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Contents
Company Perspectives .................................................................................... 3 Key Dates ........................................................................................................ 3 Company history ............................................................................................. 4 Financial STATEMENTS............................................................................... 5 INCOME STATEMENT ............................................................................. 5 Balance sheet ............................................................................................... 6 Balance sheet (continued) ............................................................................ 7 Financial ratios ................................................................................................ 8 Analysis........................................................................................................... 9 Net operating working capital ..................................................................... 9 Total operating capital (toc) ........................................................................ 9 Net operating profit after taxes (NOPAT) ................................................. 10 Free Cash Flow (fcf) .................................................................................. 10 Market value added (mva) ......................................................................... 11 Recommendation .......................................................................................... 11

Company Perspectives
Mitsubishi Motors Corporation intends to grow as a global player and as a strong partner within the DaimlerChrysler-Mitsubishi Motors Corporation alliance. Cross-functional alliance teams are now working together at a global level. Mitsubishi Motors Corporation boasts a proud history of technological innovation. Although automobiles have become an established part of modern life, challenges still remain to boost their safety and ecocompatibility without sacrificing any of the benefits or convenience they offer. Mitsubishi Motors Corporation is developing a variety of technologies designed to improve the safety and environmental features of its products.

Key Dates
1970: Mitsubishi Motors Corporation is founded. 1980: Mitsubishi produces one million cars annually. 1982: Mitsubishi enters the U.S. market under its own brand name. 1988: Mitsubishi becomes a public company. 1991: Mitsubishi acquires Value Rent-A-Car. 2000: Mitsubishi forms partnership with DaimlerChrysler AG. 2002: Mitsubishi begins restructuring program.

Company history
Mitsubishi Motors Corporation is Japan's fourth largest car company, and manufactures and markets passenger cars and light commercial trucks in its domestic markets as well as in other Asian countries and North America. Its line of passenger cars includes the Diamante sedan, the Gallant sedan, several mini-cars for the Japanese market, the hatchback Colt, and the Montero and Endeavor sport utility vehicles for North American consumers. Mitsubishi Motors also operates a financial services division that oversees lending and financing for its car sales. In large part to escape a crushing debt burden, though also to address declining sales, Mitsubishi Motor's parent company, the Mitsubishi Group, sold a 37 percent stake in Mitsubishi Motors to German auto giant DaimlerChrysler AG. (Mitsubishi Heavy Industries controls an additional 15 percent share of Mitsubishi Motors.) Mitsubishi Motors has embarked on a massive restructuring program instigated by DaimlerChrysler. As part of this program, Mitsubishi Motors spun off its truck business as Mitsubishi Fuso Truck and Bus Corp. in 2003.

Financial STATEMENTS
INCOME STATEMENT

Balance sheet

Balance sheet (continued)

Financial ratios

Analysis
Net operating working capital
Net Operating Working Capital is a traditional measure of a companys liquidity and potential for growth. Net operating working capital is defined as non-interest bearing current assets minus non-interest charging liabilities: Net operating working capital = current assets current liabilities Generally, net operating working capital is equal to cash, accounts receivables, and inventories less accounts payable and accruals. The net operating working capital is 2518.3 in 2010. It rose to 2836.9 in 2011 and then decreased to 2654.7 in 2012.The net operating working capital is positive for all the years which means that the firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. An increase in working capital indicates that the business has either increased current assets (that it has increased its receivables or other current assets) or has decreased current liabilities. Changes in working capital will impact a business cash flow. When working capital increases, the effect on cash flow is negative. This is often caused by the liquidation of inventory or the drawing of money from accounts that are due to be paid by the business. On the other hand, a decrease in working capital translates into less money to settle short-term debts.

Total operating capital (toc)

Mitsubishi Motors increased its operating capital to USD 7117.5 from USD 7074.2 or by USD 43.3 during 2011. Furthermore, most of this increase went into working capital, which rose from USD 2836.9 to USD 2518.3 or by USD 318.6. This shows an increase of approximately 0.61% increase versus a total revenue increase of 26.49%. Hence, the company is doing well and has shown an increase in the capital invested resulted in to a large increase in total revenue generated from operating capital. However, the operating capital shows a decrease by USD 258.4 which is a decrease of 3.6%. The total revenue also decreased by 1.16% which shows that due to 9

decrease in operating capital resulted in a decrease in total revenue. The receivables show an increase of USD 400.8, Mitsubishi motors should focus on collecting its receivables.

Net operating profit after taxes (NOPAT)

In 2011 Mitsubishi Motors generated an after-tax operating profit of USD 283.6 which is 193% increase than last years NOPAT. The operating profit has increased to USD 153.2 from USD 48.3 and the interest expense declined by USD 2.Debt increased as shown in balance sheet, due to increase in investment in operating capital. However, interest expense rose to USD 150.8 in 2012, and long term debt decreased to USD 1801.1 which also affects the operating capital to decline.

Free Cash Flow (fcf)

Free cash flow is an important measurement of the unconstrained cash flow of the company. It measures a companys ability to generate internal growth and to return profits to shareholders. In 2010 the FCF is negative which is probably because of the increase in Long-term investments from 2009 to 2010; they have used up their cash to do so hence the decline in the cash flow in addition to this the NOPAT for 2010 is also quite low as compared to 2011 where we can see that there has been a rise in NOPAT resulting in a positive FCF this means that Mitsubishi Motors has managed their operations and cash well because its operating income as well as cash balance has increased subsequently. In 2012 we can indicate a problem with Mitsubishis FCF because the net investments are negative because investments have decreased between 2011 and 2012 from the Income Statement we can see that they have sold some of the investments and also the TOC has decreased from the previous year. Many high growth companies have negative FCF because they are making large investments in operating assets to support growth but in this case they need to manage their cash and investments efficiently. 10

Market value added (mva)

It shows the difference between the market value of a company and the capital contributed by investors (both bondholders and shareholders). In other words, it is the sum of all capital claims held against the company plus the market value of debt and equity. The MVA for Mitsubishi Motors has faced a decline since 2010 all the way till 2012, this shows that he value of management's actions and investments are less than the value of the capital contributed to the company by the capital market. The decrease in TOC supports the result i.e. there has been a decline in investments over the years which shows that the management at Mitsubishi Motors is not efficient or are not properly working towards the shareholders interest. Mitsubishi needs to enhance and improve its management which will help improve its market value and share price.

Recommendation
Mitsubishi Motors performance has declined in the year 2012 or we can say the in the past three years it has been fluctuating. Following are the steps Mitsubishi should take to improve performance in the future 1. Mitsubishi Motors should focus on collecting its receivables. 2. They need to manage their cash and investments efficiently. 3. Mitsubishi needs to enhance and improve its management which will help improve its market value and share price.

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