Comparative Analysis of Ford and Toyota

5/28/2018 Comparative Analysis of Ford and Toyota

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COMPARATIVE ANALYSIS: FORD MOTOR COMPANY AND TOYOTA

MOTOR CORPORATION

COMPILED BY:

Shadman Tauheed

051

MBA (2013-2015)

SEC B


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Acknowledgement

This satisfaction and euphoria that accompany the successful completion of any task that would be

incomplete without mentioning the name of the people whose constant guidance and encouragement

has crowned all our efforts and success.

Firstly, we would like to thank Ms. Teena Bagga who has through her vast experience and knowledge

has been able to guide us, both ably and successfully toward the completion of the term paper for

information and technology for managers project.

It is my growing feeling to place on record my best regards, deepest sense of gratitude to all those

who have helped us by imparting the judicious and precious guidance which were extremely valuable

for our study both theoretically and practically.

28th October 2013

Shadman Tauheed (B-51)


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FORD

Henry Ford designed his first moving assembly line in 1913 Wheels for the world-the motto behind popularization of cars Each section of the production process was divided into component parts Combination of precision, continuity, and fast-paced brought the worldmass production In Highland Park, Model T production reached record levels, every day a car came off the

assembly line every ten seconds

The fourth-largest automotive company in the world in terms of sales Sells cars on 6 continents Car Brands: Ford, Mercury, Lincoln and Volvo

in March of 2010 confirmation of sale of Geely Automobile Holdings Ltd) Since the mid-90s Ford continually loses significance in the American market Over the same period steadily increases its share in the European market Reasons for the gap between the development of the brand in the U.S. and Europe:

high labor costs in the U.S. high expenditure on healthcare in the U.S. strong trade unions in the U.S. (high pension commitments) strong economic growth in lower combustion cars


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FORD: More Economic

Dominance of large cars: SUVs, Pick ups Rapid fluctuations in oil prices and legislators striving to reduce consumption of materials led

to reorganization

Restructuring of the three production lines for production of more economic models in Europe(Mondeo, Focus etc.)

in short-run minimization of costs Ultimately, Ford intends to make engines in all their models to be more economical In 2009 to market were introduced four hybrid models based on technology leased from

Toyota

FORD: Hybrid Technology

Currently, Ford has four hybrid models Ford Focus Hybrid is a direct threat to so far the most popular Prius (hybrid line of

Toyota)

In 2010, the company plans to spend an additional $450 million to develop electric motors By 2012, Ford wants to produce own hybrid technology and plug-ins

Ford has invested more than $550 million in restructuring its manufacturing facility inMichigan

What if the market chooses a different path?


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FORD: One Ford

Despite the very large amount of cars produced, so far Ford has derives small economies ofscale by applying a separate, independent technologies and models for European, US and

developing markets

One Ford changed approach Ford moves the emphasis to universal models for use in different regions of the world

(the first "world car"-new Ford Fiesta)


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FORD: Wrong Sales Model

From the 90s Ford has created demand sales on installments without interest charged discounts promotions combined with a loan

Ford exceptionally strong suffered from a crisis on a real estate market in recent years, sales in the U.S. were strongly associated with the property market it is estimated that in California, 30% of car purchases has been financed with a

mortgage

Feeling the effects of this approach, Ford began to change strategy less emphasis on creating demand emphasis on quality and safety

FORD: Developing Markets

Ford is mainly engaged in the American market,which slowly begins to lose its attractiveness

Fords task now is to develop a universal line for use in every country (European Ford Fiestain the U.S., Ford Transit Van in Asia)

Whether european car models will be appealing to clients in India or Brazil depends the futureof Ford in the long term.


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Risk Factors

Ford is exposed to various kinds of risk not only to the market risk currency risk, commodity price changes, interest rate risk,

financing risk, risk of extraordinary events are just some of the most important kinds ofrisk present

risk of loss of liquidity: hedge against it by sale of receivables (securitization), issue ofdebt and bank loans

insurable risks: the loss (damage) of property, civil liabilitycompanies insurethemselves privately

they use derivatives to hedgecurrency, interest rate or changein commodity prices riskby forwards, swaps, options

does not use derivative to speculate


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TOYOTA

Toyota's history began at the end of XIX century Sakichi Toyoda invented Japan's first power loom which revolutionized the countrys textile

industry

Two years later, he founded the company Toyoda Automatic Loom Works ToyodaSakichis son, Kiichiro Toyoda invested 100,000 pounds in the creation of Toyota

