LG Company Financial Analysis

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Introduction

The company has been ventured in the electronic world that has facilitated by the increased number of customers in the market. This had been an ample time for the company’s operations to be strategically arranged and formulated to ensure that they are effective and efficiently undertaken once the company started its operations .This helped the company in the production of quality products that do not disappoint the consumers thus earning their loyalty.

The company has numerous competitors in the electronic market such as the mobile phone companies such as Samsung, Nokia, Apple, Blackberry, HTC, Alcatel, Sony, Motorola, Tecno mobiles among others. The competitors are at a rise as they also try to achieve the market dominance with their services and products. On the other hand in the face of appliances especially the home use appliances, such companies as Samsung, Armco, Phillips, and Sony among others are also in the move to dominate in the market. This poses a threat to the company of losing its dominance in the market (Grant, 2007).

The company’s financial statements are stated below indicating the trends in the financial status of the company. The trends are clearly shown in the statement of financial statements as well as in the income statement.

LG COMPANY LTD

INCOME STATEMENT FOR THE YEARS ENDED DEC 2011, 2012, 2013

 

Dec 31
2011
Restated
$

Dec 31
2012
$

Dec 31
2013
$

Revenues

165,001,771.0

201,103,613.0

228,692,667.0

TOTAL REVENUES

165,001,771.0

201,103,613.0

228,692,667.0

Cost Of Goods Sold

112,145,120.0

126,651,931.0

137,696,309.0

GROSS PROFIT

52,856,651.0

74,451,682.0

90,996,358.0

Selling General & Admin Expenses, Total

26,588,576.0

33,073,560.0

38,934,012.0

R&D Expenses

9,955,164.0

11,532,795.0

14,319,402.0

Depreciation & Amortization, Total

668,620.0

795,989.0

957,931.0

Other Operating Expenses

--

--

--

OTHER OPERATING EXPENSES, TOTAL

37,212,360.0

45,402,344.0

54,211,345.0

OPERATING INCOME

15,644,291.0

29,049,338.0

36,785,013.0

Interest Expense

-644,133.0

-599,006.0

-509,658.0

Interest And Investment Income

740,076.0

951,612.0

1,463,768.0

NET INTEREST EXPENSE

95,943.0

352,606.0

954,110.0

Income (Loss) On Equity Investments

1,399,194.0

986,611.0

504,063.0

Currency Exchange Gains (Loss)

-664,817.0

-143,912.0

-330,105.0

Other Non-Operating Income (Expenses)

-289,058.0

-47,993.0

-480,186.0

EBT, EXCLUDING UNUSUAL ITEMS

16,185,553.0

30,196,650.0

37,432,895.0

Impairment Of Goodwill

-183,145.0

-204,746.0

-99,643.0

Gain (Loss) On Sale Of Investments

223,496.0

112,505.0

1,117,029.0

Gain (Loss) On Sale Of Assets

1,067,145.0

-177,348.0

-77,225.0

Other Unusual Items, Total

-101,131.0

-12,044.0

-8,777.0

EBT, INCLUDING UNUSUAL ITEMS

17,191,918.0

29,915,017.0

38,364,279.0

Income Tax Expense

3,432,875.0

6,069,732.0

7,889,515.0

Minority Interest In Earnings

-376,398.0

-659,910.0

-653,549.0

Earnings From Continuing Operations

13,759,043.0

23,845,285.0

30,474,764.0

NET INCOME

13,382,645.0

23,185,375.0

29,821,215.0

NET INCOME TO COMMON INCLUDING EXTRA ITEMS

11,613,300.0

20,130,020.0

25,893,396.0

NET INCOME TO COMMON EXCLUDING EXTRA ITEMS

11,613,300.0

20,130,020.0

25,893,396.0

 

Balance Sheet                                   

 

Division

2011

2012

2013

Current assets

7,556

7,453

74,529

Non-current assets

8,029

91,282

91,282

Total assets

15,286

165,812

165,812

Current liabilities

4,724

43,380

43,380

Non-current liabilities

854

14,778

14,778

Total liabilities

5,578

58,158

58,158

Equity attributable to owners of the parent

9,554

106,293

106,293

Non-controlling interests

154

1,361

1,361

Total equity

9,708

107,654

107,654

 

With the company’s trend in the profitability, the trend shows that the company has been making profits throughout the venture. This is due to the increased products and services diversification thus leading to the client satisfaction. As the clients get satisfied, they tend to back to the company for the services thus earning their loyalty (Bhadur, 2008). From the graphs below, the profitability within the years can be clearly seen to be rising with from one tear to the other.

The changes in the profitability are due to the changes in the demand for the company’s products. Though there is the increased competition, the company has been dealing with the trend in a much more comprehensive way to achieve the competitive advantage over the competitors (Hill, 2013). During the years, the operational strategies of the company have been improved thus improving the overall income for the company in the years.

Ratios for the year 2013

Quick ratio = C.A-C.L      74,529-43,380   = 0.7180

                        C.L                 43,380

Current ratio = C.A                     74,529   = 1.7180

                          C.L                     43,380

Operating income margin = Operating income   36,785,013.0   = 0.2672

                                                  Net sales              137,696,309        

 

Ratios for the year 2012

Quick ratio = C.A-C.L      7,453-43,380   = -0.8282

                        C.L                 43,380

Current ratio = C.A                     7453   = 0.1718

                          C.L                     43,380

Operating income margin = Operating income   29,049,338 = 0.2294

                                                  Net sales              126,651,931

Having clearly done the valuations and attached the spreadsheets, however, the profitability of the company is observed to be rising from year to year. This has been attributed by the various factors and underatakings of the company (Levine, 2002). The number of share has also increased to 1563 thus possing an increase in the company’s capital. The EPS and other ratios has been calculated and clearly recorded in the statements. They has been changing with time from the economic status of the country.

Conclusion

Following the debt ratio, the pay back period of the debts ought to be checked for an effective and favorable debt ration. The average collection period should also be considered. The company’s assets has aslo increased showing an improvemet on the diversification of the various fields in the investments of the company. 

References:

Bhadur, R. (2008). Production and operation management. Jaipur, India: Book Enclave.

Grant, T. (2007). International directory of company histories. Chicago: St. James Press.

Hill, K. (2013). International directory of company histories. Vol. 139. Detroit, Mich.: St. James Press.

Levine, H. A. (2002). Practical project management tips, tactics, and tools. New York: J. Wiley.

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