Cash and Receivables of a Samsung Company - Case Study Example

Cash and Receivables Case study Cash and Receivables of a Samsung company Executive summary Among the many available technological companies, Samsung has emerged to be a company that has ever been growing steadily (Lee, 2006), if traced on the past decades. One of the main aspects that rank the company at the top is that fact that the employees and managers have made themselves noticeable, as the best innovative company, which gives its clients a variety of brands in the electronic industry (Michell, 2010). Due to their will to strive for sustainability, they have achieved a competitive advantage. This can be seconded with the fact that they have remained at the top of the digital market for a long time now. Their policy is recommendable. They have the mandate to devote both human resources and technologies with the aim of creating superior products as well as services thus contributing to the better global society. It is known as the world’s largest provider of technology. Introduction Technological world has greatly advanced with the influence of bigger companies like Samsung, Nokia, and Siemens just to mention but a few (Lee, 2006). According to Michell (2010), all the technology related companies have tried their best to ensure what they are producing fits the world, the dynamic world. It is true to affirm that technology is what most people today are interested. Therefore, the better the technological capability a device will have, the more the client the company will, attract (Salek, 2005). This is what this company has been up to for a very long time now. The company has a well elaborate working system, and employees who are up to the task, all in the name of boosting the company’s profit. This explains the fact that the company has so far glued to what the world needs and what the firm is aspiring at to come up with a perfect win and win strategy. It is wise to note that for the past seventy years now, Samsung has dedicated itself in making world a better place by the use of diverse business (Salek, 2005). The business today, is what spans the word in terms of advanced technology. For the advanced technology to be noticed in the world, the company ensured that their semiconductors, the general plant construction, skyscrapers, fashions, finance and much more have been made with the latest designs and technology (Lee, 2006). Due to this, the sales or financial statement of the Samsung Company has proved to be a boom in the market. Cash Recently, the financial statement of the company outlined a very great difference between these companies with other prominent companies in the world of technology. Recently, experts illustrates that the company has recorded a net profit of almost 5.9 rise of year on year in what is called the first quarter to 7.57 trillion. However, the slowing Smartphone made the operating profit top decline by a quarter, however that a lone did not make the company to drop (Michell, 2010). Evidently, the company is located in south Korea, which experts argues that it is a strategic location for the company since it has won a consistent flow making it maneuver the market. Its financial report explains that the company won a 7.3 dollars net profit, during the first three month of the year (Shenzhen Securities Information, 2010). However, they witnessed an operating profit slip of almost 3.3 percent. This made the company to witness an 8.49 trillion won, although it had earlier own witnessed a 6.0 percent decline. For a while, alarm bells have been ringing over what the experts called an over-reliance of the company on sales of Smartphone in mature markets like the United State and Europe. Competitive emerging markets like the china, also still submits to the fact that the South Korean giants have an upper hand over them. The company according to the market evaluators is proved to have a diverse product line ranging from home appliances to memory chips (Salek, 2005). However, that is not the case in its dramatic growth. The truth is that over than a half of its sales come form the mobile devices. In reality, it can be noted that this company has a high sense of mobile trading, due to their highly innovated operating system ion most of the gadgets. One of its recent financial flows is as below: Fiscal year is January-December. All values KRW millions. 