Financial Statement of Toyota Motor Corporation and Greenergy International Limited - Assignment Example

Number Subject Name Lecturer’s Name Financial statement analysis Due date Date Submitted Financial statement analysis Introduction The paper aims to give a report of comparison of the financial statement of Toyota Motor Corporation and Greenergy International limited. Toyota Motor Corporation is a leading company in designing and manufacturing automotives in the world while Greenergy supplies fuel. Further the report will provide the main differences in presentation and format. Accounting ratios, historical financial information and financial information of similar companies in the same industry will be used to do the comparison. Secondary sources of data such as company’s financial reports and journals will provide essential information. Further, online research will be done whereby data on the company website will be evaluated. First section will be focused on financial statements of Toyota Motor Company and Greenergy International limited. Object of this section will be the main differences in these statement’s presentation and format. The second part will give an analysis of the financial performance of the two companies. In these two companies financial information is significant for customers, investors, investors, management and shareholder among other to make the decision published financial statements. To make sure that financial information is accurate and gives the fair value of the firm, it is audited (Clor-Proell & Maines, 2014). The two companies use accountings standards, principles and procedures that are recommended to ensure that the information is easily understood (Wang, 2014). Task 1 Comparison of the published financial statements for two different limited companies studied, identifying and explaining the main differences in their presentation and format. Inferring from the company law all of the business has to be registered in the Companies House in the UK or in Fair Business Bureau (FBB) in the USA. Every registered company in the UK and USA is entrusted with the task of preparing financial statement every accounting period. The information should give a clear picture of the entity. As explained by “Companies Act 2006” financial account and annual records are considered to be trustworthy financial information sources, because the board of directors has to approve them. Financial statements of the two companies consist of the statement of financial position, profit and loss account Director’s report, auditor’s report and cash flow. These statements give an account of business performance, adaptability and position. In case of any accounting, malpractices are discovered the organization can be prosecuted and panelized for misleading the shareholders. Toyota and Greenergy companies’ financial information will be compared where the format and method of presentation will be put into consideration. Greenergy Toyota CURRENCY Pounds sterling American dollars Presentation is each set of statements Well-designed, and easy to understand to attract investors Very detailed, Promoting the brand MAIN INCOME Distribution of fuel Selling products SECTOR Fuel industry Automotive industry VALUE OF BUSINESS £1263 Millions $318 Billions STAKEHOLDERS customers, Investors, employees, banks Investors, suppliers, Employees, banks Source :( Forbes, 2014) The figures of Greenergy Company are done in sterling pound while those of Toyota Company are calculated using American dollars. Greenergy financial statements are well designed (Greenergy International Ltd financial report, 2015). Toyota Company provides detailed financial information. However, this plays a crucial role in showing how the brand is globally recognized thus convincing more customers and investors to join them. Greenergy Company is focused on fuel industry while Toyota is a designer as well as a manufacture of Toyota-branded products. Both companies have listed their share the stock exchange market. Both companies of the financial statements are user-friendly because they provide clear content that permits stakeholders to find information quickly. Task 2 Analysis of financial performance of Toyota Company The following table gives important financial information of Toyota Company. The financial information of current year is compared with that of previous years. The financial figures of Toyota company from 2012 to 2015 Units in US dollars 2012 2013 2014 2015 revenue 154,430.2 226,318.9 213,499.8 226,318.9 Gross profit 18,241.2 28,446.8 40,642.3 44,814.5 Total expenses 15,285.9 16,722.3 21,594.9 21,957.4 Total assets 265948.3 273985 311257.4 318564.7 Total liabilities 265948.3 273985 311257.4 318564.7 Net income 2,356.4 7,995.6 15,150.1 18,060.4 Currency in Millions of US Dollars Mar 31 2012 USD Mar 31 2013 USD Mar 31 2014 USD Mar 31 2015 USD 4 Year Trend Revenues 145,524.0 173,796.6 202,038.1 212,842.7 TOTAL REVENUES 154,430.2 226,318.9 213,499.8 226,318.9 Cost of Goods Sold 131,264.1 149,667.8 166,102.3 173,815.0 GROSS PROFIT 18,241.2 28,446.8 40,642.3 44,814.5 Selling General & Admin Expenses, Total 15,285.9 16,722.3 21,594.9 21,957.4 OTHER OPERATING EXPENSES, TOTAL 15,285.9 16,722.3 21,594.9 21,957.4 OPERATING INCOME 2,955.3 11,724.5 19,047.5 22,857.2 Interest Expense -190.5 -190.9 -163.1 -190.1 Interest and Investment Income 829.9 