A STUDY ON FINANCIAL ANALYSIS OF TOYOTA MOTOR CORPORATION By
S.R.SAIRAM
32313139 Of
UNIVERSITY OF MADRAS
SUMMER TRAINING REPORT
Submitted to the
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DEPARTMENT OF MANAGEMENT STUDIES
In partial fulfillment of the requirements for the award of the degree
of
MASTER OF BUSINESS ADMINISTRATION
AUGUST-2014
UNIVERSITY OF MADRAS
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CHEPAUK CAMPUS, CHENNAI600005,TAMILNADU,INDIA PHONE: 044-25399778 FAX :044-25366693 WEBSITE : WWW.UNOM.AC.IN
DEPARTMENT OF MANAGEMENT STUDIES
CERTIFICATE A STUDY ON FINANCIAL ANALYSIS OF TOYOTA MOTOR CORPORATION is the bonafide work This is to certify that this project report titled
of S.R.SAIRAM who carried out the research under my supervision. Certified further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on earlier occasion on this or any other candidate.
Internal Guide Department
Head of the
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ACKNOWLEDGEMENT I would like to express my sincere gratitude to Our Vice-Chancellor Prof. R.Thandavan for providing excellent environment and infrastructure and for his
valuable support throughout the course of study. I take this opportunity to express my gratitude to the Head of the Department of Management studies, Dr. P.T.SRINIVASAN, B.Tech, M.B.A., Ph.D[IIT,M]., for providing me an opportunity and Dr. R.THENMOZHI, M.B.A., M.Phil., Ph.D who has given me guidance to do this project work. This project would not have been successful without the help of G.PRASATH M.B.A., M.Com. M.Phil of senior personnel of company. Last but not least I would like to thank all the employees of TOYOTA MOTOR CORPORATION who have directly or indirectly helped me with their moral support for the completion of my project.
S.R.SAIRAM
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TABLE OF CONTENTS
S.NO
CONTENTS
Page No.
Abstract
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List of tables
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Industry Profile
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2
Company Profile
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3
Production Process
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4
Product Profile
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5
Financial statement
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6
Financial analysis
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Findings and Suggestions
61
8
Conclusion
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INDUSTRY PROFILE Industry Overview and Analysis Toyota Motor Corporation competes in the automotive industry. The past five years were tumultuous for automobile manufacturers. Skyrocketing fuel prices and growing environmental concerns have shifted consumers' preferences away from fuel-guzzling pickup trucks to smaller, more fuel-efficient cars. Some automakers embraced the change by expanding their small-car portfolios and diversifying into the production of hybrid electric motor vehicles. Other automakers were more reluctant to shift their focus from big to small cars, expecting the price of fuel to contract eventually, bringing consumers back to the big-car fold. When fuel prices did fall during the second half of 2008, it was due to the US financial crisis ripping through the global economy. This had a domino effect throughout the developed and emerging worlds, with many Western nations following the United States into recession. Industry revenue fell about 15.4% in 2009. Pent-up demands will aid industry revenue growth, estimated at 2.1% in 2013, thus bringing overall revenue to an estimated $2.3 trillion. Overall, the large declines followed by recovery are expected to lend the industry average growth of 2.2% per year during the five years to 2013. Throughout the past five years, growth in the BRIC countries supported production. Rising income in these countries led to an increase in the demand for motor vehicles. Also, Western automakers moved production facilities to BRIC countries to tap into these markets and benefit from low-cost production. Over the next five years, the emerging economies will continue their growth, and demand for motor vehicles in the Western world will recover. Industry revenue is forecast to grow an annualized 2.5% to total an estimated $2.6 trillion over the five years to 2018.
Industry Life Cycle This industry is in the mature stage of its life cycle. Industry Demand Determinants. Worldwide automobile demand is tied to vehicle prices, per capita disposable income, fuel prices and product innovation. On the supply end, vehicle prices stem from material and equipment costs, with higher steel and plastic prices raising manufacturers' purchasing costs and, ultimately, retail prices. During the past five years, automakers have been plagued with high steel and plastics prices, which have raised manufacturing costs and product prices. On the demand side, per capita disposable incomes determine affordability for consumers. As incomes increase, the propensity to purchase motor vehicles increases as they become more affordable. Incentives are 6
used to generate sales during periods of low economic growth. Over the past five years, there has been a significant increase in the number of automobile financing companies being established in the BRICs. This has resulted in the number and range of automobile loans increasing, which has contributed to stronger industry demand. In the developed world, overall improved quality among most manufacturers has caused buyers to feel freer to use price to differentiate similar products. Consumers are increasingly better informed about a vehicle's actual cost and less likely to accept large annual price increases. In an era of low inflation, customers familiar with dealer cost information from consumer publications and the internet have become more astute when negotiating the purchase of a vehicle. In this way, consumer awareness and access to information can determine demand. Movements in fuel prices also generally influence the demand for vehicles by type. During periods of high fuel prices, more fuel-efficient vehicles are in demand. Over the past five years, the price of fuel has been rising, which has encouraged the adoption of hybrid and other fuel-efficient models. For example, Japanese carmakers offering more fuelefficient vehicles took market share from manufacturers of large vehicles throughout the latter half of the past decade. Last, product innovation can spur demand, especially with regard to more fuel-efficient vehicles such as hybrids and electric models. The more fuel-efficient a model is, the more likely a consumer will be willing to invest up front in a new car for potential savings on fuel costs down the road. Analysis of Toyota Motor Corporation by ThembaniNkomo
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Porter’s Five Forces of the Automotive Industry Threat of New Entry (Weak): Large amount of capital required High retaliation possible from existing companies, if new entrants would bring innovative products and ideas to the industry Few legal barriers protect existing companies from new entrants All automotive companies have established brand image and reputation Products are mainly differentiated by design and engineering quality New entrant could easily access suppliers and distributors It is very hard to achieve economies of scale for small companies Governments often protect their home markets by introducing high import taxes Supplier power (Weak): Large number of suppliers Some suppliers are large but the most of them are pretty small Companies use another type of material (use one metal instead of another) but only to some extent (plastic instead of metal) Materials widely accessible Suppliers do not pose any threat of forward integration Buyer power (Strong): There are many buyers Most of the buyers are individuals that buy one car, but corporates or governments usually buy large fleets and can bargain for lower prices It doesn’t cost much for buyers to switch to another brand of vehicle or to start using other type of transportation Buyers can easily choose alternative car brand Buyers are price sensitive and their decision is often based on how much does a vehicle cost Buyers do not threaten backward integration Threat of Substitutes (Weak):
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There are many alternative types of transportation, such as bicycles, motorcycles, trains, buses or planes Substitutes can rarely offer the same convenience Alternative types of transportation almost always cost less and sometimes are more environment friendly Competitive Rivalry (Very Strong): Moderate number of competitors If a firm would decide to leave an industry it would incur huge losses, so most of the time it either bankrupts or stays in automotive industry for the lifetime Industry is very large but matured Size of competing firm’s vary but they usually compete for different consumer segments Customers are loyal to their brands There is moderate threat of being acquired by a competitor Automotive Industry Cost Structure Benchmark Purchases (70.7%), wages (6.3%), depreciation (6.0%), rent & utilities (1.7%), other (10.4%), profit (4.9%) Automotive Industry Competitive Landscape Market share concentration in the industry is low. The industry is deemed to have a low level of concentration, and the largest four automakers are estimated to account for about one-third of global revenue. Major Companies in the Automotive Industry Toyota (10.2%), Volkswagen (9.6%), General Motors (6.9%), Ford (5.6%), Others (67.7%) Key Success Factors in the Automotive Industry: Flexibility in determining expenditure: Controlling employee-related costs, such as health and pension costs, makes manufacturers in the developed world more competitive. Analysis of Toyota Motor Corporation by ThembaniNkomo Establishment of export markets: Development of export markets helps negate any downturns in domestic markets.
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Use of most efficient work practices: Good industrial relations through a motivated workforce assist in minimizing industrial disputes. Effective cost controls: A close relationship with suppliers and good distribution channels assist controlling costs. Access to the latest available and most efficient technology and techniques: The industry is highly competitive, so enterprises need a technology-enabled competitive edge. Optimum capacity utilization: Excessively high plant utilization is required for success in any modern automobile and light-duty motor vehicle manufacturing plant.
