Question

Selected product data from Samsung (www.samsung.com) follow.

Product segment for year ended	Net sales		Operating income
	Dec 31, 2015	Dec 31, 2014	Dec 31, 2015	Dec 31, 2014
Consumer electronics	W 46,895	W 50,183	W 1,254	W 1,184
IT and mobile communications	103,554	111,765	10,142	14,563

Required

1. Compute the percentage growth (or decline) in net sales for each product line from fiscal year 2014 to 2015. Round percents to one decimal.

2. Which product line’s net sales grew (or declined) the most?

3. Which segment was the most profitable?

4. How can Samsung’s managers use this information?

Short answer

1. The decline in sales:

Consumer electronic:6.55%

IT and mobile accessories:7.35%

1. Higher decline in sales is reported by IT and mobile accessories.
2. Information can be used to determine the areas needing improvement.

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of Net Sales

Sales calculated after adjusting the returns made by the customer are known as the net sale. This amount of scale is used to determine thegross profit of the business entity.

percentage growth and decline in sales

Consumer electronic

$$\begin{gathered} Percentagegrowth\left(decline\right)insales=\frac{Salesin2015-Salesin2014}{Salesin2014}\times 100 \\ =\frac{46,895-50,183}{50,183}\times 100 \\ =(6.55\%) \end{gathered}$$

IT and mobile accessories

$$\begin{gathered} Percentagegrowth\left(decline\right)insales=\frac{Salesin2015-Salesin2014}{Salesin2014}\times 100 \\ =\frac{103,554-111,765}{111,765}\times 100 \\ =(7.35\%) \end{gathered}$$

Higher decline in sales

IT and mobile accessories sector reflect a higher decline in the sales. Its sales declined by 7.35% in 2015 as compared to 2014.

Profitable segment

IT and mobile accessories segments are more profitable because they generated higher profits in both years.

Use of information

The manager can use the above information to determine the areas and departments that need improvement. The manager will find loopholes in the sales department because sales of both departments are declining.