Financial Ratios Analysis of the Toyota Motor Corporation Finance Essay

This report was written to make an analysis of the financial statements of the Toyota Motor Corporation for period from 2008 to 2010, according to analysis of the ratios and trend analysis of absolutes. The review of company's history and the impact of events happen to TMC gave an opportunity to enlarge our understandings of the entity's financial situation. Furthermore, this report performs a view to predict and forecast the expectations of the company.

Introduction

Nowadays major and popular companies publish their financial information such as balance sheet, cash flow, financial statement and others in order to perform the financial position of the company on the world market. All this financial data makes an influence on attractiveness of the company for investors and customers.

The purpose of this report is to study financial analysis instruments and methods according to published data of the company. The object of this report is Toyota Motor Corporation which takes the seventh place as the largest company worldwide and the second place as the largest manufacturer of automobiles. Toyota Motor Corporation founded in 1937 by Mr. Kiichiro Toyoda now is a famous multinational automaker simply known as Toyota. This company has 28 producing facilities all over the world, employs over 300A 000 people and sells vehicles in over 170 countries/regions.

As for me the reason why I have chosen this company was to study and understand how this company was succeeding for so many years and even having global problems with gas pedal and financial crisis Toyota still is one of the leading car producers. Consequently the analysis of the financial statements of Toyota Company can give the answers for many questions. Also, one more reason of my choice is that Toyota is one of the largest car distributors in my country, in Kazakhstan. I wanted to learn more what Toyota did for my country as a customer and what is position of TMC in world as in Kazakhstan Toyota cars are really demanded.

The full financial picture for potential investors of any company is the annual report that makes an analysis of the financial profitability on the base of which a decision can be done whether invest or not. To perform the situation of TMC in a more precise way it is necessary to analyze the financial position of the company via financial ratios, statements and profitability. Financial ratios are helpful indicators of performance and financial situation of the company. The financial statements provide with the information from ratios. All these data give a full vision of trends and company's financial position. As many other business companies suffered from the global financial crisis, TM was impressed as well. Also the great scandal of Toyota cars recall didn't pass without a trace. All these events made a great influence on the financial stability of the company.

For the beginning, the observation of the main financial statements such as income for the period, revenue, basic earnings and dividends per share is very useful analysis. For revenue statement of Toyota, the decrease can be considered from 262 394 ($ millions) on the end of March 2008 to 202 814 ($ millions) on the end of 2010.

As a result, income for the period of 2008-2009 decreased almost for 21% and 2009-2010 for 2.5% due to several problems as the global financial crises and Toyota cars recall because of technical problems of gas pedal.

Conclusion

The Toyota Motor Corporation is one of the biggest world cars producing company. Nowadays it has lots of manufacturing factories all over the world and the demand for Toyota cars is going up year by year as automobiles of this company are of good quality, sold on available price and safety. The financial analysis of the company performed the good statement in 2008 and recovery process till 2010 as TMC as other automobile producers suffered from the global financial crisis. Though Toyota's image was collapsed due to millions of cars recall, the company still has a stable position on the world market and will recovery easily.

In conclusion, I would point out that the strong potential of TMC will return the level it had before and attract more and more investors to its business.

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