Govt.

Post Graduate College for

Women Samanabad Lahore.

(Department of Management sciences)

Project report of financial management

Submitted to Mam Sobia

Roll no. 1723106005
Name Amina Nazir

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Introduction

 Toyota Motor Corporation, Japanese parent company of the Toyota Group. It

became the largest automobile manufacturer in the world for the first time in 2008.
Most of its nearly 600 subsidiary companies are involved in the production of
automobiles, automobile parts, and commercial and industrial vehicles. Headquarters
are in Toyota City, an industrial city east of Nagoya, Japan.
 Toyota Motor Corporation began in 1933 as a division of the Toyoda Automatic Loom
Works, Ltd. (later Toyota Industries Corporation, now a subsidiary), a Japanese
manufacturer founded by Toyoda Saki chi. Its first production car, the Model AA
sedan, was released in 1936.

 During the
1960s and
’70s the
company
expanded at a
rapid rate and
began
exporting
large
numbers of
automobiles to foreign markets.
 The company took its present name in 1982, when Toyota Motor Company was
merged with Toyota Motor Sales Company, Ltd. Two years later Toyota partnered
with General Motors Corporation in the creation of New United Motor Manufacturing,
Inc., a dual-brand manufacturing plant in California, where Toyota began U.S.
production in 1986.
 The company experienced significant growth well into the 21st century,
with innovations such as its luxury brand, Lexus (1989), and the first mass-
produced hybrid- Beginning in 2014, millions of vehicles manufactured by Toyota and
several other car companies were recalled by regulators in the United States because of
potentially malfunctioning airbags produced by the Japanese automotive-parts
supplier.

Today Toyota has assembly plants and distributors in many countries. In addition to
automotive products, its subsidiaries manufacture rubber and cork materials,
steel, synthetic resins, automatic looms, and cotton and woolen goods. Others deal in
real estate, prefabricated housing units, and the import and export of raw materials.

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 Toyota’s Vision Statement
Toyota Motor Corporation’s vision statement indicates the company’s long-term strategic
direction in the automobile industry. This vision statement reads, “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.

In this vision statement, Toyota includes major areas of its business. The vision statement
states that the company aims to achieve leadership in the global market. The vision statement
also shows that Toyota moves forward based on quality, innovation and environmental
conservation. Thus, Toyota includes corporate social responsibility in its vision statement.

Toyota’s Mission Statement

Toyota Motor Corporation uses various mission statements for its businesses in different
markets. However, with regard to the business of automobile manufacturing and sales, the
company’s mission statement pertains to its strategic actions in technology. Thus, Toyota’s
mission statement is as follows: “Create vehicles that are popular with consumers.” In
expanded form, Toyota’s mission statement includes the following strategic actions:

 Provide world-class safety to protect the lives of customers.

 Provide optimization of energy/infrastructure to local communities.
 Put high priority on safety and promote product development with the ultimate goal of
“completely eliminating traffic casualties”.
 Deliver cars that stimulate and even inspire, and earn smiles from our customers.

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Financial statements of Toyota motors

Balance sheet
Toyota motors
As on 31 March
2019 2018 2017 2016
Cash and cash equivalents 239140 323830 243685 92399
Time deposits with deposit terms of over three
months 223219 111796
Trade receivable and other receivable 845255 764514 646542 624240
Other financial assets 3988 6359 174301 273410
Inventories 245182 223714 194427 195982
Income tax receivables 13713 9359 21106 7170
Other current assets 53282 54219 42356 38958
Total current assets 1623784 1493793 1322420 1232161
Property plant and equipment 938030 889220 833329 815399
Goodwill and intangible asset 361078 361797 185813 189207
Trade receivable and other receivables 5803 337 149 1005
Investments for accounted by the equity method 10253 10352 8673 13593
Other financial assets 2258788 2441545 2161509 2028284
Net defined benefit assets 28603 29232 18129 11651
Deferred tax assets 30590 27017 23800 22599
Other non-current assets 4241 5204 4386 3379
Total non-current assets 3637390 3764707 3235791 3085121
Total assets 5261174 5258500 4558212 4317282

