COMPARATIVE ANALYSIS: FORD MOTOR COMPANY AND TOYOTA

MOTOR CORPORATION

COMPILED BY:
Shadman Tauheed
051
MBA (2013-2015)
SEC B

Acknowledgement
This satisfaction and euphoria that accompany the successful completion of any task that would be
incomplete without mentioning the name of the people whose constant guidance and encouragement
has crowned all our efforts and success.
Firstly, we would like to thank Ms. Teena Bagga who has through her vast experience and knowledge
has been able to guide us, both ably and successfully toward the completion of the term paper for
information and technology for managers project.
It is my growing feeling to place on record my best regards, deepest sense of gratitude to all those
who have helped us by imparting the judicious and precious guidance which were extremely valuable
for our study both theoretically and practically.

28th October 2013

Shadman Tauheed (B-51)

FORD
Henry Ford designed his first moving assembly line in 1913
Wheels for the world-the motto behind popularization of cars
Each section of the production process was divided into component parts
Combination of precision, continuity, and fast-paced brought the world mass production
In Highland Park, Model T production reached record levels, every day a car came off the
assembly line every ten seconds
The fourth-largest automotive company in the world in terms of sales
Sells cars on 6 continents
Car Brands: Ford, Mercury, Lincoln and Volvo
in March of 2010 confirmation of sale of Geely Automobile Holdings Ltd)
Since the mid-90s Ford continually loses significance in the American market
Over the same period steadily increases its share in the European market
Reasons for the gap between the development of the brand in the U.S. and Europe:
high labor costs in the U.S.
high expenditure on healthcare in the U.S.
strong trade unions in the U.S. (high pension commitments)
strong economic growth in lower combustion cars

FORD: More Economic

Dominance of large cars: SUVs, Pick ups
Rapid fluctuations in oil prices and legislators striving to reduce consumption of materials led
to reorganization
Restructuring of the three production lines for production of more economic models in Europe
(Mondeo, Focus etc.)
in short-run minimization of costs
Ultimately, Ford intends to make engines in all their models to be more economical
In 2009 to market were introduced four hybrid models based on technology leased from
Toyota

FORD: Hybrid Technology

Currently, Ford has four hybrid models
Ford Focus Hybrid is a direct threat to so far the most popular Prius (hybrid line of
Toyota)
In 2010, the company plans to spend an additional $450 million to develop electric motors
By 2012, Ford wants to produce own hybrid technology and plug-ins
Ford has invested more than $550 million in restructuring its manufacturing facility in
Michigan
What if the market chooses a different path?

FORD: One Ford

Despite the very large amount of cars produced, so far Ford has derives small economies of
scale by applying a separate, independent technologies and models for European, US and
developing markets
One Ford changed approach
Ford moves the emphasis to universal models for use in different regions of the world
(the first "world car"-new Ford Fiesta)

FORD: Wrong Sales Model

From the 90s Ford has created demand
sales on installments without interest charged
discounts
promotions combined with a loan
Ford exceptionally strong suffered from a crisis on a real estate market
in recent years, sales in the U.S. were strongly associated with the property market
it is estimated that in California, 30% of car purchases has been financed with a
mortgage
Feeling the effects of this approach, Ford began to change strategy
less emphasis on creating demand
emphasis on quality and safety

FORD: Developing Markets

Ford is mainly engaged in the American market,
which slowly begins to lose its attractiveness
Fords task now is to develop a universal line for use in every country (European Ford Fiesta
in the U.S., Ford Transit Van in Asia)
Whether european car models will be appealing to clients in India or Brazil depends the future
of Ford in the long term.

