Toyota Statement of Cash Flow - Case Study Example

Toyota Statement of Cash Flow Table of Contents Page Introduction 2 Profitability ratio analysis 4 Liquidity and solvency ratio analysis 7 Working capital efficiency 9 Long-term financial structure 10 Investor’s perspective 11 Recommendation 12 References 14 Appendix 15 Toyota Analysis Introduction Toyota Motors or known as Toyota is noted as leading car manufacturer in the world today. Combined with its innovative strategic moves, the firm’s marketing strategies have momentarily outweighed those of other key players in the industry. From the year 2006 until present, Toyota remarkably beat the sales performance of once the leading car manufacturer in the world, the General Motors. Despite this amazing market performance of Toyota for years, it is still important to look closely at its financial status and the prevailing market condition to actually see its real standing in the on-going trend of competition among the leading car manufacturers in the world. It is in this regard that this paper tries to assess the financial performance of Toyota not only purely on its balance sheet, statement of cash flow and statement of income, but by using advanced tools for analysis in managerial accounting. Company’s overall efficiency and performance are usually among of the most important figures that one needs to know about a certain company in the corporate world. This is due to the fact that business must certainly operate with a positive profit in order to continue operation and ensure growth. In the case of Toyota Motors Corporation, profitability ratios are important figures to find out in order to assess the company’s overall efficiency and performance. There are three important business segments of Toyota and the automotive operations consist the highest share which 89% over financial services operations and other operations (Toyota.com, 2010). The Automotive market environment is highly influenced by market demand. Consumers have become conscious on price and they go for those small vehicles with affordable prices. This in return contributed to the profitability of Toyota in recent years. Aside from this, there are other significant factors that are viewed to affect profitability and these include vehicle unit sales volume, mix of vehicles models and options sold, the level of parts and services sales, the level of price discount and other sales incentives and marketing costs, the cost of warranty customer claims and other customer satisfaction actions, the cost of research and development and other fixed costs, the prices of raw materials and the ability to control costs, the efficient use of production capacity, changes in the value of Japanese yen and other currencies trying to make business with Toyota (Toyota.com, 2010). Profitability ratio analysis In Table 1 and Table 2 below, the two major measures of profitability are subdivided into two categories. The first part is about Margin ratios and the second part is about return ratios of Toyota. All detailed raw data used in the ratio analysis are gathered from Finance.yahoo.com (2010), Marketwatch.com (2010) and Toyora.com (2010). In Table 1 are margin ratios of Toyota which involved gross profit margin, operating profit margin, net profit margin and cash flow margin. These ratios in general are measures of the ability of Toyota to convert sales dollars into profits at different stages of measurement. The gross profit margin of Toyota from 2008 to 2010 increased which means that the firm was able to have much control of its inventory and manufacturing of products. This is also an indication that the firm has positively passed on the costs to its customers from 2008 to 2010. This implies that the products produced by Toyota are strongly in demand in the market. The positive demand of Toyota’s products over the course of time can be attributed to the firm’s initiative to go for products that are of high quality but at a highly affordable price (Toyota.com, 2010). On the other hand, there was a rapid downward spiral trend on the firm’s operating profit margin. Earning before interest and taxes over net sales is equal to the operating profit margin. Since there was a slowing of growth on the company’s operating profit margin, the operating efficiency of Toyota has momentarily decreased over time. This operating efficiency must necessarily be involved with all expenses of ordinary, daily business activity. However, Toyota’s operating efficiency on daily activity has momentarily come