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COMPANY PROFILE TOYOTA CORPORATE OVERVIEW: Founded in 1937, Toyota Motor Corporation is a Japanese company that engages in the design, manufacture, assembly, and sale of passenger cars, minivans, commercial vehicles, and related parts and accessories primarily in Japan, North America, Europe, and Asia. Current brands include Toyota, Lexus, Daihatsu and Hino. Toyota Motor Corporation is the leading auto manufacturer and the eighth largest company in the world. As of March 31, 2013, Toyota Motor Corporation’s annual revenue was $213 billion and it employed 333,498 people. INTERNAL ENVIROMENT OF TOYOTA: Core Competency The core competence of Toyota Motor Corporation is its ability to produce automobiles of great quality at best prices, thereby providing a value for money to the customers. This core competence of quality can be attributed to its innovative production practices. The quality aspect of Toyota’s products have revolutionized the automobiles in the past and almost all the automobile companies had to try and better the quality of their products. It is a cornerstone of the cost leadership strategy that the company pursues. Distinctive Competency Toyota’s distinctive competence is its production system known as the “Toyota Production System” or TPS. TPS is based on the Lean Manufacturing concept. This concept also includes innovative practices like Just in Time, Kaizen, and Six Sigma and so on. Toyota has worked tirelessly over the years to establish this distinctive competence. No other automobile manufacturer can do it as well as Toyota does. This distinct competence has led to a competitive advantage that has given Toyota a sustainable brand name and a market leader position. SWOT ANALYSIS Strengths: Strong market position and brand recognition: Toyota has a strong market position in different geographies across the world. The company's market share for Toyota and Lexus brands, (excluding mini vehicles) in Japan was 45.5% in FY2012. Similarly, Toyota has a market share of 12.2% in North America, 13.4% market share in Asia (excluding Japan and China), and 4.3% 11
market share in Europe. In addition, the company holds a 7% share of the Chinese market and a significant market share in South and Central America, Oceania, Africa and the Middle East regions. Such strong market position allows the company to gain competitive advantage and also expand into international markets. In addition, Toyota holds a portfolio of strong brands in the automotive industry. Thus, the company's strong market position gives it significant competitive advantage and helps it to register higher sales growth in domestic and international markets. Strong focus on R&D: Toyota has a strong focus on R&D to expand its product portfolio and improve the functionality, quality; safety and environmental compatibility of its products. The company's R&D efforts are directed at developing new products and processes and improving the capabilities of existing products. The company conducts its R&D operations at 14 facilities worldwide. Strong focus on R&D has helped the company in incorporating newer features to its existing range of products and also in bringing out latest technologies in the varied areas. The company's strong focus on R&D allows it to uphold the technological leadership in most of its product segments. It also enables Toyota to develop innovative products, leading to strong sales. Extensive production and distribution network: Toyota has an extensive production and distribution network. Toyota and its affiliates produce automobiles and related parts and components through more than 50 manufacturing companies in 27 countries and regions besides Japan. During FY2012, the company produced 7,435,781 vehicles, including 3,940,000 vehicles in Japan and 3,495,000 vehicles across all other manufacturing locations. In addition, Toyota has an extensive distribution network. While the company’s geographically well spread production base diversifies business risks, its extensive distribution network provides a wider reach, thus boosting revenues. Weaknesses: Product recalls could affect brand image: Toyota has conducted a number of product recalls in the recent past, which could affect the brand image and overall sales of the company. For instance, in 2011, Toyota recalled 111,000 models of Toyota and Lexus brands’ vehicles due to the damage to elements of the substrate and potential shutdown of the hybrid system. Further in the year, Toyota recalled 181,000 vehicles in Japan in relation to abnormal noise and oil leakage that Analysis of Toyota Motor Corporation by ThembaniNkomo may have resulted from slack of bolts in the sub transmission and the rear wheel differential. In addition, the company was involved in government investigations related to product recalls. For instance, in February 2012, 12
the National Highway Traffic Safety Administration initiated a preliminary investigation of a potentially faulty power window master switch in the driver-side doors in model year 2007 Camry and RAV4 vehicles. This could also result in significant penalties, which could affect the operational margins. Poor allocation of resources as compared to peers: Toyota has low return on equity (ROE) and return on assets (ROA) compared to its peer companies. The company's competitors such as Honda Motor and Nissan Motor have more ROE when compared to Toyota. Honda Motor's ROE was 4.8%, while Nissan Motor's ROE was 8% in FY2012. In contrast, Toyota's ROE was 2.7% in FY2012. Lower ROE and ROA compared to its peers indicates that the company is not using the shareholders' money efficiently and that it is not generating high returns for its shareholders. Thus, poor allocation of resources could hurt shareholder's value and confidence in the long term. Opportunities: Growing global automotive industry: The global automotive industry was severely affected by the economic downturn, with a decline in revenues being recorded in 2008 and 2009. However, 2011 saw a strong rebound which has continued into 2012. According to MarketLine, the global automotive manufacturing industry grew by 8.9% in 2012 to reach a value of $1,563.9 billion. The recovery of global automotive industry thus provides Toyota an opportunity to gain more customers and increase revenues. Toyota poised to benefit from growing partnership with BMW: Toyota is poised to benefit from the growing partnership with BMW. In June 2012, BMW and Toyota signed a memorandum of understanding aimed at long-term strategic collaboration on technological fields. As part of the agreement, the two companies will partner for the joint development of a fuel cell system, joint development of architecture and components for a future sports vehicle, collaboration on power-train electrification and joint research and development on lightweight technologies. The growing partnership between the two companies is expected to boost the technological know-how of the companies and may result in the development of new products thus increasing revenues in the long run. Also, in the short run, the combined partnership will result in significant synergies and cost-savings, boosting the operational margins. Strong outlook for the global new car market: The global new cars market has experienced moderate growth during 2008-2012. However, forecasts suggest this will accelerate to strong 13
double digit growth during the 2012-2016 periods. Thus, the strong outlook for the global new car market coupled with the company’s new product launches provides a growth opportunity for the company. Threats: Intense competition: The worldwide automotive market is highly competitive. Toyota faces strong competition from automotive manufacturers in its various markets. The competition among various auto players is likely to intensify in light of continuing globalization and consolidation in the worldwide automotive industry. The factors impacting competition include product quality and features, the amount of time required for innovation and development, pricing, reliability, safety, fuel economy, customer service and financing terms. Increased competition may lead to lower vehicle unit sales and large inventory, which may result in downward pricing pressure, thus impacting the financial condition and results of operations of the company. Appreciating Japanese Yen a major concern: Toyota is sensitive to the fluctuations in foreign currency exchange rates and is principally exposed to fluctuations in the value of the Japanese Yen, the US dollar and the Euro. The strengthening of the Japanese Yen against the US dollar and fluctuations in foreign exchange rates would have a material adverse effect on Toyota's reported operating results, which in turn would impact the valuation of the company. Natural disasters could impact production structure: Toyota is subject to disruption of production due to natural disasters such as earthquakes, floods, among others. Toyota primarily operates in Japan which is a highest earthquake prone region in the world. The country has witnessed many devastating earthquakes in the recent years which seriously disrupted the economy. In 2011, the country witnessed one of the worst hit earthquakes in its history in the form of 2011 Tohoku earthquake, which led to a temporary production halt at its domestic auto manufacturing facilities. In the same year, major floods occurred in Thailand which halted its operations and production of about 150,000 Toyota automobiles. Such natural calamities, if occur frequently, could severely influence the production output of the company due to work stoppages and in turn impact the overall revenue base and profitability.Analysis of Toyota Motor Corporation by ThembaniNkomo
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Toyota Global Vision Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people. Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile. We will meet our challenging goals by engaging the talent and passion of people, who believe there is always a better way. Your Satisfaction Our Commitments
Vision 1. Delight our customers through innovative products, by utilising advanced technologies and services. 2. Ensure growth to become a major player in the Indian auto industry and contribute to the Indian economy by involving all
stakeholders.
3. Become the most admired and respected company in India by following the Toyota Way. 4. Be a core company in global Toyota operations.
Mission 1. Practice ethics and transparency in all our business operations. 2. Touch the hearts of our customers by providing products and services of superior quality at a competitive price. 3. Cultivate a lean and flexible business model throughout the value chain by continuous improvement. 4. Lead the Toyota global operations for the emerging mass market.
