SCHOOLSCHOOLSCHOOLSCHOOL OFOFOFOFARCHITECTURE,ARCHITECTURE,ARCHITECTURE,ARCHITECTURE, BUILDINGBUILDINGBUILDINGBUILDING &&&& DESIGNDESIGNDESIGNDESIGNResearch Unit for Modern Architecture Studies in Southeast AsiaFoundation of Natural Build Environments (FNBE)

BasicBasicBasicBasic AccountingAccountingAccountingAccounting [FNBE0145]Lecturers: Chang Jau Ho

AssignmentAssignmentAssignmentAssignment :::: FinancialFinancialFinancialFinancial RatioRatioRatioRatio AnalysisAnalysisAnalysisAnalysis

CompanyCompanyCompanyCompany :::: ToyotaToyotaToyotaToyota MotorMotorMotorMotor CorporationCorporationCorporationCorporation

TanTanTanTan KaiKaiKaiKai SinSinSinSin 0315213031521303152130315213

WongWongWongWong YunYunYunYun ShiShiShiShi 0315225031522503152250315225

TableTableTableTable ofofofof ContentContentContentContent

No.No.No.No. TitleTitleTitleTitle PagePagePagePage1 Company Background 12 Ratio Analysis & P/E Ratio 23 Investment Recommendation 54 Appendix

Appendix A : CalculationAppendix B : Consolidated Balance Sheets

Appendix C : Consolidated Statements of Income

6679

5 Reference 10

CompanyCompanyCompanyCompany BackgroundBackgroundBackgroundBackground

Toyota Motor Co. was established as an independent and separate company in 1937. Thecompany being a division of Toyoda Automatic Loom Works devoted to the production ofautomobiles under the direction of the founder's son, Kiichiro Toyoda. Although the founder’sfamily name was written in the Kanji (rendered as “Toyoda”), the company name was changed tokatakana (rendered as “Toyota”) because of 8 letters regarding as lucky number in East Asianculture. (Wikipedia, n.d)

Toyota Motor Co. mission is to provide safe & sound journey. Toyota is developing variousnew technologies from the perspective of energy saving and diversifying energy sources.Environment has been first and most important issue in priorities of Toyota and working towardcreating a prosperous society and clean world. While Toyota Motor Co. vision is to be the mostrespected and successful enterprise, delight customers with a wide range of products andsolutions in the automobile industry with the best people and best technology. (Indus MotorCompany LTD, 2012)

Announced by Toyota Motor Corporation (TMC) managing officer Satoshi Ogiso, theirfuture plan aims to see 15 new or redesigned hybrid vehicles introduced globally between nowand the end of 2015. This is a reduction of the plan marking the sale of its five-millionth hybridvehicle, it said it was committed to introducing 18 new hybrid models between now and the endof 2015. Still intended to include Toyota’s first commercially available hydrogen fuel cell vehicle– a new mid-size four-door sedan based on the Toyota FCV-R concept and due to be unveiled atthe Tokyo motor show in November – the plan also includes the next-generation Toyota Prius.(Zalstein, 2013)

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RatioRatioRatioRatioAnalysisAnalysisAnalysisAnalysis

( Amount: million yen )Profitability

Ratios2012 2013 Interpretation

Return onEquity(ROE)

Net profitAverage O/E

283 55911 919 667

= 2.4%

Net profitAverage O/E

962 16311 919 667

= 8.1%

During the period of2012-2013, the ROE hasincrease from from 2.4% to8.1%. It means the owner wasgetting a higher return onhis/her capital this year.

Net ProfitMargin(NPM)

Net ProfitNet Sales283 55917 511 916

= 1.6%

Net ProfitNet Sales962 16320 914 150

= 4.6%

During the period of2012-2013, the NPM hasincrease from 1.6% to 4.6%.Itmeans the business is gettingbetter in controlling theirexpenses.

