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008
Ownership:
Cost
Management:
Performance Targets
GM Financials
Income Statement Revenue Gross Profit Margin Operating Margin Total Net Income Net Profit Margin Balance She e t Cash Net Receivables Inventories Other Current Assets Total Current Assets Net Fixed Assets Other Noncurrent Assets Total Assets Accounts Payable Short-Term Debt Other Current Liabilities Total Current Liabilities Long-Term Debt Other Noncurrent Liabilities Total Liabilities Preferred Stock Equity Common Stock Equity Total Equity Dec-02 177.3
26.1%
5.7%
0.6
0.3%
De c-02 18.6
141.4
10.0
23.9
193.8
34.9
95.2
324.0
26.2 2.4 35.6 64.2 163.9 75.4 304.3 0.0 19.7 19.7 Dec-00 184.6 28.4% 9.1% 4.5 2.4% Dec-00 10.3 100.2 10.9 24.8 146.3 34.0 122.8 303.1 25.7 2.2 35.2 63.2 142.4 66.5 272.9 0.0 30.2 30.2 Dec-99 167.4 21.0% 5.6% 6.0 3.6% Dec-99 10.4 123.1 10.6 19.8 164.0 32.8 77.9 274.7 21.5 2.0 33.9 57.4 129.7 59.6 254.1 0.0 20.6 20.6 Dec-98 154.0 23.4% 4.2% 3.0 1.9% Dec-98 10.9 76.9 12.2 37.4 137.3 37.2 82.9 257.4 20.0 0.0 0.0 20.0 114.2 97.7 242.4 0.0 15.0 15.0 Dec-97 166.4 21.9% 2.2% 6.7 4.0% Dec-97 11.3 66.4 12.1 11.7 101.4 34.6 92.9 228.9 15.8 0.0 0.0 15.8 93.0 98.7 211.4 0.0 17.5 17.5
35% 30% 25% 20% 15% 10% 5% 0% Oct-99 Jul-00 Apr-01 Dec-01 Oct-02
GM (w/S aab) DaimlerChrysler (w/Mercedes) Honda
2.008 - Spring 2004
Toyota Financials
$ billions Income Statement Revenue Gross Profit Margin Operating Margin Total Net Income Net Profit Margin Balance Sheet Cash Net Receivables Inventories Other Current Assets Total Current Assets Net Fixed Assets Other Noncurrent Assets Total Assets Accounts Payable Short-Term Debt Other Current Liabilities Total Current Liabilities Long-Term Debt Other Noncurrent Liabilities Total Liabilities Preferred Stock Equity Common Stock Equity Total Equity Mar-02 107.4 26.5% 7.6% 4.2 3.9% Mar-02 12.4 29.9 7.2 11.0 60.6 38.3 46.0 144.9 10.7 22.4 17.0 50.1 27.9 6.7 90.4 0.0 54.5 54.5 Mar-02 106.0 24.9% 6.0% 5.4 5.1% Mar-02 12.2 26.3 7.1 9.8 55.4 36.0 46.0 137.4 10.4 17.6 16.8 44.8 24.9 4.6 80.2 0.0 57.1 57.1 Mar-00 119.7 27.4% 5.5% 4.5 3.8% Mar-00 14.4 26.2 7.4 11.2 59.2 43.9 51.7 154.9 12.2 20.5 15.9 48.6 27.5 6.2 89.8 0.0 65.1 65.1 Mar-99 105.8 27.8% 5.9% 3.7 3.5% Mar-99 11.1 21.8 6.3 8.0 47.3 41.2 43.0 131.5 10.3 14.8 17.4 42.5 24.9 5.5 76.2 0.0 55.2 55.2 Mar-98 88.5 27.0% 6.4% 3.4 3.9% Mar-98 9.3 8.9 5.6 24.6 48.3 34.9 21.7 105.0 8.0 11.5 14.6 34.1 21.1 3.5 59.3 0.0 45.6 45.6
Financial Comparison
GM 2001 Current Ratio Days Receivable Asset Turnover Inventory Turnover ROA ROE Gross Margin Operating Margin Profit Margin 3.02 291 0.57 16.90 0.2% 3.0% 26.1% 5.7% 0.3% 2000 2.32 198 0.64 17.11 1.5% 14.8% 28.4% 9.1% 2.4% 1999 2.86 269 0.63 14.65 2.2% 29.1% 21.0% 5.6% 3.6% 2001 1.21 102 0.76 15.04 2.9% 7.7% 26.5% 7.6% 3.9% TOYOTA 2000 1.24 91 0.73 14.61 4.0% 9.5% 24.9% 6.0% 5.1% 1999 1.22 80 0.84 17.35 2.9% 7.0% 27.4% 5.5% 3.8%