Motor Corporation in 1937 (TMC)

Sakichi Toyoda received this money for selling the patent rights to an automatic loom The biggest carmaker in the world in 2009 (more than 7.5 million cars) Main markets are Japan and North America, but recently we can see a strong growth in Asian

and South American markets

Toyota has three brands: Toyota, Lexus and Scion

TOYOTA: hybrid technology

Toyota as one of the first ones started a hybrid cars production line (including leasing itstechnology to Ford)

At present, hybrid Toyota - Prius line, represents approximately 73% of all hybrid vehiclessold in the U.S.

So far in the U.S. Toyota sold the 1,000,000+ hybrid cars In addition, Toyota announced its intention to manufacture electric cars with lithium-ion

batteries Toyota Plug-HV


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TOTOTA: withdrawal of models

Several serious flaws in the models has significantly hurt Toyotas image in 2009, the company had to withdraw from the market 3.8 million vehicles due to the

acceleration system flaw

In the short term: it is estimated that due to defects and withdrawals Toyota models suffered losses of $ 3

billion in 2010

over the past year, throughout the world over 9 million vehicles have been withdrawn for consideration more than 30 lawsuits are waiting

In the long term: current crisis has significantly hurt the reputation of the company competition has used well (Chrystler, Ford and Honda hasorganized the promotions,

giving discount on a new car for customers who got rid of the old Toyota)

TOYOTA: the future

Car Sales in highly developed countries will fall and remain at low levels majority of consumers demand is already satisfied relatively low economic growth

The biggest outlays directed on emerging marketsmainly Brazil, Russia, India, China (BRIC) countries

Toyota earlier than other companies in the sector began to invest in the development ofappropriate infrastructure and brand awareness in the above countries

in 2009 Toyota announced the beginning of motor vehicle production in India (thecompany Toyota Kirloskar)

in 2010 Toyota plans to produce 100,000 cars in the new factory opened in India


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TOYOTA: Trends and Expectations

Japan investing in luxury brands (Lexus)

in 1990 10% of Japan's population was over 65 years, in 2006, the numbersuppose to double

older society saves more and raises the demand for more luxury goods USA

collapse of the real estate market strength of real estate market has always been related to car market because

consumers often fund the purchase of car with a mortgage owed

stagnation in credit market will reduce demand for new cars demand for green technologies

oil prices are rising, resulting in increased demand for cars Hybrid (Prius model) in December of 2007. U.S. government passed a law requiring the car

manufacturers to reduce the combustion of up to 35 mpg for cars, trucks and

SUVsToyota,typically produces small, economical cars and its standards are already satisfy

new requirements

hybrid legislation USA introduces new law to encourage development of hybrid

technologies

at present, when buying a car you can count on the hybridtax relief of up to $ 3,400, depending on the amount of car sales (the more cars

the company sells the smaller the deduction )the aim is to support companiesdesiring to enter the market with hybrid technology

World Market demand for cars will depend on the trend in oil, steel and aluminum prices


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Risk factors

Toyota is exposed to risks arising from: changes in exchange rates interest rates availability of materials changes in prices of materials

Instruments used to protect: forward contracts currency and interest rate options swaps

Unfortunately, Toyota does not protect itself from price changes and changes in supply ofmaterials

only protection is to maintain reserves of some materials Toyota settles its invoices in Japanese yen which increases its currency risk Changes in exchange rates reflect very strongly on company results

change in the dollar-yen exchange rate of 1% will change revenues by about $42million

Toyota protect itself from risk with the help of swaps and futures Despite this, the company is unable to protect itself from a falling demand for exports of

Japanese cars due to a change in exchange rates


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SWOT analysis

FORD

TOYOTA

TOYOTA

Strengths

Hybrid technology

Well-known brand in the USA

Weaknesses:

Weak sales results

Inability to accommodate products

to changes on the market

Opportunities:

Promotion of ecology-friendly cars

Appeal of a national brand in crisis

Threaths:

Further evolution of the crisis

Strengths

Hybrid technology

Ability to cope in crisis

Weaknesses:

Lack of protection against changes

in prices and demand

Opportunities:

Promotion of economical and

ecology-friendly cards

In crisis, lesser importance of

competitors

Threaths:

