Content

1. Company Presentation

2. Financial Statements

2.1. Balance Sheet

2.2. Income Statement

3. Financial Ratios Analysis

3.1. Liquidity Ratios

3.1.1. Current Ratio

3.1.2. Quick Ratio

3.1.3. Cash Ratio

3.2. Solvency Ratios

3.2.1. Debt Equity Ratio

3.2.2. Interest Coverage Ratio

3.3. Operation Ratios

3.3.1. Days in Inventory

3.3.2. Asset Turnover

3.3.3. Receivable Days

3.3.4. Days Payable

3.4. Profitability Ratios

3.4.1. Profit Margin

3.4.2. Gross Profit Margin

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 3.4.3. Return on Assets (ROA)

3.4.4. Return on Equity (ROE)

4. Conclusion

5. References

1. Company Presentation

SAP SE (Systems, Applications & Products in Data Processing) is the

world leader in enterprise applications in terms of software and
software-related service revenue. Based on market capitalization, SAP is
the worlds third largest independent software manufacturer.

SAP SE operates through Applications, Technology and Services, and

SAP Business Network segments. The Applications, Technology and
Services segment derives its revenue primarily from the sale of
software licenses, subscriptions to cloud applications, and related
services, which mainly support various professional and premium
services, as well as implementation of software products and education
services. The SAP Business Network segment emerged from combining
all SAP network offerings into one network that covers temporary
workforce sourcing, other procurement, end-to-end travel and business
travel expense management. The company was founded by Hasso
Plattner, Klaus Tschira, Claus Wellenreuther, Dietmar Hopp, and Hans-
Werner Hector in 1972 and is headquartered in Walldorf, Germany.

In 1972, five entrepreneurs in Germany had a vision for the business

potential of technology. Starting with one customer and a handful of
employees, SAP set out on a path that would not only transform the
world of information technology, but also forever alter the way
companies do business. Now 44 years and approximately 300,000
customers stronger, more than ever, SAP is fueled by the pioneering
spirit that inspired its founders to continually transform the IT industry.

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The Executive Board is the governing body of SAP SE. Subject to the
requirements of stock corporation law, the Executive Board is
committed to SAP's interests and bound by SAP company policy. It
provides the Supervisory Board with regular, prompt, and
comprehensive reports about all essential issues of business, corporate
strategy, and potential risks.

The SAP SE Supervisory Board advises and supervises the Executive

Board. The number of members in and the composition of the
Supervisory Board are determined by the Articles of Incorporation and
the Agreement of the Involvement of the European Employees in SAP
SE. SAP's Supervisory Board currently comprises nine members elected
by the shareholders at their General Meeting and nine members
representing the European employees of the SAP group.

From pioneering ERP software to new offerings like the SAP HANA in-
memory computing platform, SAP innovation goes beyond software
SAP is developing breakthrough technologies that shape IT and
business trends.

The Company is developing a suite of SAP solutions for the Internet of

Things. The Company serves approximately 300,000 customers in over
180 countries. The Company offers end-to-end solutions specific to over
25 industries and approximately 12 lines of business, localized by
country and for companies of any size. Its lines of business include
asset management, commerce, human resources, manufacturing,
marketing, sourcing and procurement, supply chain, sales, and research
and development (R&D)/engineering. The Company offers customers a
portfolio of products, solutions and services. Its technology strategy
centers on SAP HANA as a real-time in-memory computing platform for
analytics and applications, the SAP S/4HANA suite as the digital core,
the business network, and SAP HANA Cloud Platform as its platform-as-
a-service offering. The SAP HANA platform combines database, data
processing, integration and application platform capabilities in-memory.
This cloud platform allows its customers and partners to build, extend,
run, and sell applications and services in the cloud. It includes
infrastructure, data, and storage, as well as a toolbox of platform and
application extension services. SAP HANA Cloud Platform also enables
connectivity between SAP solutions, including on-premise software,
such as SAP Business Suite, as well as software-as-a-service offerings,
such as SAP Success Factors solutions.

