Samsung Still Sits on Ample Cash Despite Q1 Slump

Visitors walk through Samsung Electronics Co.’s TV pop-up store in Seoul on May 12, 2019. (image: Samsung Electronics Co.)

SEOUL, May 13 (Korea Bizwire) — Samsung Electronics Co.’s cash on its balance sheets still remained high despite a slump in its business in the first quarter of the year, its financial report showed on Monday, leaving room for more investment and shareholder-friendly policies.

Samsung’s liquidity ratio stood at 263 percent as of March, up from 227 percent a year earlier, according to its latest financial statement.

Liquidity ratios are measurements used to examine the ability of an organization to pay off its short-term obligations. The higher the ratio, the more financially secure a company is in the short term.

The South Korean tech giant’s liquidity ratio has remained over 200 percent since 2012, and the latest figure is the second highest since 271 percent in the second quarter of 2016.

Samsung’s total assets broke the previous record to reach 345.7 trillion won (US$292.8 billion) in the first quarter, making it the formidable industry leader in the nation, its report said.

Its cash flow totaled 102 trillion won, hovering over 100 trillion won for the second consecutive quarter.

The firm’s debt ratio fell to the lowest-ever level of 36 percent at the end of March, shedding one percentage point from three months earlier.

The world’s largest memory chip and smartphone maker spent 18.6 trillion won on research and development (R&D) in 2018, with its ratio to total sales reaching 7.7 percent.

Analysts projected a downbeat second-quarter outlook for Samsung, but expected the company’s earnings to recover when memory chip prices stabilize and demand for its panels picks up in the latter half of this year.

“Despite the sluggish earnings prospects for the second quarter, its shares are undervalued as the company has the capacity to expand shareholder-friendly policies and merger and acquisitions with ample liquidity,” Kim Yang-jae, an analyst at KTB Investment & Securities, said.

(Yonhap)