the comparison of financial statements and performance analyses of three technology companies through three years

ObjectiveThe purpose is to collect the annual accounting statements of three chosen companies inthe Technology field including Xiaomi, Huawei, and Samsung from 2019 to 2021.. Xiaomi Fina

Huỳnh Th H ng Ánhị ồ - SS171187

Date of submission: 08/08/2022

TABLE OF CONTENTS

1 INTRODUCTION 3

1.1 Background information 3

1.1.1.Principles of Accounting 3

1.2 Objective 3

2 TOPIC DESCRIPTION 3

2.1 Company background 3

2.1.1 Xiaomi 3

2.1.2 Huawei 4

2.1.3 Samsung 4

3 FINANCIAL STATEMENT ANALYSIS 5

3.1 Financial Ratios 5

3.1.1 Xiaomi financial Ratios 5

3.1.2 Huawei financial Ratios 6

3.1.3 Samsung financial Ratios 6

3.2 The performance of three companies through three years 3.2.1 Xiaomi performance 6

3.2.2 Huawei performance 12

3.2.3 Samsung performance 15

3.3 The comparison of three companies through three years 20

4 CONCLUSION 22

REFERENCE 23

it makes it easier to compare financial data between several businesses Accounting principlesalso minimize accounting fraud by enhancing openness and making it easier to identify signs oftrouble.

1.2 Objective

The purpose is to collect the annual accounting statements of three chosen companies inthe Technology field including Xiaomi, Huawei, and Samsung from 2019 to 2021 Therefore, theobjectives involve:

● Calculating and analysing the financial ratios of the three chosen companies

● Evaluation of the performance of those companies in the period of three recent years

● Compare the result between three companies

non-developers may quickly install MIUI on their phones using the MIUI Express APK Morethan 30 million people worldwide were using Xiaomi's MIUI as of the end of 2013.

Xiaomi likes to compare itself to Amazon since they both produce powerful hardwarethat they sell at cost and rely on their services and content to generate the majority of theirrevenue, even if commenters are eager to refer to the Beijing-based business as "The Apple ofChina." In relation to that, their revenue for 2013 alone was over $5 billion, which is reallyoutstanding for a startup business

2.1.2 Huawei

Established in 1988, Huawei Technologies is a high-tech company that specializes inoptical, fixed, mobile, and data communications networks as well as research and development(R&D), production, and marketing of communications equipment Huawei Technologies alsooffers telecom carriers customised network solutions China Telecom, China Mobile, ChinaNetcom, China Unicom, Thai AIS, Telefonica, SingTel, Hutchison Telecom, PCCW HKT,SUNDAY, Etisalat (UAE), Telemar (Brazil), Rostelecom (Russia), and other companies areamong Huawei's clients In 2003, Huawei's contracted sales increased by 42% year over year to

$3.83 billion USD Fixed networks, mobile networks, data communications, optical networks,software & services, and mobile terminals are the different areas into which Huawei's productsfall Most important of all, Huawei products are based on its independently designed ASIC chips.Its ASIC designing capability is among the most advanced in this field worldwide This allowsHuawei to consider the needs of its customers from start to finish, from the chip to the network.This experience is invaluable as Huawei expands its penetration into the international market

2.1.3 Samsung

Samsung Electronics Co Ltd (Samsung), a subsidiary of Samsung Group, is amanufacturer of consumer electronics, information technology and mobile communications, anddevice solutions Televisions (TV), refrigerators, washing machines, air conditioners, medicalequipment, printers, monitors, computers, network systems, and digital cameras are among the

company's product offerings Additionally, it produces tablets, smartphones, LCD and LEDpanels, mobile phones, and other accessories The business operates in a number of differentgeographic areas, including the Americas, Europe, Africa, the Middle East, and Asia-Pacific.Seoul, South Korea serves as the home base for Samsung.

The initial focus on the creation of audio/video components, SamsungElectro-Mechanics established the groundwork for the technological independence of Korea'sparts sector Samsung expanded its operations into materials and computer components in the1980s The company then concentrated on creating promising next-generation products such aschip components, mobile communication parts, and optical parts in the 1990s The company hasbeen working to advance strategic technologies and forge business ties based on the fundamentaltechnologies of materials, multilayer thin-film moulding, and high-frequency circuit design sincethe turn of the millennium With this as their central goal, Samsung is concentrating onpromoting the chip part, camera module, communication module, and board industries

3 FINANCIAL STATEMENT ANALYSIS

3.1 Financial Ratios

3.1.1 Xiaomi Financial Ratios

3.1.2 Huawei Financial Ratios

3.1.3 Samsung Financial Ratios

3.2 The performance of three companies through three years

3.2.1 Xiaomi performance

● From 2019 to 2020 :

Profitability: From the table in 3.1.1 Xiaomi Financial Ratios, the results illustrate theprofit margin and the gross profit margin in the year 2020 were higher than those in 2019,

especially the profit margin in 2020 was nearly double the 2019’s These datas also show thatXiaomi is profitable and has the potential to grow through the following activities.