Risk Factors
Ford is exposed to various kinds of risk not only to the market risk
currency risk, commodity price changes, interest rate risk,
financing risk, risk of extraordinary events are just some of the most important kinds of
risk present
risk of loss of liquidity: hedge against it by sale of receivables (securitization), issue of
debt and bank loans
insurable risks: the loss (damage) of property, civil liability companies insure
themselves privately
they use derivatives to hedge currency, interest rate or change
in commodity prices risk by forwards, swaps, options

does not use derivative to speculate

TOYOTA
Toyota's history began at the end of XIX century
Sakichi Toyoda invented Japan's first power loom which revolutionized the countrys textile
industry
Two years later, he founded the company Toyoda Automatic Loom Works
ToyodaSakichis son, Kiichiro Toyoda invested 100,000 pounds in the creation of Toyota
Motor Corporation in 1937 (TMC)
Sakichi Toyoda received this money for selling the patent rights to an automatic loom
The biggest carmaker in the world in 2009 (more than 7.5 million cars)
Main markets are Japan and North America, but recently we can see a strong growth in Asian
and South American markets
Toyota has three brands: Toyota, Lexus and Scion

TOYOTA: hybrid technology

Toyota as one of the first ones started a hybrid cars production line (including leasing its
technology to Ford)
At present, hybrid Toyota - Prius line, represents approximately 73% of all hybrid vehicles
sold in the U.S.
So far in the U.S. Toyota sold the 1,000,000+ hybrid cars
In addition, Toyota announced its intention to manufacture electric cars with lithium-ion
batteries Toyota Plug-HV

TOTOTA: withdrawal of models

Several serious flaws in the models has significantly hurt Toyotas image
in 2009, the company had to withdraw from the market 3.8 million vehicles due to the
acceleration system flaw
In the short term:
it is estimated that due to defects and withdrawals Toyota models suffered losses of $ 3
billion in 2010
over the past year, throughout the world over 9 million vehicles have been withdrawn
for consideration more than 30 lawsuits are waiting
In the long term:
current crisis has significantly hurt the reputation of the company
competition has used well (Chrystler, Ford and Honda hasorganized the promotions,
giving discount on a new car for customers who got rid of the old Toyota)

TOYOTA: the future

Car Sales in highly developed countries will fall and remain at low levels
majority of consumers demand is already satisfied
relatively low economic growth
The biggest outlays directed on emerging markets
mainly Brazil, Russia, India, China (BRIC) countries
Toyota earlier than other companies in the sector began to invest in the development of
appropriate infrastructure and brand awareness in the above countries
in 2009 Toyota announced the beginning of motor vehicle production in India (the
company Toyota Kirloskar)
in 2010 Toyota plans to produce 100,000 cars in the new factory opened in India

TOYOTA: Trends and Expectations

Japan
investing in luxury brands (Lexus)

in 1990 10% of Japan's population was over 65 years, in 2006, the number
suppose to double

older society saves more and raises the demand for more luxury goods

USA
collapse of the real estate market

strength of real estate market has always been related to car market because
consumers often fund the purchase of car with a mortgage owed

stagnation in credit market will reduce demand for new cars

demand for green technologies

oil prices are rising, resulting in increased demand for cars Hybrid (Prius model)

in December of 2007. U.S. government passed a law requiring the car

manufacturers to reduce the combustion of up to 35 mpg for cars, trucks and
SUVs Toyota,
typically produces small, economical cars and its standards are already satisfy
new requirements

hybrid legislation

USA introduces new law to encourage development of hybrid

technologies

at present, when buying a car you can count on the hybrid

tax relief of up to $ 3,400, depending on the amount of car sales (the more cars
the company sells the smaller the deduction ) the aim is to support companies
desiring to enter the market with hybrid technology

World Market
demand for cars will depend on the trend in oil, steel and aluminum prices

Risk factors
Toyota is exposed to risks arising from:
changes in exchange rates
interest rates
availability of materials
changes in prices of materials
Instruments used to protect:
forward contracts
currency and interest rate options
swaps
Unfortunately, Toyota does not protect itself from price changes and changes in supply of
materials
only protection is to maintain reserves of some materials
Toyota settles its invoices in Japanese yen which increases its currency risk
Changes in exchange rates reflect very strongly on company results
change in the dollar-yen exchange rate of 1% will change revenues by about $42
million
Toyota protect itself from risk with the help of swaps and futures
Despite this, the company is unable to protect itself from a falling demand for exports of
Japanese cars due to a change in exchange rates

SWOT analysis
FORD
Strengths

Weaknesses:

