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Project – Report If you do not know how to pull 10-k information, use this video to aid your ability to find a company 10-K document: https://youtu.be/h7uyeT71vk0 Using the two publicly traded companies (in the same industry) that were approved in week 2 by your instructor, conduct the following analysis using two years of data: a. Calculate the gross profit margin (profitability ratio) for two years b. Calculate the net profit margin (profitability ratio) for two years c. Calculate the inventory turnover and the days in inventory for two years d. Calculate the receivables turnover and the days in inventory for two years e. Calculate the working capital, current ratio and quick ratio for two years (liquidity ratios) f. Calculate the debt to equity ratio for two years (solvency ratio) g. Using finance.yahoo.com, look up your two companies, go to the financial statement and click on the cash flow statement. At the bottom, the screen should have calculated the free cash flow. Pull the free cash flow numbers for two years for your companies. Include all the calculations and prepare the numbers in tables and/or charts. Explain the financial performance of these two companies by explaining the results of each of the items/ratios above and conclude with which company would you rather invest in or work for and why. Running head: SHORT TITLE OF PAPER (<= 50 characters) 1 8 team project: apple inc. and samsung electronics co. audrey bravo lauren davis kai-hsiang lin ivy yu bus 305 - principles of accounting december 6, 2020 professor glenn villanea westcliff university gross and net profit margin – audrey bravo apple inc.'s gross profit margins for 2018 decreased from 38.3% in 2018 to 37.8% in 2019, while their net profit margins declined from 22.41% in 2019 to 21.24% in 2019. gross profit margins measure a company's manufacturing efficiencies; it is the percentage of sales revenue after manufacturing expenses, while net profit margins are income after all of the expenses (franklin, 2019). using the income statement, a company can calculate a company's gross and net profit margin. the first step to calculate the gross profit margin is to get the company's gross profit by getting the revenue and subtract the cost of goods sold; after identifying the gross profit, divided it by total revenue. in 2018, apple's net sales were $265,595 billion, then less the cost of goods sold, which is $163,756 that equals to gross profit of $101,839 billion, then divide $101,839 billion over $265,595 billion, that makes apple's 2018 gross profit margin of 38.3%. in 2019, net sales were $260,174 billion less the cost of goods sold of $162,782 billion that equals a gross profit of $98, 329 billion, then divide $98,392 billion by $260,174 billion that makes apple's 2019 gross profit of 37.8%. to calculate the net profit margin is to divide the net income over the revenue. in 2018, apple's net income was $59,531 billion and divided it by revenue of $265,595 billion, which gives a total net profit margin of 22.41%. in 2019, apple's net income was $55,256 billion and divided it by the revenue of $260,174 billion, which gives a total net profit margin of 21.24% compared to the company's closest competitor samsung electronics corporation, which suffered significant losses from 2018 to 2019 on gross and net profit margins. in 2018, samsung's net sales were $243,771 billion, then less cost of goods sold which is $132,394 billion that is equal to gross profit of $111,377 billion, divide gross profit over sale of $243,771 billion, that makes samsung's 2018 gross profit margin of 45.69%. in 2019, samsung's net sales were $ 230,400 billion, then less cost of goods sold, which is $147,239 billion that is equal to gross profit of $ 83,161 billion, divide gross profit over sale of $230,400 billion, that makes samsung's 2018 gross profit margin of 36.09% in 2018, samsung's net income was $44,344 billion and divided it by its revenue of $243,771 billion, which gives a total net profit margin of 18.19%. in 2019, net income was significantly lower at $21,738 billion, making the net profit margin of $9.44%. according to samsung news (2020), though mobile phones' sale is in the steady-state, the sales decline was due to the sales of memory cards and oled displays. memory cards gave the company a sales boost over the past few years are now low in demand as mobile phones hold higher internal memory capacity. inventory turnover – lauren davis apple: to calculate the inventory turnover and the