A STUDY ON FINANCIAL ANALYSIS OF

TOYOTA MOTOR CORPORATION

By

S.R.SAIRAM

32313139

Of

UNIVERSITY OF MADRAS

SUMMER TRAINING REPORT

Submitted to the

1

DEPARTMENT OF MANAGEMENT STUDIES

In partial fulfillment of the requirements

for the award of the degree

of

MASTER OF BUSINESS ADMINISTRATION

AUGUST-2014

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UNIVERSITY OF MADRASCHEPAUK CAMPUS, CHENNAI-600005,TAMILNADU,INDIAPHONE: 044-25399778 FAX :044-25366693WEBSITE : WWW.UNOM.AC.IN

DEPARTMENT OF MANAGEMENT STUDIES

CERTIFICATE

This is to certify that this project report titled A STUDY ON FINANCIAL ANALYSIS OF TOYOTA MOTOR CORPORATION is the bonafide work 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 Head of the Department

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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 I

List of tables II

1 Industry Profile 1

2 Company Profile 5

3 Production Process 15

4 Product Profile 18

5 Financial statement 31

6 Financial analysis 35

7 Findings and Suggestions 61

8 Conclusion 64

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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

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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 fuel-

efficient 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%

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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,

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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

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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 eco-

friendly 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 in-

built 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 Eco-

Factory 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

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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

32

SERVICES

33

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

34

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.

35

FINANCIALS

36

TOYOTA MOTOR CORP ADR (TM) CashFlowFlag BALANCE SHEETFiscal year ends in March. JPY in millions except per share data. 2010-03 2011-03 2012-03 2013-03 2014-03AssetsCash and cash equivalents 2258470 2284583 1759501 1824997 2221377Short-term investments 1793165 1225435 1181070 1445663 2046877Total cash 4051635 3510018 2940571 3270660 4268254Receivables 1886273 1449151 1999827 1971659 2036232Inventories 1422373 1304242 1622282 1715786 1894704Deferred income taxes 632164 605884 718687 749398 866386Prepaid expenses 511284 517454 516378 527034 672014Other current assets 4569875 4443006 4523444 5550353 5980116Total current assets 13073604 11829755 12321189 13784890 15717706Gross property, plant and equipment 17093748 16611349 16849282 18223620 19764791Accumulated Depreciation -10382847 -10302189 -10613902 -11372381 -12123493Net property, plant and equipment 6710901 6309160 6235380 6851239 7641298Equity and other investments 4135599 5398518 6491934 7849681 9931209Other long-term assets 6429183 6280733 5602462 6997507 8147260Total non-current assets 17275683 17988411 18329776 21698427 25719767Total assets 30349287 29818166 30650965 35483317 41437473LiabilitiesShort-term debt 5497997 5951836 5963269 6793956 7780483Accounts payable 1956505 1503072 2242583 2113778 2213218Taxes payable 153387 112801 133778 156266 594829Accrued liabilities 1735930 1773233 1828523 2185537 2313160Other current liabilities 1342395 1450048 1613421 1662983 1778995Total current liabilities 10686214 10790990 11781574 12912520 14680685Long-term debt 7015409 6449220 6042277 7337824 8546910Deferred taxes liabilities 813221 810127 908883 1385927 1811846Accrued liabilities 678677 668022 708402Minority interest 570720 587653 516217 624821 749839Other long-term liabilities 225323 179783 143351 308078 411427Total non-current liabilities 9303350 8694805 8319130 10422762 12287640Total liabilities 19989564 19485795 20100704 23335282 26968325Common stock 397050Additional paid-in capital 898381 902810 550650 948090 948358Retained earnings 11568602 11835665 11917074 12689206 14116295Treasury stock -1260425 -1261383 -1135680 -1133138 -1123666Accumulated other comprehensive -846835 -1144721 -1178833 -356123 528161Total stockholders' equity 10359723 10332371 10550261 12148035 14469148Total liabilities and stockholders' equity 30349287 29818166 30650965 35483317 41437473TOYOTA MOTOR CORP ADR (TM) CashFlowFlag INCOME STATEMENT

37

Fiscal year ends in March. JPY in millions except per share data. 2010-03 2011-03 2012-03 2013-03 2014-03Revenue 18950973 18993688 18583653 22064192 25691911Cost of revenue 16683797 16615326 16388564 18640995 20801139Gross profit 2267176 2378362 2195089 3423197 4890772Operating expensesSales, General and administrative 2119660 1910083 1839462 2102309 2598660Total operating expenses 2119660 1910083 1839462 2102309 2598660Operating income 147516 468279 355627 1320888 2292112Interest Expense 33409 29318 22922 22967 19630Other income (expense) 177361 124329 100168 105728 168598Income before taxes 291468 563290 432873 1403649 2441080Provision for income taxes -92664 -312821 -262272 551686 767808Other income -139920 -410626 -326843 231519 318376Net income from continuing operations 244212 465485 368302 1083482 1991648Other -34756 -57302 -84743 -121319 -168529Net income 209456 408183 283559 962163 1823119Net income available to common shareholders 209456 408183 283559 962163 1823119Earnings per shareBasic 133.58 260.34 180.42 607.64 1150.6Diluted 133.58 260.32 180.4 607.56 1149.84Weighted average shares outstandingBasic 1568 1568 1572 1583 1584Diluted 1568 1568 1572 1584 1585EBITDA 1739446 1768181 1523625 2531725 3711563

