FINANCIAL MANAGEMENT

Financial Management



Abstract

The aim of this paper is to convince the banker to provide a loan of $100000 for investing in Toyota Motors. Toyota is the world's number one automobile company. It is based in Japan and operates in 170 countries all over the world. The core operations of the company are automobile manufacture, but now it has diversified in financial sector. The performance of the company is appraisable and we thing investing in Toyota motors will provide us with good returns. Toyota is active in various areas in addition to its core business of automobile manufacturing, including housing; communications; GAZOO; marine vehicles; biotechnology and a forestation. For FY2010, Toyota generated 90.7% of its total revenue from automotive operations; 6.5% from financial operations; and 2.8% from other business operations. Further, Toyota generated 75.5% of its revenues from vehicles sales, 8.1% from parts and components for after service, 1.9% from parts and components for overseas production, 6.5% from financial services and the remaining revenues from other businesses. Toyota production system keeping costs comparably down Toyota developed the internationally recognized production system known as 'Toyota Production System' to achieve mass-production efficiencies even for small production volumes. Based on ratio analysis (comparing with competitors), I is found that Toyota Motors is more profitable than its competitors. It has stronger liquidity position, and market share. Based on financial analysis, it is recommended that investing in Toyota Motors would be a profitable decision. It is expected that revenues of the company will increase with 6.8% for next five years (on compound basis), and operating margin will grow by 6.0% on average. Therefore, if we invest $100000 in Toyota, out money will grow by 6.0% annually. So, at the end of 5 years, our investment earns $33822.

Financial Management

Company Overview

Toyota Corporation is number one auto producer in the world. Toyota is active in various areas in addition to its core business of automobile manufacturing, including housing; communications; GAZOO; marine vehicles; biotechnology and a forestation. For FY2010, Toyota generated 90.7% of its total revenue from automotive operations; 6.5% from financial operations; and 2.8% from other business operations. Further, Toyota generated 75.5% of its revenues from vehicles sales, 8.1% from parts and components for after service, 1.9% from parts and components for overseas production, 6.5% from financial services and the remaining revenues from other businesses. A diversified product base helps the company to serve larger customer base and enables it to mitigate market volatility in any specific market segment. Toyota production system keeping costs comparably down Toyota developed the internationally recognized production system known as 'Toyota Production System' to achieve mass-production efficiencies even for small production volumes.

Toyota has been concerned over its aging lineup of products. This is due to the company's history of paying less attention towards “cutting edge design”. In the past one year, the sales of the company's best cars declined considerably. For instance, Toyota Camry's sales fell by 10% in December 2010 from the previous year. Similarly, Toyota Corolla's sales plunged by 35% in ...