2019-01-25T10:15:00+00:00 Assignments

Sony and Samsung Companies Analysis

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Sony and Samsung Companies Analysis

Sony and Samsung Companies Analysis

PART A

Ratio Analysis

  1. Profitability

Profitability ratios indicate the performance of an entity for a specific period. It indicates the ability of the entity to generate profit on the invested resources (Fridson & Alvarez, 2011). The profitability analysis of Sony Corporation and Samsung Electronics companies, considers sales growth, Gross profit margin and operating profit percentage ratios.

  1. Operating Profit Percentage

The operating profit percentage indicates the amount profit generated by every dollar of sale before taxation (Helfert, 2009). In 2014, Sony Corporation and its subsidiaries had an operating profit percentage of 0.0033. This indicates that the company was left with $ 0.0033 from each dollar of sales after taking out all costs. The company had a ratio of 0.03, -0.01, and 0.04 in the years 2011, 2012, and 2013. Looking at the ratios Sony Co. performance reduced between 2011 and 2012 (when I recorded a loss) before increasing in 2013 and decreasing slightly in 2014. On the other hand, Samsung Electronics Co., Ltd. and Subsidiaries had an operating profit percentage of 0.1, 0.15, 0.17, and 0.17 in the years 2011 through 2014. Comparing the two companies based on the operating profit margin it shows that  Samsung Electronics Co., Ltd. and Subsidiaries was left with more earnings for every $ of sales after taking out all costs.

  1. Gross Profit Margin

Gross profit margin indicates the margin of every dollar of sales after deducting the direct costs (Lee, Lee & Lee, 2009). Sony Corporation and its subsidiaries generated a profit margin of 0.23, 0.21, 0.21, and 0.24 in the years 2011, through 2014 respectively. This indicates that the company generated a margin $0.24 for every dollar of sales in the year 2014, which was high than the three preceding years. On average, the company’s ability to generate high margin of every dollar of sales increased slightly from 2011 to 2014. The Samsung Electronics Co., Ltd had gross margin ratios of 0.32, 0.37, 0.4, and 0.38 in the years 2011 through 2014. The ratio shows that, Samsung Electronics Co., Ltd and its subsidiaries performed better in the four years in comparison to the Sony Corporation and its subsidiaries. However, on average the Sony company gross profit ratio increased over the four years, but Samsung Co. gross margin profit reduced between the year 2013 and 2014 from 0.4 to 0.38.

  1. Sales Growth

This ratio indicates the sales increase between given periods (Lee, Lee & Lee, 2009). Sony Corporation and its subsidiaries had sales of -9.92%, 4.61%, and 14.6% in the years 2012 through 2014. The company recorded a sales growth of 14.6% in the year 2014, which was the highest sales growth over the three years. On average, the company recorded an increasing sales growth over the years. This indicates that Sony Company has an efficient sales growth strategy. Samsung Electronics Company had a sales growth of 21.88%, 13.72% and -9.83% in the same period.

This indicates that Samsung C…………………………..


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