38

TOYOTA MOTOR CORP ADR (TM) Statement of CASH FLOWFiscal year ends in March. JPY in millions except per share data. 2010-03 2011-03 2012-03 2013-03 2014-03Cash Flows From Operating ActivitiesNet income 244212 465485 368302 1083482 1991648Depreciation & amortization 1414569 1175573 1067830 1105109 1250853Deferred income taxes 25537 85710 6395 160008 -56279Accounts receivable 421423 -585464 -168260 -121926Inventory 56059 51808 -344923 50483 -110819Accounts payable 649214 -406210 756363 -209284 65312Accrued liabilities 102207 -40629Income taxes payable 20943 22127 438527Other working capital -39312 461010 246997 597907 401869Other non-cash items 106044 -190161 -84008 -190256 -213150Net cash provided by operating activities 2558530 2024009 1452435 2451316 3646035Cash Flows From Investing ActivitiesInvestments in property, plant, and equipment -1437601 -1691191 -1532082 -1974152 -2678691Property, plant, and equipment reductions 517565 538037 467946 572632 783530Purchases of investments -2413202 -4422106 -3173781 -3412423 -4738278Sales/Maturities of investments 1108741 3716156 2856825 2669091 3319327Other investing activities -625687 -257240 -61566 -882460 -1022136Net cash used for investing activities -2850184 -2116344 -1442658 -3027312 -4336248Cash Flows From Financing ActivitiesDebt issued 3178310 2931436 2394807 3392484 4358286Debt repayment -2938202 -2489632 -2867572 -2682136 -2988923Common stock repurchased -10251 -28617 -37448 -43098Dividend paid -172476 -141120 -156785 -190008 -459095Other financing activities -335363 162260 311651 9212Net cash provided by (used for) financing activities -277982 434327 -355347 477242 919480Effect of exchange rate changes -8898 -127029 -55939 137851 93606Net change in cash -578534 214963 -401509 39097 322873Cash at beginning of period 2444280 1865746 2080709 1679200 1718297Cash at end of period 1865746 2080709 1679200 1718297 2041170Free Cash FlowOperating cash flow 2558530 2024009 1452435 2451316 3646035Capital expenditure -1437601 -1691191 -1532082 -1974152 -2678691Free cash flow 1120929 332818 -79647 477164 967344

39

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.

41

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 2010 2011 2012 2013 2014

SALES 1,89,50,973 1,89,93,688 1,85,83,653 2,20,64,192 2,56,91,911

GROSS

PROFIT22,67,176

23,78,362 21,95,089 34,23,197 48,90,772

G.P RATIO(%) 11.96 12.52 11.81 15.51 19.03

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%.

42

2010 2011 2012 2013 20140

2

4

6

8

10

12

14

16

18

20

GROSS PROFIT RATIO

GROSS PROFIT RATIO

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 2010 2011 2012 2013 2014

SALES 1,89,50,973 1,89,93,688 1,85,83,653 2,20,64,192 2,56,91,911

NET PROFIT 17,39,446 17,68,181 15,23,625 25,31,725 37,11,563

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

43

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%

2010 2011 2012 2013 20140

2

4

6

8

10

12

14

16

9.17 9.38.19

11.47

14.44

NET PROFIT RATIO

NET PROFIT RATIO

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 2010 2011 2012 2013 2014

CURRENT ASSET 1,30,73,604 1,18,29,755 1,23,21,189 1,37,84,890 1,57,17,,706

CURRENTLIABILITY 1,06,86,214 1,07,90,990 1,17,81,574 1,29,12,520 1,46,80,685

CURRENT RATIOS 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.

44

2010 2011 2012 2013 20140.95

1

1.05

1.1

1.15

1.2

1.25 1.22

1.09

1.041.06 1.07

CURRENT RATIO

CURRENT RATIO

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:-

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

LIQUID RATIOS 1.04 0.92 0.86 0.89 0.89

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.

