Financial Study: Financial Analysis Of Samsung Electronics

Financial analysis of Samsung Electronics

Section I

Group 9

Report By:

Bhupendar Pratap Singh 1421010

Giridharan Ranganathan 1421022

Y. Sai Ravi Teja 1421033

Arati Sabu 1421035

Rishika Mitra1421052

Yadhumita Murali 1421061

Financial analysis of Samsung Electronics

Introduction

The electronics industry came to be during the late 20th century and today is a global industry worth billions. Samsung is a South Korean Multinational conglomerate company which is headquartered in Samsung town, Seoul. The Samsung group engaged in the market diversification of the business in various fields. In the late 1960s Samsung began its electronics industry, which was its major source of income for the company’s growth. Samsung electronics in its consumer

DRAM (dynamic random access memory) which is one of the Samsung products which stores data in separate capacitor with in a integrated circuit, has its leading competitor SK Hynix with the market share of 19.8%. The NAND flash memory is a type of non-volatile storing technology that does not involve power to hold data; Samsung has its competitor Toshiba which has the market share of around 33% whereas Samsung world market share is around 40.4%. Samsung large size LCD panels has its competitor of LG displays which has its market share 25.9% whereas Samsung world market share is 26.0%. Samsung’s mobile phones is one of the best innovation in the mobile industry but the significant competitor is Apple Inc. which has market share of 13.4% whereas Samsung world market share is around 35%.In the digital camera Sony is the main competitor of Samsung with the market share of 17.4% where as Samsung’s share is 11.8%.

Samsung Regulatory Environment:

Samsung by considering the importance of the Company law has given its contribution by ensuring various management policies. Since the recent developments in the technological period have its advantages and also the disadvantages of causing harm to the environment. By giving importance to save the people and the nature Samsung has formulated various policies.

Financial

Cost of capital depends on the cost of equity if the total funding is only based on equity and sometimes the funding can be done based on the debt values.

So, the combination of debt and equity is the most followed pattern in capital funds. The calculation of costs in such circumstances is done based on WACC( weighted Average Cost of Capital) method. Samsung is a diversified firm with its market in various sectors, but in the electronics it’s the forerunner with marketcap of 202.09tn KRW. This kind of market share gives the company the factors like Credit Worthiness, profitability and a good Beta value of 0.988.

The RoE (Return on Equity) of the Samsung electronics is given below: A firm obtains capital from various sources because of the risk differences and the contractual agreements between the firm and investors; the cost of capital of each source differs. The cost of capital of each source is known as specific cost of capital. The combined of all sources of capital is called overall, or average cost of capital. The component costs are combined accordingly to the weight of each component capital to obtain the average costs of capital. Thus the overall cost is also called the weighted average cost of capital