Hybrid technology

Weak sales results

Well-known brand in the USA

Inability to accommodate products

to changes on the market

Opportunities:
Promotion of ecology-friendly cars
TOYOTA
Appeal of a national brand in crisis

Threaths:

Further evolution of the crisis

TOYOTA
Strengths
Hybrid technology

Weaknesses:
Lack of protection against changes

Ability to cope in crisis

Opportunities:
Promotion of economical and
ecology-friendly cards
In crisis, lesser importance of
competitors

in prices and demand

Threaths:

Rapid increase of material costs or

decrease in supply

Cash Flow Analysis

FORD
Operating
2011
2012
2013

+
+
+

Investing

Financing

TOYOTA
Operating

+
-

+
+
+

Investing

Financing

From the table above it can be seen that for Ford in the year 2011 there has been in flow of cash form
operating as well as financing activities and cash outflow in investing activities. Whereas Toyota has
only inflow from operating activities i.e. it has not gone for cash inflow from financing activities (no
loan, no issue of shares).
For the year 2012 and 2013 the cash inflow for both the companies are the same i.e. from operating
activities and there is outflow by mean of investing and financing.

Ratio analysis of Ford Motor Company

Financial
Revenue USD Mil

Gross Margin %

2003-12

2004-12

2005-12

2006-12

2007-12

2008-12

2009-12

2010-12

2011-12

2012-12

TTM

164,196 171,652 177,089 160,123 172,455 146,277 118,308 128,954 136,264 134,252 142,501