820.0 959.1 1,222.6 NET INTEREST EXPENSE 639.4 629.1 795.9 1,032.5 Income (Loss) on Equity Investments 1,642.9 1,923.9 2,645.7 2,564.0 Currency Exchange Gains (Loss) 308.3 46.1 417.7 732.4 Other Non-Operating Income (Expenses) 141.5 30.0 75.8 -561.3 EBT, EXCLUDING UNUSUAL ITEMS 5,687.4 14,353.6 22,982.6 26,624.8 Gain (Loss) on Sale of Investments -447.3 -17.5 -51.5 -21.4 Other Unusual Items, Total -- -747.9 -- -- Legal Settlements -- -747.9 -- -- EBT, INCLUDING UNUSUAL ITEMS 5,240.1 13,588.2 22,931.1 26,603.4 Income Tax Expense 2,179.5 4,584.5 6,380.5 7,424.7 Minority Interest in Earnings -704.2 -1,008.2 -1,400.5 -1,118.2 Earnings from Continuing Operations 3,060.6 9,003.7 16,550.6 19,178.7 NET INCOME 2,356.4 7,995.6 15,150.1 18,060.4 NET INCOME TO COMMON INCLUDING EXTRA ITEMS 2,356.4 7,995.6 15,150.1 18,060.4 NET INCOME TO COMMON EXCLUDING EXTRA ITEMS 2,356.4 7,995.6 15,150.1 18,060.4 Source: Toyota Motor Corporation (2015) Over the last four years the company has observed increase in revenue. Its total revenue has increased from $154,430.2 in 2012 to $2263118.9 in the year 2015. However, despite increase in cost of goods and expenses, the company’s profit has been increasing. In 2012 the company had a gross profit of $18,241.2 million, which has increased to $44,814.5 million in 2015. This shows that the company management over the last four years has been able to balance the expense incurred in generating revenue. Further, the company has been expanding thus increasing its market share. Its marketing strategies have been prudent and are aimed to counter attack its main competitors. The company has a competitive advantage over it competitors’ because its brand is famous all over the world (Jingguo, Gupta and Rao, 2015). Additionally, it is products are unique thus making it difficult for competitors to duplicate. The company has been avoiding unnecessary expenses. The company non operating income expense have been decreasing for instance in 2012 $141.5 million and in 2013 they declined to $30 million. Over the years the company has been growing. A good indication is increase in the value of the assets. Financial ratios give management of Toyota motor Company an essential tool to understand the financial trend as well as performance over time. The company is able to use them to pinpoint weakness and strength, thus placing them in a good position to formulate strategies to improve. Financial ratios will be used to compare the financial performance of Toyota motor company in 2013 and 2014. 2014 2013 Current ratio 1.21 1.12 Quick ratio 0.87 0.86 Cash flow ratio 0.67 0.73 Gross profit margin ratio (in percentages ) 62.31% 59.87% The current ratio shows that Toyota motor company has increased its ability to meet short-term obligations using it short term assets. This is indicated by the increases of the current ratio from 1.12 to 1.2. The company does not have any liquidity issues. It has invested the necessary cash in the business, it is not too much or little. The company observed a slight decrease in its quick ratio. The company experienced an increase in the gross profit margin. The primary causes are rise in sales as well as decline in cost of sales. Company General motor company (2014) Toyota motors corporation (2014) Current ratio 1.34 1.21 Quick ratio 0.87 0.87 Cash flow ratio 0.56 0.67 Gross profit margin ratio 54% 62.31% Toyota Motors Corporation has a better liquidity ratio compared to the general motor company. The profitability of Toyota Motors Corporation is higher. This indicates that it is making more sales, and its cost of sales is less. Further the company has a better cash flow ratio that is 0.67 compared to General motors company that has 0.56. Toyota motor corporation has been observing a growth over the years. Conclusion Toyota Motor Corporation and Greenergy International limited provide accurate and reliable information. Their financial reports are reliable because they follow the accounting procedures, standards and principles. Every company has different way of presenting its financial statement.. The information is provided consistently making it significant for comparison. Further, it gives the companies broad trends as well as weaknesses and strength. Bibliography Clor-Proell, S, & Maines, L 2014, 'The Impact Of Recognition Versus Disclosure On Financial Information: A Preparer's Perspective', Journal Of Accounting Research, 52, 3, Pp. 671- 701, Business Source Complete, EBSCOhost, Viewed 9 September 2015. 'Greenergy International Ltd' 2015, Greenergy International Ltd Marketing Company Profile, Pp. 1-16, Business Source Complete, EBSCOhost, Viewed 9 September 2015. Jingguo, W, Gupta, M, & Rao, H 2015, 'INSIDER THREATS IN A FINANCIAL INSTITUTION: ANALYSIS OF ATTACK-PRONENESS OF INFORMATION SYSTEMS APPLICATIONS', MIS Quarterly, 39, 1, Pp. 91-A7, Business Source Complete, EBSCOhost, Viewed 9 September 2015. 'Toyota Motor Corporation' 2015, Toyota Motor Corporation Marketing Company Profile, Pp. 1- 35, Business Source Complete, EBSCOhost, Viewed 9 September 2015. Wang, C 2014, 'Accounting Standards Harmonization And Financial Statement Comparability: Evidence From Transnational Information Transfer', Journal Of Accounting Research, 52, 4, Pp. 955-992, Business Source Complete, EBSCOhost, Viewed 9 September 2015. Read More

 

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