days in inventory i had to find the total cost of goods sold for 2018&2019 and the total inventory from the year prior for both years. for 2018 the total cost of sales was 163,756. the two total inventories from that year and the year before was 4,855 and 3,956. once i got these numbers, i started to put together the formula to find the inventory turnover. adding together the total inventories i got 8,811 and divided this number by 2. this gave me the average inventory which was 4,405. dividing the cost of goods sold from the average inventory i got the inventory turnover which is 37.17. that led me to find the days in inventory which i divided 365 from 37.17 and got 9.81. so, the calculated inventory turnover is 37.11 and the days in inventory is 9.81. for 2019 i did the same formula which was finding the cost of goods sold which is 161,782. the two total inventories i found was 3,956 and 4,106. i got 8,062 and divided by 2 which gave me 4,031. i divided that number by the total cost of goods sold and got the inventory turnover 40.13. the days in inventory i got by dividing 365 and 40.13 was 9.09. this states the calculated inventory turnover which is 40.13 and the days in inventory which is 9.09. i noticed that the numbers went down from 2018 to 2019 by a little margin. overall, apple has maintained their high numbers every year. samsung: for 2018, the total cost of goods sold was 117,954. the total inventories from that year and the year prior were 23,071 and 25,823. the sum of those two were 48,894 which was divided by 2. this equalled to 24,447 and divided it by the total goods sold. the inventory turnover i got was 4.82. the days in inventory i calculated was 75.72. in 2019 the total cost of goods sold was 125,342. the total inventories were 25,823 and 22,786 which equalled to 48,609. dividing this by 2 i got 24,304. the total cost of goods divided by 24,304 gave me the inventory turnover which was 5.15. the days in inventory i got was 70.87. the comparison between the two years were about the same but the total cost of goods was more in 2019 and the days in inventory was more in 2018. receivables turnover - lauren davis apple: to calculate the receivables turnover and the days in inventory in 2018 & 2019, i had to first use the formula accounts receivable turnover ratio equals sales divided by average accounts receivable. i then use the formula average accounts receivable divided by annual total sales and multiply it by 365. for 2018, the total net sales were 265,595. i find the accounts receivable total from 2018 and the year prior which was 17,874 and 23,186. adding them together and dividing by 2 i got 20,530. divide that by the net sales i get the receivables turnover which is 12.93. to calculate the days in inventory i divided 20,530 and 265,595 times 365 and got 28.2 days. in 2019, the total net sales were 260,174. the accounts receivable amounts for the year and the year prior was 23,186 and 22,926. using the formula, i got 23,056 in the end. to get the receivables turnover i divided 260,174 and 23,056 and got 11.28. the days in inventory was dividing those two again and multiplying by 365 and got 32.3. these two years were not a big amount of a difference but in 2018 all the numbers were greater expect the days in inventory which was greater in 2019. samsung: using the same formulas, in 2018 the total net sales for samsung was 217,183. the accounts receivables were 25,576 and 30,174. using the formula, i got the receivables turnover which is 7.79. the days in inventory i divided 27,875 and 217,183 and got 46.8. in 2019, the total net sales were 196,135. the accounts receivables were 30,174 and 29,907. using the formula, i got the receivable turnover which was 6.52. the days in inventory is 55.9 days by dividing 30,040 and 196,135 multiplying by 365. both years moved up and down in different areas. the turnover was greater in 2018 but the days in inventory was greater in 2019. working capital, current ratios, quick and equity ratios - kai-hsiang lin to calculate apple's working capital in 2019, we have to understand the definition of working capital. working capital = current assets- current liabilities. for 2019, apple's total current assets are 162,819 in millions of dollars, and it's total current liabilities are 105,718 in millions of dollars. therefore, we can calculate apple working capital for 2019, which should be 162,819 - 105,718 = 57101 in millions of dollars. similarly, apple's total current assets in 2018 are 131,339 in millions of dollars, and it's current liabilities