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BOARD OF DIRECTORS ALI S. HABIB
Chairman Ali S. Habib is the Chairman of Indus Motor Company Limited and is also the Founder Director of the Company. He also serves as a Member on the Board of Directors of Thal Limited, Shabbir Tiles & Ceramics Ltd., Metro Habib Cash and Carry Pakistan (Pvt.) Ltd. and Habib Metropolitan Bank Ltd. Ali S. Habib is a graduate in Mechanical Engineering from the University of Minnesota, USA. He has attended the PMD Program at Harvard University and currently serving as Chairman of the Pakistan Business Council. KEIICHI MURAKAMI
Vice Chairman Keiichi Murakami was elected as Director of Indus Motor Company Ltd and was appointed as Vice Chairman with effect from January, 2013. He has been serving at Toyota Motor Corporation for over 30 years now and has worked in different capacities primarily in the areas of Product Planning and marketing Research. He has looked after Toyota’s business in Asia, Oceana and Middle East with various Toyota distributors. Murakami had served as Executive Director at UMWT who is the Toyota distributor in Malaysia.
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PARVEZ GHIAS
Chief Executive Officer ParvezGhias is the Chief Executive Officer of Indus Motor Company Limited, since 2005. Prior to joining the Company, he was the Vice President and CFO at Engro Chemical Pakistan Limited and also served as a Member of the Board of Directors. He is also serving on the Boards of Standard Chartered Bank Limited and Dawood Hercules Corporation Ltd. ParvezGhias is a fellow of the Institute of Chartered Accountants from England & Wales and member of several faculties of the Institute and holds a Bachelors Degree in Economics and Statistics. YOSHIYUKI MATSUO
Senior Director Mr. Yoshiyuki Matsuo has been appointed in place of Mr. MitoshiOkimotow.e.f. 1st January 2014 as Senior Director Manufacturing and the Board member / Director of Indus Motor Company Ltd. He has been with the Toyota Group since 1986 during which he has held various senior executive positions. He has a vast experience in the areas of Production, Logistic, Plant Engineering and Quality Control at various Toyota plants in the world. Mr. Yoshiyuki Matsuo is a graduate from the Nanzan University, Japan
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FARHAD ZULFICAR
Director FarhadZulficar is the Founder Director of Indus Motor Company Limited. He was the first Managing Director of the Company from 1989 to 2001 and has also been a Director on various listed and private companies. He is currently the Vice Chairman of House of Habib and Chairman of MAKRO Habib Pakistan Ltd. He is a Commerce graduate from University of Karachi. MOHAMEDALI R. HABIB
Director Mohamedali R. Habib is the Founder Director of Indus Motor Company Limited. He is an Executive Director of Habib Metropolitan Bank Ltd. since 2004 and also serves as a Member on the Board of Thal Limited and Habib Insurance Company Ltd. He was also appointed as Joint-President & Division Head (Asia) & Member of General Management of Habib Bank AG Zurich in 2011. Mohamedali R. Habib is a graduate in Business Management – Finance from Clark University, USA.
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KYOICHI TANADA
Director KyoichiTanada was appointed as a Director of Indus Motor Company Ltd. in May 2013. Currently he is serving as the President of Toyota Motor Thailand. He is also serving as a Managing Officer, Toyota Motor Corporation. KyoichiTanada is a graduate in Foreign studies from Tokyo University, Japan TETSURO HIRAI
Director Tetsuro Hirai was appointed as Director of Indus Motor Company Ltd. in July2013. He has been associated with Toyota Motor Corporation from 1980 to 2009, during which he has held various senior positions. He joined Toyota Tsusho Corporation in January 2010 as a member of Management team. He holds directorships of certain companies of the Toyota Group in various countries. Tetsuro Hirai is a graduate from Faculty of Science and Engineering of Waseda University , Japan.
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PRODUCTION SYSTEM Harmonizing with the Environment Globally, Toyota has indicated a strong and diverse commitment to the pursuit of harmonious growth through its technically advanced and environment-friendly products. There have been relentless efforts in the crucial fields of mobility, city transportation, resources, society and environment, through research & development. Protecting the environment has always been a priority at TKM, starting with the ecofriendly engines that are manufactured for the Toyota vehicles, to the advanced technology that is used for purification or recycling of waste water at the plant. Apart from this, the plant at Bidadi, Karnataka, is surrounded by a green belt, meets high environmental standards and has achieved the ISO 14001 certification in its very first year of operations. Setting benchmarks for Production Excellence Quality is ensured in every vehicle that rolls out of Toyota Kirloskar Motor, through inbuilt audits at every process of the system. The company's operational excellence is based on the improvement tools and methods developed by Toyota under the Toyota Production System (TPS), greatly emphasizing superlative quality and minimal waste. In line with Toyota's growing comfort with its India operations, the company set up Toyota Kirloskar Auto Parts (TKAP), which commenced production of transmissions in May 2004, for its global requirements. Another initiative is the Toyota Techno Park India (TTPI), a non-profit industrial infrastructure company aimed at boosting local industries and related job opportunities. Setting benchmarks for the automobile industry, the manufacturing facility consists of 4 divisions (shops) – Press, Weld, Paint and Assembly. Delivering Excellence Toyota Production System (TPS) combines a balanced mix of human resources and robot technology for increased productivity. This system involves two important principles:
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Jidoka - building quality into the production system and ensuring damaged parts do not proceed to the next stage. Just In Time (JIT) - making only what is needed, when it's needed, and only as much as is needed. Eco Factory: As part of our sustainable plant initiatives, the plant is designed with an EcoFactory concept to maximise the output with minimum input by creating a highly optimized manufacturing process. From our energy efficient servo press to our state-of-the-art global body line, we are able to reduce process steps to further increase our energy efficiency. We also use water borne paint and a water recycling system that recycles 40% waste water back into the process, thereby leading to higher resource optimization and contributing towards a greener society Committed Partners In our drive to build the perfect automobile, selecting the components that go in to it becomes a key criterion for success. We at TKM believe that an innovative, capable and cost competitive supplier base is critical to our viability. We perceive suppliers and dealers as equal stakeholders in our drive towards sustainability. Supplier enhancement initiatives are designed to bring a sense of partnership in all our endeavors.
Social Contribution Commitment to Society As a responsible corporate citizen, Toyota Kirloskar Motor is constantly working towards the development of people, communities, and the earth at large. TKM's efforts over the years towards developing a prosperous society include rebuilding a local residential school, construction of two water tanks in rural Bangalore that benefit around 80,000 people; reconstruction of a local police station; awareness on environmental conservation for local schools; distribution of school materials like 21
bags, books, computers, and chairs to under-privileged students; and donation of funds towards rehabilitating the victims of the Tsunami and the Gujarat earthquake. Ongoing initiatives: TKM started the Toyota Safety Education Program (TSEP) - an interactive learning programme designed to teach school children about road safety in the year 2007. It features interactive courses, traffic booths, an animated film, computer and board games, and an informative website. The Toyota Technical Training Institute (TTTI) was started in the year 2007 to impart technical know-how about automobiles, or Monozukuri (skilled manufacturing), to students who have the talent, but not the means, to pursue higher studies. This residential school aims to develop a sound knowledge base, individual skill sets, a strong body, and a positive attitude in every student. TKM in conjunction with Toyota Motor Corporation and its nationwide dealer network has initiated a unique training initiative - The Toyota Technical Education Program (TTEP). The special training module, launched in 2006, aims at enhancing the skill sets and employability of the students at the ITIs in the country. Conforming to its eco-commitment, Toyota, together with NDTV, conducted a host of eco-initiatives that culminated in India's first 24-hour live TV programme - Greenathon. The three-year nationwide environment campaign aims at creating awareness about issues that threaten the future of our planet. With an overwhelming response from India's leading corporate houses, top Bollywood stars, musicians, environmentalists, NGOs and educational institutions, Greenstone Seasons I and II have been tremendously successful.
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Products and specification
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MODEL NAME: ETIOS LIVA SPECIFICATION: .