Rapid increase of material costs or

decrease in supply


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Ratio analysis of Ford Motor Company

Financial2003-12 2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 TT

Revenue USD Mil 164,196 171,652 177,089 160,123 172,455 146,277 118,308 128,954 136,264 134,252 142,50

Gross Margin % 20.9 20.9 18.2 7.0 16.9 11.8 15.5 19.0 16.8 16.1 15

Operating Income USD Mil 8,116 10,681 7,493 -7,926 8,031 -4,130 -2,824 6,658 6,943 6,291 6,09

Operating Margin % 4.9 6.2 4.2 -4.9 4.7 -2.8 -2.4 5.2 5.1 4.7 4

Net Income USD Mil 495 3,487 2,024 -12,613 -2,723 -14,672 2,717 6,561 20,213 5,665 6,07

Earnings Per Share USD 0.27 1.73 1.05 -6.72 -1.38 -6.46 0.86 1.66 4.94 1.42 1.5

Dividends USD 0.40 0.40 0.40 0.25 0.20 0.3

Payout Ratio % 80.0 22.2 35.1 14.2 19.

Shares Mil 1,832 1,830 1,846 1,879 1,979 2,273 2,992 4,178 4,111 4,015 4,00

Book Value Per Share USD 6.62 8.77 7.24 -1.83 2.67 -6.98 -2.34 -0.18 3.94 4.04 4.8

Operating Cash Flow USD Mil 20,195 24,514 21,679 9,611 17,098 -179 16,042 11,477 9,784 9,045 9,35

Cap Spending USD Mil -7,749 -9,237 -7,517 -6,848 -6,022 -6,696 -4,561 -4,092 -4,293 -5,488 -6,28

Free Cash Flow USD Mil 12,446 15,277 14,162 2,763 11,076 -6,875 11,481 7,385 5,491 3,557 3,07

Free Cash Flow Per Share USD 6.79 8.35 7.67 1.47 5.60 -3.02 3.84 1.77 1.34 0.89

Working Capital USD Mil 89,880 157,480 104,352 102,615 101,403 36,806 99,358 81,737 82,690 74,816


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Margins % of Sales 2003-12 2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12

Revenue 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 10

COGS 79.06 79.15 81.85 92.97 83.07 88.17 84.54 81.00 83.18 83.86 8

Gross Margin 20.94 20.85 18.15 7.03 16.93 11.83 15.46 19.00 16.82 16.14

SG&A 10.65 14.63 13.92 11.98 12.28 14.65 11.21 9.24 8.50 9.07

R&D

Other 5.35 6.64 4.60 3.23 2.38

Operating Margin 4.94 6.22 4.23 -4.95 4.66 -2.82 -2.39 5.16 5.10 4.69

Net IntInc& Other -4.11 -3.40 -3.10 -4.45 -6.83 -7.02 4.94 0.38 1.28 1.06

EBT Margin 0.83 2.83 1.13 -9.40 -2.17 -9.85 2.56 5.54 6.37 5.75

Profitability 2003-12 2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12

Tax Rate % 9.85 19.31 2.28 8.28 26.63 2

Net Margin % 0.30 1.94 1.14 -7.88 -1.58 -10.03 2.30 5.09 14.83 4.22

Asset Turnover (Average) 0.54 0.56 0.63 0.58 0.62 0.59 0.57 0.72 0.79 0.73

Return on Assets % 0.16 1.10 0.72 -4.60 -0.98 -5.90 1.32 3.65 11.78 3.07

Financial Leverage (Average) 27.12 18.24 20.80 49.62 11.87 11.95

Return on Equity % 5.74 24.08 13.96 -265.76 -251.78 281.62 36.58 3

Return on Invested Capital % -3.31 -1.35 -2.05 -10.92 -5.76 16.24 2.42

Interest Coverage 16.20


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2003-12 2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 Latest Q