20.9

20.9

18.2

7.0

16.9

11.8

15.5

19.0

16.8

16.1

15.6

8,116

10,681

7,493

-7,926

8,031

-4,130

-2,824

6,658

6,943

6,291

6,097

Operating Margin %

4.9

6.2

4.2

-4.9

4.7

-2.8

-2.4

5.2

5.1

4.7

4.3

Net Income USD Mil

495

3,487

2,024

-12,613

-2,723

-14,672

2,717

6,561

20,213

5,665

6,073

Earnings Per Share USD

0.27

1.73

1.05

-6.72

-1.38

-6.46

0.86

1.66

4.94

1.42

1.52

Dividends USD

0.40

0.40

0.40

0.25

0.20

0.30

Payout Ratio %

80.0

22.2

35.1

14.2

19.8

1,832

1,830

1,846

1,879

1,979

2,273

2,992

4,178

4,111

4,015

4,004

6.62

8.77

7.24

-1.83

2.67

-6.98

-2.34

-0.18

3.94

4.04

4.87

Operating Cash Flow USD Mil

20,195

24,514

21,679

9,611

17,098

-179

16,042

11,477

9,784

9,045

9,355

Cap Spending USD Mil

-7,749

-9,237

-7,517

-6,848

-6,022

-6,696

-4,561

-4,092

-4,293

-5,488

-6,281

Free Cash Flow USD Mil

12,446

15,277

14,162

2,763

11,076

-6,875

11,481

7,385

5,491

3,557

3,074

6.79

8.35

7.67

1.47

5.60

-3.02

3.84

1.77

1.34

0.89

89,880 157,480 104,352 102,615 101,403

36,806

99,358

81,737

82,690

74,816

Operating Income USD Mil

Shares Mil

Book Value Per Share USD

Free Cash Flow Per Share USD

Working Capital USD Mil

Margins % of Sales

2003-12

2004-12

2005-12

2006-12

2007-12

2008-12

2009-12

2010-12

2011-12

2012-12

TTM

Revenue

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

COGS

79.06

79.15

81.85

92.97

83.07

88.17

84.54

81.00

83.18

83.86

84.42

Gross Margin

20.94

20.85

18.15

7.03

16.93

11.83

15.46

19.00

16.82

16.14

15.58

SG&A

10.65

14.63

13.92

11.98

12.28

14.65

11.21

9.24

8.50

9.07

9.11

Other

5.35

6.64

4.60

3.23

2.38

2.19

Operating Margin

4.94

6.22

4.23

-4.95

4.66

-2.82

-2.39

5.16

5.10

4.69

4.28

-4.11

-3.40

-3.10

-4.45

-6.83

-7.02

4.94

0.38

1.28

1.06

1.36

0.83

2.83

1.13

-9.40

-2.17

-9.85

2.56

5.54

6.37

5.75

5.63

R&D

Net IntInc& Other

EBT Margin

Profitability

2003-12

2004-12

2005-12

2006-12

2007-12

2008-12

2009-12

2010-12

2011-12

Tax Rate %

9.85

19.31

2.28

8.28

Net Margin %

0.30

1.94

1.14

-7.88

-1.58

-10.03

2.30

5.09

14.83

4.22

4.26

Asset Turnover (Average)

0.54

0.56

0.63

0.58

0.62

0.59

0.57

0.72

0.79

0.73

0.76

Return on Assets %

0.16

1.10

0.72

-4.60

-0.98

-5.90

1.32

3.65

11.78

3.07

3.22

27.12

18.24

20.80

49.62

11.87

11.95 10.23

Return on Equity %

5.74

24.08

13.96

-265.76

-251.78

281.62

36.58 33.54

Return on Invested Capital %

-3.31

-1.35

-2.05

-10.92

-5.76

16.24

Financial Leverage (Average)

Interest Coverage

2012-12

TTM

26.63 24.35

2.42

2.88

16.20 15.52

2003-12

2004-12

2005-12

2006-12

2007-12

2008-12

2009-12

2010-12

2011-12

2012-12

Latest Qtr

Year over Year

0.47

4.54

3.17

-9.58

7.70

-15.18

-19.12

9.00

5.67

-1.48

14.71

3-Year Average

-1.16

1.86

2.71

-0.83

0.16

-6.17

-9.60

-9.23

-2.34

4.30

5-Year Average

2.60

1.09

0.81

-0.28

1.08

-2.28

-7.17

-6.15

-3.18

-4.89

10-Year Average

4.23

2.94

2.59

0.86

1.16

0.13

-3.13

-2.73

-1.74

-1.95

Year over Year

-17.66

31.60

-29.85

4.28

-9.39

-3.94

3-Year Average

-22.91

-8.74

-9.07

-6.06

5-Year Average

-13.76

-10.49

-15.81

-4.01

-2.34

-4.77

10-Year Average

-2.64

-4.00

-7.37

-8.78

-9.32

-4.39

Year over Year

604.44

-41.96

141.48

208.08

-71.97

3-Year Average

-47.73

27.75

5-Year Average

-53.21

-13.59

-10.21

-4.87

26.52

10-Year Average

-15.05

-4.11

-6.90

-9.33

6.59

Year over Year

540.74

-39.31

93.02

197.59

-71.26

15.38

3-Year Average

-51.04

18.19

5-Year Average

-52.62

-14.24

-14.51

-13.05

9.59

10-Year Average

-18.55

-4.79

-6.78

-13.65

-3.21

Revenue %

Operating Income %

Net Income %

EPS %

Cash Flow Ratios

200312

200412

200512

2006- 2007- 2008- 2009- 2010- 2011- 201212

12
12
12
12
12
12

TTM

Operating Cash Flow Growth %

YOY

8.38

21.39 -11.56 -55.67 77.90

-28.46 -14.75 -7.55

Free Cash Flow Growth % YOY

9.61

22.75

-35.68 -25.65 -35.22

Cap Ex as a % of Sales

4.72

5.38

4.24

4.28

3.49

4.58

3.86

3.17

3.15

4.09

4.41

Free Cash Flow/Sales %

7.58

8.90

8.00

1.73

6.42 -4.70

9.70

5.73

4.03

2.65

2.16

25.14

4.38

7.00

4.23

1.13

0.27

0.63

0.51

Free Cash Flow/Net Income

Balance Sheet Items (in %)