0.0012m3 (1.2L) DOHC PETROL ENGINE And New TRD Sportivo Engine 0.0014m3 (1.4L) D-4D DIESEL ENGINE Anti- braking system with electronic breakforce distribution Transmission- 5 speed manual Tank capacity – 45litres 12 spokes Alloys Tone premium interiors Impact absorbing body structure Dual front SRS airbags Keyless entry and door ajar warning Air conditioner with air filter Tachometer and digital trip meter 3 spokes- steering wheel Power windows with driver side auto-down Mileage diesel -23.59 kmpl , petrol- 17.71kmpl
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MODEL NAME: ETIOS SPECIFICATION:
PETROL-4-Cylinder 16V, DOHC, DIESEL - 4-Cylinder 8V, SOHC,D-4D Transmission - 5 speed manual Electronic Fuel Injection(EFI), Common Rail Direct Injection(CRDI) Dual front SRS airbags Tank capacity - 45 litres Electronic power steering with tilt function Adjustable head rest Body colored bumper Suspension- torsion beam, Mac pherson strut ABS with EBD Keyless entry and door ajar warning Impact absorbing body structure Air conditioner with air filter Central locking system Mileage diesel -22.33 kmpl , petrol- 16.85kmpl
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MODEL NAME: ETIOS CROSS SPECIFICATION:
0.0015m3(1.5L)DOHC petrol engine,0.0014m3(1.4L)D_4D diesel engine Transmission- 5speed manual Tank capacity 45 liters Bold front grille with grille guard & flag lamps Piano black interior Sporty seat fabric with stitch and badging Distinctive side cladding and diamond cut alloys Sturdy roof rails OVRM with turn indicators Ergonomic seats 2DIN audio CD with Bluetooth, USB ,AUX & remote Cooled 13L glove box Rear defogger with wiper ASD with EBD Mileage; diesel- 23.59 kmpl, petrol-16.78 kmpl
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MODEL NAME: INNOVA SPECIFICATION:
D-4D common-rail diesel engine,VVT-I petrol engine Tank capacity – 55liters High ground clearance ABS with EBD 7 seater, transmission- 5 speed model Ventilated front disc brake SRS airbags Contemporary body graphics Exclusive “z” grade badge Classy dual tone seat with leather trio GOA body, Child protector lock Collapsible steering column Load sensing proportion valve High rigidity frame Immobilizer Mileage diesel – 12.06 kmpl, petrol -10.37kmpl
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MODEL NAME: COROLLA ALTIS SPECIFICATION:
1.81 dual VVT-I gasoline engine, 1.4 diesel engine with variable nozzle turbo & intercooler 7 speed super CVT-I transmission 6 speed manual transmission Splendid interior design, stylish LED head and tail lamps R16 alloy wheels Rear reclining seat 7.0 touch audio with Bluetooth, navigation & voice command Paddle shift Best in class leg space 8way power driver seat with lumbar support Smart entry with push start/stop Cruise control, Rain sensing wipers Daytime running lamps Mileage diesel- 21.3kmpl, petrol- 14.53kmpl
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MODEL NAME: FORTUNER SPECIFICATION:
3.0L Diesel engine, intercooler turbocharger 2WD with5-speed automatic transmission Full time 4WD with 5 speed manual transmission Tank capacity -80liters Exceptional All – terrain capability Suspensions 3- driving modes (4WD only) Front grill and bonnet scoop Automatic HID head lamps with washer Side step & roof rails ORVM with electrical adjust Multi information display Black wood like finish panels Steering wheel with audio, MID and Bluetooth control switches Assist grip A-pillar Mileage 12.26kmpl
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MODEL NAME: CAMRY SPECIFICATION:
2.5L VVT-I engine 16-inch alloy wheels Tank capacity-70liters ECO drive indicator, cruise control Automatic rain sensing wiper Headlamps ,grill ,fog lamps ABS with EBD and break assist Impact absorbing body structure Driver and passenger front air bags Opteron meter Multi functioning steering 8way power seats Audio system with excellent sound quality Mileage 19,61 kmpl
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MODEL NAME: PRIUS SPECIFICATION:
Engine - 1.8-litre (2ZR-FXE) Electrically Controlled Continuously Variable Transmission MacPherson struts (gas-filled shock absorbers with a stabilizer bar) Synchronous alternating current motor (Permanent magnet type) Fuel tank capacity 45 liters Electronic Fuel Injection 3 drive modes- switch Evolving HSD EPS/VSC, airbags ABS with EBD Crash safety body Reduction gear Nickel metal hybrid battery 15inch alloy wheel Platform and suspension system Mileage- 23.09 kmpl
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MODEL NAME: LC PRADO SPECIFICATION:
D-4D Diesel with Intercooler Turbocharger, 4 Cylinders In-line Fuel Tank Capacity 87 liters 5 Speed Automatic transmission ORVM [ Outside Rear View Mirrors ] with Electrical Adjust, Electric Fold, LED Turn Signal Indicator Roof Rails , Rear Spoiler [ with Integrated High Mount Stop Lamp ] Assist Grips (Roof & Pillar), Overhead storage console with Conversation mirror Multi terrain monitor & multi terrain select TEMS and KDSS 7 SRS airbags Vehicle stability control Automatic light control system Mileage – 23.91 KMPL
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SERVICES
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Express Maintenance ;
3 highly trained technicians work simultaneously Quality check is an inherent part of each process Specially designed tools and equipment’s Watch your car being serviced Get your vehicle delivered in 60 minutes
Toyotas Quick Vehicle information ; Unique e-CRB (evolutionary customer relationship building) tool based on to assure Faster Response &Resolution to all customer queries Watch live status of your vehicle being serviced Get Service Reminder, Special offers & Book appointments to on a call
QUICK onsite support; Free 24x7 roadside assistance for 3 years for;
Out of fuel Wrong or contaminated fuels Lost or lock out key Tire related Battery related Onsite repairs Accident support
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Toyota’s QUICK NETWORK REACH; Widespread network which is constantly growing Designed to enhance customer convenience & equipped with latest equipment’s Stop shop solutions for all your needs like finance ,insurance, service, parts, lubricants , tire, battery & car care solutions under one roof.
Toyota’s Qualified Manpower; Recruited from best technical institutes supported by Toyota under Toyota Technical Education Program initiative Toyota technicians are continuously groomed through Toyota Global Training System Toyota Service Adviser are trained to high Toyota standards and always assist you
Unmatched warranty;
Best in class vehicle warranty [100,000 km / 3years] Warranty begins from date of sale of vehicle to the first customer Warranty covers for repairs or replacement of any Toyota found defective Contact Service Adviser of your Toyota dealership for warranty related support
Toyota‘s Genuine parts; Only Toyota Genuine Parts are designed & engineered specially for your Toyota. Over the years, heavy investments in R&D have been made to study the design, material selection & internal construction of Toyota Genuine Parts. These parts are also tested under various simulated extreme conditions to ensure Quality, Reliability & Durability. For peace of mind, always insist on Toyota Genuine Parts. All Toyota Genuine Parts carry a 6 month / 10,000 Km [whichever is earlier] Toyota Warranty*. If a non-genuine part is fitted to your Toyota, and that part's failure damages your vehicle, then that damage will not be covered by your Toyota Warranty. Also, when your car is serviced by a Toyota Dealership, any warranty covered repairs identified will be carried out and are covered under your Toyota Warranty.