NPV Payback Period Average Return on Book Internal Rate of Return Profitability Index
Discount rate: Return foregone by investing in the project rather than in other opportunities
15.10
9.97
Operations: Bar chuck, cut off and bore 8.49 3.17 47.50 1.92 Operations: Compact (100-ton press) Sinter Harden Grind ends perpendicular to pitch diameter Deburr Inspect Perishable tools and gages, per piece Total 2.37 2.56 1.92
3 4 5 6 7 8 n
Broach keyway Hob teeth Harden Grind ends perpendicular to pitch diameter Deburr Inspect Perishable tools and gages, per piece Total
17.10 100.00
8.19 31.73
10
=
Direct Labor Cost
Engineering 15%
R&D 5%
=
Overhead Cost
Manufacturing 40%
=
Distribution Cost
Manufacturing 40%
+
General & Administrative Cost
Selling Price
Manufacturing Costs
11
12
100
10
10
102
103
103
104
105
106
Materials
Value adde d
Machines
Value adde d
Total Cost (TC) Variable Cost (VC) Fixed Cost (FC) Waste: waiting for materials, watching machine running, producing defects, looking for tools, fixing machine breakdowns, producing unnecessary items, etc. Waste: transportation, storage, inspection and rework Waste: unnecessary movement of machine, setup time, machine breakdown, unproductive maintenance, producing defective products, producing products when not needed, etc.
16
Waste
Waste
Waste
Volume, n
TC = FC + nVC
15
17
18
Station 4
Cost Driver
Quantity of Driver
Total Cost
- Assembly Non-value Added Activities: - Machine setup - Tool Load/Unload - Part Load/Unload - Inspection Total
$8.00 / hour
1 Person Direct labor Machine time 1 Person Direct labor CMM Time
1 hour per day 2 hours per day 45 hours per day 3 hours per day
$8.00 per day $120.00 per day $6.00 per day $105.00 per day $303.00
20
19
Traditional Costing
Overhead Costs Production Overhead 600 Machine Classes Materials Overhead Support Overhead Materials Overhead Overhead Cost Pools DM Direct Material Allocation Bases
DM Direct Material
Cost to date
Per order
# of special components
Cost to date
Products Products
Products
21
22
Distribution of Orders
3% 630,000
Number of motors
$105,000 6,000 36,000 120,000 267,000 (74%) 5,700 22,500 33,000 61,200 (17%) 13,800 19,500 $361,500
> 99 Motors 9%
44%
352,800
Number of orders
65,625
23
24
Volume
Total Ratio to Traditional
Traditional Costs
Low
Revised Cost per Unit 1 unit 10 units 20 units 100 units A 613.6 370.6 357.1 346.3 B 713.2 416.2 399.7 386.5 C 812.8 461.8 442.3 426.7 D 1,012.0 553.0 527.5 507.1 E 1,510.0 781.0 740.5 708.1
Undercosted
Product Complexity Small batch sizes Long set-up times Unique components Special inspection and tests Extensive material handling Special vendors
25 2.008 - Spring 2004
Customer Complexity Customized products Short lead times Unpredictable orders Extensive technical support Extensive post-sales support Special test and requirements
26