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 The Company's industry portfolio includes various sectors, such as
consumer, discrete manufacturing, energy and natural resources,
financial services, public services and other services. Its offerings in the
consumer sector include SAP for Consumer Products, SAP for life
sciences, SAP for retail and SAP for wholesale distribution. Its offerings
in the discrete manufacturing sector include SAP for aerospace and
defense, SAP for automotive, and SAP for industrial machinery and
components. The Company's offerings in the energy and natural
resources include SAP for chemicals, SAP for mill products, SAP for
mining, SAP for oil and gas, and SAP for utilities. The Company's
offerings in the financial services sector include SAP for banking and
SAP for insurance. Its offerings in the public services sector include SAP
for defense and security, SAP for healthcare, SAP for higher education
and research, and SAP for public sector. Its offerings in the services
sector include SAP for engineering, construction and operations; SAP for
media; SAP for professional services; SAP for sports and entertainment;
SAP for telecommunications, and SAP for travel and transportation. The
Company is building other functional innovations that serve each line of
business, such as human capital management (HCM) solutions and
customer engagement and commerce (CEC) solutions.

The digital economy is having a profound impact on SAP customers and

requires a new level of orchestration to evolve your business, unleash
full business value, and ensure business continuity. SAP Digital Business
Services brings business and IT together to help you reimagine your
business using our digital business framework. Based on over 40 years
of experience working with the worlds most progressive organizations
and a robust partner ecosystem, SAP Digital Business Services can
guide you on the path to innovation and digital transformation, while
securing critical business processes.

2. Financial Statements

In this chapter I will present the Financial Statements of SAP SE using the balance
sheet and the income statement of the company. You will find this documents
attached in an Excel file.

2.1. Balance Sheet

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A balance sheet is a financial statement that summarizes a company's assets,
liabilities and shareholders' equity at a specific point in time. These three balance
sheet segments give investors an idea as to what the company owns and owes,
as well as the amount invested by shareholders.

The balance sheet adheres to the following formula:

Assets = Liabilities + Shareholders' Equity

Within the assets segment, accounts are listed from top to bottom in order of
their liquidity, that is, the ease with which they can be converted into cash. They
are divided into current assets, those which can be converted to cash in one year
or less; and non-current or long-term assets, which cannot. Liabilities are the
money that a company owes to outside parties, from bills it has to pay to
suppliers to interest on bonds it has issued to creditors to rent, utilities and
salaries. Current liabilities are those that are due within one year and are listed in
order of their due date. Long-term liabilities are due at any point after one year.
If we analyse the companys balance sheet from Table 1, we can observe that the
fixed assets represent the majority of the assets, which is expected as the
company has a great amount of money in Goodwill. Goodwill is an intangible
asset that reflects a business's customer connections, reputation and other
similar factors. As we are talking about a multinational company which has a
brand with a certain reputation and particular status within the market.

There are many factors valuable when calculating goodwill of SAP SE, other than
reputation:

The firm has a dedicated and solid customer base

The company has run a major advertising campaigns and the effect of this
influence the companys goodwill.

Added value can be found in new agreements, integrations or partners,

which are known to bring in new income.

If we take a look at the companys Equity figure, we can see that it is

substantially positive, which indicates that the amount of short-term funds
available from current assets are more than adequate to pay for current liabilities
as they come due for payment.

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 Balance Sheet for 2015 - SAP SE

Fiscal data as of Dec 31 2015 2015

ASSETS
Cash And Short Term
3,438
Investments
Total Receivables, Net 5,820
Total Inventory --
Prepaid expenses 232
Other current assets, total 249
Total current assets 9,739
Property, plant & equipment, net 2,192
Goodwill, net 22,689
Intangibles, net 4,280
Long term investments 939
Note receivable - long term 612
486
Total assets 41,390

LIABILITIES
Accounts payable 893
Accrued expenses 2,810
Notes payable/short-term debt 0
Current portion long-term 567
debt/capital leases
Other current liabilities, total 3,597
Total current liabilities 7,867
Total long term debt 8,623
Total debt 9,190
Deferred income tax 448
Minority interest 28
Other liabilities, total 1,157
Total liabilities 18,123
SHAREHOLDERS EQUITY
Common stock 1,229
Additional paid-in capital 558
Retained earnings (accumulated
20,044
deficit)
Treasury stock - common -1124
Unrealized gain (loss) --
Other equity, total 2,560
Total equity 23,267
Total liabilities &
41,390
shareholders' equity
Total common shares
1,198
outstanding
Treasury shares - common 31
primary issue

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*In millions of EUR (except for per share items)
Table 1

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 2.2. Income Statement

An income statement is a financial statement that reports a company's financial

performance over a specific accounting period. Financial performance is assessed
by giving a summary of how the business incurs its revenues and expenses
through both operating and non-operating activities. It also shows the net profit
or loss incurred over a specific accounting period.