First of all, due to its pricing advantage of "cheap price and high distribution," Xiaomihas always been liked by fee-payers According to the financial report for 2019 of Xiaomi, itillustrates that Xiaomi saw its fair share of ups and downs The business showed that it earnedCNY 205.8 billion (about $29 billion) in total This is the first time the company has pulled inmore than CNY 200 billion However, even though Xiaomi's overall sales set a record high, thecompany's net profit still declined Xiaomi's 2019 profits decreased to CNY 10.1 billion ($1.4billion), down from CNY 13.55 billion ($2 billion) in 2018 That is a significant 26 %year-over-year decline

In addition, with Redmi's brand split from Xiaomi, it has formally begun a dual-brandapproach for its smartphone companyas well as launching more Poco Phone brands to focus onthe vision of "high configuration at a bargain price" (GizmoChina, 2019) As a result, the averageselling price of Xiaomi smartphones has increased, and the image of cheap (and copied Apple) isincreasingly blurred

During the COVID-19 outbreak, the company clarified its status amid the currentcoronavirus pandemic The outbreak initially hampered Xiaomi's production in February andMarch, which made sales decrease during this period in both mainland China and abroad SoXiaomi planned to invest at least 50 billion CNY in the next 5 years in “5G+AIoT”(PhateZhang, 2020).As Xiaomi witnessed people in isolation connecting with their family, and lovedones, through their smart devices, it recognized that people had human desires to connect and tocare Therefore, if it builds “5G+AIoT” and the next generation super internet, we will continue

to use technology to connect and improve lives everywhere Moreover, the increase in grossprofit margin mainly reflected the improvement of our product mix and more prudentoperations during the early transition period from 4G to 5G technology in mainland China

By the end of 2020, Xiaomi is currently the third largest smartphone manufacturer in theworld, behind only Apple and Samsung, and still strengthened the presence of 5G in thepremium smartphone segment, in order to increase the average selling price Xiaomi's totalrevenue reached 245.9 billion CNY, up 19.4% over the previous year; adjusted net profit for theyear was 13 billion CNY, up 12.8% year-on-year, far exceeding market expectations It sold about

10 million high-end smartphones globally with retail prices of 3,000 CNY or more in thedomestic market and 300 euros or equivalent in overseas markets Furthermore, the companystrongly promoted the "Smartphone and AIoT" strategy when revenue from IoT and lifestyleproducts reached RMB 67.4 billion, up 8.6% year-on-year (Xuân Thành, 2021)

Efficiency: In the year 2019, Xiaomi began a strategy to expand its offline retailpresence in mainland China by boosting the number of retail shops while strongly emphasizingoperating efficiency To illustrate, the inventory turnover in 2019 was 5.713, bigger than 5.632 in

2020 (Table 3.1.1) It indicates in 2020 perhaps surplus inventory, commonly known asoverstocking It can be a sign that the products being sold have a problem or that there has beeninsufficient promotion One more thing, the asset turnover in 2019 was also higher than that in

2020, which means thatthe company was efficient in generating sales or revenues from its assetbase in 2019

Xiaomi was determined to extend its footprint to every county across mainland China sothat Mi Homes was accessible to every Mi Fan (Gizmochina, 2020) There were more than 3,200retail establishments in mainland China as of December 31, 2020, a net increase of more than1,000 outlets from September 30, 2020 The company was developing a new digital retail system

to guarantee great operational efficiency It might combine and analyse real-time data, such asuser traffic, in-store sales, and inventory, to support wise business decisions by utilising exclusiveretail management software And its big data skills would support the offline retail operations'core competencies, maximising overall operational effectiveness and enhancing return oninvestment for each store