Revenue %

Year over Year 0.47 4.54 3.17 -9.58 7.70 -15.18 -19.12 9.00 5.67 -1.48 14.7

3-Year Average -1.16 1.86 2.71 -0.83 0.16 -6.17 -9.60 -9.23 -2.34 4.30

5-Year Average 2.60 1.09 0.81 -0.28 1.08 -2.28 -7.17 -6.15 -3.18 -4.89

10-Year Average 4.23 2.94 2.59 0.86 1.16 0.13 -3.13 -2.73 -1.74 -1.95

Operating Income %

Year over Year -17.66 31.60 -29.85 4.28 -9.39 -3.9

3-Year Average -22.91 -8.74 -9.07 -6.06

5-Year Average -13.76 -10.49 -15.81 -4.01 -2.34 -4.77

10-Year Average -2.64 -4.00 -7.37 -8.78 -9.32 -4.39

Net Income %

Year over Year 604.44 -41.96 141.48 208.08 -71.97

3-Year Average -47.73 27.75

5-Year Average -53.21 -13.59 -10.21 -4.87 26.52

10-Year Average -15.05 -4.11 -6.90 -9.33 6.59

EPS %

Year over Year 540.74 -39.31 93.02 197.59 -71.26 15.3

3-Year Average -51.04 18.19

5-Year Average -52.62 -14.24 -14.51 -13.05 9.59

10-Year Average -18.55 -4.79 -6.78 -13.65 -3.21


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Liquidity/Financial Health 2003-12 2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 Latest Q

Current Ratio 2.09 3.99 2.09 2.28 2.32 1.33 2.96 2.67 2.64 2.11 1.

Quick Ratio 1.86 2.86 1.64 2.13 2.19 1.25 2.85 2.55 2.52 2.00 1.

Financial Leverage 27.12 18.24 20.80 49.62 11.87 11.95 10.

Debt/Equity 12.89 10.78 11.91 24.92 5.46 4.54 3.

Efficiency 2003-12 2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 TTM

Days Sales Outstanding 5.32 9.24 124.15 252.29 228.49 252.69 274.68 229.33 208.93 218.70 206.9

Days Inventory 22.72 26.80 26.49 26.78 27.64 26.52 25.67 19.86 19.03 21.50 23.4

Payables Period 55.39 56.30 55.78 56.84 56.54 50.38 53.58 49.03 44.25 47.21 61.6

Cash Conversion Cycle -27.35 -20.26 94.86 222.24 199.60 228.83 246.77 200.16 183.71 192.99 168.8

Receivables Turnover 68.62 39.50 2.94 1.45 1.60 1.44 1.33 1.59 1.75 1.67 1.7

Inventory Turnover 16.07 13.62 13.78 13.63 13.20 13.77 14.22 18.38 19.18 16.98 15.5

Fixed Assets Turnover 4.11 3.97 4.15 4.04 4.61 4.51 4.44 5.38 5.98 5.68 5.8

Asset Turnover 0.54 0.56 0.63 0.58 0.62 0.59 0.57 0.72 0.79 0.73 0.7

Accrued Liabilities 10.18 10.66 27.08 8.72 8.44 13.16 5.97 9.11 1.48 1.35 6.3

Other Short-Term Liabilities 0.04 1.69 1.47 1.68 11.00 5.76 9.02 8.91 1.7

Total Current Liabilities 26.05 18.00 35.55 28.80 27.49 50.76 26.06 29.68 28.23 35.31 38.1

Long-Term Debt 47.55 59.10 57.27 51.83 50.22 41.47 59.21 53.76 46.01 38.02 35.6

Other Long-Term Liabilities 22.71 17.41 2.37 20.62 20.27 15.70 18.74 16.97 17.33 18.31 16.4

Total Liabilities 96.31 94.52 95.19 101.24 97.98 107.93 104.01 100.41 91.57 91.63 90.2

Total Stockholders' Equity 3.69 5.48 4.81 -1.24 2.02 -7.93 -4.01 -0.41 8.43 8.37 9.7

Total Liabilities & Equity 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.0


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Ratio Analysis of Toyota Motor Corporation

Financial 2004-03 2005-03 2006-03 2007-03 2008-03 2009-03 2010-03 2011-03 2012-03 2013-03 TTM

Revenue JPY Mil 17,059,73818,524,36921,078,50823,901,50126,163,52620,529,57018,950,97318,993,68818,583,65322,064,19222,817,93

Gross Margin % 19.8 19.8 19.5 19.7 18.1 10.1 12.0 12.5 11.8 15.5 16.

Operating Income JPY Mil 1,644,287 1,669,723 1,882,062 2,234,345 2,259,547 -461,011 147,516 468,279 355,627 1,320,888 1,631,12

Operating Margin % 9.6 9.0 8.9 9.3 8.6 -2.2 0.8 2.5 1.9 6.0 7.