Gross ProfitMargin(GPM)

Gross ProfitNet Sales2 787 73517 511 916

= 15.9%

Gross ProfitNet Sales4 053 62320 914 150

= 19.4%

During the period of2012-2103, the GPM isincrease from 15.9% to19.4%. It means the businessis getting better in controllingtheir COGS expenses.

Selling ExpRatio (SER)

Total S. ENet Sales919 73117 511 916

= 5.3%

Total S. ENet Sales1051 154.5020 914 150

= 5%

During the period of2012-2013, the SER hasdecrease from 5.3% to 5%.The business is getting betterin controlling their sellingexpenses ratio.

General ExpRatio (GER)

Total S. ENet Sales919 73117 511 916

= 5.3%

Total S. ENet Sales1051 154.5020 914 150

= 5%

During the period of2012-2013, the GER hasdecrease from 5.3% to 5.0%.The business is getting betterin controlling their generalexpenses ratio.

FinancialExp Ratio(FER)

Total F. ENet Sales

22 92217 511 916

= 0.13%

Total F. ENet Sales

22 96720 914 150

= 0.11%

During the period of2012-2013, the FER hasdecrease 0.13% to 0.11%. Thebusiness is getting better incontrolling its financialexpense.

× 100% × 100%

× 100%× 100%

× 100% × 100%

× 100% × 100%

× 100% × 100%

× 100% × 100%

= =

=

× 100%× 100%

=

=

=

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× 100%

× 100% ==

× 100%

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= =

× 100% × 100%

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ProfitabilityRatios

2012 2013 Interpretation

WorkingCapital

Total Current AssetTotal Current Liabilities

12 321 18911 781 574

= 1.05 : 1

Total Current AssetTotal Current Liabilities

13 784 89012 912 520

= 1.07 : 1

During the period of 2012- 2013, Working Capitalhas increase from 1.05 : 1to 1.07 : 1. The ability ofbusiness to pay off itscurrent liabilities withcurrent asset is gettingbetter. However, it doesnot satisfy the minimum2 : 1 ratio.

Total Debt Total liabilitiesTotal Asset

1958448730650965

= 0.639 × 100%= 63.8%

Total liabilitiesTotal Asset

22,710,46135,483,317

= 0.640 × 100%= 64%

During the period of 2012- 2013, Total Debt hasincrease from 63.8% to64%. The total debt levelis going up. In addition, itis still above themaximum 50% level.

StockTurnover

COGSAverage Inventory15795918

1622682 + 1715486= 365 ÷ 4.732= 77.1 days

COGSAverage Inventory18010569

1622682 + 1715486= 365 ÷ 5.413= 67.4 days

During the period of 2012- 2013, the stock turnoverhas decrease from 77.1days to 67.4 days. Itmeans the stock selling isgetting better.

DebtorTurnover

Credit SalesAverage Debtor

87559584523444 + 5550353

287559585036898.50

1.74= 209.8 days

Credit SalesAverage Debtor

104572604523444 + 5550353

2104572605036898.502.08

= 175.5 days

During the period of 2012- 2013, Debt Turnover hasdecrease from 209.8 daysto 175.5 days. It meansthe debt turnover isgetting faster in collectingthe debts.

InterestCoverage

Interest Expense + Net ProfitInterest Expense22922 + 283559

22922= 13.4 times

Interest Expense + Net ProfitInterest Expense22967 + 962163

22967= 42.9 times

During the period of 2012- 2013, the InterestCoverage has increasefrom 13.4 times to 34.4times. It means thebusiness ability to pay itsinterest expense is gettingbetter. In addition, it isstill satisfy the minimum5 times requirement.

X 100%

365 ÷

( )365 ÷

( )

X 100%

= 365 ÷

X 100%

( )

X 100%

( )

365 ÷

365 ÷

= 365 ÷

= 365 ÷

= 365 ÷ = 365 ÷

= 365 ÷

= 365 ÷ = 365 ÷

= =

= =

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* figure obtained from TOYOTAMOTOR CORPORATION FINANCIAL SUMMARY FY2013

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Price/EarningPrice/EarningPrice/EarningPrice/Earning orororor P/EP/EP/EP/E RatioRatioRatioRatio

= Current share priceEarnings per share

= 120.468.56

= 14.1

This ratio measures how expensive a share is. The higher the P/E ratio, the moreexpensive a share is. The P/E Ratio for Toyota Motor Corp is 14.072. It means that theinvestor need to wait for 14.1 years to recoup the investment.