Safety: Both debts to asset ratios of 2019 and 2020 were under 1, which shows that thecompany avoided paying as much interest, it also means owners retained less residual profitsbecause shareholders might be entitled to a portion of the company's earningsIn general, a ratioaround 0.3 to 0.6 is where many investors will feel comfortable, though a company's specificsituation may yield different results.The financial report shows that Xiaomi's firm maintained asafe level of current assets to satisfy its commitments This ratio was within a reasonable rangefor IT businesses since there was enough cash on hand to avoid leaving too much money on thesidelines or in low-yielding investments (Gartner.com, 2018) Since Xiaomi was not taking onexcessive financial obligations, which could be constrictive and harmful for equity investors, thisrange was seen as safe (Gartner.com, 2018) For Xiaomi, the risk associated with debt isextremely low, and the business has the capacity and headroom to raise debt as needed in thefuture Since its cash flow only covered about 25% of its borrowings, low debt suggested theopportunity for improvement, which means operating efficiency might be increased But thecorporation shows that it could pay its short-term debts, which was expected of a large-cap.Liquidity: From the calculation results of Xiaomi’s financial ratios, the current ratios andacid-test ratios between 2019 and 2020 were greater than 1 It means that Xiaomi aimed tomaintain sufficient cash and cash equivalents The company’s policy was to continuously reviewthe Group's liquidity risk and to maintain appropriate cash and cash equivalents or alter financingarrangements to satisfy the liquidity requirements due to the dynamic nature of the underlyingcompany For some borrowings, there were loan covenant requirements And there wasnon-compliance with such loan covenants as of December 31, 2019 (2018: Nil) In the past,Xiaomi had primarily used cash earned from our operations and bank borrowings to cover itsliquidity requirements, with the exception of the money received through the Global Offering inJuly 2018 As of December 31, 2019, and September 30, 2019, it had cash and cash equivalents

of RMB25.9 billion and RMB35.5 billion, respectively; RMB54.8 billion and RMB30.3 billion as

of December 31, 2020, and September 30, 2020, in turns

Additionally, because DSI in 2019 was smaller than that in 2020, it indicates that the year

2019 was quick inventory stock sales, which would reduce handling expenses and boost cashflow In this year, the company was effective at managing its inventory and performing its sales.The higher DSI number of 72.735 in 2020, on the other hand, often denoted either a weak salesperformance or an excess of acquired inventory (the firm was buying too much inventory),which might later become obsolete To accommodate strong client demand, a high DSI may alsomaintain large inventory levels

● From 2020 to 2021

Profitability: As a result of the table 3.1.1, although the profit margin in 2021 was lowerthan that in 2020, Xiaomi’s gross profit margin increased from 14.9% for the year endedDecember 31, 2020, to 17.7% in the year 2021 Not only that, Xiaomi's total revenue in 2021reached 51.5 billion USD, up 33.5% over the same period last year, and also was the highestnumber in three years (from 2019 to 2021) In addition, this brand also recorded a net profit of

up to $3.4 billion, up 69.5% over the same period in 2020 (Quang Minh, 2021) The companyshipped 190 million smartphones, equivalent to a growth of 30% in just one year According toCanalys, thanks to the increase in the number of products, Xiaomi has obtained the third place inthe world in 2021, with a market share of 14.1% of smartphones In addition, sales of the Xiaomi

12 series reached $ 282.8 million within 5 minutes when launched on commercial platforms AndInternet revenue was about $785.6 million, up 84.3% year-on-year

Xiaomi kept implementing its primary "Smartphone AIoT" approach The globalsmartphone shipments increased by 30.0% year over year to 190.3 million units in 2021, a newhigh It intended to invest more than RMB100 billion in research and development Besides, itkept moving on with our foreign policy The revenue from international markets reachedRMB163.6 billion in 2021, an increase of 33.7 percent over the previous year and 49.8 percent ofour overall sales And the market share of smartphone shipments in 2021 placed us No 1 in 14countries and regions and in the top five in 62 countries and regions globally, including No 2 in

Europe, according to Canalys Our regional smartphone market share in 2021 has increasedacross all significant regions, including Europe, Latin America, the Middle East, Africa, and AsiaPacific

Efficiency: By the firm released MIUI 13 in December 2021, and it significantlyimproved stability and responsiveness across system apps and third-party apps, which wasaccomplished by optimizing memory management and background processing efficiency whileenhancing data calculation and storage access speeds What is more, it consolidated the offlinechannel in mainland China throughout 2021, surpassing the goal of 10,000 offline retail shopsearly on In 2022, the company enhanced and combined sales and customer support skills,substantially enter the offline channel, and increase its rural presence Additionally, it increasedthe operational effectiveness of offline stores through initiatives like end-to-end digitalization,employee training, cross-selling of IoT devices, and better cooperation with carriers Therefore,all these activities are evidence for the inventory turnover and total asset turnover ratios in 2021were higher and it operated efficiently more than those in 2020

