Your parents are considering investing in Samsung ordinary shares. They ask you, as an accounting expert, to make an analysis of the company for them. Samsung’s financial statements are presented in Appendix A. The complete annual report, including the notes to the financial statements, is available in the Investor Relations section of the company’s website at www.samsung.com. (Note that all amounts are in millions.)

Instructions
(Follow the approach in the chapter for rounding numbers.)
(a) Make a 5-year trend analysis, using 2006 as the base year, of 

(1) Net sales and
(2) Net income. Comment on the significance of the trend results.
(b) Compute for 2010 and 2009 the 

(1) Profit margin, 

(2) Asset turnover, 

(3) Return on assets, and 

(4) Return on ordinary shareholders’ equity. How would you evaluate Samsung’s profitability?
Total assets at December 31, 2008, were W105,300,650 and total ordinary shareholders’ equity at December 31, 2008, was W63,460,385.
(c) Compute for 2010 and 2009 the 

(1) Debt to total assets and 

(2) Times interest earned ratio. How would you evaluate Samsung’s long-term solvency?
(d) What information outside the annual report may also be useful to your parents in making a decision about Samsung?