Financial Analysis

Financial AnalysIs

of SONY and Samsung Corporation`s financial statements

(CORPORATE FINANCE FINAL ASSIGNMENT

LECTURER MR. KUNIHIKO FURUYAMA)

Umurbek Osorkhan

2EC12056R QBS 10th

7 September 2012

Introduction

Recently I read news that Japanese consumer electronics giants are suffering from financial losses and I was curious why they lose the money despite their technological and quality advantages. Answering to this question we may need to do more research on organizational or strategic issues (management issues) but in this report we will only focus on financial analysis. I`ve chose the biggest two companies SONY and Panasonic Corporation.

Q1: Did and will the each company generate more economic return or profit than shareholders’ expectation in the most recent annual result and current fiscal year forecast? How much did and will it outperform the shareholders’ expectation? Answer above question in terms both of the amount of JPY or USD and of %. You need to specify criteria and assumptions on your analysis.

In order to find whether enterprises generate more economic return than shareholders` expectation we need at first to calculate and find the Return on investment (ROI, which measures the firm`s gain or loss generated on an investment relative to the amount of money invested. ROI is usually expressed a percentage and is typically used for organizational financial decisions, to compare a company's profitability, or to compare the efficiency of different investments. The calculation can be altered by deducting taxes and fees to get a more accurate picture of the total ROI. Then it would be appeared as net operating profit after tax as formulation NOPAT = Operating Income x (1 - Tax Rate), NOPAT=Net Profit after Tax+after Tax Interest Expense-after Tax Interest Income. Another fully equivalent expression is NOPAT = (1-Tax Rate)* EBIT 

Then we should find EVA (Economic Value Added). EVA is net operating profit after taxes (or NOPAT) less a...