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Acc 561 Week 2 Financial Statement Analysis

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Acc 561 Week 2 Financial Statement Analysis
Financial Statement Analysis
NAME
ACC/561 Accounting
DATE
University of Phoenix
PROFESSOR
Introduction
Samsung – International Manufacturing Company
Samsung served as the manufacturing industry and international
company analyzed. Samsung has been in business for over 70 years
and manufactures products for diverse markets, including: digital media,
high -tech electronics, home appliances, information technology and
telecommunication. Samsung's motto is to "inspire the world and create
the future" by leveraging three key strengths: new technology, innovative
products and creative solutions.
| Samsung | Wells Fargo | AT&T |
Current Ratio | 1.4101 | 1.1500 | 1.6467 |
Debt to Equity Ratio | 0.6768 | 9.8100 | 0.9675 |
Profitability Ratio | 0.2881 | 2.3500 | 0.3069 |
Return on Sales | 0.0736 | 2.0900 | 0.9563 |
Dupont Ratio | 0.1200 | 0.6900 | 0.3496 |
Financial Leverage | 1.1317 | 1.3500 | 1.0724 |
Total Asset Turnover | 2.5035 | 0.0100 | 0.9003 |
When you compare Samsung to AT&T, the retail sales company we
profiled, Samsung has a lower current ratio by 20%. Samsung's debt to

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equity ratio is almost 30% lower than AT&T. Samsung's profitability ratio
is very similar to AT&T, though 2% lower. Samsung's return on sales is
comparable to AT&T, thought slightly lower. AT&T is much strong on
return on equity, with almost 3X the Dupont ratio of Samsung.
Samsung's financial leverage is slightly higher than AT&T. The key
strength of Samsung over AT&T's financial performance is the total asset
turnover which is almost 3X that of AT&T. Samsung's focus on lean
manufacturing and supply chain management enable the company to
perform so strongly in this area.
When you compare Samsung to Wells Fargo, the services industry
company we profiled, Samsung has a higher current ratio by more than
20%. Samsung also has a much stronger debt to equity ratio position
than Wells Fargo, with Wells Fargo being 15X higher debt/equity than
that of Samsung. Wells Fargo shows a much higher profitability ratio
than Samsung, with over 8X that of Samsung. This is to be expected as
services are typically more profitable than hardware sales which operate
on leaner margins. Wells Fargo also outperforms Samsung significantly
on return on sales with over 25X better performance. This again is
attributable to better margins on services than hardware. Wells Fargo
has a much stronger return on equity than Samsung with a Dupont ratio
over 5X higher than Samsung's. Samsung has a stronger financial
leverage ratio than Wells Fargo with almost 20% lower ratio for
Samsung. Samsung also has a much lower total asset turnover than
Wells Fargo. This is attributable to the quick turnover of assets in the
manufacturing industry compared to the slow turnover of assets in the
financial services sector.
With Samsung being the only international company evaluated, there
doesn't seem to be any significant impact of IASB over FASB standards
for accounting. With the ratios used, the core components of the balance
sheet and income statement were utilized. The key elements of revenue,
expenses, assets and liabilities weren't significantly impacted by IASB
over FASB standards.
Wells Fargo – Domestic Services Industry Company
Wells Fargo is an international company based in United States and
Canada. Wells Fargo has several divisions and services, ranging from
basic deposit accounts to complex commercial loans. Wells Fargo is a
publicly traded company and must adhere to certain guidelines for its

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