both college dropouts. (Referenceforbusiness.com, 2020). They started with the Apple I
computer without keyboard or power supply. Apple company slowly become successful but
still faced and ups and downs. They persisted by advancing into more technologies and
slowly gain its reputation back from their customer. Apple Inc. is a company that designs,
manufactures and markets mobile communication and media devices, personal computers,
and portable digital music players. (UKEssays.com, 2018) The company sells products and
services such as iPhone, iPad , Mac , iPod , Apple TV , a portfolio of consumer and
professional software applications, the iOS and Mac OS X operating systems, iCloud , and a
variety of accessory, service and support offerings. (UKEssays.com, 2018) Apple Inc. engage
with customer closely if they have issue using their devices as it aims to educate and build
loyalty. Apple is a consumer goods company, and therefore evaluating its value requires
understanding its products and consumers. (Dpnick330.wikidot.com, 2008) Apple Inc. has
pioneered its way through the computer industry—not once, but multiple times throughout its
existence. It believes in pushing the limits of creativity in order to produce interesting and
valuable products for society. (Terrell, 2018)

2
2.0 Ratio Computation

2.1 Samsung Electronics Co., Ltd. and Its Subsidiaries 2017

i. Current Ratio 133,595,101 / 61,056,713 = 2.19x

ii. Acid -Test Ratio (133,595,101 - 22,707,837) / = 1.82x
61,056,713
iii. Account receivables 217,754,524 / 25,173,406 =8.65x
turnover ratio
iv. Inventory turnover ratio 117,514,691 / 22,707,837 = 5.18x
v. Fixed assets turnover ratio 217,754,524 / (274,268,098 - = 1.55x
133,595,101)
vi. Total assets turnover ratio 217,754,524 / 274,268,098 = 0.79x
vii. Times interest earned ratio 51,077,562 / 8,161,100 = 6.26x
viii. Debt-to-assets ratio 79,312,842 / 274,268,098 = 0.289 =
28.9%
ix. Gearing ratio 79,312,842 / 194,955,256 = 0.407 =
40.7%
x. Gross profit margin (217,754,524 - 117,514,691) / = 0.46 = 46%
217,754,524
xi. Operating profit margin 51,077,562 / 217,754,524 = 0.235 =
23.5%
xii. Net profit margin 38,344,321 / 217,754,524 = 0.176 =
17.6%
xiii. Return on assets 38,344,321 / 274,268,098 = 0.14 = 14%
xiv. Return on equity 38,344,321 / 194,955,256 = 0.197=
19.7%
xv. Average collection period 25,173,406 / (217,754,524/365) = 42.20 days

3
 2.2 Samsung Electronics Co., Ltd. and Its Subsidiaries 2018

i. Current Ratio 158,785,744 / 62,789,472 = 2.53x

ii. Acid -Test Ratio (158,785,744 - 26,344,738) / 62,789,472 = 2.11x
iii. Account receivables 221,568,382 / 30,783,014 = 7.2x
turnover ratio
iv. Inventory turnover ratio 120,335,747 / 26,344,738 = 4.57x
v. Fixed assets turnover 221,568,382 / (308,448,123 - = 1.48x
ratio 158,785,744)
vi. Total assets turnover 221,568,382 / 308,448,123 = 0.72x
ratio
vii. Times interest earned 55,589,426 / 7,824,786 = 7.10x
ratio
viii. Debt-to-assets ratio 83,260,643 / 308,448,123 = 0.27 = 27%
ix. Gearing ratio 83,260,643 / 225,187,480 = 0.37 = 37%
x. Gross profit margin (221,568,382 - 120,335,747) / = 0.457 =
221,568,382 45.7%
xi. Operating profit margin 55,589,426 / 221,568,382 = 0.251 =
25.1%
xii. Net profit margin 40,305,867 / 221,568,382 = 0.182 =
18.2%
xiii. Return on assets 40,305,867 / 308,448,123 = 0.131 =
13.1%
xiv. Return on equity 40,305,867 / 225,187,480 = 0.179 =
17.9%
xv. Average collection 30,783,014 / (221,568,382/365) =50.71 days
period

4
 2.3 Apple Inc. 2017

i. Current Ratio 128,645 / 100,814 = 1.28x

ii. Acid -Test Ratio (128,645 - 4,855) / 100,814 = 1.23x
iii. Account receivables 229,234 / 17,874 = 12.8x
turnover ratio
iv. Inventory turnover ratio 141,048 / 4,855 = 29x
v. Fixed assets turnover 229,234 / 246,674 = 0.93x
ratio
vi. Total assets turnover 229,234 / 375,319 = 0.61x
ratio
vii. Times interest earned 61,344 / 26,842 = 2.29x
ratio
viii. Debt-to-assets ratio 241,272 / 375,319 = 0.643=
64.3%
ix. Gearing ratio 241,272 / 134,047 = 1.80 =
180%
x. Gross profit margin 88,186 / 229,234 = 0.385 =
38.5%
xi. Operating profit margin 61,344 / 229,234 = 0.268 =
26.8%
xii. Net profit margin 48,351 / 229,234 = 0.21 = 21%
xiii. Return on assets 48,351 / 375,319 = 0.129 =
12.9%
xiv. Return on equity 48,351 / 134,047 = 0.361 =
36.1%
xv. Average collection 17,874 / (229,234 / 365) = 28.46 days
period