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FINANCIALS
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TOYOTA MOTOR CORP ADR (TM) CashFlowFlag BALANCE SHEET Fiscal year ends in March. JPY in millions except per share data. 2010-03 2011-03 2012-03 2013-03 2014-03 Assets Cash and cash equivalents 2258470 2284583 1759501 1824997 2221377 Short-term investments 1793165 1225435 1181070 1445663 2046877 Total cash 4051635 3510018 2940571 3270660 4268254 Receivables 1886273 1449151 1999827 1971659 2036232 Inventories 1422373 1304242 1622282 1715786 1894704 Deferred income taxes 632164 605884 718687 749398 866386 Prepaid expenses 511284 517454 516378 527034 672014 Other current assets 4569875 4443006 4523444 5550353 5980116 Total current assets 13073604 11829755 12321189 13784890 15717706 Gross property, plant and equipment 17093748 16611349 16849282 18223620 19764791 Accumulated Depreciation -10382847 -10302189 -10613902 -11372381 -12123493 Net property, plant and equipment 6710901 6309160 6235380 6851239 7641298 Equity and other investments 4135599 5398518 6491934 7849681 9931209 Other long-term assets 6429183 6280733 5602462 6997507 8147260 Total non-current assets 17275683 17988411 18329776 21698427 25719767 Total assets 30349287 29818166 30650965 35483317 41437473 Liabilities Short-term debt 5497997 5951836 5963269 6793956 7780483 Accounts payable 1956505 1503072 2242583 2113778 2213218 Taxes payable 153387 112801 133778 156266 594829 Accrued liabilities 1735930 1773233 1828523 2185537 2313160 Other current liabilities 1342395 1450048 1613421 1662983 1778995 Total current liabilities 10686214 10790990 11781574 12912520 14680685 Long-term debt 7015409 6449220 6042277 7337824 8546910 Deferred taxes liabilities 813221 810127 908883 1385927 1811846 Accrued liabilities 678677 668022 708402 Minority interest 570720 587653 516217 624821 749839 Other long-term liabilities 225323 179783 143351 308078 411427 Total non-current liabilities 9303350 8694805 8319130 10422762 12287640 Total liabilities 19989564 19485795 20100704 23335282 26968325 Common stock 397050 Additional paid-in capital 898381 902810 550650 948090 948358 Retained earnings 11568602 11835665 11917074 12689206 14116295 Treasury stock -1260425 -1261383 -1135680 -1133138 -1123666 Accumulated other comprehensive -846835 -1144721 -1178833 -356123 528161 Total stockholders' equity 10359723 10332371 10550261 12148035 14469148 Total liabilities and stockholders' equity 30349287 29818166 30650965 35483317 41437473 TOYOTA MOTOR CORP ADR (TM) CashFlowFlag INCOME STATEMENT 37
Fiscal year ends in March. JPY in millions except per share data. Revenue Cost of revenue Gross profit Operating expenses Sales, General and administrative Total operating expenses Operating income Interest Expense Other income (expense) Income before taxes Provision for income taxes Other income Net income from continuing operations Other Net income Net income available to common shareholders Earnings per share Basic Diluted Weighted average shares outstanding Basic Diluted EBITDA
2010-03 18950973 16683797 2267176
2011-03 18993688 16615326 2378362
2012-03 18583653 16388564 2195089
2013-03 22064192 18640995 3423197
2014-03 25691911 20801139 4890772
2119660 2119660 147516 33409 177361 291468 -92664 -139920 244212 -34756 209456 209456
1910083 1910083 468279 29318 124329 563290 -312821 -410626 465485 -57302 408183 408183
1839462 1839462 355627 22922 100168 432873 -262272 -326843 368302 -84743 283559 283559
2102309 2102309 1320888 22967 105728 1403649 551686 231519 1083482 -121319 962163 962163
2598660 2598660 2292112 19630 168598 2441080 767808 318376 1991648 -168529 1823119 1823119
133.58 133.58
260.34 260.32
180.42 180.4
607.64 607.56
1150.6 1149.84
1568 1568 1739446
1568 1568 1768181
1572 1572 1523625
1583 1584 2531725
1584 1585 3711563
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TOYOTA MOTOR CORP ADR (TM) Statement of CASH FLOW Fiscal year ends in March. JPY in millions except per share data. 2010-03 2011-03 2012-03 2013-03 2014-03 Cash Flows From Operating Activities Net income 244212 465485 368302 1083482 1991648 Depreciation & amortization 1414569 1175573 1067830 1105109 1250853 Deferred income taxes 25537 85710 6395 160008 -56279 Accounts receivable 421423 -585464 -168260 -121926 Inventory 56059 51808 -344923 50483 -110819 Accounts payable 649214 -406210 756363 -209284 65312 Accrued liabilities 102207 -40629 Income taxes payable 20943 22127 438527 Other working capital -39312 461010 246997 597907 401869 Other non-cash items 106044 -190161 -84008 -190256 -213150 Net cash provided by operating activities 2558530 2024009 1452435 2451316 3646035 Cash Flows From Investing Activities Investments in property, plant, and equipment -1437601 -1691191 1532082 -1974152 -2678691 Property, plant, and equipment reductions 517565 538037 467946 572632 783530 Purchases of investments -2413202 -4422106 3173781 -3412423 -4738278 Sales/Maturities of investments 1108741 3716156 2856825 2669091 3319327 Other investing activities -625687 -257240 -61566 -882460 -1022136 Net cash used for investing activities -2850184 -2116344 1442658 -3027312 -4336248 Cash Flows From Financing Activities Debt issued 3178310 2931436 2394807 3392484 4358286 Debt repayment -2938202 -2489632 2867572 -2682136 -2988923 Common stock repurchased -10251 -28617 -37448 -43098 Dividend paid -172476 -141120 -156785 -190008 -459095 Other financing activities -335363 162260 311651 9212 Net cash provided by (used for) financing activities -277982 434327 -355347 477242 919480 Effect of exchange rate changes -8898 -127029 -55939 137851 93606 Net change in cash -578534 214963 -401509 39097 322873 Cash at beginning of period 2444280 1865746 2080709 1679200 1718297 Cash at end of period 1865746 2080709 1679200 1718297 2041170 Free Cash Flow Operating cash flow 2558530 2024009 1452435 2451316 3646035 Capital expenditure -1437601 -1691191 1532082 -1974152 -2678691 Free cash flow 1120929 332818 -79647 477164 967344
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FINANCIAL RATIOS Ratio analysis:-
Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication of a firm's financial performance in several key areas. The ratios are categorized as Short-term Solvency Ratios, Debt Management Ratios, Asset Management Ratios, Profitability Ratios, and Market Value Ratios. Ratio Analysis as a tool possesses several important features. The data, which are provided by financial statements, are readily available. The computation of ratios facilitates the comparison of firms which differ in size. Ratios can be used to compare a firm's financial performance with industry averages. In addition, ratios can be used in a form of trend analysis to identify areas where performance has improved or deteriorated over time. Because Ratio Analysis is based upon Accounting information, its effectiveness is limited by the distortions which arise in financial statements due to such things as Historical Cost Accounting and inflation. Therefore, Ratio Analysis should only be used as a first step in financial analysis, to obtain a quick indication of a firm's performance and to identify areas which need to be investigated further Classification of financial ratios on the basis of function: On the basis of function or test, the ratios are classified as liquidity ratios, profitability ratios, activity ratios and solvency ratios Liquidity Ratios: Liquidity ratios measure the adequacy of current and liquid assets and help evaluate the ability of the business to pay its short-term debts. The ability of a business to pay its short-term debts is frequently referred to as short-term solvency position or liquidity position of the business. a) Profitability ratios: Profitability ratios measure the efficiency of management in the employment of business resources to earn profits. These ratios indicate the success or failure of a business enterprise for a particular period of time. 40
b) Activity ratios: Activity ratios (also known as turnover ratios) measure the efficiency of a firm or company in generating revenues by converting its production into cash or sales. Generally a fast conversion increases revenues and profits. c) Solvency ratios: Solvency ratios (also known as long-term solvency ratios) measure the ability of a business to survive for a long period of time. These ratios are very important for stockholders and creditors. OBJECTIVES:The importance of ratio analysis lies in the fact that it presents data on a comparative basis and enables the drawing of inferences regarding the performance of the firm. Ratio analysis helps in concluding the following aspects:
a) Liquidity Position: Ratio analysis helps in determining the liquidity position of the firm. A firm can be said to have the ability to meet its current obligations when they become due. It is measured with the help of liquidity ratios.
b) Long- Term Solvency: Ratio analysis helps in assessing the long term financial viability of a firm. Long- term solvency measured by leverage/capital structure and profitability ratios.
c) Operating Efficiency: Ratio analysis determines the degree of efficiency of management and utilization of assets. It is measured by the activity ratios.
d) Over-All Profitability: The management of the firm is concerned about the overall profitability of the firm which ensures a reasonable return to its owners and optimum utilization of its assets. This is possible if an integrated view is taken and all the ratios are considered together.
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GROSS PROFIT RATIO:Gross profit ratio is a profitability ratio that shows relationship between gross profit and total net sales revenue. It is a popular tool to evaluate the operational performance of the business. When gross profit ratio is expressed in percentage form, it is known as gross profit margin or gross profit percentage. The basic components of the formula of gross profit ratio are gross profit and sales
FORMULA:-
RATIOS:-
YEAR SALES
2010
2011
2012
2013
2014
1,89,50,973
1,89,93,688
1,85,83,653
2,20,64,192
2,56,91,911
23,78,362
21,95,089
34,23,197
48,90,772
12.52
11.81
15.51
19.03
22,67,176
GROSS PROFIT G.P RATIO(%)
11.96
INTERPRETATION:There is a fluctuation in the gross profit ratio. The percentage of gross profit over sales is gradually decreasing till 2012 and after which it is increased to 15.51 and 19.03 in 2013 and 2014. Thus it show an increasing trend from 2013 onwards. It is also apparent that the GP ratio is increasing about 4% from 2012-2013(11.81%-15.51%) and 2013-2014(15.51-19.03%), Hence it can be stimulated that between 2014 and 2015 there may be an increase in GP ratio of at least 4%.
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GROSS PROFIT RATIO 20 18 16 14 12
GROSS PROFIT RATIO
10 8 6 4 2 0 2010
2011
2012
2013
2014
NET PROFIT RATIO:Net profit ratio is a popular profitability ratio that shows relationship between net profit after tax and net sales. It is computed by dividing the net profit (after tax) by net sales. The relationship between net profit and net sales may also be expressed in percentage form. When it is shown in percentage form, it is known as net profit margin.