2009 2010 2011 2012 2013 5-year trend Cash & Short Term Investments 20.88T 22.48T 26.88T 37.45T 54.5T Cash Only 10.15T 9.79T 14.69T 18.79T 16.28T Short-Term Investments 10.73T 12.69T 12.19T 18.66T 38.21T Total Accounts Receivable 19.8T 21.31T 24.15T 26.67T 27.88T Accounts Receivables, Net 17.82T 19.15T 21.88T 23.86T 24.99T Accounts Receivables, Gross 17.84T 19.34T 21.88T 23.86T 24.99T Bad Debt/Doubtful Accounts (19.59B) (185.76B) - - - Other Receivables 1.98T 2.16T 2.27T 2.81T 2.89T Inventories 9.84T 13.36T 15.72T 17.75T 19.13T Finished Goods 3.01T 4.51T 5.91T 6.84T 7.43T Work in Progress 1.9T 2.62T 3.07T 3.23T 4.07T Raw Materials 4.93T 6.23T 6.74T 7.68T 7.64T Progress Payments & Other 0 0 0 0 0 Other Current Assets 3.69T 4.25T 4.75T 5.4T 9.25T Miscellaneous Current Assets 664.36B 746.1B 988.93B 1.46T 4.85T Total Current Assets 54.21T 61.4T 71.5T 87.27T 110.76T Receivables Here, it is worth noting that the receivers turn over of this company has qualified it to collect either liability of debts. This has helped Samsung to effective gain favor by the investor since they have literally gauged its efficiency and capability in regards to credit and collection policies (Michell, 2010). For instance, according to the recent research, it is noted that this company had a receivable turn ratio of 10. In this way, the investors understood that Samsung has the ability to turn over its receivables ten times a year. After noting the annual receiver of Samsung, the investors used the formula below to calculate the real figures before primarily doing the investments. Receiver turnover = NCS /AAR. NCS= Net Credit Sales AAR=Average Account Receivable. It is wise to note that the above is one of the main facilitators for an investor to reconsider a company for investment, which the Samsung has greatly won (Gupta, 2013). According to observers, it is firmly thought that all Samsung products including both low and high quality have gained ground in the international market; this is something the company is proud of, since it is a clear illustration that all the products made by the company are accepted in the world market (Gupta, 2013). If that is note is not enough, the company has suggested meeting the expanding product line up in the market. The above are some of the few cash and receivers of the Samsung Company. Following its evaluation, it can be noted that the cash inflow of the company is at its peak, since its receivers is gaining stability. Conclusion Here, anyone can understand that the company is among the best selling companies in the world. It is important also to suggest that the strategy laid by the company, of gaining popularity in the bigger markets led to its raising in the market rank (Michell, 2010). Notably, the company right now, enjoys the fact that it is among the best companies that are currently enjoying the dominance of the market. Its cash flow has ever been increasing, thus marking the company to gain the market advantage despite of tough competitors like the Chinese market. In alliteration, “experts illustrates that the company has recorded a net profit of almost 5.9 rise of year on year in what is called the first quarter to 7.57 trillion”. This is enough evident that a company has a considerable amount of cash flow, hence making it the best growing comp any in the world. Recommendations The company is well equipped with advancement in technology. Being focused mainly on phones devices, it is clear to note that the company understood where the world is going in terms of technology ands so it focused the market (Salek, 2005). That is the best thigh to do; however, focusing on one side of the market is what will make the company to drag in the near future. For instance, the company’s main market is Europe, however according to technology; all the developing countries have also focused in the same market topography. To avoid over competition, the company should as well channel their investment in the third world market. In so doing, they will literally win the mass, which arte currently neglected in the developing country. Secondly, however much the company is enjoying to sale the mid and lower class devices, it should as well identify the fact that standards of living have drastically grown and that many will remain at a lower side of life. With that, the company should adjust its manufacturing target, and target more on lower-leveled devices but at the same time, ensure that the quality of the gadgets are also being met. In this ways, they will have attracted all people in the world, hence creating a wide spectrum of operation. According to experts, the targeted consumers will automatically trigger the growth of a company as well as its dominancy. Therefore, targeting a world wide market is the best option unlike targeting only Europe based markets. References Gupta, A. (2013). Financial Accounting for Management: An Analytical Perspective. New Delhi: Pearson Education India. Lee, D. (2006). Samsung Electronics: The Global Inc. Shanghai: LEE Dongyoup. Michell, T. (2010). Samsung Electronics: And the Struggle For Leadership of the Electronics Industry. New York: John Wiley & Sons. Salek, J. G. (2005). Accounts Receivable Management Best Practices. New York: John Wiley & Sons. Shenzhen Securities Information CO. LTD. (2010). China Listed Companies Handbook (Vol. 7). Shanghai: Javvin Technologies Inc. Read More