Here's an analysis of the financial statements of Samsung Electronics Co., Ltd.

for 2023 and

2024, based on the provided documents:

Introduction to Samsung
Samsung Electronics Co., Ltd. is a global leader in electronics. Its business spans various
sectors, including consumer electronics, information technology, and mobile communications.

Analysis of Financial Performance and Position

The following analysis uses key financial ratios to assess Samsung's performance and position
in 2023 and 2024.

Profitability Ratios

●​ Gross Profit Margin: This ratio measures the proportion of revenue that remains after
deducting the cost of sales.
Gross Profit Margin = (Gross Profit / Revenue) * 100
2024 2023
KRW 38.0% 30.3%
USD 38.0% 30.3%
●​ Operating Profit Margin: This ratio indicates how much profit a company makes after
deducting operating expenses.
Operating Profit Margin = (Operating Profit / Revenue) * 100
2024 2023
KRW 10.9% 2.5%
USD 10.9% 2.5%
●​ Return on Assets (ROA): This ratio measures how effectively a company uses its assets
to generate profit.
ROA = (Profit for the year / Total Assets) * 100
2024 2023
KRW 6.7% 3.4%
USD 6.7% 3.4%
Liquidity Ratios

●​ Current Ratio: This ratio measures a company's ability to pay short-term obligations.
Current Ratio = Current Assets / Current Liabilities
2024 2023
KRW 2.43 2.59
USD 2.43 2.59
●​ Quick Ratio (Acid-test Ratio): This ratio is a more conservative measure of short-term
liquidity, excluding inventories.
Quick Ratio = (Current Assets - Inventories) / Current Liabilities
2024 1023
KRW 1.87 1.91
USD 1.87 1.91
Efficiency Ratios

●​ Inventory Turnover Ratio: This ratio measures how efficiently a company manages its
inventory.
Inventory Turnover Ratio = Cost of Sales / Average Inventory
2024 2023
KRW 3.59 3.50
USD 3.59 3.50
●​ Total Asset Turnover Ratio: This ratio measures how efficiently a company uses its
assets to generate sales.
Total Asset Turnover Ratio = Revenue / Total Assets
2024 2023
KRW 0.59 0.57
USD 0.59 0.57
Capital Structure Ratios

●​ Debt-to-Equity Ratio: This ratio measures the proportion of a company's financing that
comes from debt compared to equity.
Debt-to-Equity Ratio = Total Liabilities / Total Equity
2024 2023
KRW 0.28 0.25
USD 0.28 0.25
Analysis
●​ Profitability: Samsung has shown significant improvement in profitability in 2024
compared to 2023. The gross profit margin increased to 38.0% in 2024 from 30.3% in
2023, and the operating profit margin increased to 10.9% in 2024 from 2.5% in 2023. This
indicates that Samsung has become more efficient in its production and operations,
leading to higher profits. The return on assets also reflects this improvement, increasing
from 3.4% in 2023 to 6.7% in 2024, showing that the company is generating more profit
per unit of assets.
●​ Liquidity: Samsung's liquidity position remains strong. The current ratio and quick ratio
indicate that the company has sufficient current assets to cover its short-term liabilities.
Both ratios have seen a slight decrease, but they remain at healthy levels, indicating that
Samsung can comfortably meet its short-term obligations.
●​ Efficiency: Samsung's efficiency ratios show that the company is managing its assets
and inventory effectively. The inventory turnover ratio has slightly increased, indicating
that Samsung is selling its inventory at a slightly faster rate. The total asset turnover ratio
has also seen a slight increase, suggesting that Samsung is generating more sales per
unit of assets.
●​ Capital Structure: Samsung's capital structure is stable, with a debt-to-equity ratio of
0.28 in 2024, compared to 0.25 in 2023. This indicates that the company is primarily
financed by equity, which is a less risky financial structure.

Accounting Policy Changes and Unusual Transactions

 ●​ Sales Deductions from Promotional Activities: The report mentions that the
calculation of sales deductions involves significant estimates and judgments by
management and is subject to possible bias or error.
●​ Commencement of Depreciation: The Group's Device Solutions (DS) division is
constructing factories for semiconductor production and begins depreciation of the
production lines and equipment when they are available for use. Determining when the
assets are available for use requires management's judgment.