are 115,929. so, apple's working capital in 2018 is 15410 in millions of dollars. moreover, we can also find out apple's current ratio from current assets and liabilities: current ratio = current assets divided by current liabilities. therefore, we find out apple's 2019 current ratio is 1.54, and 2018 is 1.13. to get a quick ratio, we also need information on companies' inventory, and the formula is current assets - inventories divided by current liabilities. so, we can find out apple's 2019 quick ratio by taking 162,819 (current asset) - 4106 (inventories) divided by 105,718 (current liabilities) = 1.50 ,and 2018 quick ratio is 131,339 – 3956 divided by 115,929(current liabilities) = 1.09. to calculate debt to equity ratio, we need information on total liabilities and total shareholder's equity because debt 50="" characters)="" 1="" 8="" team="" project:="" apple="" inc.="" and="" samsung="" electronics="" co.="" audrey="" bravo="" lauren="" davis="" kai-hsiang="" lin="" ivy="" yu="" bus="" 305="" -="" principles="" of="" accounting="" december="" 6,="" 2020="" professor="" glenn="" villanea="" westcliff="" university="" gross="" and="" net="" profit="" margin="" –="" audrey="" bravo="" apple="" inc.'s="" gross="" profit="" margins="" for="" 2018="" decreased="" from="" 38.3%="" in="" 2018="" to="" 37.8%="" in="" 2019,="" while="" their="" net="" profit="" margins="" declined="" from="" 22.41%="" in="" 2019="" to="" 21.24%="" in="" 2019.="" gross="" profit="" margins="" measure="" a="" company's="" manufacturing="" efficiencies;="" it="" is="" the="" percentage="" of="" sales="" revenue="" after="" manufacturing="" expenses,="" while="" net="" profit="" margins="" are="" income="" after="" all="" of="" the="" expenses="" (franklin,="" 2019).="" using="" the="" income="" statement,="" a="" company="" can="" calculate="" a="" company's="" gross="" and="" net="" profit="" margin.="" the="" first="" step="" to="" calculate="" the="" gross="" profit="" margin="" is="" to="" get="" the="" company's="" gross="" profit="" by="" getting="" the="" revenue="" and="" subtract="" the="" cost="" of="" goods="" sold;="" after="" identifying="" the="" gross="" profit,="" divided="" it="" by="" total="" revenue.="" in="" 2018,="" apple's="" net="" sales="" were="" $265,595="" billion,="" then="" less="" the="" cost="" of="" goods="" sold,="" which="" is="" $163,756="" that="" equals="" to="" gross="" profit="" of="" $101,839="" billion,="" then="" divide="" $101,839="" billion="" over="" $265,595="" billion,="" that="" makes="" apple's="" 2018="" gross="" profit="" margin="" of="" 38.3%.="" in="" 2019,="" net="" sales="" were="" $260,174="" billion="" less="" the="" cost="" of="" goods="" sold="" of="" $162,782="" billion="" that="" equals="" a="" gross="" profit="" of="" $98,="" 329="" billion,="" then="" divide="" $98,392="" billion="" by="" $260,174="" billion="" that="" makes="" apple's="" 2019="" gross="" profit="" of="" 37.8%.="" to="" calculate="" the="" net="" profit="" margin="" is="" to="" divide="" the="" net="" income="" over="" the="" revenue.="" in="" 2018,="" apple's="" net="" income="" was="" $59,531="" billion="" and="" divided="" it="" by="" revenue="" of="" $265,595="" billion,="" which="" gives="" a="" total="" net="" profit="" margin="" of="" 22.41%.="" in="" 2019,="" apple's="" net="" income="" was="" $55,256="" billion="" and="" divided="" it="" by="" the="" revenue="" of="" $260,174="" billion,="" which="" gives="" a="" total="" net="" profit="" margin="" of="" 21.24%="" compared="" to="" the="" company's="" closest="" competitor="" samsung="" electronics="" corporation,="" which="" suffered="" significant="" losses="" from="" 2018="" to="" 2019="" on="" gross="" and="" net="" profit="" margins.="" in="" 2018,="" samsung's="" net="" sales="" were="" $243,771="" billion,="" then="" less="" cost="" of="" goods="" sold="" which="" is="" $132,394="" billion="" that="" is="" equal="" to="" gross="" profit="" of="" $111,377="" billion,="" divide="" gross="" profit="" over="" sale="" of="" $243,771="" billion,="" that="" makes="" samsung's="" 2018="" gross="" profit="" margin="" of="" 45.69%.="" in="" 2019,="" samsung's="" net="" sales="" were="" $="" 230,400="" billion,="" then="" less="" cost="" of="" goods="" sold,="" which="" is="" $147,239="" billion="" that="" is="" equal="" to="" gross="" profit="" of="" $="" 83,161="" billion,="" divide="" gross="" profit="" over="" sale="" of="" $230,400="" billion,="" that="" makes="" samsung's="" 2018="" gross="" profit="" margin="" of="" 36.09%="" in="" 2018,="" samsung's="" net="" income="" was="" $44,344="" billion="" and="" divided="" it="" by="" its="" revenue="" of="" $243,771="" billion,="" which="" gives="" a="" total="" net="" profit="" margin="" of="" 18.19%.