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Annual Reports Financial Statements Annual Financial Reports Essay

¶ … Annual Reports Financial Statements Annual Financial Reports

Describe the general organization of each of the three sets of financial statements. Which is more useful in your opinion for each of the three companies: Net Income or Cash from Operating Activities?

The general organization, of the three companies being examined is focused on different segments of the economy. Samsung Electronics is a manufacturer of: digital media products, semiconductors, telecommunications products, consumer related electronics (such as cell phones / DVD players) and LCDs. The recent recession has caused the company to experience large amounts of volatility in earnings. Part of the reason for this, is because of intense competition and the sharp contraction in consumer spending. Evidence of this can be seen by looking no further than the net income. Where, it would fluctuate between $1.58 billion in 2008 to $499 million in 2009. This is significant, because it shows how the bottom line of the company is affected by changes in the economy and from competition. ("Samsung Electronics Company Limited," 2009) In the case of Samsung Electronics, the most useful way of evaluating the company is to look at the net income. The reason why, is because it can provide a more accurate number and it can confirm the underlying trend that is taking place. This is because net income for the company will take in account a number of different deductions, helping to improve the accuracy of the information being presented. ("Samsung Electronics Company Limited," 2009)

Lockheed Martin is a defense contractor that markets / manufacturers: weapon systems, electronics technology, rockets / missiles and they provide information / engineering services to various governments. The most useful measure from the financial statement for this company would be: the cash from operating activities. The reason why this number would be most accurate is because, it takes into account recurring expenses or costs that have been carried over. For example, in the annual report there were several different recurring costs that were carried over from pervious reporting periods...

At the same time, this number will take into account: depreciation of plants / equipment, customer advances and excess costs that were incurred. When you put these different elements together, this shows how cash from operating activities will accurately reflect the profit margins of Lockheed Martin. ("Lockheed Martin 2009 Annual Report," 2009)
RTL Group is involved in the entertainment industry. Where, the company is based out of Luxembourg owing a number of different media assets to include: 45 television stations and 30 radio stations (in 11 countries). At the same time the company produces a number of different original programs such as: game shows, talent shows, dramas and soap operas. In this case the cash flow from operations would be most useful. The reason why, is because this number will provide more complete information about the financial strength of the company. Where, it will take into account a number of different factors to include: deprecation / amortization, losses / gains on disposable assets, changes in working capital and income taxes that have been paid. This is significant, because it shows how the cash flow from operations will provide the most accurate reading of the underlying financial strengths of RTL Group. ("Consolidated Income Statement," 2009)

Predict future trends using the companies' Net Income or Cash Flows

When you look at Samsung Electronics the net income indicates that the company is facing severe challenges in the future. This is because of the drop off in consumer demand and a host of losses that they have been taking over the last two years. The losses are troubling, because they are increasing in a number of different areas to include: plants / equipment / property, foreign exchange losses, foreign currency translation and equity security transactions. To corroborate the medium term challenges the company is facing, the different operating profits show how earnings are declining. Evidence of this can be seen by looking no further than, the decline in operating profits from 2008 (which…

Sources used in this document:
Bibliography

2009 Samsung Electronics Annual Report. (2009). Samsung Electronics. Retrieved from: http://www.samsung.com/us/aboutsamsung/ir/financialinformation/annualreport/downloads/2009/SECAR2009_Eng_Final.pdf

Annual Report. (2009). RTL Group. Retrieved from: http://www.rtlgroup.com/www/assets/file_asset/AR2009_RTLGroup_COMPLETE.pdf

Consolidated Income Statement. (2009). RTL Group. Retrieved from: http://www.rtlgroup.com/www/assets/file_asset/AR2009_RTLGroup_CONSOLIDATEDFINANCIALSTATEMENTS.pdf

Lockheed Martin 2009 Annual Report. (2009). Lockheed Martin. Retrieved from: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzYyMjh8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Samsung Electronics Company Limited. (2009). Samsung. Retrieved from: http://www.samsung.com/us/aboutsamsung/ir/financialinformation/auditedfinancialstatements/downloads/parent/2009_quart01_soi.pdf
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