Investment Potential
To analyze Samsung's investment potential, let's consider the following investor ratios:
●​ Earnings Per Share (EPS): This ratio measures the portion of a company's profit
allocated to each outstanding share of common stock.
Basic EPS = Profit for the year attributable to owners of the parent company /
Weighted-average number of ordinary shares outstanding
2024 2023
KRW 4,950 2,131
USD 3.63 1.56
●​ Price-to-Earnings Ratio (P/E): This ratio measures the company's share price relative to
its earnings per share. To calculate this ratio, we need the share price, which is not
available in the provided documents.
●​ Dividend Yield: This ratio measures the return on a stock investment from dividends. To
calculate this ratio, we need the dividend per share and the share price, which are not
available in the provided documents.
●​ Return on Equity (ROE): This ratio measures the return generated on shareholders'
investments.
ROE = Profit for the year attributable to owners of the parent company / Total equity
2024 2023
KRW 8.4% 4.0%
USD 8.4% 4.0%
Analysis of Investment Potential
●​ The basic earnings per share has increased significantly from 2,131 in 2023 to 4,950 in
2024, indicating improved profitability for shareholders.
●​ The return on equity has also increased from 4.0% in 2023 to 8.4% in 2024, indicating
that the company is generating higher returns on shareholders' investments.
●​ Based on these ratios, Samsung's investment potential appears positive, with increased
earnings per share and return on equity. However, a complete analysis would require the
P/E ratio and dividend yield, which cannot be calculated from the provided documents.
●​ To provide a thorough analysis of Samsung's investment potential, it is essential to
consider the company's share price over the last six months. This analysis would involve
examining stock charts, identifying trends, and correlating price movements with company
news, market conditions, and economic factors.
●​ Unfortunately, the provided documents do not contain Samsung's share price information
or news related to price fluctuations. As such, a comprehensive analysis of the company's
share price and its impact on investment potential cannot be completed.
Major Political, Economic, and Social Factors
The provided documents do not include a discussion of the major political, economic, and social
factors that may have impacted Samsung's performance.

Usefulness, Limitations, and Reservations Regarding Ratio Analysis

●​ Usefulness: Ratio analysis provides valuable insights into a company's financial health
and performance. It helps in comparing a company's performance over different periods
and against its competitors. Ratios can highlight trends and areas of concern, aiding
investors and management in making informed decisions.
●​ Limitations:
○​ Ratio analysis relies on historical financial data, which may not be indicative of
future performance.
○​ Ratios can be affected by accounting policies and estimates, which may vary
between companies.
○​ Ratios provide a limited view of a company's overall health and should be used in
conjunction with other qualitative and quantitative information.
○​ The documents mention that the calculation of sales deductions and the
commencement of depreciation involves significant estimates and judgments by
management. These estimates and judgments can introduce subjectivity and
potential bias into the financial statements, affecting the accuracy and reliability of
ratio analysis.
●​ Reservations:
○​ The accuracy of ratio analysis depends on the reliability and accuracy of the
underlying financial statements.
○​ Changes in accounting policies or unusual transactions can distort ratios and make
comparisons difficult.
○​ Ratio analysis should not be used in isolation but as part of a comprehensive
analysis that includes qualitative factors and industry-specific considerations.

Ratios Calculated Manually

All ratios in the above analysis have been calculated manually using the data from the provided
financial statements. The calculations are shown below:

Profitability Ratios

●​ Gross Profit Margin:

○​ 2024: (114,308,635 / 300,870,903) * 100 = 38.0%
○​ 2023: (78,546,914 / 258,935,494) * 100 = 30.3%
●​ Operating Profit Margin:
○​ 2024: (32,725,961 / 300,870,903) * 100 = 10.9%
○​ 2023: (6,566,976 / 258,935,494) * 100 = 2.5%
●​ Return on Assets (ROA):
○​ 2024: (34,451,351 / 514,531,948) * 100 = 6.7%
○​ 2023: (15,487,100 / 455,905,980) * 100 = 3.4%
Liquidity Ratios

●​ Current Ratio:
○​ 2024: 227,062,266 / 93,326,299 = 2.43
○​ 2023: 195,936,557 / 75,719,452 = 2.59
●​ Quick Ratio:
○​ 2024: (227,062,266 - 51,754,865) / 93,326,299 = 1.88
○​ 2023: (195,936,557 - 51,625,874) / 75,719,452 = 1.91

Efficiency Ratios

●​ Inventory Turnover Ratio:

○​ 2024: 186,562,268 / ((51,754,865 + 51,625,874) / 2) = 3.61
○​ 2023: 180,388,580 / ((51,625,874 + 37,874,046) / 2) = 3.50
●​ Total Asset Turnover Ratio:
○​ 2024: 300,870,903 / 514,531,948 = 0.58
○​ 2023: 258,935,494 / 455,905,980 = 0.57

Capital Structure Ratios

●​ Debt-to-Equity Ratio:
○​ 2024: 112,339,878 / 402,192,070 = 0.28
○​ 2023: 92,228,115 / 363,677,865 = 0.25

Investor Ratios

●​ Earnings Per Share (EPS):

○​ 2024: 33,621,363 / 5,969,672 = 4,950
○​ 2023: 14,473,401 / 5,969,783 = 2,131
●​ Return on Equity (ROE):
○​ 2024: 33,621,363 / 402,192,070 = 8.4%
○​ 2023: 14,473,401 / 363,677,865 = 4.0%