Trade payable and other payables 506547 479253 387333 355882

Corporate bonds and loans 342232 400803 311663 190844
Other financial liabilities 67030 71683 71807 75440
Accrued income taxes 15993 27097 11163 48051
Provisions 8807 7754 7397 9336
Other current liabilities 16754 19284 21327 20186
Total current liabilities 95365 1005876 810603 699741
Corporate bonds and loans 955183 767297 665890 711424
Other financial liabilities 75813 70912 79375 106248
Net defined benefits liabilities 101347 86655 92552 88942
Provisions 7525 8460 6479 6888
Deferred tax liabilities 598083 665342 567803 517854
Other non-current liabilities 21918 20086 19039 16868
Total non-current liabilities 1741872 1618754 143140 1448227

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Total liabilities 2699237 2624631 2241744 2147969
Capital stock 80462 80462 80462 80462
Capital surplus 103507 105343 105417 105517
Retained earnings 1178773 1084139 954503 855317
Treasury stock -59297 -59284 -59272 -41266
Other components of shareholders’ equity 1176272 1342730 1159181 1098627
Total share of equity attributable to owner of
parents 2479718 2553391 2240293 2098658
Non-controlling interests 82218 80478 76174 70655
Total equity 2561936 2633869 2316467 2169313
Total liabilities and equity 5261174 5258500 4558212 4317282

Income statements of the years

ended 31 march
2019 2018 2017 2016
Net sales 2214945 2003973 1675148 1,696,856
Cost of sales -1,702,599 -1534207 -1278378 -1,291,859
Gross profit 512,346 469765 396769 404,997
Selling general and administrative expenses -376,866 -334347 -268354 -266,894
Other income 11,389 21915 11411 10,879
Other expenses -12,184 -9887 -12480 -11,956
Operating profit 134,684 147445 127345 137,026
Financial income 76,603 70279 63734 67,264
Financial expenses -10,226 -10046 -10067 -13,536
Share of profit(loss)of investments accounted for
by the equity method 1163 2149 974 632
Profit before income taxes 202,225 209827 181986 191,386

Income taxes -42,447 -36010 -44420 -52,865

Profit from continuing operations 138,521
Profit from discontinued operation 61,435
Profit 159,778 173816 137565 199,956
Profit attributable to:
Owners of the parent 152,748 168180 131398 194,270
Non-controlling interests 7,029 5635 6167 5685

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Earnings per share
Earnings per share-basic(yen) 491.97 541.67 420.78 618.34
Earnings per share-dilute(yen) 618.33

Horizontal analysis of balance sheet

2019 2018 2017

Cash and cash equivalents -26.15% 32.89% 163.73%
Time deposits with deposit terms of over three months 99.67%
Trade receivable and other receivables 10.56% 18.25% 3.57%
Other financial assets -37.29% -96.35% -36.25%
Inventories 9.60% 15.06% -0.79%
Income tax receivables 46.52% -55.66% 194.37%
Other current assets -1.73% 28.01% 8.72%
Total current assets 8.70% 12.96% 7.33%
Property plant and equipment 5.49% 6.71% 2.20%
Goodwill and intangible asset -0.20% 94.71% -1.79%
1621.96
Trade receivables and other receivables % 126.17% -85.17%
Investments for accounted by the equity method -0.96% 19.36% -36.20%
Other financial assets -7.49% 12.96% 6.57%
Net defined benefit assets -2.15% 61.24% 55.60%
Deferred tax assets 13.23% 13.52% 5.31%
Other non-current assets -18.50% 18.65% 29.80%
Total non-current assets -3.38% 16.35% 4.88%
Total assets 0.05% 15.36% 5.58%