into slow down based on the figure presented in Table 1. Just like its operating profit margin, Toyota’s net profit margin also has the same downward trend from 2007 to 2010. The net profit margin in 2010 was actually due to the negative net profit margin in 2009. The previous performance in year 2009 had significantly created a negative impact on the performance in 2010 based on the net profit margin. It is important to look closely in detail how much profit Toyota has been making after considering all expenses and taxes, interest and depreciation. Considering the figures on net profit margin, it can be drawn out that Toyota has not actually made much of each sales dollar for its net income after consideration of all expenses. Starting in 2009, each sales dollar got corresponding loss of more than 20 cents. Such event was still not momentarily recovered in 2010 by only having 9 cent as profit for every sales made. This however, does not guarantee a continuous positive trend in the days or years to come considering that there are different key players in the industry. Not only that, Toyota’s performance over time is affected by its corporate strategies and customer’s needs or demand may vary over time. Finally, the cash flow margin of Toyota got a positive score compared to the previous years starting in 2008. Cash is important for every firm because it can be used to pay dividends, supplies, invest a new asset and more. Cash therefore is a must for every firm which tries to establish a remarkable future. Despite low performance on its net profit margin, Toyota specifically has a very strong ability to translate sales into cash. With this in mind, the company has the strong tendency to sustain its operation because of its ability to realise sales and positively convert it into cash. Table 1. Margin ratios of Toyota (Computation is on Appendix G) Ratio 2010 2009 2008 2007 Gross Profit Margin 1.62 1.72 1.31 1.29 Operating Profit Margin 0.16 -0.22 0.58 0.56 Net Profit Margin 0.09 0.21 0.36 0.35 Cash Flow Margin 1.12 0.71 0.63 - Other measures of profitability ratio are returns ratios which basically belong to asset management. It is important to find out the firm’s ability to have an overall measure of the overall efficiency in generating returns for shareholders. Return on asset or return on investment is used to measure the efficiency of company to manage its investment in assets to generate profit. Thus, it is important to find out the amount of profit earned by Toyota based on the total investment made in its total assets. The return on asset or investment is one of the most important measures that investors want to find out. Toyota momentarily showed a declining performance on managing its assets to generate profit. This is evident on the declining percentage of return on asset or investment from 2007 to 2010 as shown in Table 2. Another return ratio is return on equity which is one of the most important figures that matters most among investors. In Table 2, Toyota’s investors would not be glad by the amount of return they have put into the company for the reason that the return on equity jumped to downward trend from 2008 to 2010. Although the percentage of return on equity in 2010 increased twice compared in 2009, still it is still the lowest compared in 2007 and 2008. As compared to return on asset or return on investment, cash return on asset on the other hand gained remarkable improvement from 2009 to 2010 which almost hit the same level of performance in 2008. Toyota therefore has sufficient cash for its future investments to generate more profit in the long run. Table 2. Returns ratios of Toyota (Computation is on Appendix H) Ratio 2010 2009 2008 2007 Return on Asset/Investment 0.006 0.015 0.052 0.050 Return on Equity 0.020 -0.043 0.144 0.138 Cash Return on Asset 0.084 0.050 0.092 0.099 Liquidity and solvency ratio analysis Other important financial ratios commonly used to scrutinise the financial standing of a firm are the liquidity and solvency ratios. In Table 3, Toyota’s current ratio tells that from 2007 to 2010 it has absolutely showed increasing performance for having enough current assets for payment schedule of current debts considering the probable margin of safety for any loss in current assets, inventory and accounts to be collected. However, such performance is still midway of what is acceptable which is 2 to 1. Quick ratio on the other hand is much strong test of liquidity. As can be observed, Toyota relies heavily on its sales revenue and when this is