="" in="" 2019,="" net="" income="" was="" significantly="" lower="" at="" $21,738="" billion,="" making="" the="" net="" profit="" margin="" of="" $9.44%.="" according="" to="" samsung="" news="" (2020),="" though="" mobile="" phones'="" sale="" is="" in="" the="" steady-state,="" the="" sales="" decline="" was="" due="" to="" the="" sales="" of="" memory="" cards="" and="" oled="" displays.="" memory="" cards="" gave="" the="" company="" a="" sales="" boost="" over="" the="" past="" few="" years="" are="" now="" low="" in="" demand="" as="" mobile="" phones="" hold="" higher="" internal="" memory="" capacity.="" inventory="" turnover="" –="" lauren="" davis="" apple:="" to="" calculate="" the="" inventory="" turnover="" and="" the="" days="" in="" inventory="" i="" had="" to="" find="" the="" total="" cost="" of="" goods="" sold="" for="" 2018&2019="" and="" the="" total="" inventory="" from="" the="" year="" prior="" for="" both="" years.="" for="" 2018="" the="" total="" cost="" of="" sales="" was="" 163,756.="" the="" two="" total="" inventories="" from="" that="" year="" and="" the="" year="" before="" was="" 4,855="" and="" 3,956.="" once="" i="" got="" these="" numbers,="" i="" started="" to="" put="" together="" the="" formula="" to="" find="" the="" inventory="" turnover.="" adding="" together="" the="" total="" inventories="" i="" got="" 8,811="" and="" divided="" this="" number="" by="" 2.="" this="" gave="" me="" the="" average="" inventory="" which="" was="" 4,405.="" dividing="" the="" cost="" of="" goods="" sold="" from="" the="" average="" inventory="" i="" got="" the="" inventory="" turnover="" which="" is="" 37.17.="" that="" led="" me="" to="" find="" the="" days="" in="" inventory="" which="" i="" divided="" 365="" from="" 37.17="" and="" got="" 9.81.="" so,="" the="" calculated="" inventory="" turnover="" is="" 37.11="" and="" the="" days="" in="" inventory="" is="" 9.81.="" for="" 2019="" i="" did="" the="" same="" formula="" which="" was="" finding="" the="" cost="" of="" goods="" sold="" which="" is="" 161,782.="" the="" two="" total="" inventories="" i="" found="" was="" 3,956="" and="" 4,106.="" i="" got="" 8,062="" and="" divided="" by="" 2="" which="" gave="" me="" 4,031.="" i="" divided="" that="" number="" by="" the="" total="" cost="" of="" goods="" sold="" and="" got="" the="" inventory="" turnover="" 40.13.="" the="" days="" in="" inventory="" i="" got="" by="" dividing="" 365="" and="" 40.13="" was="" 9.09.="" this="" states="" the="" calculated="" inventory="" turnover="" which="" is="" 40.13="" and="" the="" days="" in="" inventory="" which="" is="" 9.09.="" i="" noticed="" that="" the="" numbers="" went="" down="" from="" 2018="" to="" 2019="" by="" a="" little="" margin.="" overall,="" apple="" has="" maintained="" their="" high="" numbers="" every="" year.="" samsung:="" for="" 2018,="" the="" total="" cost="" of="" goods="" sold="" was="" 117,954.="" the="" total="" inventories="" from="" that="" year="" and="" the="" year="" prior="" were="" 23,071="" and="" 25,823.="" the="" sum="" of="" those="" two="" were="" 48,894="" which="" was="" divided="" by="" 2.="" this="" equalled="" to="" 24,447="" and="" divided="" it="" by="" the="" total="" goods="" sold.="" the="" inventory="" turnover="" i="" got="" was="" 4.82.="" the="" days="" in="" inventory="" i="" calculated="" was="" 75.72.="" in="" 2019="" the="" total="" cost="" of="" goods="" sold="" was="" 125,342.="" the="" total="" inventories="" were="" 25,823="" and="" 22,786="" which="" equalled="" to="" 48,609.="" dividing="" this="" by="" 2="" i="" got="" 24,304.="" the="" total="" cost="" of="" goods="" divided="" by="" 24,304="" gave="" me="" the="" inventory="" turnover="" which="" was="" 5.15.="" the="" days="" in="" inventory="" i="" got="" was="" 70.87.="" the="" comparison="" between="" the="" two="" years="" were="" about="" the="" same="" but="" the="" total="" cost="" of="" goods="" was="" more="" in="" 2019="" and="" the="" days="" in="" inventory="" was="" more="" in="" 2018.="" receivables="" turnover="" -="" lauren="" davis="" apple:="" to="" calculate="" the="" receivables="" turnover="" and="" the="" days="" in="" inventory="" in="" 2018="" &="" 2019,="" i="" had="" to="" first="" use="" the="" formula="" accounts="" receivable="" turnover="" ratio="" equals="" sales="" divided="" by="" average="" accounts="" receivable.