-7.30 -80.49 300.87

-0.22 -4.07

0.47

2003-12 2004-12

2005-12 200612

2007-12 200812

2009-12 2010-12 2011- 201212

12

Latest
Qtr

Cash & Short-Term Investments

12.44 11.64

15.79 19.97

18.19 18.07

30.84 28.69 27.25 27.50

28.82

Accounts Receivable

35.96 39.88

42.49 41.51

41.99 45.60

43.41 47.03 44.04 43.21

42.48

Inventory

2.91

3.68

3.81

4.16

3.62

3.95

2.80

3.59

3.31

3.86

4.18

Other Current Assets

3.19 16.60

12.18

Total Current Assets

54.50

74.27

65.64

63.80

67.62

77.05

79.31

74.60

74.57

75.48

Net PP&E

13.29 15.22

12.72 14.07 12.54 13.09

13.18

Intangibles

2.30

71.81

2.48

15.11 13.82
2.21

2.49

12.98 13.08
0.74

0.73

0.11

0.06

0.06

0.05

0.04

Other Long-Term Assets

29.91 10.48

8.42 18.05

22.48 18.57

10.13

6.55 12.80 12.30

11.29

Total Assets

100.00 100.00

100.00 100.00

100.00 100.00

100.00 100.00 100.00 100.00

100.00

Accounts Payable

6.46

7.34

8.47

8.45

Short-Term Debt

9.36

9.94

Taxes Payable

7.46

6.77

8.18

7.86

7.93

10.68

10.12 29.16

9.09

6.64

9.88 17.11

19.30

Accrued Liabilities

10.18 10.66

27.08

8.72

8.44 13.16

5.97

9.11

1.48

1.35

6.38

Other Short-Term Liabilities

0.04

1.69

1.47

1.68

11.00

5.76

9.02

8.91

1.75

Total Current Liabilities

26.05

18.00

35.55

28.80

27.49

50.76

26.06

29.68

28.23

35.31

38.13

Long-Term Debt

47.55 59.10

57.27 51.83

50.22 41.47

59.21 53.76 46.01 38.02

35.67

Other Long-Term Liabilities

22.71 17.41

2.37 20.62

20.27 15.70

18.74 16.97 17.33 18.31

16.43

Total Liabilities

96.31

94.52

95.19 101.24

97.98 107.93

104.01 100.41

3.69

5.48

Total Stockholders' Equity

Total Liabilities & Equity

Liquidity/Financial Health

100.00 100.00

4.81

-1.24

100.00 100.00

2.02

-7.93

100.00 100.00

91.57

91.63

90.23

8.43

8.37

9.77

100.00 100.00 100.00 100.00

100.00

-4.01

-0.41

2003-12

2004-12

2005-12

2006-12

2007-12

2008-12

2009-12

2010-12

2011-12

2012-12

Latest Qtr

Current Ratio

2.09

3.99

2.09

2.28

2.32

1.33

2.96

2.67

2.64

2.11

1.98

Quick Ratio

1.86

2.86

1.64

2.13

2.19

1.25

2.85

2.55

2.52

2.00

1.87

Financial Leverage

27.12

18.24

20.80

49.62

11.87

11.95

10.23

Debt/Equity

12.89

10.78

11.91

24.92

5.46

4.54

3.65

Efficiency

2003-12

2004-12

2005-12

2006-12

2007-12

2008-12

2009-12

2010-12

2011-12

2012-12

TTM

5.32

9.24

124.15

252.29

228.49

252.69

274.68

229.33

208.93

218.70

206.97

Days Inventory

22.72

26.80

26.49

26.78

27.64

26.52

25.67

19.86

19.03

21.50

23.48

Payables Period

55.39

56.30

55.78

56.84

56.54

50.38

53.58

49.03

44.25

47.21

61.62

Cash Conversion Cycle

-27.35

-20.26

94.86

222.24

199.60

228.83

246.77

200.16

183.71

192.99

168.84

Receivables Turnover

68.62

39.50

2.94

1.45

1.60

1.44

1.33

1.59

1.75

1.67

1.76

Inventory Turnover

16.07

13.62

13.78

13.63

13.20

13.77

14.22

18.38

19.18

16.98

15.54

Fixed Assets Turnover

4.11

3.97

4.15

4.04

4.61

4.51

4.44

5.38

5.98

5.68

5.86

Asset Turnover

0.54

0.56

0.63

0.58

0.62

0.59

0.57

0.72

0.79

0.73

0.76

Days Sales Outstanding

Ratio Analysis of Toyota Motor Corporation

Financial
Revenue JPY Mil
Gross Margin %
Operating Income JPY Mil

Operating Margin %

Net Income JPY Mil

Earnings Per Share JPY

2004-03

2005-03

2006-03

2007-03

2008-03

2009-03

2010-03

2011-03

2012-03

2013-03

TTM

17,059,73818,524,36921,078,50823,901,50126,163,52620,529,57018,950,97318,993,68818,583,65322,064,19222,817,938
19.8