Net Income JPY Mil 1,146,268 1,169,589 1,374,882 1,640,884 1,709,642 -436,937 209,456 408,183 283,559 962,163 1,234,01

Earnings Per Share JPY 687.16 712.37 841.19 1021.39 1082.79 -278.26 133.58 260.32 180.40 607.56 779.0

Dividends JPY 81.32 101.05 193.24 225.43 281.86 204.98 92.84 39.71 94.29 52.68 52.6

Payout Ratio % 12.0 14.2 22.9 22.1 26.2 59.6 13.4 40.2 7.7 6.

Shares Mil 1,695 1,648 1,627 1,606 1,589 1,570 1,568 1,568 1,572 1,584 1,58

Book Value Per Share USD 46.47 51.64 55.35 63.01 75.60 64.84 71.16 79.21 80.96 81.31 83.5

Operating Cash Flow JPY

Mil

2,251,981 2,367,487 2,520,480 3,231,929 2,967,395 1,476,905 2,558,530 2,024,009 1,452,435 2,451,316 2,777,96

Cap Spending JPY Mil -1,468,307 -1,920,433 -2,776,718 -2,830,280 -2,746,834 -1,437,601 -1,691,191 -1,532,082 -1,974,152 -2,178,38

Free Cash Flow JPY Mil 783,674 447,054 -256,238 401,649 220,560 1,120,929 332,818 -79,647 477,164 599,57

Free Cash Flow Per

Share USD

4.44 2.53 -1.34 2.13 1.39 7.70 2.55 -0.62 3.19

Working Capital JPY Mil 1,233,528 1,211,088 707,863 16,848 144,780 709,636 2,387,390 1,038,765 539,615 872,370


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Key Ratios

Margins % of Sales 2004-03 2005-03 2006-03 2007-03 2008-03 2009-03 2010-03 2011-03 2012-03 2013-03 T

Revenue 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100

COGS 80.20 80.16 80.55 80.29 81.86 89.90 88.04 87.48 88.19 84.49 83

Gross Margin 19.80 19.84 19.45 19.71 18.14 10.10 11.96 12.52 11.81 15.51 16

SG&A 10.16 10.83 10.52 10.36 9.50 12.35 11.18 10.06 9.90 9.53 9

R&D

Other

Operating Margin 9.64 9.01 8.93 9.35 8.64 -2.25 0.78 2.47 1.91 5.99 7

Net IntInc& Other 0.57 0.44 0.99 0.60 0.63 -0.48 0.76 0.50 0.42 0.38 0

EBT Margin 10.21 9.46 9.92 9.95 9.27 -2.73 1.54 2.97 2.33 6.36 7

Profitability 2004-03 2005-03 2006-03 2007-03 2008-03 2009-03 2010-03 2011-03 2012-03 2013-03 T

Tax Rate % 38.58 37.49 38.09 37.70 37.40 39.30 34

Net Margin % 6.72 6.31 6.52 6.87 6.53 -2.13 1.11 2.15 1.53 4.36 5

Asset Turnover (Average) 0.82 0.80 0.79 0.78 0.81 0.67 0.64 0.63 0.61 0.67 0

Return on Assets % 5.52 5.08 5.18 5.35 5.28 -1.42 0.71 1.36 0.94 2.91 3

Financial Leverage (Average) 2.69 2.69 2.72 2.75 2.73 2.89 2.93 2.89 2.91 2.92 2

Return on Equity % 15.23 13.68 14.02 14.65 14.47 -4.00 2.05 3.95 2.72 8.48 10

Return on Invested Capital % 7.65 7.00 7.06 7.17 7.02 -2.05 0.82 1.70 1.18 3.88 4

Interest Coverage -10.95 9.72 20.21 19.88 62.12 80


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Cash Flow Ratios 2004-03 2005-03 2006-03 2007-03 2008-03 2009-03 2010-03 2011-03 2012-03 2013-03 T

Operating Cash Flow Growth % YOY 10.04 5.13 6.46 28.23 -8.19 -50.23 73.24 -20.89 -28.24 68.77