gone, the firm is expected to shut down because of relatively unsatisfactory quick funds on hand from 2007 to 2010. The satisfactory quick ratio is 1:1. Another measure of liquidity is the cash flow. Working capital measures the company’s cash flow. As stated in Table 3, Toyota has increasing cash flow from 2007 to 2010 implying probable increase of investment that will help increase the firm’s profit. The general solvency ratio of Toyota on the other hand implies that the remaining company’s asset would be sufficient enough to meet its long-term obligation to avoid bankruptcy and remain solvent in the long run. However, it shows that the company has relatively declining performance based on its general solvency ratio. Table 3. Liquidity ratios and solvency ratios of Toyota (Computation is on Appendix I) Ratio 2010 2009 2008 2007 Current Ratio 1.22 1.06 1.01 1.00 Quick Ratio 0.98 0.87 0.76 0.75 Working Capital ($ billion) 25.54 7.18 1.45 0.14 General Solvency Ratio 1.51 1.52 1.57 1.57 Working capital efficiency As shown in Table 3, the working capital of Toyota increases over time and the increase was instantaneous from 2007 to 2010. This is basically the case considering that the company has become the leading car provider and manufacturer in the world as shown in Graph 1. It is in this regard that the company has become more willing to invest so as to maintain to be on top and increase its market share. Next to Toyota when it comes to sales for passenger cars and light commercial vehicles is the VW Porsche, followed by the General Motors and finally Ford-Mazda. These are the four leading car manufacturers in the world but Toyota has been on the lead from the year 2006 until present. As it can be observed, the sales started to slow down from the year 2007 until 2009 for Toyota, General Motors and Ford-Mazda. However, VW Porsche remained to increase its sales and started to soar high and has become the second leading car manufacturer in the world at present time outweighing the performance of General Motors and Ford Mazda. Even if decrease in sales has become the general trend for the global sales in the car industry, Toyota still manage to be on top and it is clear that it has eventually managed to maintain a certain level of working capital as shown in Table 3. Even if sales for Toyota have been leading in the market, its return on investment on the other hand momentarily slowed down from 2007 to 2010 as shown in Table 2. Thus, profit could not eventually justify the level or amount of working capital the company has invested. This is a clear indication that as the company begins to grow across the globe; its profit momentarily decreases considering other major economic considerations especially on the global economic recession. The global economic recession has become one of the major concerns why the capital efficiency of Toyota could not actually be justified in the real setting. Its capital efficiency on the other hand can be obviously justified by its ability to have stayed on top of the competition. Graph 1. Global sales (units in millions) for passenger cars and light commercial vehicles (Reed and Simon, 2010). Long-term financial structure The long-term financial structure for Toyota is clear. It wants to promote quality products yet with a minimal amount for costing. The company has enough funds at hand for probable reinvestment. It has remarkable assets on the other hand that are enough to preserve solvency. Toyota tries to work on capital efficiency in line with its corresponding goal to improve profitability. Cost reduction is a key to this goal and this can simply be implemented by creating products in line with the advancement of technology and quality at a significantly lower price (Borowski, 2010). Investors’ perspective Toyota for over a long period of time always relied on their capacity to take advantage of technology. In line with this, the company has continued to increase capital for its investment. Not only that, in order to increase more profit to further justify how efficient is the involvement of capital, Toyota tries to cut cost in its production while providing quality products at the same time. Toyota’s produced cars have remained their assets over a long period of time. However, recently, the widespread rumors about recalls initiated for its products over the world have momentarily weaken the potential of Toyota to brag about the quality of its products (Reed and Simon, 2010). The quality and affordability of its products have long been the company’s