5
 2.4 Apple Inc 2018

i. Current Ratio 131,339 / 116,866 = 1.12x

ii. Acid -Test Ratio (131,339 - 3,956) / 116,866 = 1.09x
iii. Account receivables 265,595 / 23,186 = 11.45x
turnover ratio
iv. Inventory turnover ratio 163,756 / 3,956 = 41.39x
v. Fixed assets turnover 265,595 / 234,386 = 1.13x
ratio
vi. Total assets turnover 265,595 / 365,725 = 0.73x
ratio
vii. Times interest earned 70,898 / 30,941 = 2.29x
ratio
viii. Debt-to-assets ratio 258,578 / 365,725 = 0.707 =
70.7%
ix. Gearing ratio 258,578 / 107,147 = 2.41 =
241%
x. Gross profit margin 101,839 / 265,595 = 0.383 =
38.3%
xi. Operating profit margin 70,898 / 265,595 = 0.267 =
26.7%
xii. Net profit margin 59,531 / 265,595 = 0.224 =
22.4%
xiii. Return on assets 59,531 / 365,725 =0.163 =
16.3%
xiv. Return on equity 59,531 / 107,147 = 0.556=
55.6%
xv. Average collection 23,186 / (265,595 / 365) = 31.86 days
period

6
3.0 Comparison of Samsung Electronics and Apple Inc.
3.1 Year 2017

Year Samsung Apple Inc. Reasons for Effect to the company

2017 Electronics differences
Current 2.19x 1.28x Samsung Apple Inc. will have issues in
Ratio Electronics has paying bills on time.
more assets than
Apple Inc.
Acid -Test 1.82x 1.23x Samsung Apple Inc. takes longer time
Ratio Electronics able to turn inventories to cash.
liquidate
inventories
faster than
Apple Inc.
Account 8.65x 12.8x Apple Inc has Apple Inc is able to collect
receivables higher more receivable which could
turnover receivable than lower debt on credit.
ratio Samsung
Electronics
Inventory 5.18x 29x Apple Inc has Samsung Electronics has
turnover higher sales to lower inventory that turns to
ratio turn inventory production which could
to production decrease sales.
than Samsung
Electronics.
Fixed 1.55x 0.93x Samsung Samsung Electronics is able
assets Electronics has to utilize their investment in
turnover higher fixed fixed assets more effectively
ratio assets to to generate revenue.
generate
revenue
compare to
Apple Inc
Total 0.79x 0.61x Samsung Samsung Electronics is

7
assets Electronics is performing well as it is able
turnover able to generate to generate value of its assets.
ratio more revenue
per dollar of
assets compare
to Apple Inc.
Times 6.26x 2.29x Apple Inc. is Samsung Electronics is still
interest able to pay safe as TIE is in industry
earned 2.29x faster average range.
ratio than Samsung
Electronics
Debt-to- 28.9% 64.3% Samsung Apple Inc has higher debt
assets ratio Electronics has ratio which takes time to pay
lesser debt load off debt through assets. .
than Apple Inc.
Gearing 40.7% 180% Apple Inc. has Apple Inc. has been
ratio higher debt than aggressive in financing its
Samsung growth with debt.
Electronics
Gross 46% 38.5% Samsung Apple Inc. will have issues in
profit Electronics have paying its operating expenses.
margin higher gross
profit margin
than Apple Inc.
Operating 23.5% 26.8% Apple Inc. have Apple Inc. able to keep their
profit more profit than cost of production low.
margin Samsung
Electronics
Net profit 17.6% 21% Apple Inc. is Samsung Electronics has
margin able to generate lower sales due to company
more sales than circumstances.
Samsung
Electronics
Return on 14% 12.9% Samsung The higher the ROA, the
assets Electronics is better as company is earning

8
 higher as the more money in less
company able to investment.
generate net
income from its
assets than
Apple Inc.
Return on 19.7% 36.1% Apple Inc. able Apple Inc is more efficient in
equity to generate making use of investment to
much profit generate high profit.
from
shareholders’
investment than
Samsung
Electronics
Average 42.20 days 28.46 days Apple Inc. has The shorter the collection
collection lower collection period, the company is able to
period date than collect payment faster.
Samsung
Electronics

3.2 Year 2018

Year Samsung Apple Inc. Reasons for Effect to the company

2018 Electronics differences
Current 2.53x 1.12x Samsung Samsung Electronics have
Ratio Electronics has sufficient current assets to
more assets than pay off current liabilities.
Apple Inc.
Acid -Test 2.11x 1.09x Samsung Samsung Electronics is able