10.1

12.0

12.5

1,644,287 1,669,723 1,882,062 2,234,345 2,259,547 -461,011

147,516

468,279

-2.2

0.8

2.5

1.9

1,146,268 1,169,589 1,374,882 1,640,884 1,709,642 -436,937

209,456

408,183

283,559

9.6

19.8

9.0

19.5

8.9

19.7

9.3

18.1

8.6

11.8

15.5

16.8

355,627 1,320,888 1,631,128

6.0

7.1

962,163 1,234,010

687.16

712.37

841.19

1021.39

1082.79

-278.26

133.58

260.32

180.40

607.56

779.04

81.32

101.05

193.24

225.43

281.86

204.98

92.84

39.71

94.29

52.68

52.68

12.0

14.2

22.9

22.1

26.2

59.6

13.4

40.2

7.7

6.1

Shares Mil

1,695

1,648

1,627

1,606

1,589

1,570

1,568

1,568

1,572

1,584

1,584

Book Value Per Share USD

46.47

51.64

55.35

63.01

75.60

64.84

71.16

79.21

80.96

81.31

83.58

Dividends JPY

Payout Ratio %

Operating Cash Flow JPY

2,251,981 2,367,487 2,520,480 3,231,929 2,967,395 1,476,905 2,558,530 2,024,009 1,452,435 2,451,316 2,777,963

Mil

Cap Spending JPY Mil

Free Cash Flow JPY Mil

Free Cash Flow Per

Share USD
Working Capital JPY Mil

-1,468,307 -1,920,433 -2,776,718 -2,830,280 -2,746,834

783,674

4.44

447,054 -256,238

401,649

220,560

2.53

-1.34

2.13

1.39

1,233,528 1,211,088

707,863

16,848

144,780

-1,437,601 -1,691,191 -1,532,082 -1,974,152 -2,178,388

1,120,929

332,818

-79,647

477,164

599,575

2.55

-0.62

3.19

709,636 2,387,390 1,038,765

539,615

872,370

7.70

Key Ratios
Margins % of Sales

2004-03

2005-03

2006-03

2007-03

2008-03

2009-03

2010-03

2011-03

2012-03

2013-03

TTM

Revenue

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

COGS

80.20

80.16

80.55

80.29

81.86

89.90

88.04

87.48

88.19

84.49

83.23

Gross Margin

19.80

19.84

19.45

19.71

18.14

10.10

11.96

12.52

11.81

15.51

16.77

SG&A

10.16

10.83

10.52

10.36

9.50

12.35

11.18

10.06

9.90

9.53

9.63

R&D

Other

Operating Margin

9.64

9.01

8.93

9.35

8.64

-2.25

0.78

2.47

1.91

5.99

7.15

Net IntInc& Other

0.57

0.44

0.99

0.60

0.63

-0.48

0.76

0.50

0.42

0.38

0.36

EBT Margin

10.21

9.46

9.92

9.95

9.27

-2.73

1.54

2.97

2.33

6.36

7.51

2013-03

TTM

Profitability

2004-03

2005-03

2006-03

2007-03

2008-03

2009-03

2010-03

2011-03

2012-03

38.58

37.49

38.09

37.70

37.40

Net Margin %

6.72

6.31

6.52

6.87

6.53

-2.13

1.11

2.15

1.53

4.36

5.41

Asset Turnover (Average)

0.82

0.80

0.79

0.78

0.81

0.67

0.64

0.63

0.61

0.67

0.68

Return on Assets %

5.52

5.08

5.18

5.35

5.28

-1.42

0.71

1.36

0.94

2.91

3.67

Financial Leverage (Average)

