Question

liquidity ratios and long term investment activity ratios for samsung for the years 2016,2017,2018

and analysis for each ratio in details and compare it with industry

Answer 1

For Liquidity Ratio I have considered Current Ratio, Quick Ratio and Cash ratio

In Long Term Investment Activity I have considered Fixed Assets Turnover Ratio, Fixed Assets Turnover Ratio and Equity Turnover Ratio.

Current and Quick ratio above one considered to be good as company has more current assets than current liabilities which means company is capable in paying short term obligations. Samsung is keeping both the ratio above which is considered to be amazing. Infact cash ratio is also good, company has cash and cash equivalents almost 40% to 50% of current liabilities so company can pay round about 50% obligations immediately.

Long Term Investment Activity ratio is also greater than one so which is good sign however all are on declining trend and that is worrisome.

	31-12-2018	31-12-2017	31-12-2016	31-12-2015
Current Assets	1,74,69,74,24,000	1,46,98,24,64,000	1,41,42,97,04,000	1,24,81,47,25,000
Current Liabilities	69,08,15,10,000	67,17,51,14,000	54,70,40,95,000	50,50,29,09,000
Inventory	28,98,47,04,000	24,98,33,55,000	18,35,35,03,000	18,81,17,94,000
Prepaid Exp	0	0	0	0
Cash and Cash Equivalents	30,34,05,05,000	30,54,51,30,000	32,11,14,42,000	22,63,67,44,000
Current Ratio = Current Assets / Current Liabilities	2.53	2.19	2.59	2.47
Quick Ratio = (Current Assets - Inventories - Prepaid Exp ) / Current Liabilities	2.11	1.82	2.25	2.10
Cash Ratio = Cash and Cash Equivalents / Current Liabilities	0.44	0.45	0.59	0.45
Net Sales	2,43,77,14,15,000	2,39,57,53,76,000	2,01,86,67,45,000	2,00,65,34,82,000
Fixed Assets	1,64,65,98,20,000	1,54,76,96,26,000	1,20,74,46,20,000	1,17,36,47,96,000
Average Fixed Assets= (Current Year + Previous Year) / 2	1,59,71,47,23,000	1,37,75,71,23,000	1,19,05,47,08,000
Fixed Assets Turnover Ratio = Net Sales / Average Fixed Assets	1.53	1.74	1.70
Total Assets	3,39,35,72,44,000	3,01,75,20,90,000	2,62,17,43,24,000	2,42,17,95,21,000
Average Total Assets	3,20,55,46,67,000	2,81,96,32,07,000	2,52,17,69,22,500
Total Assets Turnover Ratio = Net Sales / Average Total Assets	0.76	0.85	0.80
Total Equity	2,40,06,89,93,000	2,07,21,34,16,000	1,86,42,43,28,000	1,72,87,67,67,000
Average Equity	2,23,64,12,04,500	1,96,81,88,72,000	1,79,65,05,47,500
Equity Turnover Ratio = Net Sales / Average Total Equity	1.090	1.217	1.124

Industry Comparison

In term of current ratios Samsung is doing better than Industry average however in term of long term investment activity ratios industry is far better than Samsung.

Samsung has to improve their assets performance by increasing the production.

		31-12-2018	31-12-2017	31-12-2016
Industry	Current Ratio = Current Assets / Current Liabilities	1.13	1.09	1.08
Industry	Quick Ratio = (Current Assets - Inventories - Prepaid Exp ) / Current Liabilities	0.78	0.76	0.75
Industry	Cash Ratio = Cash and Cash Equivalents / Current Liabilities	0.35	0.34	0.33
Samsung	Current Ratio = Current Assets / Current Liabilities	2.53	2.19	2.59
Samsung	Quick Ratio = (Current Assets - Inventories - Prepaid Exp ) / Current Liabilities	2.11	1.82	2.25
Samsung	Cash Ratio = Cash and Cash Equivalents / Current Liabilities	0.44	0.45	0.59
Industry	Fixed Assets Turnover Ratio = Net Sales / Average Fixed Assets	2.61	2.86	2.72
Industry	Total Assets Turnover Ratio = Net Sales / Average Total Assets	1.43	1.55	1.49
Industry	Equity Turnover Ratio = Net Sales / Average Total Equity	4.46	4.87	4.69
Samsung	Fixed Assets Turnover Ratio = Net Sales / Average Fixed Assets	1.53	1.74	1.70
Samsung	Total Assets Turnover Ratio = Net Sales / Average Total Assets	0.76	0.85	0.80
Samsung	Equity Turnover Ratio = Net Sales / Average Total Equity	1.09	1.22	1.12

Hope this helps. Feel free to share your feedback. Thanks and have a good day.