For my project I have chosen a Toyota Motor Corporation (TMC) an international automobile manufacturer. In addition, Toyota provides retail and wholesale financing, retail leasing and certain other financial services primarily to its dealers and their customers related to vehicles manufactured by Toyota. The major portions of Toyota's operations on a worldwide basis are derived from the Automotive and Financial Services business segments. The Company also has an All Other segment, which includes its non-automotive business activities. The most significant of Toyota's other operations are its information technology (IT)-related businesses and pre-fabricated housing. The company was established in 1937. The Toyota group manufactures automobiles in 25 countries and regions throughout the world and its vehicles are sold in more than 160 countries and regions under the Toyota, Lexus, Daihatsu, and Hino brand. Recently the company created a new brand Scion. This new line of automobiles was developed for the young generation. In the fiscal year ended March 31, 2002, TMC and its subsidiaries sold over 5.54 million passenger cards, trucks and buses worldwide. In terms of vehicles sold, Toyota is the No. 3 automobile manufacturer. The Company operates through 500 consolidated subsidiaries and 225 affiliated companies. Toyota's business philosophy is to achieve stable, long-term growth, through the development of business activities that contribute to society by recognizing the importance of harmonious relationships between individuals, society and global environment, and the world economy. TMC invented and turned into perfection a number of successful management concepts as just-in-time production, doctrine of kaizen, and total production system. TMC accounting periods are ending on the March 31 instead of December 31. The consolidated financial analyzed in this project come from the year ended March 31, 2003. I also used some data from the previous years as 2000, 2001 and 2002. Some figures from the original Japanese financial statements are expressed in yens. The current conversion rate between US dollar and Yen is ¥108.5 for $1.
Firm's auditor's opinion on the financial statements
The audit was performed by PricewaterhouseCoopers Company. The auditors expressed a clean opinion about TMC's financial statements. The accounting company conducted the audits of these statements in accordance with auditing standards generally accepted in the United States of America. The auditors believe that they obtained reasonable assurance that the financial statements are free of material misstatement and that their audits provided reasonable basis for the opinion. The financial statements remain the responsibility of the company's management.
Changes in company's accounting methods
In June 2001, the Financial Accounting Standards Board (FASB) issued FAS No. 141, Business Combinations (FAS 141) and FAS No. 142, Goodwill and Other Intangible Assets (FAS142). FAS 141 requiring all business combinations to be accounted for using the purchase method of accounting and is effective for all business combinations initiated after June 30, 2001. FAS 142 requires goodwill and intangible assets having an indefinite useful life to be tested for impairment under certain circumstances, and written off when impaired, rather than being amortized as previous standards required. Toyota adopted the provisions of FAS 142 as of April 1, 2002. The adoption of FAS 141 and FAS 142 did not have a material impact on Toyota's consolidated financial statements. TMC also adopted FAS No. 144, (issued in August 2001) Accounting for the Impairment or Disposal of Long-Lived Assets and similar standards. TMC reclassified certain sales incentives which fall into the scope from selling, general and administrative expenses to a reduction of revenues in the accompanying consolidated statements of income, for all periods presented. There were also other...