Safety: Like the period from 2019 to 2020, the Debt to Asset Ratio was also under 1.00,only 0.531 In order to maximize recovery, Xiaomi seldom adjusts the conditions of loans given

to clients owing to commercial renegotiations or for troubled loans It believes that the impact ofsuch a revision is minimal expecting a complete recovery

When it made all practicable recovery attempts and come to the conclusion that therewas no reasonable possibility of recovery, the business wrote off loan receivables, in whole or inpart Stopping enforcement efforts was one sign that there was no realistic possibility ofrecovery Loan receivables that were currently being pursued by enforcement actions may bewritten off by the Group RMB779,362,000 in contractually obligated loan receivables waswritten down for the year ending December 31, 2021 (2020: RMB1,049,800,000) It was stilltrying to get the money it was rightfully entitled to, but that had been written off because therewas no realistic chance of getting it back in full

Liquidity: The calculation from the above table for Xiaomi give the information thatthree liquidity ratios decreased in 2021 compared to in 2019 Xiaomi still sought to have enoughcash and cash equivalents on hand The policy was to continuously review the liquidity risk and

to maintain appropriate cash and cash equivalents or alter financing arrangements to satisfy theGroup's liquidity requirements due to the dynamic nature of the underlying company There was

no non-compliance with such loan covenants as of December 31, 2021 (2020: Nil) Thenon-derivative financial obligations and off-balance sheet guarantee liabilities of the Group werebroken down into appropriate maturity groups in the table below depending on the number ofyears between each balance sheet date and the contractual maturity date The table's amountsrepresent the contractually obligated undiscounted cash flows

3.2.2 Huawei performance

● From 2019 to 2020 :

Profitability: Last year, as U.S sanctions and the economic effects of the coronavirus,weighed heavily on the Chinese technological behemoth, Huawei's revenue growth slowednoticeably In yuan terms, revenue for 2020 was 891.4 billion yuan ($136.7 billion), up 3.8 percentfrom the previous year That was less rapid than Huawei's 2019 sales increase of more than 19%.Only China, where Huawei has operations, had an increase in income Over 65 percent of totalincome came from sales in China, which reached 584.9 billion yuan ($89.7 billion), an increase of15.4 percent year over year

According to Huawei, its consumer division reported sales of 482.9 billion yuan ($74.1billion), an increase of 3.3% over the previous year Compared to 2019, when there was a 34percent gain, that was slower This, together with a possible slowdown in equipment purchases

by mobile networks last year, is probably the cause of Huawei's carrier business's meager growth

of just 0.2 percent in 2020 The enterprise business generated sales of 100.3 billion yuan ($15.4

billion) in 2020, an increase of 23% from the previous year, making it Huawei's division with thequickest rate of growth.

Efficiency: Huawei utilized 1.25 billion kWh of clean energy in 2019, which averted theemission of 570,000 tons of CO2 Huawei is committed to maximizing resource use throughoutthe product's lifetime in order to support a circular economy For instance, just 1.24 percent ofthe company's e-waste was landfilled, but 86 percent of the items returned to it were repurposed.Huawei is dedicated to promoting digital inclusion and ensuring that everyone can access digitaltechnologies 2019 saw the introduction of Huawei's RuralStar Lite solution, which links morethan 40 million people living in distant areas while significantly lowering site building costs Allforms of topography, including plains, hilly areas, deserts, and island chains, are connected by thesolution Additionally, Huawei and its partners developed the DigiTruck mobile digital school,which has trained approximately 800 rural residents of Kenya in digital skills An MoU betweenHuawei and the UNESCO Regional Office for Eastern Africa was signed in September 2019.Together, the two parties will expand the reach of DigiTruck and provide all Africans with access

to digital skills

Safety:

The Thinking Ahead About AI Security and Privacy Protection white paper, which Huaweireleased at HUAWEI CONNECT 2019, outlines the company's perspective and practices in AIsecurity, privacy issues, and related solutions It also suggests a shared responsibility model forthe governance of AI security and privacy protection At a meeting aimed at developing acomprehensive AI security and privacy protection system, Sean Yang, Director of Huawei'sGlobal Cyber Security and Privacy Office, presented the white paper

System security and controllability, transparency and traceability, privacy protection, fairness, datamanagement, competency, and deployment aim assurance are the seven governance objectivesfor security and privacy that Huawei has identified The white paper also describes Huawei'sgovernance measures for security and privacy protection Products and applications for AI are a