FORMULA:-
RATIOS:-
YEAR SALES NET PROFIT
2010
2011
2012
2013
2014
1,89,50,973
1,89,93,688
1,85,83,653
2,20,64,192
2,56,91,911
17,39,446
17,68,181
15,23,625
25,31,725
37,11,563
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N.P RATIO(%)
9.17
9.30
8.19
11.47
14.44
INTERPRETATION:The Net Profit Ratio was 9.17% in 2010 which increased slightly to 9.30% in 2011.There is a decrease in Net profit Ration in 2012 to 8.19%. However, there is a increase of almost 3% in Net Profit Ration between 2013-2013 when it was 11.47%. Similarly there is an increase of 3% again for the next consecutive year in 2014 where the Net Profit Ration was 14.44%
NET PROFIT RATIO 16 14 12 10 8 6 4 2 0
14.44 11.47 9.17
9.3
2010
2011
NET PROFIT RATIO
8.19
2012
2013
2014
CURRENT RATIO:The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current asset to its current liabilities. The current ratio is an indication of a firm's market liquidity and ability to meet creditor's demands. FORMULA:-
RATIOS:-
YEAR CURRENT ASSET
2010 1,30,73,604
2011
2012
1,18,29,755
44
1,23,21,189
2013 1,37,84,890
2014 1,57,17,,706
CURRENTLIABILITY CURRENT RATIOS
1,06,86,214
1,07,90,990
1,17,81,574
1,29,12,520
1,46,80,685
1.22
1.09
1.04
1.06
1.07
INTERPRETATION:There is a fluctuation in the current ratio from 1.22 in 2010 tp 1.09 in 2011 to a decrease in 2012 to 1.94 and then an increase in 2013 to 1.06 and consecutively an increase again to 1.07 in 2014. but the current asset is well enough to meet current liability.
CURRENT RATIO 1.25
1.22
1.2 1.15
CURRENT RATIO
1.09
1.1
1.04
1.05
1.06
1.07
2013
2014
1 0.95 2010
2011
2012
LIQUID RATIO:In finance, the Acid-test or quick ratio or liquid ratio measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liability immediately. Quick assets include those current asset that presumably can be quickly converted to cash at close to their book value.
FORMULA:-
RATIOS:-
45
YEAR
2010
2011
2012
2013
2014
LIQUID ASSET
1,11,39,947
1,00,08,059
1,01,82,529
1,15,42,070
1,31,50,988
CURRENT LIABILITY
1,06,86,214
1,07,90,990
1,17,81,574
1,29,12,520
1,46,80,685
1.04
0.92
0.86
0.89
0.89
LIQUID RATIOS INTERPRETATION:-
The liquid Asset ratio was 1.04 in 2010 which has shown a gradual decrease to 0.92 % in 2011 to further decreased to 0.86% in 2012. Between 2012-2013 and 2013-2014 the Liquid Asset Ratio has remained stable at 0.89 % in both the financial years.
LIQUID RATIO 1.2
1.04
1
0.92
0.86
0.89
0.89
0.8
LIQUID RATIO
0.6 0.4 0.2 0 2010
2011
2012
2013
2014
INVENTORY TURNOVER RATIO:In accounting, the Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the Cost of goods sold divided by the average inventory. Inventory turnover is also known as inventory turns, stock turn, stock turns, turns, and stock turnover.
FORMULA:-
46
RATIOS:YEARS AVG STOCK COST OF GOODS SOLD INVENTORY TURNOVER
2010 2011 2012 2013 2014 14,22,373 13,04,242 16,22,282 17,15,786 18,94,704 1,89,50,973 1,89,93,688 1,85,83,653 2,20,64,192 2,56,91,911
RATIO(Times)
7.50
6.86
8.72
7.77
7.37
INTERPRETATION:The Inventory Turn over Ratio decreased from 7.50% in 2010 to 6.86% in 2011. How ever, it increased almost by 2% to 8.72% in 2012 but again had a gradual decrease to 7.77% in 2013 to further decrease to 7.37% in 2014
INVENTORY TURNOVER RATIO 10
8.72 7.5
8
6.86
7.77
7.37 INVENTORY TURNOVER RATIO
6 4 2 0 2010
2011
2012
2013
2014
DEBTORS TURNOVER RATIO:An accounting measure used to quantify a firm's effectiveness in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets.
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FORMULA:-
RATIOS:YEARS AVG ACC RECEIVABLE CREDIT SALES DEBTPRS TURNOVER RATIO(Times)
2010 2011 2012 2013 2014 18,86,273 14,49,151 19,99,827 19,71,659 20,36,232 1,89,50,973 1,89,93,688 1,85,83,653 2,20,64,192 2,56,91,911 10.04
13.10
9.29
11.19
12.61
INTERPRETATION:The Debtors Turn Over Ration was 10.04% in 2010 which has increased to 13.10% in 2011 but then it was decreased drastically in 2012 to 9.29% but slowly is accelerating from 2013 on wards to 11.19 in 2013-14 and 10 12.61 in 2014.
DEBTORS TURNOVER RATIO 14 12 10 8 6 4 2 0
13.1 11.19
10.04
2010
12.61
9.29
2011
DEBTORS TURNOVER RATIO
2012
2013
CREDITOR TURNOVER RATIO:-
48
2014
A short-term liquidity measure used to quantify the rate at which a company pays off its suppliers. Accounts payable turnover ratio is calculated by taking the total purchases made from suppliers and dividing it by the average accounts payable amount during the same period.
FORMULA:-
RATIOS:YEARS AVG ACC PAYABLE CREDIT PURCHASE CREDITOR TURNOVER RATIO(Times)
2010 2011 2012 2013 2014 19,56,505 15,03,072 22,42,583 21,13,778 22,13,218 1,66,83,797 1,66,15,326 1,63,88,564 1,86,40,995 2,08,01,139 8.52
11.05
7.30
8.82
INTERPRETATION:The creditor turn over ratio is 8.52% in 2010 which increased to 11.05% in 2011 but decreased to 7.30% I 2012 and then picked up to 8.82% in 2013 and increased in 2014 to 9.39%.
CREDITOR TURNOVER RATIO 12 10 8 6 4 2 0
11.05 8.52
2010
7.3
2011
2012
8.82
9.39
2013
2014
CREDITOR TURNOVER RATIO
FIXED ASSET TURNOVER RATIO:A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-asset investments - specifically property, plant and equipment
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9.39
(PP&E) - net of depreciation. A higher fixed-asset turnover ratio shows that the company has been more effective in using the investment in fixed assets to generate revenues.
FORMULA:-
RATIOS:YEARS FIXED ASSET
2013
NET SALES FIXED ASSET TURNOVER RATIO(Times)
2012
1,85,19,532 1,89,50,973 0,98
2011
1,74,96,977 1,89,93,688 0.92
2010
1,68,66,075 1,85,83,653 0.91
2009
1,97,65,611 2,20,64,192
4,14,37,473 2,56,91,911
0.89
INTERPRETATION:The fixed asset ratio was 0.98 % in 2010 which decreased to 0.92% in 2011 and further decreased to 0.91 in 2012 and then to 0.89% in 2013. The fixed asset has shown a increasing trend in 2014 to 1. 61% This is far more than what it has been since 2010.
FIXED ASSET TURNOVER RATIO 2 1.5 1 0.5 0 2010
2011
2012
50
2013
2014
1.61
Concept of Working Capital Management `There are two concepts of working capital viz.quantitative and qualitative. Some people also define the two concepts as gross concept and net concept. According to quantitative concept, the amount of working capital refers to ‘total of current assets’. What we call current assets? Smith called, ‘circulating capital’. Current assets are considered to be gross working capital in this concept. The qualitative concept gives an idea regarding source of financing capital Current assets – It is rightly observed that “Current assets have a short life span. These type of Current assets – It is rightly observed that “Current assets have a short life span. These type of assets are engaged in current operation of a business and normally used for short– term operations of the firm during an accounting period i.e. Within twelve months. The two important characteristics of such assets are, (i) short life span, and (ii) swift transformation into other form of assets. Cash balance may be held idle for a week or two, account receivable may have a life span of 30 to 60 days, and inventories may be held for 30 to 100 days.”4 Fitzgerald defined current assets as, “cash and other assets which are expected to be converted in to cash in the ordinary course of business within one year or within such longer period as constitutes the normal operating cycle of a business.”53Current liabilities – The firm creates a Current Liability towards creditors (sellers) from whom it has purchased raw materials on credit. This liability is also known as accounts payable and shown in the balance sheet till the payment has been made to the creditors The claims or obligations which are normally expected to mature for payment within an accounting cycle are known as current liabilities. These can be defined as “those liabilities where liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current assets, or the creation of other current liabilities.”6ets are engaged in current operation of a business and normally used for short– term operations of the firm during an accounting period i.e. within twelve months. The two important characteristics of such assets are, (i) short life span, and (ii) swift transformation into other form of assets. Cash balance may be held idle for a week or two, account receivable may have a life span of 30 to 60 days, and inventories may be held for 30 to 100 days.”4 Fitzgerald defined current assets as, “cash and other assets which are expected to be converted in to cash in the ordinary course of business within one year or within such longer period as constitutes the normal operating cycle of a business.”53Current liabilities – The firm creates a Current Liability towards creditors (sellers) from whom it has purchased raw materials on credit. This liability is also known as accounts payable and shown in the balance sheet till the payment has been made to the creditors. The claims or obligations which are normally expected to mature for payment within an accounting cycle are known as current liabilities. These can be defined as “those liabilities where liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current assets, or the creation of other current liabilities.”
