Toyota Motor Corporation Performance - Essay Example

Some of the car brands manufactured by Toyota Corporation are Toyota Avalon, Toyota land cruiser, and Toyota mark X, Toyota Lexus amongst many more (Toyota 12). The company is in a stiffly competitive industry. Some of Toyota's competitors are general motors, Ford motors company, Nissan motors, Honda motor company, and Volkswagen AG just to mention but a few. The financial statements in the year 2010 have shown a declining performance in Toyota performance.

This has been attributed to the economic conditions in Japan, the US, Europe, and other parts of the world. Despite the economic downturn, the management of Toyota is still geared at ensuring customer satisfaction by putting first the interest of the customers and at the same time looking at the demands and expectations of society by remaining socially responsible to all stakeholders. The company has undergone major restructuring to correct the disturbing performance. The company has also planned to manufacture reliable and cheap car models that are environmentally compliant to gain market power.

According to the financial report of 2010, the company 2010 total assets amounted to $326196 million while the total liability for this year was  208715 million dollars. The net stockholder's equity was $117481 million (Toyota 63). These values are adverse compared to the 2009 financial performance. For instance, the total asset in 2009 was 29062037 million yen. The revenue for 2010 as per the income statement was $190507 million and the net profits attributed to the corporation were $ 2251 million (Toyota 62).

The basic earnings per share for this particular period was $ 0.72 a value equivalent to the diluted EPS. It must be noted that these profit values are an improvement when compared to the year 2009 when the company incurred a net loss in its income statement. The improved result is attributed to the reduction in the cost of manufacturing and operation as championed by the management. The management discussion and analysis of the financial statements reveal a major shift in the demand for vehicle models.

Consumers are shifting towards quality, low-fuel consumption cars that are cheap and reliable. The company was therefore faced with a reduction in the number of vehicles sold and has therefore invested heavily in research and development to ensure their products remain relevant. In the analysis, the management identifies the economic recession as a major cause of the adverse impact on the business performance as consumers are aiming at minimizing costs to reduce their cost of living. Commodity price risk, foreign exchange fluctuations, and interest rate risk has adversely influenced the performance of the business (Toyota 60).

The management has also noted equity price fluctuation as another risk component. To mitigate the impact of the foreign risk in the transaction and translation of the consolidated statements, Toyota has relied on the derivative market. As per the management, the financial performance posted by the company was not the best. The decline in the automotive segment performance, financial services performance, and the other segments all make the performance not satisfactory.

The management is however optimistic that the future business prospects will be attractive with the prioritization of the customer's taste and the expected restoration of the economic conditions. Price Waterhouse Coopers audited the financial statements and issued an unqualified report on the financial statements (Toyota 100). The financial statements were prepared in all material respect in accordance with the generally accepted accounting standards and the internal controls could also be relied upon.

Investment in Toyota remains an attractive area irrespective of the fierce competition from its competitors because of its diversified portfolio. If management formulates well strategies and adheres to market demands, then the investment would be worth it.