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iphone vs samsung

- 1.A138872 ZHANG LUWEN A138900WANG KETAOA138876LU JIAYAOA138853HUANG XINGVS

2. 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. 3. I. Liquidity a) 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 liabilities20090.40xCurrent ratio201020112.01x1.61xCurrent ratio 2.5 2 1.51Current ratio0.5 0 200920102011 4. 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 liabilities200920110.32xQuick ratio2010 1.96x1.58xQuick ratio 2.5 2 1.5 Quick ratio1 0.5 0 200920102011 5. II. Asset Management a) Inventory Turnover Ratio Inventory turnover is calculated by sales dividing inventories. Inventory turnover = Sales / Inventories2009 Inv. turnover2010201180.30x62.06x139.50xInv. turnover 160 140 120 100 80 60 40 20 0Inv. turnover200920102011 6. 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 day2009201133.58DSO2010 30.8318.10DSO 40 35 30 25 20 15 10 5 0DSO200920102011 7. c) Asset Turnover Ratio i) Fixed Assets Turnover Ratio Fixed Assets Turnover = Sales / Net fixed assets ii) Total Assets Turnover Ratio Total Assets Turnover = Sales / Total assets 2009 FA turnover0.84xTA turnover20100.68x20111.95x1.52x0.87x0.93x2.5 2 1.5FA turnover1TA turnover0.5 0 200920102011 8. III. Debt Management Ratios The use of debt will increase, or leverage up, a firms 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 assets2009201148%D/A2010 36%34%D/A 60% 50% 40% 30% 20% 10% 0%D/A200920102011 9. IV. Profitability Ratios: a) Profit Margin The profit margin, also sometimes called the net profit margin, is calculated by using net income to divide sales: Profit margin = Net income/Salesb) Basic Earning Power (BEP) Ratio The Basic Earning Power Ratio is calculated by using operating income (EBIT) to divide total assets: BEP = EBIT/Total assets200920102011PM16%21%24%BEP14.8%24.7%29.4%35%30% 25% 20%PM15%BEP10% 5% 0% 200920102011 10. C) Return on Assets Return on Assets=Net income/Total assets d) Return on Equity Return on Equity=Net income/Total common equity200920102011ROA11%19%22%ROE20.4%29.3%33.8%40% 35% 30% 25% 20%ROA15%ROE10% 5% 0% 200920102011 11. I. Liquidity a) Current Ratio The primary liquidity ratio is the current ratio, which is calculated by current assets dividing current liabilities: Current ratio = Current assets/ Current liabilities200920111.65xCurrent ratio2010 1.54x1.61xCurrent ratio 1.66 1.64 1.62 1.6 1.58 1.56Current ratio1.54 1.52 1.5 1.48 200920102011 12. 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 liabilities200920111.38xQuick ratio2010 1.20x1.26xQuick ratio 1.4 1.35 1.3 1.25 Quick ratio 1.2 1.15 1.1 200920102011 13. II. Asset Management a) Inventory Turnover Ratio Inventory turnover is calculated by sales dividing inventories. Inventory turnover = Sales / Inventories 2009Inv. turnover2010201113.93x11.57x10.50xInv. turnover 16 14 12 10 8 Inv. turnover 6 4 2 0 200920102011 14. 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 day2009201165.73DSO2010 50.3053.43DSO 70 60 50 40 30DSO20 10 0 200920102011 15. c) Asset Turnover Ratio i) Fixed Assets Turnover Ratio It 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 assetsii) Total Assets Turnover Ratio It 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 firms assets, and it is calculated using sales to divide total assets: Total Assets Turnover = Sales / Total assets 16. 200920102011FA turnover2.47x2.12x1.96xTA turnover1.18x1.15x1.06x32.521.5FA turnover TA turnover10.50 200920102011 17. III. Debt Management Ratios The use of debt will increase, or leverage up, a firms 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 2009201138%D/A2010 33%35%D/A 39% 38% 37% 36% 35%D/A34%33% 32% 31% 30% 200920102011 18. IV. Profitability Ratios a) Profit Margin The 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 assets200920102011PM19.2%21.5%24%BEP14%11%18% 19. 30.00%25.00%20.00%15.00%PMBEP10.00%5.00%0.00% 200920102011 20. c) Return on assets The (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 assetsd) Return on equity This 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 21. 200920102011ROA8.6%12%8.8%ROE14%18%13%20.00% 18.00% 16.00% 14.00% 12.00% 10.00%ROA8.00%ROE6.00% 4.00% 2.00% 0.00% 200920102011 22. Quick ratioCurrent ratio 1.81.8 1.61.61.41.41.21.2110.8Current ratio0.60.8Quick ratio0.60.40.40.20.20 Samsung(2011)Apple(2011)0 Samsung(2011)Liquidity position LiabilitiesApple(2011)Inventory management 23. Inv. turnoverDSO160 60 140 5012040100 80 Inv. turnover30 DSO60 2040 102000 Samsung(2011)Apple(2011)InventorySamsung(2011)Apple(2011)Collection of cash Credit policy 24. FA turnoverTA turnover2.5 1.1 2 1.05 1.5 1 FA turnover1TA turnover0.950.50.900.85 Samsung(2011)Apple(2011)Fixed asset SalesSamsung(2011)Apple(2011)Current Assets 25. D/AProfit margin35%30%35% 25%35% 35%20%34% D/A34% 34%15% Profit margin 10%34% 5%34% 33% Samsung(2011)Apple(2011)0% Samsung(2011)Debt Account payableApple(2011)Net income Sales Costs 26. BEPROA35% 25.00%30% 20.00%25% 20%15.00% BEP15%ROA10.00% 10% 5.00%5%0.00%0% Samsung(2011)Apple(2011)EBITSamsung(2011)Apple(2011)Net income 27. ROE 40%35% 30% 25% 20% ROE 15% 10% 5% 0% Samsung(2011)Apple(2011)Net income Total common equity 28. Conclusion