45

2010 2011 2012 2013 20140

0.2

0.4

0.6

0.8

1

1.2 1.040.92 0.860000000

000001 0.89 0.89

LIQUID RATIO

LIQUID RATIO

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:-

RATIOS:-

YEARS2010 2011 2012 2013 2014

AVG STOCK 14,22,373 13,04,242 16,22,282 17,15,786 18,94,704COST OF GOODS SOLD 1,89,50,973 1,89,93,688 1,85,83,653 2,20,64,192 2,56,91,911INVENTORY TURNOVER

RATIO(Times) 7.50 6.86 8.72 7.77 7.37

INTERPRETATION:-

46

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

2010 2011 2012 2013 20140123456789

10

7.56.86

8.727.77 7.37

INVENTORY TURNOVER RATIO

INVENTORY TURNOVER RATIO

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.

FORMULA:-

RATIOS:-

YEARS2010 2011 2012 2013 2014

AVG ACC RECEIVABLE 18,86,273 14,49,151 19,99,827 19,71,659 20,36,232CREDIT SALES 1,89,50,973 1,89,93,688 1,85,83,653 2,20,64,192 2,56,91,911DEBTPRS TURNOVER

RATIO(Times) 10.04 13.10 9.29 11.19 12.61

INTERPRETATION:-

47

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.

2010 2011 2012 2013 201402468

101214

10.04

13.1

9.2911.19

12.61

DEBTORS TURNOVER RATIO

DEBTORS TURNOVER RATIO

CREDITOR TURNOVER RATIO:-

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:-

YEARS2010 2011 2012 2013 2014

AVG ACC PAYABLE 19,56,505 15,03,072 22,42,583 21,13,778 22,13,218CREDIT PURCHASE 1,66,83,797 1,66,15,326 1,63,88,564 1,86,40,995 2,08,01,139CREDITOR TURNOVER

48

RATIO(Times) 8.52 11.05 7.30 8.82 9.39

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%.

2010 2011 2012 2013 20140

2

4

6

8

10

12

8.52

11.05

7.38.82 9.39

CREDITOR TURNOVER RATIO

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

(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 2013 2012 2011 2010 2009

FIXED ASSET1,85,19,532 1,74,96,977 1,68,66,075 1,97,65,611 4,14,37,473

NET SALES 1,89,50,973 1,89,93,688 1,85,83,653 2,20,64,192 2,56,91,911FIXED ASSET TURNOVER

RATIO(Times) 0,98 0.92 0.91 0.89 1.61

INTERPRETATION:-

49

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.

2010 2011 2012 2013 20140

0.20.40.60.8

11.21.41.61.8

FIXED ASSET TURNOVER RATIO

50

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.”

51

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 2011 2012 2013 2014

WORKING CAPITAL 1038765 539615 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

2011 2012 2013 20140

200000

400000

600000

800000

1000000

1200000

working capital

working capital

52

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 AssetsCurrent Liabilities

RATIOS:-

YEAR 2011 2012 2013 2014

WORKING CAPITAL

RATIOS

1.09 1.04 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.

2011 2012 2013 20141.01

1.02

1.03

1.04

1.05

1.06

1.07

1.08

1.09

1.1

Working Capital Ratio

Working Capital Ratio

53

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 Productivity

7.47 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.

54

2011 2012 2013 201402468

1012141618

working capital productivity

working capital produc-tivity

55

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 salesAccounts 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.

56

2011 2012 2013 20143.63.73.83.9

44.14.24.34.44.54.6

working capital sales ratio

working capital sales ratio

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.

2011 2012 2013 20140

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WorkingCapital Turnover Ratio

WorkingCapital Turnover Ra-tio

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Comparative Statement Of The Company For The Year 2013 And2014PARTICULARS 2014 2013 Amt %AssetsCash and cash equivalents 2258470 2284583 -26113 (1.16)Short-term investments 1793165 1225435 567730 31.66Total cash 4051635 3510018 541617 13.37Receivables 1886273 1449151 437122 23.17Inventories 1422373 1304242 118131 8.31Deferred income taxes 632164 605884 26280 4.16Prepaid expenses 511284 517454 -6170 (1.21)Other current assets 4569875 4443006 126869 2.78Total current assets 13073604 11829755 1243849 9.51Gross property, plant and equipment 17093748 16611349 482399 2.82

Accumulated Depreciation -10382847-

10302189 -80658 0.78Net property, plant and equipment 6710901 6309160 401741 5.99Equity and other investments 4135599 5398518 -1262919 (30.54)Other long-term assets 6429183 6280733 148450 2.31Total non-current assets 17275683 17988411 -712728 (4.13)Total assets 30349287 29818166 531121 1.75LiabilitiesShort-term debt 5497997 5951836 -453839 (8.25)Accounts payable 1956505 1503072 453433 23.18Taxes payable 153387 112801 40586 26.46Accrued 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 8.07Deferred taxes liabilities 813221 810127 3094 0.38Accrued liabilities 678677 668022 10655 1.57Minority interest 570720 587653 -16933 (2.97)Other long-term liabilities 225323 179783 45540 20.21Total non-current liabilities 9303350 8694805 608545 6.54Total liabilities 19989564 19485795 503769 2.52Additional 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 0.26Total 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

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.

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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

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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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