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Working capital Definitions The cash available for day-to-day operations of an organization is called working capital. Strictly speaking, one borrows cash (and not working capital) to be able to buy assets or to pay for obligations. This is also called current capital. Accounting: Net liquid assets computed by deducting current liabilities from current assets. The amount of available working capital is a measure of a firm's ability to meet its short-term FORMULA:Working Capital = Current Assets − Current Liabilities RATIOS:-
YEAR WORKING CAPITAL
2011
2012 1038765
2013 539615
2014 872370
1037021
INTERPRETATION: The working capital in the year 2012 has decreased but by 2013-2014 there is an increase in the working capital ratio from 539615 to 872370 and 87230 to 1037021 which shows that the company has gained working capital in the year 2014 as it was on 2011
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working capital 1200000 1000000 800000
working capital
600000 400000 200000 0 2011
2012
2013
2014
53
Working Capital Ratio The working capital ratio is the same as the current ratio. It is the relative proportion of an entity's current assets to its current liabilities, and is intended to show the ability of a business to pay for its current liabilities with its current assets. A working capital ratio of less than 1.0 is a strong indicator that there will be liquidity problems in the future, while a ratio in the vicinity of 2.0 is considered to represent good short-term liquidity. To calculate the working capital ratio, divide all current assets by all current liabilities. FORMULA:Current Assets Current Liabilities RATIOS:-
YEAR WORKING CAPITAL RATIOS
2011
2012 1.09
2013 1.04
2014 1.06
1.07
INTERPRETATION: In 2011 the company had working capital of 1.09 and has drastically decreased to 1.04 in 2012.Though there is a gradual increase in 2013 by 1.06,in 2014 the company has1.07 of working capital.
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Working Capital Ratio 1.1 1.09 1.08 1.07 1.06 1.05 1.04 1.03 1.02 1.01
Working Capital Ratio
2011
2012
2013
2014
55
Working Capital Productivity The working capital productivity measurement compares sales to working capital. The intent is to measure whether a business has invested in a sufficient amount of working capital to support its sales. From a financing perspective, management wants to maintain low working capital levels in order to keep from having to raise more cash to operate the business. This can be achieved by such techniques as issuing less credit to customers, implementing just-in-time systems to avoid investing in inventory, and lengthening payment terms to suppliers. To decide whether the working capital productivity ratio is reasonable, compare a company's results to those of competitors or benchmark businesses. To derive working capital productivity, divide annual revenues by the total amount of working capital. FORMULA:Annual revenue Total Working capital RATIOS:year
2011
2012
2013
2014
Working Capital 7.47 Productivity
16.31
10.39
10.04
INTERPRETATION: This ratio shows that in 2011 the company has 7.47 and has increased the in 16.31 that shows that there is not much of working capital in the year 2012 invested to support the productivity of the company but over the year 2013 and 2014 there is lot of working capital invested in the productivity of the company.
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working capital productivity 20 15
working capital productivity
10 5 0 2011
2012
2013
2014
57
Working Capital Sales Ratio It usually takes a certain amount of invested cash to maintain sales. There must be an investment in accounts receivable and inventory, against which accounts payable are offset. Thus, there is typically a ratio of working capital to sales that remains relatively constant in a business, even as sales levels change. The mechanism for showing management the results of its decisions related to working capital. The sales to working capital ratio is calculated by dividing annualized net sales by average working capital Management should be cognizant of the problems that can arise if it attempts to alter the outcome of this ratio. For example, tightening credit reduces sales, shrinking inventory may also reduce sales, and lengthening payment terms to suppliers can lead to strained relations with them.
FORMULA:Annualized net sales Accounts receivable + Inventory - Accounts payable RATIOS:year
2011
2012
2013
2014
Working Capital Sales Ratio
3.98
4.30
4.55
4.29
INTERPRETATION: There is much amount of accounts receivables, inventory into the business that extracts sales in the year 2011.In 2012 there is relatively less amount of accounts receivables, inventory invested in the business and the position remains the same in the year 2013 but in 2014 it clearly depicts that there is certain amount of accounts receivables, inventory induced into the business.
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working capital sales ratio 4.6 4.5 4.4 4.3 4.2 4.1 4 3.9 3.8 3.7 3.6
working capital sales ratio
2011
2012
2013
2014
Working Capital Turnover Ratio
The working capital turnover ratio measures how well a company is utilizing its working capital to support a given level of sales. Working capital is current assets minus current liabilities. A high turnover ratio indicates that management is being extremely efficient in using a firm's short-term assets and liabilities to support sales. Conversely, a low ratio indicates that a business is investing in too many accounts receivable and inventory assets to support its sales, which could eventually lead to an excessive amount of bad debts and obsolete inventory. Working Capital Turnover Formula To calculate the ratio, divide net sales by working capital (which is current assets minus current liabilities). The calculation is usually made on an annual or trailing 12-month basis, and uses the average working capital during that period. Issues with the Measurement An extremely high working capital turnover ratio can indicate that a company does not have enough capital to support it sales growth; collapse of the company may be imminent. This is a particularly strong indicator when the accounts payable component of working capital is very high, since it indicates that management cannot pay its bills as they come due for payment.
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An excessively high turnover ratio can be spotted by comparing the ratio for a particular business to those reported elsewhere in its industry, to see if the business is reporting outlier results.
Net sales (Beginning working capital + Ending working capital) / 2 RATIOS:year
2011
2012
2013
2014
Working Capital Turnover Ratio
11.42
23.54
31.25
26.91
INTERPRETATION:
In 2011 the company has utilized good amount of working capital into the business towards sales. In 2012 -2013 there is not much utilization of working capital into the business but in 2014 the company has started to invest in working capital towards the working of the company.