Free Cash Flow Growth % YOY 68.13 -42.95 -45.09 -70.31

Cap Ex as a % of Sales 8.61 10.37 13.17 11.84 10.50 7.59 8.90 8.24 8.95 9

Free Cash Flow/Sales % 4.59 2.41 -1.22 1.68 0.84 5.91 1.75 -0.43 2.16 2

Free Cash Flow/Net Income 0.68 0.38 -0.19 0.24 0.13 5.35 0.82 -0.28 0.50 0

Revenue %

Year over Year 12.13 8.59 13.79 13.39 9.46 -21.53 -7.69 0.23 -2.16 18.73 1

3-Year Average 8.46 9.06 11.48 11.90 12.20 -0.88 -7.44 -10.13 -3.27 5.20

5-Year Average 6.24 8.54 9.53 10.85 11.45 3.77 0.46 -2.06 -4.91 -3.35

10-Year Average 6.35 8.39 6.89 6.94 8.31 5.00 4.42 3.57 2.67 3.79

Operating Income %

Year over Year 31.75 1.55 12.72 18.72 1.13 217.44 -24.06 271.43 8

3-Year Average 26.89 15.25 14.68 10.76 10.61 -59.58 -40.82 107.66

5-Year Average 17.27 19.81 18.52 15.42 12.61 -38.45 -24.29 -30.76 -10.18

10-Year Average 29.09 20.41 18.26 12.91 11.66 -14.12 -5.27 -10.60 0.57

Net Income %

Year over Year 55.54 2.03 17.55 19.35 4.19 94.88 -30.53 239.32

3-Year Average 18.61 28.19 23.10 12.70 13.49 -49.65 -37.96 66.23

5-Year Average 20.77 20.18 14.89 24.20 18.33 -29.11 -21.56 -29.61 -10.86

10-Year Average 25.42 24.14 18.14 15.59 14.08 -7.70 -5.07 -6.50 2.70

EPS %

Year over Year 63.42 3.67 18.08 21.42 6.01 94.88 -30.70 236.78 9

3-Year Average 23.64 32.62 26.00 14.12 14.98 -49.24 -37.82 65.68

5-Year Average 23.85 23.43 18.27 27.31 20.83 -28.45 -20.91 -29.30 -10.91

10-Year Average 26.95 26.12 20.27 17.68 16.28 -6.02 -3.29 -5.13 3.75


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Balance Sheet Items (in %) 2004-03 2005-03 2006-03 2007-03 2008-03 2009-03 2010-03 2011-03 2012-03 2013-03 Latest

Cash & Short-Term Investments 10.19 8.59 7.67 7.25 7.10 10.27 13.35 11.77 9.59 9.22 9.

Accounts Receivable 20.65 20.81 20.51 20.10 21.15 19.33 21.27 19.76 21.28 21.20 20.

Inventory 4.92 5.37 5.64 5.54 5.62 5.02 4.69 4.37 5.29 4.84 5.

Other Current Assets 4.39 4.02 3.53 3.29 3.36 4.26 3.77 3.77 4.03 3.60 3.

Total Current Assets 40.15 38.79 37.36 36.18 37.24 38.88 43.08 39.67 40.20 38.85 38

Net PP&E 24.29 23.82 24.60 24.74 24.07 25.47 22.11 21.16 20.34 19.31 18

Intangibles

Other Long-Term Assets 35.56 37.39 38.04 39.08 38.70 35.65 34.81 39.17 39.46 41.84 42.

Total Assets 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100

Accounts Payable 7.76 7.63 7.26 6.79 6.82 4.47 6.45 5.04 7.32 5.96 5.

Short-Term Debt 15.04 14.52 16.56 18.01 19.19 21.74 18.12 19.96 19.46 19.15 18.

Taxes Payable 0.18 0.51 0.38 0.44 0.44 0.

Accrued Liabilities 5.14 5.30 5.10 5.12 4.95 5.30 5.72 5.95 5.97 6.16 6.

Other Short-Term Liabilities 6.54 6.36 5.99 6.21 5.83 4.75 4.42 4.86 5.26 4.69 4.

Total Current Liabilities 34.47 33.81 34.90 36.12 36.79 36.44 35.21 36.19 38.44 36.39 35

Long-Term Debt 19.27 20.61 19.63 19.23 18.43 21.68 23.12 21.63 19.71 20.68 21.

Other Long-Term Liabilities 9.15 8.42 8.71 8.31 8.21 7.26 7.54 7.53 7.43 8.69 8.