Trade payable and other payables 5.70% 23.73% 8.84%

Corporate bonds and loans -14.61% 28.60% 63.31%
Other financial liabilities -6.49% -0.17% -4.82%
Accrued income taxes -40.98% 142.74% -76.77%
Provisions 13.58% 4.83% -20.77%
Other current liabilities -13.12% -9.58% 5.65%
Total current liabilities -90.52% 24.09% 15.84%
Corporate bonds and loans 24.49% 15.23% -6.40%
Other financial liabilities 6.91% -10.66% -25.29%
Net defined benefits liabilities 16.95% -6.37% 4.06%
Provisions -11.05% 30.58% -5.94%
Deferred tax liabilities -10.11% 17.18% 9.65%
Other non-current liabilities 9.12% 5.50% 12.87%
1030.89
Total non-current liabilities 7.61% % -90.12%

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 Total liabilities 2.84% 17.08% 4.37%
Capital stock 0.00% 0.00% 0.00%
Capital surplus -1.74% -0.07% -0.09%
Retained earnings 8.73% 13.58% 11.60%
Treasury stock `` 0.02% 43.63%
Other components of shareholders’ equity -12.40% 15.83% 5.51%
Total share of equity attributable to owner of parents -2.89% 13.98% 6.75%
Non-controlling interests 2.16% 5.65% 7.81%
Total equity -2.73% 13.70% 6.78%
Total liabilities and equity 0.05% 15.36% 5.58%

Balance Sheet Analysis of Toyota motor corporation

The asset side of balance sheet shows the size of the firm so by comparing balance sheet
2019 18 17 and 16. The results of 2019 are too much lower than other years .2019 indicating
a poor financial year of Toyota.

Vertical analysis of balance sheet

2019 2018 2017 2016
Cash and cash equivalents 4.55% 6.16% 5.35% 2.14%
Time deposits with deposit terms of over three
months 4.24% 2.13% 0.00% 0.00%
Trade receivable and other receivables 16.07% 14.54% 14.18% 14.46%
Other financial assets 0.08% 0.12% 3.82% 6.33%
Inventories 4.66% 4.25% 4.27% 4.54%
Income tax receivables 0.26% 0.18% 0.46% 0.17%
Other current assets 1.01% 1.03% 0.93% 0.90%
Total current assets 30.86% 28.41% 29.01% 28.54%
Property plant and equipment 17.83% 16.91% 18.28% 18.89%
Goodwill and intangible asset 6.86% 6.88% 4.08% 4.38%
Trade receivables and other receivable 0.11% 0.01% 0.00% 0.02%
Investments for accounted by the equity method 0.19% 0.20% 0.19% 0.31%
Other financial assets 42.93% 46.43% 47.42% 46.98%
Net defined benefit assets 0.54% 0.56% 0.40% 0.27%
Deferred tax assets 0.58% 0.51% 0.52% 0.52%
Other non-current assets 0.08% 0.10% 0.10% 0.08%
Total non-current assets 69.14% 71.59% 70.99% 71.46%

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 100.00 100.00 100.00 100.00
Total assets % % % %

Trade payable and other payables -9.63% -9.11% -8.50% -8.24%

Corporate bonds and loans 6.50% 7.62% 6.84% 4.42%
Other financial liabilities 1.27% 1.36% 1.58% 1.75%
Accrued income taxes 0.30% 0.52% 0.24% 1.11%
Provisions 0.17% 0.15% 0.16% 0.22%
Other current liabilities 0.32% 0.37% 0.47% 0.47%
Total current liabilities 1.81% 19.13% 17.78% 16.21%
Corporate bonds and loans 18.16% 14.59% 14.61% 16.48%
Other financial liabilities 1.44% 1.35% 1.74% 2.46%
Net defined benefits liabilities 1.93% 1.65% 2.03% 2.06%
Provisions 1.93% 1.65% 2.03% 2.06%
118.07 138.83 146.59 145.51
Deferred tax liabilities % % % %
Other noncurrent liabilities 0.42% 0.38% 0.42% 0.39%
Total non-current liabilities 33.11% 30.78% 3.14% 33.54%
Total liabilities
Capital stock 1.53% 1.53% 1.77% 1.86%
Capital surplus 1.97% 2.00% 2.31% 2.44%
Retained earnings 22.41% 20.62% 20.94% 19.81%
Treasury stock -1.13% -1.13% -1.30% -0.96%
Other components of shareholders’ equity 22.36% 25.53% 25.43% 25.45%
Total share of equity attributable to owner of
parents 47.13% 48.56% 49.15% 48.61%
Non-controlling interests 1.56% 1.53% 1.67% 1.64%
Total equity 48.70% 50.09% 50.82% 50.25%
100.00 100.00 100.00 100.00
Total liabilities and equity % % % %