assets in the market. Not to mention any other factors such as innovation and other related marketing strategies. This recent issue faced by Toyota has significant impact on its image and may sound not good to hear by those planning to invest in Toyota brands. Customers after hearing the news about quality problem on Toyota products began to spread the rumors and potentially affecting other potential customers. This greatly has an impact on the company’s sales in the long run and may give positive way to other leading car manufacturers in the market such as Ford Mazda, VW Porsche and General Motors. Investors always have alternatives in which company to invest. Recommendation It seems quality cannot be guaranteed by reduction of production cost, which implies further that a cheaper price of a product cannot guarantee much of its quality. This is absolutely presented by the case of Toyota. As a leading car manufacturer in the world, it has substantially focused on the quality and cheaper products while trying to create possibilities through the advancement of technology. Considering that the company relies heavily on its sales in order to continue business operation, it is important to consider that it cannot absolutely stay longer in the competition without creating full acceptance for its products in the market. The very assets of Toyota are its products. However, considering negative feedbacks about its products’ quality lately, the sales of the firm is most likely to go in a downward spiral. The best move of the company so far is to continue its massive recalls for defective products. With this, spreading rumors about the negative publicity of Toyota’s products cannot be stopped. This means that Toyota’s products as of the moment can become one of the least choices among customers and investors. Considering Toyota’s profitability, liquidity and solvency as of the present time, it is unlikely that the firm can stand on this over a long period as far as it relies heavily on sales in order to continue its operation. Thus, it is safe for the meantime to invest in other leading car manufacturers which consistently promote quality over a long period of time. However, time is not mature yet to close doors for Toyota. What the firm just to do now is to clear its name and double its effort to prove further that its products are undeniably its genuine assets. References Borowski, A. (2010) Report on the Toyota Company. Germany: GRIN Verlag. Finance.yahoo.com (2010) ‘Toyota Motor Corp Balance Sheet’. [Online] Available at: http://finance.yahoo.com/q/bs?s=TM&annual (Accessed: 17 Nov. 2010). Finance.yahoo.com (2010) ‘Toyota Motor Corp Cash Flow’. [Online] Available at: http://finance.yahoo.com/q/cf?s=TM+Cash+Flow&annual (Accessed: 17 Nov. 2010). Finance.yahoo.com (2010) ‘Toyota Motor Corp Income Statement’. [Online] Available at: http://finance.yahoo.com/q/is?s=TM+Income+Statement&annual (Accessed: 17 Nov. 2010). Marketwatch.com (2010) ‘Annual Financials for TOYOTA MOTOR CORP: Balance Sheet’. [Online] Available at: http://www.marketwatch.com/investing/stock/TM/financials/balance-sheet (Accessed: 17 Nov. 2010). Marketwatch.com (2010) ‘Annual Financials for TOYOTA MOTOR CORP: Cash Flow’. [Online] Available at: http://www.marketwatch.com/investing/stock/TM/financials/cash-flow (Accessed: 17 Nov. 2010). Marketwatch.com (2010) ‘Annual Financials for TOYOTA MOTOR CORP: Income Statement’. [Online] Available at: http://www.marketwatch.com/investing/stock/TM/financials (Accessed: 17 Nov. 2010). Reed, J. and Simon, B. (2010) ‘Toyota’s long climb comes to an abrupt halt’. [Online] Available at: http://www.ft.com/cms/s/0/2f126b60-12be-11df-9f5f-00144feab49a.html#axzz15c9tXcq0 (Accessed: 17 Nov. 2008). Toyota.com (2010) ‘Consolidated performance highlights’. [Online] Available at: http://www.toyota.co.jp/en/ir/library/annual/pdf/2010/p12.pdf (Accessed: 17 Nov. 2010). Toyota.com (2010) ‘Management Discussion and Analysis of Financial Condition and Results of Operations’. Available at: http://www.toyota.co.jp/en/ir/library/annual/pdf/2010/p36_60.pdf (Accessed: 17 Nov. 2010). Appendix Appendix A. Toyota Balance Sheet (Finance.yahoo.com, 2010) Balance Sheet Get Balance Sheet for: View: Annual Data | Quarterly Data All numbers in thousands Period Ending Mar 31, 2010 Mar 31, 2009 Mar 31, 2008 Assets Current Assets Cash And Cash Equivalents 19,967,000   24,748,000   17,600,000   Short Term Investments 23,394,000   5,472,000   5,412,000   Net Receivables 75,859,000   62,997,000   74,140,000   Inventory 