Last Updated 10 Jan 2022

Financial Analysis on Toyota and General Motors

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There are different financial ratios that are to be studied with regard to the financial analysis of the financial condition of the two companies, General Motors, and Toyota. This paper seeks to make a general financial analysis of the previously mentioned companies through the available financial ratios. Particularly, this intends to present the relevant financial ratios, comparison of the indicators in the two companies, and interpretation of such. The financial indicators There are several financial indicators that are noted for the two companies. These are the current ratio, quick ratio, net working capital ratio, return on assets, return on equity, earnings per share, inventory turnover ratio, interest cover ratio, dividend yield, and dividend payout ratio. The results for the following are presented in the table below. For GM, the current ratio is computed at 0. 86 with current assets at $60,135 and current liabilities at $70,308 where both values are in million dollars. On the other hand, Toyota’s current ratio is placed at 0.

32 as computed from the current assets of $4,811,532 and current liabilities of $15,039,178. For the computation of the quick ratio, GM has a ratio of 0. 5 while Toyota has 0. 0 This is taken from the quick assets divided by the current liabilities of the two companies. In comparison to their liquidity ratios, GM has a liquidity ratio of 0. 38, and Toyota has 0. 19. The networking capital ratio is -6. 67 for GM and -28. 10 for Toyota. These values were computed from the net working capital and total assets for Toyota and GM. The return on assets for GM is 26.0 whereas it is 0. 017 for Toyota and it is computed through the net income divided by the average total assets for the companies. In addition to this, the return on equity for GM is 0. 0 and 0. 0 for Toyota where it is taken from the net income over the average stakeholders’ equity. Furthermore, a great difference may be seen from the earnings per share of the two companies where it is $-68. 45 for GM whereas it is $5. 40. For a particular day for GM, the turnover was 33 while Toyota had zero. Above all these, the dividend payout ratio for GM is 9.9 % and it is 2. 4 % for Toyota. The dividend payout ratio for GM is pegged at 0% and for Toyota, it is at 40%. These are the results of the financial indicators presented above. It can be seen that the two companies have their own strengths and weaknesses. GM has more current assets for its current liabilities as compared to Toyota. However, the ability to generate profit for the outstanding shares marks a great difference for the two companies.

Reference

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  1. http://www.advfn.com/p.phppid=financials&cb=1215163649&btn=sf_ok&symbol=NYSE%3AGM&sf_symbol_search=NYSE%3AGM&ss_symb=GM. ADVFN Financial. “Toyota.
  2. http://www.advfn.com/p.php?pid=financials&symbol=NYSE%3ATM. Financial Highlights. Retrieved July 04, 2008.
  3. http://www.toyota-industries.com/ir/library/annual/2007/ar/p02-03.pdf.
  4. http://www.gm.com/corporate/investor_information/docs/fin_data/gm07ar/download/gm07ar_full. pdf

Related Questions

on Financial Analysis on Toyota and General Motors

What does financial reporting quality mean for Toyota?

Financial reporting quality relates to the accuracy with which Toyota Motor Corp.’s reported financial statements reflect its operating performance and to their usefulness for forecasting future cash flows. Aggregate accruals deriving measures of the accrual component of Toyota Motor Corp.’s earnings.

What is Toyota's operating performance ratio?

Operating performance ratios describe the relationship between the Toyota Motor Corp.’s level of operations and the assets needed to sustain operating activities. Measures how efficiently Toyota Motor Corp. generates revenues from its investments in fixed or total assets.

What is the financial position of General Motors Company?

The financial position of General Motors Company is about the same as the average financial condition of the listed companies that submit financial statements to the U.S. Securities and Exchange Commission. The above is a comparative analysis of the financial position and performance of the company.

What are the key facts of Toyota?

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 1people. 2. EXTERNAL ENVIROMENT OF AUTOMOTIVE INDUSTRY: 2.1.

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Financial Analysis on Toyota and General Motors. (2018, Feb 17). Retrieved from https://phdessay.com/financial-analysis-on-toyota-and-general-motors/

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