Finance For Strategic Managers

Introduction

Finance for Strategic Managers plays an important role as most of the businesses require formulation of various strategies and decisions on the type of financial data and information available with the company. Such managers, then, analyse and interpret various data so as to conduct resource planning and forecasting so as to achieve their overall short-term and long-term objectives (Alkaraan, 2015). This report aims to provide a detailed account on Samsung PLC in regards to the types of methodologies undertaken by it for the purpose of strategic planning, appraisal of capital investment projects as well as financial data required for the same.

The entire report is bifurcated into various tasks which provides supporting evidence for the members of Chamber of Commerce who want to research and study the success of Samsung PLC. For this purpose, this report aims to provide a presentation, information leaflet, discussion paper and practical application of capital expenditure appraisal methods in a comprehensive manner.

Task 1

Interpretation of Samsung PLC Financial Statements to assess its current viability

Financial Statements help in providing relevant information to not only the management of the business but also to other internal as well as external stakeholders. This is due to the fact that they include all the financial data in a predefined format that facilitates easy identification of the company's health in terms of corporate performance and profitability.

In the context of Samsung PLC, the company creates quarter-wise reports along with a full year report so as to brief their stakeholders in a continuous manner (Annual Report, 2018). For this purpose, however, the following financial statements, related to full year, have been analysed so as to determine its current viability:

  • Statement of Cash Flows:

As per this statement, Samsung PLC reports its net cash-flow generated from Operating, Investing and Financing activities in both South Korean Won (KRW) as well as U.S. Dollar (USD). The balance of cash and cash equivalents at the beginning of 2018 is reported as $27,763,038 whereas at the end of the period, this amount reduced to $27,577,050. Even though the Net Cash inflow from operating activities did increase from $56,500,238 in 2017 to $60,926,509 in 2018, there has been an increased outflow in terms of investing by $2,595,178 and financing activities by $2,298,978. Thus, indicating the impact of overall decrease in the cash and cash equivalents for 2018 by $185,988.

  • Statement of Profits or Loss:

In the context of Samsung PLC, the net profit for 2018 accounted an increase of $1,961,546 (=$40,305,867−$38,344,321)from 2017. Thus, indicating a net increase in the overall profits of the company by 5.12%. For a company as big as Samsung PLC, a 5% increase in its annual profit shows that the financial health of the business is quite strong (Appuhami, 2017). The Earning Per share (Basic) also increased from 5.45 in 2017 to 5.87 in 2018. Thus, indicating a net increase of 7.71% which is attractive for from stakeholders' perspective.

  • Statement of Financial Position:

As per this statement, Samsung PLC reports its net cash-flow generated from Operating, Investing and Financing activities in both South Korean Won (KRW) as well as U.S. Dollar (USD). The balance of total assets increased by 12.46% whereas the total liabilities and equity rose by 4.98% and 15.51% respectively. Thus, indicating that the investor's belief in the company has grown stronger which has resulted in an infusion of capital in the business in 2018.

Comparative analysis of Financial Data related to Samsung PLC

In order to conduct comparative analysis of financial data related to Samsung PLC, the ratio analysis has been carried out for the years 2018 and 2017 in the following manner:

Liquidity Ratios:

Particulars

2018

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