In Table 2 can be found the Income Statement of SAP SE for 2015.

Table 2

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3. Financial Ratios Analysis

Financial Ratios are useful indicators of a firms performance and financial

situation. Most ratios can be calculated from information provided by the financial
statements. Financial ratios can be used to analyze trends and to compare the
firms financials to those of other firms. In some cases, ration can predict future
bankruptcy.

3.1. Liquidity Ratios

Liquidity ratios attempt to measure a company's ability to pay off its short-term
debt obligations. This is done by comparing a company's most liquid assets (or,
those that can be easily converted to cash), its short-term liabilities.

3.1.1. Current Ratio

The current ratio is a popular financial ratio used to test a company's
liquidity (also referred to as its current or working capital position) by
deriving the proportion of current assets available to cover current
liabilities.

Formula:
Current ratio = Current assets / current liabilities = 9,739.00/
7,867.00 1.24

The current ratio for SAP SE is 1.24 and considering the size of this
company we can assume it is a satisfactory value, even if it is not in the
recommended interval (1.8-2).

3.1.2. Quick Ratio

The quick ratio - aka the quick assets ratio or the acid-test ratio - is a
liquidity indicator that further refines the current ratio by measuring the
amount of the most liquid current assets there are to cover current
liabilities. The quick ratio is more conservative than the current ratio
because it excludes inventory and other current assets, which are more
difficult to turn into cash. Therefore, a higher ratio means a more liquid
current position. In our case, the quick ratio is the same as the company
has no Inventories.

Quick ratio = (Current assets Inventory)/Current

liabilities=9,739.00/7,867.00 1.24

3.1.3. Cash Ratio

The cash ratio is an indicator of a company's liquidity that further refines
both the current ratio and the quick ratio by measuring the amount of
cash, cash equivalents or invested funds there are in current assets to
cover current liabilities.

Cash ratio = 3,438.00 / 7,867.00 0.43

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 The cash ratio for SAP SE is 0.43 which means that the company can pay
almost half of the liabilities with the current cash existing in the accounts.

3.2. Solvency Ratios

A key metric used to measure an enterprises ability to meet its debt and
other obligations. The solvency ratio indicates whether a companys cash
flow is sufficient to meet its short-term and long-term liabilities. The lower a
company's solvency ratio, the greater the probability that it will default on its
debt obligations.

3.2.1. Debt Equity Ratio

The debt-equity ratio is another leverage ratio that compares a company's
total liabilities to its total shareholders' equity. This is a measurement of
how much suppliers, lenders, creditors and obligors have committed to the
company versus what the shareholders have committed.

Debt equity ratio = Total debt / Total equity = 567.00/ 23,267.00

0.02

In the case of sap se, the debt ratio is 2% which means that the company
have rather small debt in this moment, indicating that the company may
borrow funds with ease.

3.2.2. Interest Coverage Ratio

This ratio assesses the margin of safety on a companys debt, in other
words, how its profit compares to its interest payments during a given
period. Bankers and other lenders look at this ratio closely- nobody likes to
lend money to a company if its profits are not substantially higher than its
interest obligations.

Interest coverage ratio = EBIT/Interest = 0

In the case of our company we dont have any Interest so the EBIT is 0.

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3.3. Operation Ratios
Operating ratios help management to assess a companys level of efficiency,
namely how well the company put its assets to work and managing its cash.

3.3.1. Days in Inventory

The days sales in inventory calculation, also called days inventory

outstanding or simply days in inventory, measures the number of days it
will take a company to sell all of its inventory. In other words, the days
sales in inventory ratio shows how many days a company's current stock of
inventory will last.

This calculation also shows the liquidity of inventory. Shorter days

inventory outstanding means the company can convert its inventory into
cash sooner. In other words, the inventory is extremely liquid.
Days in inventory = 365 days (Average inventory)/ Cost of
goods sold

As this is a software company, there is no stock so we cannot calculate

this.