15,222,000   14,776,000   18,222,000   Other Current Assets 5,472,000   6,404,000   5,259,000   Total Current Assets 139,914,000   114,396,000   120,633,000   Long Term Investments 105,241,000   97,746,000   115,514,000   Property Plant and Equipment 71,820,000   74,939,000   77,972,000   Goodwill -   -   -   Intangible Assets -   -   -   Accumulated Amortization -   -   -   Other Assets 7,823,000   7,159,000   9,849,000   Deferred Long Term Asset Charges -   -   -   Total Assets 324,800,000   294,240,000   323,968,000   Liabilities Current Liabilities Accounts Payable 41,159,000   29,274,000   49,225,000   Short/Current Long Term Debt 64,966,000   70,748,000   62,163,000   Other Current Liabilities 8,240,000   7,189,000   7,793,000   Total Current Liabilities 114,364,000   107,212,000   119,181,000   Long Term Debt 75,079,000   63,799,000   59,706,000   Other Liabilities 9,674,000   9,398,000   9,088,000   Deferred Long Term Liability Charges 8,703,000   6,503,000   10,969,000   Minority Interest 6,108,000   5,462,000   6,554,000   Negative Goodwill -   -   -   Total Liabilities 207,822,000   186,912,000   205,498,000   Stockholders' Equity Misc Stocks Options Warrants -   -   -   Redeemable Preferred Stock -   -   -   Preferred Stock -   -   -   Common Stock 4,249,000   4,020,000   3,963,000   Retained Earnings 123,808,000   116,752,000   123,850,000   Treasury Stock (13,489,000) (12,766,000) (11,902,000) Capital Surplus 5,365,000   5,075,000   4,966,000   Other Stockholder Equity (9,063,000) (11,216,000) (2,407,000) Total Stockholder Equity 110,870,000   101,865,000   118,470,000   Net Tangible Assets $110,870,000   $101,865,000   $118,470,000   Appendix B. Toyota Income Statement (Finance.yahoo.com, 2010). Income Statement Get Income Statement for: View: Annual Data | Quarterly Data All numbers in thousands Period Ending Mar 31, 2010 Mar 31, 2009 Mar 31, 2008 Total Revenue 202,814,000   207,852,000   262,394,000   Cost of Revenue 178,551,000   186,856,000   214,795,000   Gross Profit 24,263,000   20,996,000   47,599,000   Operating Expenses Research Development -   -   -   Selling General and Administrative 22,685,000   25,663,000   24,938,000   Non Recurring -   -   -   Others -   -   -   Total Operating Expenses -   -   -   Operating Income or Loss 1,579,000   (4,668,000) 22,661,000   Income from Continuing Operations Total Other Income/Expenses Net 1,898,000   (531,000) 2,125,000   Earnings Before Interest And Taxes 3,477,000   (5,199,000) 24,786,000   Interest Expense 358,000   475,000   460,000   Income Before Tax 3,119,000   (5,674,000) 24,326,000   Income Tax Expense 992,000   (571,000) 9,098,000   Minority Interest (372,000) 246,000   (778,000) Net Income From Continuing Ops 2,242,000   (4,424,000) 17,146,000   Non-recurring Events Discontinued Operations -   -   -   Extraordinary Items -   -   -   Effect Of Accounting Changes -   -   -   Other Items -   -   -   Net Income 2,242,000   (4,424,000) 17,146,000   Preferred Stock And Other Adjustments -   -   -   Net Income Applicable To Common Shares $2,242,000   ($4,424,000) $17,146,000   Appendix C. Annual Financials for TOYOTA MOTOR CORP “Balance Sheet” (Marketwatch.com, 2010) All amounts in millions except per share amounts. 03/2010 (TTM) 03/2009 (TTM) 03/2008 (TTM) 03/2007 (TTM) Assets Cash and Equivalents 24,170.27 25,204.60 16,255.00 16,130.00 Restricted Cash 0.00 0.00 0.00 0.00 Marketable Securities 19,190.55 5,014.94 6,757.00 3,923.00 Accounts Receivable 20,187.00 14,100.93 20,364.00 17,178.00 Loans Receivable 45,050.26 39,398.66 42,930.00 34,261.00 Other Receivable 3,856.80 3,368.65 5,225.00 4,127.00 Receivables 69,094.05 56,868.25 68,519.00 55,566.00 Raw Materials 2,841.32 2,611.11 2,990.00 0.00 Work In Progress 2,132.57 2,548.04 2,395.00 0.00 Purchased Components 0.00 0.00 0.00 0.00 Finished Goods 9,471.37 8,868.38 12,093.00 0.00 Other Inventories 777.05 748.15 744.00 15,312.00 Inventories -Adj Allowances 0.00 0.00 0.00 0.00 Inventories 15,222.31 14,775.68 18,222.00 15,312.00 Prepaid Expenses 5,471.79 6,404.20 5,259.00 4,412.00 Current Deferred Income Taxes 6,765.45 6,128.69 5,621.00 4,681.00 Other Current Assets 0.00 0.00 0.00 0.00 Total Current Assets 139,914.43 114,396.37 120,633.00 100,024.00 Gross Fixed Assets (Plant, Prop. & Equip.) 