* figure obtain from http://data.cnbc.com/quotes/TM at 21 January 2014

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InvestmentInvestmentInvestmentInvestment RecommendationRecommendationRecommendationRecommendation

(a) ProfitabilityToyota Motor Corporation demonstrated good profitability. Based on the ratio analysis, thebusiness getting better in all aspects during the period of 2012 to 2013. The Return On Equityhas increase 5.7%. It means the owner was getting a higher return on his/her capital this year.Next, the business is getting better in controlling their expenses as the Net Profit Margin hasincrease 3%. While the Gross Profit Margin increase 3.5%. It means the business is gettingbetter in controlling their COGS expenses. Moreover, the business is also become better incontrolling its selling expense ratio and general expense ratio. Its Selling Expense Ratio andGeneral Expense Ratio has decrease 0.3%. Last, the business perform better in controlling itsfinancial expense ratio. This can be seen at its Financial Expense Ratio has decrease 0.02%.

(b) StabilityToyota Motor Corporation is also has a strong financial stability. Although during the period2012 to 2013 the Working Capital does not satisfy the minimum 2 : 1 ratio and total debtincrease 0.2% and above the maximum 50% level but it perform good in other aspects. Forexample, Its stock selling is getting better as the stock turnover decrease 9.7 days. Besides,the Debt Turnover decrease 34.3 days which means the debt turnover is getting faster incollecting the debts. In additions, the Interest Coverage has increase 20 times and satisfy theminimum 5 times requirement, means the business ability to pay its interest expense isgetting better.

(c) PriceThe price of Toyota Motor Corporation's share is still consider cheap as it Price/Earning ratiodoes not over 15. It is 14.1.

In conclusion the investor is encouraged to invest Toyota Motor Corporation as is demonstratesgood profitability, strong financial stability and the price is consider not expensive.

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AppendixAppendixAppendixAppendix

* Calculation:Average O/ E : (11,066,478 + 12,772,856) ÷ 2 = 11 919 667Gross Profit for 2012 : 18583653 - 15795918 = 2787735Gross Profit for 2013 : 22,064,192 - 18,010,569 = 4053623General Expense / Selling Expense for 2012 : 1,839,462 ÷ 2 = 919 731General Expense / Selling Expense for 2013 : 2,102,309 ÷ 2 = 1 051 154.50Credit Sales for 2012 : 17511916 ÷ 2 = 8755958Credit Sales for 2013 : 20914520 ÷ 2 = 10457260Total Receivable for 2012 : 4,114,897 + 408,547 = 4523444Total Receivable for 2013 : 5,117,660 + 432,693 = 5550353

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ReferenceReferenceReferenceReference

Toyota Motor Corporation, (2013), Financial Summary FY2013. Retrieved fromhttp://www.toyota-global.com/investors/financial_result/2013/pdf/q4/summary.pdf

Toyota Motor Corporation, (2013), Annual Report 2013. Retrieved fromhttp://www.toyota-global.com/investors/ir_library/annual/pdf/2013/p42_123.pdf

Zalstein, David ( 2013, August 29), Toyota adjusts future plans, reveals next-gen Prius details. Retrievedfromhttp://www.caradvice.com.au/249125/toyota-adjusts-future-plans-reveals-next-gen-prius-details/

Indus Motor Company LTD, (2012 ) Vision & Mission. Retrieved fromhttp://www.toyota-indus.com/corporate/company-profile/vision-mission/

Wikipedia, ( n.d ), History of Toyota. Retrieved from http://en.m.wikipedia.org/wiki/History_of_Toyota

CNBC, (2014), Toyota Motor Corp. Retrieved from http://data.cnbc.com/quotes/TM

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