Essay Acc 561 Week 2 Financial Statement Analysis

1405 Words Jul 12th, 2012 6 Pages
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 |
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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.

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