182,938.23 174,070.46 173,633.00 148,722.00 Accumulated Depreciation & Depletion 111,117.80 99,131.90 95,661.00 80,304.00 Net Fixed Assets 71,820.43 74,938.55 77,972.00 68,418.00 Intangibles 0.00 0.00 0.00 0.00 Cost in Excess 0.00 0.00 0.00 0.00 Non-Current Deferred Income Taxes 0.00 0.00 0.00 0.00 Other Non-Current Assets 113,064.88 104,904.60 125,363.00 108,053.00 Total Non Current Assets 184,885.31 179,843.15 203,335.00 176,471.00 Total Assets 324,799.73 294,239.52 323,968.00 276,495.00 Liabilities Accounts Payable 27,065.01 19,946.23 22,086.00 18,772.00 Notes Payable 0.00 0.00 0.00 0.00 Short Term Debt 58,839.87 63,958.53 62,163.00 49,786.00 Accrued Expenses 0.00 0.00 16,039.00 14,161.00 Accrued Liabilities 18,578.02 15,598.67 0.00 0.00 Deferred Revenues 0.00 0.00 0.00 0.00 Current Deferred Income Taxes 0.00 0.00 0.00 0.00 Other Current Liabilities 9,881.55 7,708.20 18,893.00 17,161.00 Total Current Liabilities 114,364.45 107,211.63 119,181.00 99,880.00 Long Term Debt 75,079.29 63,799.42 59,706.00 53,165.00 Capital Lease Obligations 0.00 0.00 0.00 0.00 Deferred Income Taxes 8,703.14 6,502.92 10,969.00 11,140.00 Other Non-Current Liabilities 9,674.66 9,398.05 9,088.00 6,513.00 Minority Interest 6,107.88 5,462.49 6,554.00 5,333.00 Preferred Securities of Subsidiary Trust 0.00 0.00 0.00 0.00 Preferred Equity outside Stock Equity 0.00 0.00 0.00 0.00 Total Non-Current Liabilities 99,564.96 85,162.87 86,317.00 76,151.00 Total Liabilities 213,929.41 192,374.51 205,498.00 176,031.00 Stockholder's Equity Preferred Stock Equity 0.00 0.00 0.00 0.00 Common Stock Equity 110,870.32 101,865.01 118,470.00 100,465.00 Common Par 0.00 0.00 3,963.00 3,370.00 Additional Paid In Capital 9,614.52 9,094.47 4,966.00 4,224.00 Cumulative Translation Adjustment 0.00 0.00 0.00 0.00 Retained Earnings 123,807.81 116,752.27 123,850.00 99,859.00 Treasury Stock -13,489.14 -12,765.97 -11,902.00 -12,941.00 Other Equity Adjustments -9,062.87 -11,215.76 -2,407.00 5,953.00 Total Equity 110,870.32 101,865.01 118,470.00 100,465.00 Total Capitalization 185,949.61 165,664.43 178,176.00 153,630.00 Total Liabilities & Stock Equity 324,799.73 294,239.52 323,968.00 276,496.00 Additional Data Cash Flow 17,380.40 10,714.11 32,029.00 25,639.00 Working Capital 25,549.98 7,184.73 1,452.00 144.00 Free Cash Flow 10,139.48 -13,040.68 -2,088.00 536.00 Invested Capital 185,949.61 165,664.43 178,176.00 153,630.00 Share Data Shares Outstanding Common Class Only 1,568.00 1,567.94 1,574.64 1,598.97 Preferred Shares 0.00 0.00 0.00 0.00 Total Ordinary Shares 3,136.00 0.00 3,448.00 3,197.94 Total Common Shares Outstanding 1,568.00 1,567.94 1,574.64 1,598.97 Treasury Shares 624.00 0.00 149.36 206.03 Appendix D. Annual Financials for TOYOTA MOTOR CORP “Income Statement” (Marketwatch.com, 2010) All amounts in millions except per share amounts. 03/2010 (TTM) 03/2009 (TTM) 03/2008 (TTM) 03/2007 (TTM) Operating Revenue 202,814.35 207,852.28 262,394.00 202,864.00 Total Revenue 202,814.35 207,852.28 262,394.00 202,864.00 Adjustment to Revenue 0.00 0.00 0.00 0.00 Cost of Sales 163,412.11 171,718.44 199,912.00 151,171.00 Cost of Sales with Depreciation 178,550.91 186,856.33 214,795.00 162,883.00 Gross Margin 39,402.24 36,133.85 62,482.00 51,693.00 Gross Operating Profit 39,402.24 36,133.85 62,482.00 51,693.00 R&D 0.00 0.00 0.00 0.00 SG&A 22,684.72 25,663.47 24,938.00 21,017.00 Advertising 0.00 0.00 0.00 0.00 Operating Profit 1,578.72 -4,667.52 22,661.00 18,964.00 Operating Profit before Depreciation (EBITDA) 16,717.52 10,470.38 37,544.00 30,676.00 Depreciation 15,138.79 15,137.90 14,883.00 11,712.00 Depreciation Unreconciled 0.00 0.00 0.00 0.00 Amortization 0.00 0.00 0.00 0.00 Amortization of Intangibles 0.00 0.00 0.00 0.00 Operating Income After Depreciation 1,578.72 -4,667.52 22,661.00 18,964.00 Interest Income 837.16 1,401.91 1,654.00 1,118.00 Earnings from Equity Interest 0.00 0.00 2,696.00 1,775.00 Other Income, Net 1,546.93 -1,500.77 471.00 518.00 Income Acquired in Process R&D 0.00 0.00 0.00 0.00 Interest Restructuring and M&A 0.00 0.00 0.00 0.00 Other Special Charges 0.00 0.00 0.00 0.00 Total Income Avail for Interest Expense (EBIT) 3,962.81 -4,766.38 27,482.00 22,375.00 Interest Expense 357.54 474.66 460.00 418.00 Income Before Tax (EBT) 3,605.27 -5,241.03 27,022.00 21,957.00 Income Taxes 991.70 -571.45 9,098.00 7,609.00 Minority Interest 371.96 -245.80 778.00 421.00 Preferred Securities of Subsidiary Trust 0.00 0.00 0.00 0.00 Net Income from Continuing Operations 2,241.61 -4,423.78 17,146.00 13,927.00 Net Income from Discontinued Ops. 0.00 0.00 0.00 0.00 Net Income from Total Operations 2,241.61 -4,423.78 17,146.00 13,927.00 Extraordinary Income/Losses 0.00 0.00 0.00 0.00 Income from Cum. Effect of Acct Chg 0.00 0.00 0.00 0.00 Income from Tax Loss Carryforward 0.00 0.00 0.00 0.00 Other Gains (Losses) 0.00 0.00 