Total Liabilities 62.89 62.83 63.24 63.67 63.43 65.38 65.87 65.35 65.58 65.76 65

Total Stockholders' Equity 37.11 37.17 36.76 36.33 36.57 34.62 34.13 34.65 34.42 34.24 34

Total Liabilities & Equity 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100


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Efficiency 2004-03 2005-03 2006-03 2007-03 2008-03 2009-03 2010-03 2011-03 2012-03 2013-03 TTM

Days Sales Outstanding 31.66 30.79 61.50 57.33 28.25 30.43 31.58 32.05 33.87 32.85 28.87

Days Inventory 27.68 29.17 31.48 32.57 30.82 32.40 31.52 29.95 32.59 32.68 33.53

Payables Period 42.54 43.51 42.40 40.87 37.57 34.63 35.62 38.00 41.71 42.65 39.11

Cash Conversion Cycle 16.80 16.45 50.58 49.03 21.50 28.20 27.48 24.00 24.75 22.88 23.29

Receivables Turnover 11.53 11.86 5.94 6.37 12.92 11.99 11.56 11.39 10.78 11.11 12.64

Inventory Turnover 13.19 12.51 11.59 11.21 11.84 11.27 11.58 12.19 11.20 11.17 10.89

Fixed Assets Turnover 3.28 3.35 3.28 3.16 3.31 2.71 2.69 2.92 2.96 3.37 3.48

Asset Turnover 0.82 0.80 0.79 0.78 0.81 0.67 0.64 0.63 0.61 0.67 0.68

Liquidity/Financial Health 2004-03 2005-03 2006-03 2007-03 2008-03 2009-03 2010-03 2011-03 2012-03 2013-03 Latest Q

Current Ratio 1.16 1.15 1.07 1.00 1.01 1.07 1.22 1.10 1.05 1.07 1.1

Quick Ratio 0.89 0.87 0.81 0.76 0.77 0.81 0.98 0.87 0.80 0.84 0.8

Financial Leverage 2.69 2.69 2.72 2.75 2.73 2.89 2.93 2.89 2.91 2.92 2.8

Debt/Equity 0.52 0.55 0.53 0.53 0.50 0.63 0.68 0.62 0.57 0.60 0.6


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Interpretation of Ratio Analysis

The complete interpretation of the ratio analysis will require in-depth study of the subject in hand, here

I would like to summarize the broad interpretation.

The comparison of profitability ratio shows us that Toyota has more consistent in earning profit

whereas Ford has been facing fluctuations in recent years(from 2004 till 2013).

Liquidity and financial health of Toyota is in better shape and has near to ideal ratio, it has also been

more consistent over the years. On the other hand Ford liquidity and financial health is currently also

good there is lack consistency and it may change over a period of time as it can be seen from the

earlier years.

There is much similarity in turnover ratio and both companies have favorable conditions but there isagain consistency in Toyota when compared to Ford like for example the receivable turnover for 2003

was 68.32 times and now(2013) it is 1.76 times so it shows lack of consistency on the part of Ford.


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Conclusion

The conclusion derived from the above analysis is very much clear that Ford though a very big brand

in the world is still lagging behind Toyota in terms of financial power, overall productivity and

consistency in performance. The ratios show us a clear picture that Ford is not as consistent as Toyota.

From the Indian perspective Toyota is way ahead of Ford because of many reasons firstly it has failed

to cater to every segment on the other hand Toyota has very well understood the Indian market and has

launched different cars over the years as and when they have that the particular segment is mature

enough.

Ford should now take corrective action and target all those segments where Toyota already is this will

lead to more profit and revenue for the firm. Growing market like India is vital for any car

manufacturer to keep earning profits and also generate revenue.

Ford with the launch of Eco-Sport has shown aggressiveness and the car is huge hit in urban areas.

Decision like these will help them to generate more demand.

Toyota can easily be said as the number one car manufacturer in the world as they have worked upon

quality in every field to create a brand name for them which has become like a synonym for quality.

They have been doing well in India be it commercial sector or household sector, they have understood

the market well and acted accordingly.


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Reference

http://financials.morningstar.com/ Based on the presentation by Dr Agata Kocia Based on the presentation by PAWE ORZECHOWSKI, MACIEJ OWIT & ANDRZEJ

BENCZEK.
http://financials.morningstar.com/http://financials.morningstar.com/http://financials.morningstar.com/

Comparative Analysis of Ford and Toyota

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