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Horizontal analysis of income statement
2019 2018 2017
Net sales 10.53% 19.63% -1.28%
Cost of sales 10.98% 20.01% -1.04%
Gross profit 9.06% 18.40% -2.03%
Selling general and administrative expenses 12.72% 24.59% 0.55%
Other income -48.03% 92.05% 4.89%
Other expenses 23.23% -20.78% 4.38%
Operating profit -8.65% 15.78% -7.07%
Financial income 9.00% 10.27% -5.25%
Financial expenses 1.79% -0.21% -25.63%
Share of profit(loss)of investments accounted for
by the equity method -45.88% 120.64% 54.11%
Profit before income taxes -3.62% 15.30% -4.91%
Income taxes 17.88% -18.93% -15.97%
Profit from continuing operations
Profit from discontinued operation
Profit -8.08% 26.35% -31.20%
Profit attributable to:
Owners of the parent -9.18% 27.99% -32.36%
Non-controlling interests 24.74% -8.63% 8.48%

Earnings per share

Earnings per share-basic(yen) -9.18% 28.73% -31.95%
Earnings per share-dilute(yen)

vertical analysis of income statement

2019 2018 2017 2016
Net sales 100.00% 100.00% 100.00% 100.00%
Cost of sales -76.87% -76.56% -76.31% -76.13%
Gross profit 23.13% 23.44% 23.69% 23.87%
Selling general and administrative expenses -17.01% -16.68% -16.02% -15.73%
Other income 0.51% 1.09% 0.68% 0.64%
Other expenses -0.55% -0.49% -0.75% -0.70%
Operating profit 6.08% 7.36% 7.60% 8.08%
Financial income 3.46% 3.51% 3.80% 3.96%
Financial expenses -0.46% -0.50% -0.60% -0.80%

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Share of profit(loss)of investments accounted for by
the equity method 0.05% 0.11% 0.06% 0.04%
Profit before income taxes 9.13% 10.47% 10.86% 11.28%
Income taxes -1.92% -1.80% -2.65% -3.12%
Profit from continuing operations
Profit from discontinued operation
Profit -7.21% -8.67% -8.21% -11.78%
Profit attributable to:
Owners of the parent 6.90% 8.39% 7.84% 11.45%
Non-controlling interests 0.32% 0.28% 0.37% 0.34%

Earnings per share

Earnings per share-basic(yen) 0.02% 0.03% 0.03% 0.04%
Earnings per share-dilute(yen) 0.00% 0.00% 0.00% 0.04%

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 Ratio analysis of Toyota motors

Ratios Formulas 2019 2018 2017 2016

1 Liquidity
Current current assets/current liabilities 17.0270 1.48506 1.63140 1.760882
ratio 4 7 3
Quick ratio current assets-inventory/current 16.8832 1.47576 1.60536 1.750635
liabilities 5 2 5

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 assets to its current liabilities. 2019
2018 2017 2016.Toyota has sufficient resources to meet its current obligations. 
The quick ratio shows how well a company can quickly convert its assets into cash in order to pay
off its current liabilities. It also shows the level of acid test ratio.