="" i="" then="" use="" the="" formula="" average="" accounts="" receivable="" divided="" by="" annual="" total="" sales="" and="" multiply="" it="" by="" 365.="" for="" 2018,="" the="" total="" net="" sales="" were="" 265,595.="" i="" find="" the="" accounts="" receivable="" total="" from="" 2018="" and="" the="" year="" prior="" which="" was="" 17,874="" and="" 23,186.="" adding="" them="" together="" and="" dividing="" by="" 2="" i="" got="" 20,530.="" divide="" that="" by="" the="" net="" sales="" i="" get="" the="" receivables="" turnover="" which="" is="" 12.93.="" to="" calculate="" the="" days="" in="" inventory="" i="" divided="" 20,530="" and="" 265,595="" times="" 365="" and="" got="" 28.2="" days.="" in="" 2019,="" the="" total="" net="" sales="" were="" 260,174.="" the="" accounts="" receivable="" amounts="" for="" the="" year="" and="" the="" year="" prior="" was="" 23,186="" and="" 22,926.="" using="" the="" formula,="" i="" got="" 23,056="" in="" the="" end.="" to="" get="" the="" receivables="" turnover="" i="" divided="" 260,174="" and="" 23,056="" and="" got="" 11.28.="" the="" days="" in="" inventory="" was="" dividing="" those="" two="" again="" and="" multiplying="" by="" 365="" and="" got="" 32.3.="" these="" two="" years="" were="" not="" a="" big="" amount="" of="" a="" difference="" but="" in="" 2018="" all="" the="" numbers="" were="" greater="" expect="" the="" days="" in="" inventory="" which="" was="" greater="" in="" 2019.="" samsung:="" using="" the="" same="" formulas,="" in="" 2018="" the="" total="" net="" sales="" for="" samsung="" was="" 217,183.="" the="" accounts="" receivables="" were="" 25,576="" and="" 30,174.="" using="" the="" formula,="" i="" got="" the="" receivables="" turnover="" which="" is="" 7.79.="" the="" days="" in="" inventory="" i="" divided="" 27,875="" and="" 217,183="" and="" got="" 46.8.="" in="" 2019,="" the="" total="" net="" sales="" were="" 196,135.="" the="" accounts="" receivables="" were="" 30,174="" and="" 29,907.="" using="" the="" formula,="" i="" got="" the="" receivable="" turnover="" which="" was="" 6.52.="" the="" days="" in="" inventory="" is="" 55.9="" days="" by="" dividing="" 30,040="" and="" 196,135="" multiplying="" by="" 365.="" both="" years="" moved="" up="" and="" down="" in="" different="" areas.="" the="" turnover="" was="" greater="" in="" 2018="" but="" the="" days="" in="" inventory="" was="" greater="" in="" 2019.="" working="" capital,="" current="" ratios,="" quick="" and="" equity="" ratios="" -="" kai-hsiang="" lin="" to="" calculate="" apple's="" working="" capital="" in="" 2019,="" we="" have="" to="" understand="" the="" definition="" of="" working="" capital.="" working="" capital="current" assets-="" current="" liabilities.="" for="" 2019,="" apple's="" total="" current="" assets="" are="" 162,819="" in="" millions="" of="" dollars,="" and="" it's="" total="" current="" liabilities="" are="" 105,718="" in="" millions="" of="" dollars.="" therefore,="" we="" can="" calculate="" apple="" working="" capital="" for="" 2019,="" which="" should="" be="" 162,819="" -="" 105,718="57101" in="" millions="" of="" dollars.="" similarly,="" apple's="" total="" current="" assets="" in="" 2018="" are="" 131,339="" in="" millions="" of="" dollars,="" and="" it's="" current="" liabilities="" are="" 115,929.="" so,="" apple's="" working="" capital="" in="" 2018="" is="" 15410="" in="" millions="" of="" dollars.="" moreover,="" we="" can="" also="" find="" out="" apple's="" current="" ratio="" from="" current="" assets="" and="" liabilities:="" current="" ratio="current" assets="" divided="" by="" current="" liabilities.="" therefore,="" we="" find="" out="" apple's="" 2019="" current="" ratio="" is="" 1.54,="" and="" 2018="" is="" 1.13.="" to="" get="" a="" quick="" ratio,="" we="" also="" need="" information="" on="" companies'="" inventory,="" and="" the="" formula="" is="" current="" assets="" -="" inventories="" divided="" by="" current="" liabilities.="" so,="" we="" can="" find="" out="" apple's="" 2019="" quick="" ratio="" by="" taking="" 162,819="" (current="" asset)="" -="" 4106="" (inventories)="" divided="" by="" 105,718="" (current="" liabilities)="1.50" ,and="" 2018="" quick="" ratio="" is="" 131,339="" –="" 3956="" divided="" by="" 115,929(current="" liabilities)="1.09." to="" calculate="" debt="" to="" equity="" ratio,="" we="" need="" information="" on="" total="" liabilities="" and="" total="" shareholder's="" equity="" because="">