2.69

2.69

2.72

2.75

2.73

2.89

2.93

2.89

2.91

2.92

2.88

15.23

13.68

14.02

14.65

14.47

-4.00

2.05

3.95

2.72

8.48 10.54

7.65

7.00

7.06

7.17

7.02

-2.05

0.82

1.70

1.18

3.88

-10.95

9.72

20.21

19.88

Tax Rate %

Return on Equity %

Return on Invested Capital %

Interest Coverage

39.30 34.85

4.89

62.12 80.60

Revenue %
Year over Year

12.13

8.59

13.79

13.39

9.46

-21.53

-7.69

0.23

-2.16

18.73

13.70

3-Year Average

8.46

9.06

11.48

11.90

12.20

-0.88

-7.44

-10.13

-3.27

5.20

5-Year Average

6.24

8.54

9.53

10.85

11.45

3.77

0.46

-2.06

-4.91

-3.35

10-Year Average

6.35

8.39

6.89

6.94

8.31

5.00

4.42

3.57

2.67

3.79

Year over Year

31.75

1.55

12.72

18.72

1.13

217.44

-24.06

271.43

87.85

3-Year Average

26.89

15.25

14.68

10.76

10.61

-59.58

-40.82

107.66

5-Year Average

17.27

19.81

18.52

15.42

12.61

-38.45

-24.29

-30.76

-10.18

10-Year Average

29.09

20.41

18.26

12.91

11.66

-14.12

-5.27

-10.60

0.57

Year over Year

55.54

2.03

17.55

19.35

4.19

94.88

-30.53

239.32

3-Year Average

18.61

28.19

23.10

12.70

13.49

-49.65

-37.96

66.23

5-Year Average

20.77

20.18

14.89

24.20

18.33

-29.11

-21.56

-29.61

-10.86

10-Year Average

25.42

24.14

18.14

15.59

14.08

-7.70

-5.07

-6.50

2.70

Year over Year

63.42

3.67

18.08

21.42

6.01

94.88

-30.70

236.78

93.41

3-Year Average

23.64

32.62

26.00

14.12

14.98

-49.24

-37.82

65.68

5-Year Average

23.85

23.43

18.27

27.31

20.83

-28.45

-20.91

-29.30

-10.91

10-Year Average

26.95

26.12

20.27

17.68

16.28

-6.02

-3.29

-5.13

3.75

Operating Income %

Net Income %

EPS %

Cash Flow Ratios

2004-03

2005-03

2006-03

2007-03

2008-03

2009-03

2010-03

2011-03

2012-03

2013-03 TTM

Operating Cash Flow Growth % YOY

10.04

5.13

6.46

28.23

-8.19

-50.23

73.24

-20.89

-28.24

68.77

Free Cash Flow Growth % YOY

68.13

-42.95

-45.09

-70.31

Cap Ex as a % of Sales

8.61

10.37

13.17

11.84

10.50

7.59

8.90

8.24

8.95 9.55

Free Cash Flow/Sales %

4.59

2.41

-1.22

1.68

0.84

5.91

1.75

-0.43

2.16 2.63

Free Cash Flow/Net Income

0.68

0.38

-0.19

0.24

0.13

5.35

0.82

-0.28

0.50 0.49

Balance Sheet Items (in %)