3.3.2. Asset Turnover

Asset turnover ratio is the ratio of the value of a
companys sales or revenues generated relative to the value of its assets.
The Asset Turnover ratio can often be used as an indicator of
the efficiency with which a company is deploying its assets in generating
revenue.
Asset turnover=Total asset turnover=Sales/Total
assets=20,793.00/41,390.00 0.5

The Asset turnover is 0.5 which means that our company is not very
efficient with assets.

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 3.3.3. Receivable Days
Accounts receivable days is the number of days that a customer invoice is
outstanding before it is collected. The point of the measurement is to
determine the effectiveness of a company's credit and collection efforts in
allowing credit to reputable customers, as well as its ability to collect cash
from them.

Receivable days = 365 days (Accounts receivable)/ Sales = 365/

3.57268 102

As we are talking about a software company, it is understandable that the

number is higher (around 3 months).

3.3.4. Days Payable

Days payable outstanding (DPO) is a company's average payable period.
Days payable outstanding tells how long it takes a company to pay its
invoices from trade creditors, such as suppliers. DPO is typically looked at
either quarterly or yearly.
Days payable = 365 days (Accounts payable) / Cost of goods
sold
= 365*893/3,438 49.19

3.4. Profitability Ratios

Profitability ratios measure how efficiently the firm uses its assets and how
efficiently the firm manages its operations (the focus is the bottom line net
income).

3.4.1. Profit Margin

In the income statement, there are four levels of profit or profit margins -
gross profit, operating profit, pretax profit and net profit. The term "margin"
can apply to the absolute number for a given profit level and/or the
number as a percentage of net sales/revenues.

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 Profit margin analysis uses the percentage calculation to provide a
comprehensive measure of a company's profitability on a historical basis
(3-5 years) and in comparison to peer companies and industry
benchmarks.
Profit margin = Net income /sales = 3,991.00 / 20,793.00
0.19

Analyzing the results we can affirm that SAP SE has a good profit margin of
19%.

3.4.2. Gross Profit Margin

Gross profit margin is a financial metric used to assess a
company's financial health and business model by revealing the proportion
of money left over from revenues after accounting for the cost of goods
sold (COGS). Gross profit margin, also known as gross margin, is calculated
by dividing gross profit by revenues. Also known as "gross margin."
Gross profit margin = Gross profit / sales (revenue) =
14,167.00/ 20,793.00 0.68
The value of 12 % basically tells that for every 1$ in sales, the company
has 0.68 $ to cover basic operating costs and make profit.

3.4.3. Return on Assets (ROA)

Return on assets (ROA) is an indicator of how profitable a company is
relative to its total assets. ROA gives an idea as to how efficient
management is at using its assets to generate earnings. Calculated by
dividing a company's annual earnings by its total assets, ROA is displayed
as a percentage. Sometimes this is referred to as "return on investment".

Return on assets (ROA) = Net income / Total assets =

3,991.00/41,390.00 0.10

In the case of SAP SE ROA is 10% which means that for every EUR invested
in assets, 10% of it will be returned as income.

3.4.4. Return on Equity (ROE)

Return on equity (ROE) is the amount of net income returned as a
percentage of shareholders equity. Return on equity measures a
corporation's profitability by revealing how much profit a company
generates with the money shareholders have invested.

Return on equity (ROE) = Net income / Total equity =

3,991.00 / 23,267.00 0.17

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 In the case of SAP SE, ROE is 0.17. This means that for each RON which is a
part of investors equity earned 0.11 RONs last year. This means that the
investors had a 17% percent of their investment.

4. Conclusion

Over the past six years, whether you measure SAP SE on the basis of their
customer satisfaction, extraordinary top line growth, dramatic expansion of
operating profit, the successful management of their business model
transformation, or their consistent commitment to corporate citizenship, SAP has
never been in a stronger position.

Analyzing the last 5 years Financial Statements, we can see that in virtually
every financial metric, 2015 was a record year. Having a profit margin of 19%,
SAP SE is confirming its place as one of the leaders on the market. The only
constant in technology is change. With breakthroughs such as SAP HANA and SAP
S/4HANA only just scratching the surface of their full potential, SAP is strongly
positioned to shape the future.

5. References

http://go.sap.com/corporate/en/company.faqs.html#innovation

http://money.cnn.com/quote/profile/profile.html?symb=SAP

http://www.investopedia.com/university/ratios/

http://go.sap.com/docs/download/investors/2015/sap-2015-annual-
report.pdf

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