2 Activity
Inventory turnover Cost of goods sold/inventory 6.94422 6.85789 6.575105 6.591723
5 4
Average collection period Account receivable /average sale 139.289 139.247 140.8758 134.2763
per day 3 2
Average payment period Account payable /average 189.63 202.08 206.08 186.13
purchase per day
Total assets turnover sales/total assets 0.42099 0.38109 0.367501 0.393038
8 2

 Inventory Turnover Ratio is a measure of the number of times inventory is sold or used in a time
period such as a year. There is almost same ratios in each year.
Average collection period measures how quickly cash is being collected from debtors. The longer it
takes for a company to collect, the greater the number of days of collection. Toyota motors collection
period remain same during these financial years, that is almost of 4 months so there is an option to
Toyota to take more debtors.
Average payment period measures how quickly cash is being pay to creditors. The longer it takes for
a company to pay, the greater the number of days of payment. Toyota motors payment period is
longer then collection period that is a good to take more days for payments.
The Asset Turnover is a financial ratio that measures the efficiency of a company's use of its assets
in generating sales revenue or sales income to the company. Companies with low profit margins tend
to have high asset turnover, while those with high profit margins have low asset turnover.

3 Debt Ratios

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 Debt ratio total liabilities /total assets 51.30% 49.91% 49.18% 49.75%
Debt to equity ratio total liabilities /common stock 108.85% 102.79% 100.06% 102.35%
equity
Time interest earned Earnings before income tax& 19.16119 26.16593 20.6494 24.10308
ratio expenses/interest 2

The debt ratio indicate that company has financed close to half of its assets with debts. The higher
the ratio , the greater the degree of indebtedness and the more financial leverage it has.
The Debt-to-Equity Ratio (D/E) is a financial ratio indicating the relative proportion of shareholders'
equity and debt used to finance a company's assets. Closely related to leveraging, the ratio is also
known as Risk, Gearing or Leverage. The little increase found in 2019 rest of the years have almost
standard ratios.
Times interest earned ratio measures a company's ability to continue to service its debt. It is an
indicator to tell if a company is running into financial trouble. A high ratio means that a company is
able to meet its interest obligations because earnings are significantly greater than
annual interest obligations. Toyota motors corporations is in good condition .

4 Profitability ratios
Gross profit margin (sales-CGS)/sales 23.13 23.44% 23.69% 23.87%
%
operating profit operating profit/sales 6.08% 7.36% 7.60% 8.08%
margin
Net profit margin earnings available for common 6.90% 8.39% 7.84% 11.45%
stock/sales
Earnings per share Earnings available for common 491.97 541.67 420.78 618.33
stock/No. of shares
Return on total assets Earnings available for common 2.90% 3.20% 2.88% 4.50%
stock/Total assets
Return on equity Earnings available for common 6.07% 7.02% 6.06% 8.65%
stock/common stock equity

The Gross Profit Margin expresses the gross profit as a proportion of sales. The gross profit margin
ratio is used as one indicator of a business's financial health. It shows how efficiently a business is
using its materials and labor in the production process and gives an indication of the pricing, cost
structure, and production efficiency of your business. The higher the gross profit margin ratio the
better.
Gross profit shows slandered trend over history. It can further be better.

Earnings per share (EPS) is the portion of a company's profit that is allocated to each outstanding
share of common stock, serving as an indicator of the company's profitability.
A higher EPS is the sign of higher earnings and company has strong financial position.
Return on total assets is a ratio that measures a company's earnings before interest and taxes (EBIT)
against its total net assets. more ·This ratio has not a huge difference in these financial years.
Return on equity (ROE) is a measure of financial performance calculated by dividing net income by
shareholders' equity. Because shareholders' equity is equal to a company's assets minus its debt. This
ratio almost in standard position all over these financial years

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5 Market ratio Market price per share/book value 0.8411 0.1689 0.9364 1.00574
per share

The market ratio means that investors are what currently paying for each yen of Toyota motors
corporation.
Market Ratios = Market Price of Common Stock per Share / Earnings per Share
That is little good in 2016 after this in 2017 to 19 this is not much better .

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