WorkingCapital Turnover Ratio 35 30 25 WorkingCapital Turnover Ratio
20 15 10 5 0 2011
2012
2013
2014
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Comparative Statement Of The Company For The Year 2013 And2014 PARTICULARS 2014 2013 Amt % Assets Cash and cash equivalents 2258470 2284583 -26113 (1.16) Short-term investments 1793165 1225435 567730 31.66 Total cash 4051635 3510018 541617 13.37 Receivables 1886273 1449151 437122 23.17 Inventories 1422373 1304242 118131 8.31 Deferred income taxes 632164 605884 26280 4.16 Prepaid expenses 511284 517454 -6170 (1.21) Other current assets 4569875 4443006 126869 2.78 Total current assets 13073604 11829755 1243849 9.51 Gross property, plant and equipment 17093748 16611349 482399 2.82 Accumulated Depreciation -10382847 10302189 -80658 0.78 Net property, plant and equipment 6710901 6309160 401741 5.99 Equity and other investments 4135599 5398518 -1262919 (30.54) Other long-term assets 6429183 6280733 148450 2.31 Total non-current assets 17275683 17988411 -712728 (4.13) Total assets 30349287 29818166 531121 1.75 Liabilities Short-term debt 5497997 5951836 -453839 (8.25) Accounts payable 1956505 1503072 453433 23.18 Taxes payable 153387 112801 40586 26.46 Accrued liabilities 1735930 1773233 -37303 (2.15) Other current liabilities 1342395 1450048 -107653 (8.02) Total current liabilities 10686214 10790990 -104776 (0.98) Long-term debt 7015409 6449220 566189 8.07 Deferred taxes liabilities 813221 810127 3094 0.38 Accrued liabilities 678677 668022 10655 1.57 Minority interest 570720 587653 -16933 (2.97) Other long-term liabilities 225323 179783 45540 20.21 Total non-current liabilities 9303350 8694805 608545 6.54 Total liabilities 19989564 19485795 503769 2.52 Additional paid-in capital 898381 902810 -4429 (0.49) Retained earnings 11568602 11835665 -267063 (2.31) Treasury stock -1260425 -1261383 958 (0.08) Accumulated other comprehensive -846835 -1144721 297886 (35.18) Total stockholders' equity 10359723 10332371 27352 0.26 Total liabilities and stockholders' eq 30349287 29818166 531121 1.75 Common Size Statement Of The Company For The Year 2013 And2014 PARTICULARS 2014 2013 Assets Cash and cash equivalents 2258470 7.44 2284583 7.66 Short-term investments 1793165 5.91 1225435 4.11 Total cash 4051635 13.35 3510018 11.77 Receivables 1886273 6.22 1449151 4.86 Inventories 1422373 4.69 1304242 4.37 Deferred income taxes 632164 2.08 605884 2.03 Prepaid expenses 511284 1.68 517454 1.74 Other current assets 456987561 15.06 4443006 14.90 Total current assets 13073604 43.08 11829755 39.67 Gross property, plant and equipment 17093748 56.32 16611349 55.71
FINDINGS:
There is a fluctuation in the gross profit ratio. The percentage of gross profit over sales is gradually decreasing till 2012 and after which it is increased to 15.51 and 19.03 in 2013 and 2014. Thus it show an increasing trend from 2013 onwards. It is also apparent that the GP ratio is increasing about 4% from 2012-2013(11.81%-15.51%) and 2013-2014(15.51-19.03%), Hence it
can be stimulated that between 2014 and 2015 there may be an increase in GP ratio of at least 4 The Net Profit Ratio was 9.17% in 2010 which increased slightly to 9.30% in 2011.There is a decrease in Net profit Ration in 2012 to 8.19%. How ever, there is a increase of almost 3% in Net Profit Ration between 2013-2013 when it was 11.47%. Similarly there is an increase of 3% again
for the next consecutive year in 2014 where the Net Profit Ration was 14.44% There is a fluctuation in the current ratio from 1.22 %in 2010 to 1.09% in 2011 to a decrease in 2012 to 1.94 and then an increase in 2013 to 1.06 and consecutively an increase again to 1.07 in
2014. But the current asset is well enough to meet current liability. The liquid Asset ratio was 1.04 in 2010 which has shown a gradual decrease to 0.92 % in 2011 to further decrease to 0.86% in 2012. Between 2012-2013 and 2013-2014 the Liquid Asset Ratio has
remained stable at 0.89 % in both the financial years. The Inventory Turn over Ratio decreased from 7.50% in 2010 to 6.86% in 2011. How ever, it increased almost by 2% to 8.72% in 2012 but again had a gradual decrease to 7.77% in 2013 to
further decrease to 7.37% in 2014. The Debtors Turn Over Ratio was 10.04% in 2010 which has increased to 13.10% in 2011 but then it was decreased drastically in 2012 to 9.29% but slowly is accelerating from 2013 on wards
to 11.19% in 2013-14 and 10 12.61 in 2014. The creditor turn over ratio is 8.52% in 2010 which increased to 11.05% in 2011 but decreased to
7.30% I 2012 and then picked up to 8.82% in 2013 and increased in 2014 to 9.39%. The fixed asset ratio was 0.98 % in 2010 which decreased to 0.92% in 2011 and further decreased to 0.91 in 2012 and then to 0.89% in 2013. The fixed asset has shown a increasing trend in 2014 to 1. 61% This is far more than what it has been since 2010.
The working capital in the year 2012 has decreased but by 2013-2014 there is an increase in the working capital ratio from 539615 to 872370 and 87230 to 1037021 which shows that the company has gained working capital in the year 2014 as it was on 2011 In 2011 the company had working capital of 1.09 and has drastically decreased to 1.04 in 2012.Though there is a gradual increase in 2013 by 1.06, in 2014 the company has1.07 of working capital
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There is a fluctuation in the liquid ratio. The liquid assets are gradually decreasing in the year 2012 from .92 - .86. From the year 2013 there is no change in the liquidity position of the company which is .89 in 2013 and 2014 This ratio shows that in 2011 the company has 7.47 and has increased the in 16.31 that shows that there is not much of working capital in the year 2012 invested to support the productivity of the company but over the year 2013 and 2014 there is lot of working capital invested in the productivity of the company. The amount of accounts receivables, inventory into the business extracts less sales in the year 2011. In 2012 there is relatively less amount of accounts receivables, inventory invested in the business and the position remains the same in the year 2013 but in 2014 it clearly depicts that there is certain amount of accounts receivables, inventory induced into the business. In 2011 the company has utilized good amount of working capital into the business towards sales. In 2012 -2013 there is not much utilization of working capital into the business but in 2014 the company has started to invest in working capital towards the working of the company.
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SUGGESTIONS: 1) Toyota should continue to undertake concerted efforts to strengthen its management platform and raise corporate value. 2) As immediate tasks, Toyota should promote business and cost structure reforms to realize a solid management platform so that it can respond quickly to the changing market circumstances. Specifically, Toyota should maintain a streamlined structure through the reduction of fixed costs and enhance its business in established markets in developed countries. 3) Toyota should accelerate its business expansion into rapidly growing emerging countries by thoroughly and meticulously monitoring market conditions in respective regions and introducing products suited to the characteristics and needs of each market. Toyota should also strive to establish production and supply structures to realize optimum product pricing and delivery, and to enhance the value chain to provide a wide range of customer services in each country and region. 4) Toyota should consider making Lexus a priority in the Chinese market. This will enable it to become competitive with other car manufacturers in the luxury segment. By increasing production facilities in Asia, this will enable Toyota to have cheaper delivery channels and become closer to the emerging market customer. Toyota should also cut out layers of middle management so that engineers get more authority over what specific customer needs are answered in the design and development of a new car. 5) Toyota should pursue the development of environmentally conscious, energy-saving products while incorporating functions and services demanded by customers (value chain) and delivering them to the global market. Acting on these measures, Toyota should aim for growth in three business units, namely, “solutions” in the areas of materials handling equipment, logistics and textile machinery; “key components” in the fields of car air-conditioning compressors and car electronics; and “mobility” in the domains of vehicles and engines. 6) To support consolidated management on a global scale, Toyota should enhance the power of the workplace and diversity in the use of human resources, and strive to nurture global human resources. 7) In addition to placing top priority on safety, Toyota should thoroughly enforce compliance, including observance of laws and regulations, and actively participate in social contribution activities. 8) Toyota should aim to support industries and social infrastructures around the world by continuously supplying products and services that anticipate customers’ needs in order to contribute to engendering a compassionate society. 64
Conclusion Study of ratio analysis of Toyota reveals the financial performance of the company. It is found from analysis of the four financial years from 2010 to 2014, the company’s Gross Profit has increased in 2013-14 and so is the Net Profit. The Current Ratio is also increasing since 2013 14 and 2014-15 and that the current assets are more than sufficient to meet the current liability. The ideal liquidity ratio needs to be at least 1: 1 but it is only 0.89% which is low. Hence the company needs to improve its liquidity position. The Inventory Turnover Ratio decreased from which means that stock is sold out or utilized by the company. However, it increased almost by 2% to 8.72% in 2012 where there may have been less sales and stock increase, but again had a gradual decrease to 7.77% in 2013 to further decrease to 7.37% in 2014 which shows very clearly that Toyota is increasing its sales and thus reducing its stock which is a very positive trend for the company. Since both the Debtors turnover ratio and the Creditor turnover ratio is both showing the same trend of from increased trend to an decreased trend, it clearly implies that the company is making sales but at the same time the companies burrowing is also increasing. The positive side of the finance of Toyota is that since the sale is going up, the company is in a position to repay it loans and borrowings comfortably. The very clear indicator that the company is on the positive trend is its fixed asset ratio. In Toyota, the fixed assets are increasing which means that the company is buying raw materials and assets required for the growth. There is money available and hence the company is able to increase it fixed assets and through this the company can increase its overall financial position. The working capital was not utilized in 2012 but it has been utilized in 2013 and 2014 and this has resulted in the productivity of the company. Thus it is very apparent that working capital needs to be utilized to increase the productivity of the company. The liquidity assets show a declining trend in 2011-12 and the company is trying to maintain it liquidity assets in 2013-14 but this needs to be strengthen even further. Although the accounts receivables is high the money has not be utilized to increase productivity. The working capital of the company needs to be utilized to increase productivity and profitability of the company. The company has started to utilize this and hence we can anticipate that the company will have more productivity and the 65
financials will improve further. We can conclude by saying the company is moving towards a very positive trend and 2014-2015 will be a productive year for the company.
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