0.00 0.00 Total Net Income 2,241.61 -4,423.78 17,146.00 13,927.00 Normalized Income 2,241.61 -4,423.78 17,146.00 13,927.00 Net Income Available for Common 2,241.61 -4,423.78 17,146.00 13,927.00 Preferred Dividends 0.00 0.00 0.00 0.00 Excise Taxes 0.00 0.00 0.00 0.00 Per Share Data Basic EPS from Continuing Ops. 1.43 -2.82 5.40 8.68 Basic EPS from Discontinued Ops. 0.00 0.00 0.00 0.00 Basic EPS from Total Operations 1.43 -2.82 5.40 8.68 Basic EPS from Extraordinary Inc. 0.00 0.00 0.00 0.00 Basic EPS from Cum Effect of Accounting Chg 0.00 0.00 0.00 0.00 Basic EPS from Other Gains (Losses) 0.00 0.00 0.00 0.00 Basic EPS Total 1.43 -2.82 5.40 8.68 Basic Normalized Net Income/Share 1.43 -2.82 5.40 8.68 Diluted EPS from Continuing Ops. 1.43 -2.82 5.39 8.68 Diluted EPS from Discontinued Ops. 0.00 0.00 0.00 0.00 Diluted EPS from Total Operations 1.43 -2.82 5.39 8.68 Diluted EPS from Extraordinary Inc. 0.00 0.00 0.00 0.00 Diluted EPS from Cum Effect of Accounting Chg 0.00 0.00 0.00 0.00 Diluted EPS from Other Gains (Losses) 0.00 0.00 0.00 0.00 Diluted EPS Total 1.43 -2.82 5.39 8.68 Diluted Normalized Net Income/Share 1.43 -2.82 5.39 8.68 Dividends Paid per Share 0.00 1.98 2.16 0.00 Additional Data Basic Weighted Shares Outstanding 1,567.99 1,570.07 1,574.64 1,605.21 Diluted Weighted Shares Outstanding 1,568.00 1,570.07 1,574.64 1,606.12 Appendix E. Toyota Statement of Cash Flow (Finance.yahoo.com, 2010) Cash Flow Get Cash Flow for: View: Annual Data | Quarterly Data All numbers in thousands Period Ending Mar 31, 2010 Mar 31, 2009 Mar 31, 2008 Net Income 2,242,000   (4,424,000) 17,146,000   Operating Activities, Cash Flows Provided By or Used In Depreciation 15,139,000   15,138,000   14,883,000   Adjustments To Net Income 1,408,000   2,919,000   146,000   Changes In Accounts Receivables (6,172,000) 8,013,000   (2,064,000) Changes In Liabilities 10,325,000   (11,452,000) 1,508,000   Changes In Inventories 600,000   1,948,000   (1,497,000) Changes In Other Operating Activities 3,468,000   3,056,000   (362,000) Total Cash Flow From Operating Activities 27,382,000   14,953,000   29,760,000   Investing Activities, Cash Flows Provided By or Used In Capital Expenditures (15,385,000) (23,538,000) (27,548,000) Investments (20,656,000) 5,250,000   (15,509,000) Other Cash flows from Investing Activities 5,539,000   5,833,000   4,382,000   Total Cash Flows From Investing Activities (30,503,000) (12,455,000) (38,675,000) Financing Activities, Cash Flows Provided By or Used In Dividends Paid (1,846,000) (4,455,000) (4,300,000) Sale Purchase of Stock (110,000) (715,000) (3,111,000) Net Borrowings (1,019,000) 12,245,000   14,459,000   Other Cash Flows from Financing Activities -   -   -   Total Cash Flows From Financing Activities (2,975,000) 7,075,000   7,048,000   Effect Of Exchange Rate Changes (95,000) (1,314,000) (846,000) Change In Cash and Cash Equivalents ($6,192,000) $8,259,000   ($2,713,000) Appendix F. Annual Financials for TOYOTA MOTOR CORP “Cash Flow” (Marketwatch.com, 2010) All amounts in millions except per share amounts. 03/2010 (TTM) 03/2009 (TTM) 03/2008 (TTM) 03/2007 (TTM) Operating Activities Net Income (Loss) 2,613.57 -4,669.59 17,146.00 13,927.00 Depreciation 15,138.79 15,137.90 14,883.00 11,712.00 Amortization 0.00 0.00 0.00 0.00 Amortization of Intangibles 0.00 0.00 0.00 0.00 Deferred Income Taxes 273.30 -1,974.18 813.00 1,121.00 Operating (Gains) Losses 29.78 50.62 -1,351.00 -1,159.00 Extraordinary (Gains) Losses 0.00 0.00 0.00 0.00 (Increase) Decrease in Receivables 0.00 0.00 -2,064.00 -1,803.00 (Increase) Decrease in Inventories 599.95 1,947.75 -1,497.00 -1,133.00 (Increase) Decrease in Prepaid Expenses 0.00 0.00 0.00 0.00 (Increase) Decrease in Other Current Assets 1,043.39 100.47 -826.00 -921.00 (Increase) Decrease in Payables 6,947.92 -8,478.30 621.00 883.00 (Increase) Decrease in Other Curr Liabs. 3,377.01 -2,973.44 887.00 2,869.00 (Increase) Decrease in Other Working Capital 2,424.70 2,955.28 464.00 1,326.00 Other Non-Cash Items -5,066.89 12,856.47 684.00 609.00 Net Cash from Continuing Operations 27,381.53 14,952.97 29,760.00 27,431.00 Net Cash from Discontinued Operations 0.00 0.00 0.00 0.00 Net Cash from Operating Activities 27,381.53 14,952.97 29,760.00 27,431.00 Investing Activities Sale of Property, Plant, Equipment 5,539.01 5,833.10 4,426.00 3,595.00 Sale of Long Term Investments 11,865.81 16,317.04 0.00 0.00 Sale of Short Term Investments 0.00 0.00 9,856.00 6,989.00 Purchase of Property, Plant, Equipment -15,385.28 -23,538.49 -27,548.00 -24,022.00 Acquisitions -10.92 -0.46 0.00 0.00 Purchase of Long Term Investments -112,969.15 -93,633.10 -789.00 -449.00 Purchase of Short Term Investments 0.00 0.00 -11,495.00 -9,049.00 Other Investing Changes Net 80,457.71 82,566.51 -13,125.00 -9,376.00 Cash from Disc. Investing Activities 0.00 0.00 0.00 0.00 Net Cash from Investing Activities -30,502.83 -12,455.40 -38,675.00 -32,312.00 Financing Activities Issuance of Debt 34,014.45 39,622.32 37,515.00 27,475.00 Issuance of Capital Stock 0.00 0.00 0.00 0.00 Repayment of Debt -35,033.87 -27,377.52 -23,056.00 -14,628.00 Repurchase of Capital Stock -109.71 -714.66 -3,111.00 -2,505.00 Payment of Cash Dividends -1,845.85 -4,454.70 -4,300.00 -2,873.00 Other Financing Charges, Net 0.00 0.00 0.00 0.00 Cash from Disc. Financing Activities 0.00 0.00 0.00 0.00 Net Cash from Financing Activities -2,974.98 7,075.44 7,048.00 7,469.00 Effect of Exchange Rate Changes -95.23 -1,314.09 -846.00 216.00 Net Change in Cash & Cash Equivalents -6,191.50 8,258.91 -2,713.00 2,804.00 Cash at Beginning of Period 26,158.82 16,488.28 18,968.00 13,294.00 Cash at End of Period 19,967.32 24,747.19 16,255.00 16,098.00 Appendix G. Margin Ratios of Toyota Gross Profit Margin = Gross Profit/Net Sales *Net sales = gross revenue – cost of good sold – Discount - Return *All information on how to compute for gross profit margin can be found in company’s income statement. For 2010 39,402,240/24,263,440 = 1.62 For 2009 36,133,850/20,995,950 = 1.72 For 2008 62,428,000/47,599,000 = 1.31 For 2007 51,693,000/39,981,000 = 1.29 Operating Profit Margin = EBIT/Net Sales *All information on how to compute for operating profit margin can be found in company’s income statement For 2010 3,962,810/24,263,440 = 0.16 For 2009 -4,766,380/20,995,950 = - 0.22 For 2008 27,482,000/47,599,000 = 0.58 For 2007 22,375,000/39,981,000 = 0.56 Net Profit Margin = Net Income/Net Sales *All information on how to compute for operating profit margin can be found in company’s income statement For 2010 2,241,610/24,263,440 = 0.09 For 2009 -4,423,780/20,995,950 = 0.21 For 2008 17,146,000/47,599,000 = 0.36 For 2007 13,927,000/39,981,000 = 0.35 Cash Flow Margin = Cash flow from operating cash flows/Net sales *Cash flow from operating cash flows can be found in the firm’s statement of Cash flow *Net sales can be found in the firm’s statement of income For 2010 27,382,000/24,263,440 = 1.12 For 2009 14,953,000/20,995,950 = 0.71 For 2008 29,760,000/47,599,000 = 0.63 Appendix H. Returns Ratios of Toyota Return on Asset/Investment = Net Income/Total Assets *Information on net income is taken from the income statement and information on total assets is taken from the balance sheet. For 2010 2,241,610/324,799,730 = 0.006 For 2009 -4,423,780/294,239,520 = 0.015 For 2008 17,146,000/323,968,000 = 0.052 For 2007 13,927,000/276,495,000 = 0.050 Return on Equity = Net Income/Stockholder’s Equity * Information on net income is taken from the income statement and information on stockholder’s equity is taken from the balance sheet. For 2010 2,241,610/110,870,320 = 0.020 For 2009 -4,423,780/101,865,010 = -0.043 For 2008 17,146,000/118,470,000 = 0.144 For 2007 13,927,000/100,465,000 = 0.138 Cash Return on Asset = Cash flow from operating activities/Total assets * Information on cash flow from operating activities is taken from the statement of cash flows and information on total assets is taken from the balance sheet. For 2010 27,381,530/324,799,730 = 0.084 For 2009 14,952,970/294,239,520 = 0.050 For 2008 29,760,000/323,968,000 = 0.092 For 2007 27,431,000/276,495,000 = 0.099 Appendix I. Liquidity ratios and solvency ratios of Toyota Current ratio = Total current assets/Total current liabilities For 2010 139,914,430/114,364,450 = 1.22 For 2009 114,396,370/107,211,630 = 1.06 For 2008 120,633,000/119,181,000 = 1.01 For 2007 100,024,000/99,880,000 = 1.00 Quick ratio = (Cash + Government securities + receivables)/Total current liabilities For 2010 112,454,820/114,364,450 = 0.98 For 2009 87,087,790/107,211,630 = 0.87 For 2008 91,531,000/119,181,000 = 0.76 For 2007 75,619,000/99,880,000 = 0.75 Working capital = Total current assets – Total current liabilities For 2010 139,914,430 – 114,364,450 = 25,549,980 For 2009 114,396,370 – 107,211,630 = 7,184,740 For 2008 120,633,000 – 119,181,000 = 1,452,000 For 2007 100,024,000 – 99,880,000 = 144,000 General solvency ratio = Total assets/Total liabilities For 2010 324,799,730/213,929,410 = 1.51 For 2009 294,239,520/192,374,510 = 1.52 For 2008 323,968,000/205,498,000 = 1.57 For 2007 276,495,000/176,031,000 = 1.57 Read More