Financial Analysis of Toyota

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Contents

Content ---------------------------------------------------------------------------------------------- 1

Executive Summary ------------------------------------------------------------------------------- 2

Key Word ------------------------------------------------------------------------------------------ 2

I. Overall Analysis ------------------------------------------------------------------------- 3 i. Analysis of Assets and Liability ---------------------------------------------------- 3 ii. Analysis of Profitability ------------------------------------------------------------- 3

II. Analysis of Operating Efficiency ------------------------------------------------------ 4

III. Analysis of Ability to Repay ----------------------------------------------------------- 5 i. Analysis of Short-term Ability to Repay ------------------------------------------- 5 1. Analysis of Current Ratio -------------------------------------------------- 6 2. Analysis of Cash Ratio ----------------------------------------------------- 7 ii. Analysis of Long-term Ability to Repay ------------------------------------------ 8

1. Analysis of Asset-liability Ratio ------------------------------------------ 8 2. Analysis of Equity Ratio --------------------------------------------------- 9

IV. Analysis of Profitability ---------------------------------------------------------------- 10 i. Analysis of Profit Margin Ratio --------------------------------------------------- 10 ii. Analysis of Gross Profit Ratio ---------------------------------------------------- 10

V. Existing Problems and Suggestion ---------------------------------------------------- 11 i. Improve the Structure of Capital --------------------------------------------- 11 ii. Reduce the Cost and Increase the Profit ------------------------------------- 11 iii. Promote the Cooperation in Auto Industries -------------------------------- 11

Reference ------------------------------------------------------------------------------------- 13

Executive Summary

Toyota Motor Company (referred to as: Toyota) is one of the world’s top ten automotive companies. It was founded in 1933, and became the largest automobile company in Japan now. Toyota Motor was only a division of Toyota Automatic Loom Company, and later Toyota Motor Company was formally established in 1933. “In 1947, the company was a little-known domestic manufacturer producing about 100,000 vehicles a year.” (P.C93) Toyota entered the United States in 1957, and now almost half of the production and sales of Toyota vehicles are in the U.S. In 2008, Toyota surpassed General Motors (GM) as the largest car manufacturer. It’s the first time for Toyota to become the world’s largest car manufacturers in the automotive industry. Since 2008 the financial crisis occurred, global economy influenced by the U.S. subprime mortgage crisis, Toyota’s profit earning shows a weak situation, and the profitability keeps going down. Through analysis, the owners, shareholders and supplies can get clearly financial information of Toyota, so that the leadership can make right decision. This paper will be based on Toyota’s financial management and financial statement analysis, comparing the ratios and tends to figure out and solve the existing problems in the company.

Key Word: Financial Statement Analysis, Operating Efficiency, Ability to Repay, Profitability

Financial Statement Analysis of Toyota

I. Overall Analysis

i. Assets and Liability Analysis
From Table 1.1, it is easy to figure out the total assets of Toyota in 2011 is lower than in 2010. It means the business scale of Toyota didn’t expand. One of the mean factors to lead this happened is the pressure of the stockholders. Since the current liabilities increased ¥104, 776 from March 2010 to March 2011, but the total stockholders’ equity...
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