The following extract is from the annual report of Samsung Securities for 2018.

REQUIRED:

1. Explain why return measures are critical to an assessment of company performance;

2. Calculate the Return on Total Assets (ROTA) and Return on Equity (ROE) for both years for Samsung Securities and disaggregate the ROE calculation further into its constituent elements for both years

3. Comment on the results of the calculations in (b) above

4. The CFO of Samsung Securities estimates the impact of adopting IFRS 16 Leasing will increase operating costs by $62 (KRW Billion) and require the recognition of a leased asset (and an associated lease obligation) of $2,500 (KRW Billion).

1. Calculate the impact this would have on your previous ROTA calculation

for 2018;

2. Explain briefly your adjustments. Make clear any assumptions you need to make.
    

Transcribed Image Text:

Financial Information Balance Sheet Summary Total Assets Total Liabilities Total Equity Earnings Summary Net Revenue Brokerage Financial Product Sales Investment Banking Trading and Interest Income Other Commission Expenses Operating Expenses Operating Income Pretax Income Net Income Annual Performance (IFRS Separate/ KRW billion) 2018.12 35,633.2 31,025.3 4,608.0 1,076.2 343.5 211.8 97.4 413.9 45.7 -36.1 633.0 443.2 440.2 320.7 2017.12 36,168.6 31,792.3 4,376.3 917.0 313.3 409.0 70.6 124.3 33.6 -33.8 573.0 344.0 340.5 256.9 YoY -1.5% -2.4% +5.3% +17.4% +9.6% -48.2% +38.0% +233.0% +36.0% +10.5% +28.8% +29.3% +24.8% Financial Information Balance Sheet Summary Total Assets Total Liabilities Total Equity Earnings Summary Net Revenue Brokerage Financial Product Sales Investment Banking Trading and Interest Income Other Commission Expenses Operating Expenses Operating Income Pretax Income Net Income Annual Performance (IFRS Separate/ KRW billion) 2018.12 35,633.2 31,025.3 4,608.0 1,076.2 343.5 211.8 97.4 413.9 45.7 -36.1 633.0 443.2 440.2 320.7 2017.12 36,168.6 31,792.3 4,376.3 917.0 313.3 409.0 70.6 124.3 33.6 -33.8 573.0 344.0 340.5 256.9 YoY -1.5% -2.4% +5.3% +17.4% +9.6% -48.2% +38.0% +233.0% +36.0% +10.5% +28.8% +29.3% +24.8%

Answer rating: 100% (QA)

a Return Measures are a useful management tool that will improve the understanding of financial resu... View the full answer