9
Ratio Electronics is to pay current liabilities
able to repay without the help of
current inventories.
liabilities faster
than Apple Inc.
Account 7.2x 11.45x Apple Inc. has Apple Inc. is able to collect
receivables higher receivables more frequently
turnover receivables than through out the year.
ratio Samsung
Electronics.
Inventory 4.57x 41.39x Apple Inc. has Apple Inc. is able to generate
turnover higher inventory more sales by efficiently
ratio turnover than turning inventory to
Samsung production.
Electronics
Fixed 1.48x 1.13x Samsung Samsung Electronics is able
assets Electronics has to effectively utilize
turnover higher sales investment in fixed assets to
ratio from fixed generate revenue.
assets than
Apple Inc.
Total 0.72x 0.73x Apple Inc. is Apple Inc. has higher assets
assets able to generate turnover ratio that allows to
turnover more sales from generate more revenue per
ratio the total assets dollar of assets.
than Samsung
Electronics.
Times 7.10x 2.29x Apple Inc. is Samsung Electronics takes a
interest faster in paying longer time to repay interest
earned interest than payments from its operating
ratio Samsung income.
Electronics.
Debt-to- 27% 70.7% Samsung Samsung Electronics has
assets ratio Electronics is sufficient assets to pay off

10
 financial stable their debt.
than Apple Inc.
Gearing 37% 241% Apple Inc. has Apple Inc. equity is not
ratio larger debt than sufficient to cover up the
Samsung debts.
Electronics.
Gross 45.7% 38.3% Samsung Samsung Electronics is able
profit Electronics is to generate more revenue
margin able to generate after deducting cost of goods
more revenue sold.
than Apple Inc.
Operating 25.1% 26.7% Apple Inc. has Apple Inc. has higher
profit lower operating operating margin means it has
margin margin than more profitable business core.
Samsung
Electronics.
Net profit 18.2% 22.4% Apple Inc. has Apple Inc. is able to earn
margin higher revenue more revenue.
compare to
Samsung
Electronics
Return on 13.1% 16.3% Apple Inc. is Apple Inc. is efficient in
assets able to earn generating income from their
more profit assets.
from assets than
Samsung
Electronics
Return on 17.9% 55.6% Apple Inc. is Apple Inc. generates more
equity more efficient in profit with the investment
making use of received.
shareholders’
funds than
Samsung
Electronics.
Average 50.71 days 31.86 days Apple Inc. has Apple Inc. has shorter period

11
 collection shorter to receive credit sales from
period collection dates customers.
than Samsung
Electronics

4.0 Conclusion

Apple Inc. is able to sustain their business well as its able to gain faster credit sales from
customer to pay off their debts quicker. Apple Inc. has some bad ration which is Gearing
Ration which indicates in 2017 is 180% and increases to 241% in 2018, and debts to
assets from 64% in 2017 to 70.7% in 2018. With this bas ratio, Apple Inc has shorter
collection period and times interest earned to cover up its losses. Samsung Electronics
ventures into many electronics appliances which have higher inventory for the company
to make more production for various products. Samsung Electronics fixed assets ratio in
2017 is 1.55x and in 2018 is 1.48x which is able to utilise their investment to fixed assets
and its gross profit margin in 2017 is 46% and in 2018 is 45.7%, that is the ability to
generate more revenue after deducting cost of goods sold. Though the ratio decline, but it
is still having higher ration compare to Apple Inc.

Overall, both companies did fairly well in maintaining their business operation. They both
have some bad ratio and good ratio to increase their revenue, shorter average collection
period to pay off debts. The company also use their investment well to increase profit and add
value to its assets.

5.0 References
1. Bondarenko, P. (2018). Samsung | History & Facts. [online] Encyclopedia Britannica.
Available at: https://www.britannica.com/topic/Samsung-Electronics [Accessed 24
Feb. 2020].

2. Burris, M. (2020). The History of Samsung (1938-Present). [online] Lifewire.

Available at: https://www.lifewire.com/history-of-samsung-818809 [Accessed 24
Feb. 2020].

12
3. Dpnick330.wikidot.com. (2008). Background - Apple the Company. [online]
Available at: http://dpnick330.wikidot.com/background [Accessed 24 Feb. 2020].

4. En.wikipedia.org. (2020). Samsung Electronics. [online] Available at:

https://en.wikipedia.org/wiki/Samsung_Electronics [Accessed 24 Feb. 2020].

5. Referenceforbusiness.com. (2020). Apple Computer, Inc. - Company Profile,

Information, Business Description, History, Background Information on Apple
Computer, Inc.. [online] Available at:
https://www.referenceforbusiness.com/history2/31/Apple-Computer-Inc.html
[Accessed 24 Feb. 2020].

6. Successstory.com. (2020). Samsung Story - History, Founder, Founded, CEO |

Conglomerate Companies | SuccessStory. [online] Available at:
https://successstory.com/companies/samsung-group [Accessed 24 Feb. 2020].

7. Terrell, E. (2018). Apple Computers: This Month in Business History (Business

Reference Services, Library of Congress). [online] Loc.gov. Available at:
https://www.loc.gov/rr/business/businesshistory/April/apple.html [Accessed 24 Feb.
2020].

8. UKEssays.com. (2018). Background Of Apple Inc Commerce Essay. [online]

Available at: https://www.ukessays.com/essays/commerce/background-of-apple-inc-
commerce-essay.php [Accessed 24 Feb. 2020].

13