2004-03

2005-03

2006-03

2007-03

2008-03

2009-03

2010-03

2011-03

2012-03

2013-03

Latest Qtr

Cash & Short-Term Investments

10.19

8.59

7.67

7.25

7.10

10.27

13.35

11.77

9.59

9.22

9.77

Accounts Receivable

20.65

20.81

20.51

20.10

21.15

19.33

21.27

19.76

21.28

21.20

20.21

Inventory

4.92

5.37

5.64

5.54

5.62

5.02

4.69

4.37

5.29

4.84

5.01

Other Current Assets

4.39

4.02

3.53

3.29

3.36

4.26

3.77

3.77

4.03

3.60

3.67

Total Current Assets

40.15

38.79

37.36

36.18

37.24

38.88

43.08

39.67

40.20

38.85

38.66

Net PP&E

24.29

23.82

24.60

24.74

24.07

25.47

22.11

21.16

20.34

19.31

18.99

Intangibles

Other Long-Term Assets

35.56

37.39

38.04

39.08

38.70

35.65

34.81

39.17

39.46

41.84

42.35

Total Assets

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

Accounts Payable

7.76

7.63

7.26

6.79

6.82

4.47

6.45

5.04

7.32

5.96

5.47

Short-Term Debt

15.04

14.52

16.56

18.01

19.19

21.74

18.12

19.96

19.46

19.15

18.30

0.18

0.51

0.38

0.44

0.44

0.73

Accrued Liabilities

5.14

5.30

5.10

5.12

4.95

5.30

5.72

5.95

5.97

6.16

6.18

Other Short-Term Liabilities

6.54

6.36

5.99

6.21

5.83

4.75

4.42

4.86

5.26

4.69

4.39

Total Current Liabilities

34.47

33.81

34.90

36.12

36.79

36.44

35.21

36.19

38.44

36.39

35.08

Long-Term Debt

19.27

20.61

19.63

19.23

18.43

21.68

23.12

21.63

19.71

20.68

21.28

Other Long-Term Liabilities

9.15

8.42

8.71

8.31

8.21

7.26

7.54

7.53

7.43

8.69

8.94

Total Liabilities

62.89

62.83

63.24

63.67

63.43

65.38

65.87

65.35

65.58

65.76

65.30

Total Stockholders' Equity

37.11

37.17

36.76

36.33

36.57

34.62

34.13

34.65

34.42

34.24

34.70

Total Liabilities & Equity

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

Taxes Payable

Liquidity/Financial Health

2004-03

2005-03

2006-03

2007-03

2008-03

2009-03

2010-03

2011-03

2012-03

2013-03

Latest Qtr

Current Ratio

1.16

1.15

1.07

1.00

1.01

1.07

1.22

1.10

1.05

1.07

1.10

Quick Ratio

0.89

0.87

0.81

0.76

0.77

0.81

0.98

0.87

0.80

0.84

0.85

Financial Leverage

2.69

2.69

2.72

2.75

2.73

2.89

2.93

2.89

2.91

2.92

2.88

Debt/Equity

0.52

0.55

0.53

0.53

0.50

0.63

0.68

0.62

0.57

0.60

0.61

Efficiency

2004-03

2005-03

2006-03

2007-03

2008-03

2009-03

2010-03

2011-03

2012-03

2013-03

TTM

Days Sales Outstanding

31.66

30.79

61.50

57.33

28.25

30.43

31.58

32.05

33.87

32.85 28.87

Days Inventory

27.68

29.17

31.48

32.57

30.82

32.40

31.52

29.95

32.59

32.68 33.53

Payables Period

42.54

43.51

42.40

40.87

37.57

34.63

35.62

38.00

41.71

42.65 39.11

Cash Conversion Cycle

16.80

16.45

50.58

49.03

21.50

28.20

27.48

24.00

24.75

22.88

Receivables Turnover

11.53

11.86

5.94

6.37

12.92

11.99

11.56

11.39

10.78

11.11 12.64

Inventory Turnover

13.19

12.51

11.59

11.21

11.84

11.27

11.58

12.19

11.20

11.17 10.89

Fixed Assets Turnover

3.28

3.35

3.28

3.16

3.31

2.71

2.69

2.92

2.96

3.37

3.48

Asset Turnover

0.82

0.80

0.79

0.78

0.81

0.67

0.64

0.63

0.61

0.67

0.68

23.29

Interpretation of Ratio Analysis

The complete interpretation of the ratio analysis will require in-depth study of the subject in hand, here
I would like to summarize the broad interpretation.
The comparison of profitability ratio shows us that Toyota has more consistent in earning profit
whereas Ford has been facing fluctuations in recent years(from 2004 till 2013).
Liquidity and financial health of Toyota is in better shape and has near to ideal ratio, it has also been
more consistent over the years. On the other hand Ford liquidity and financial health is currently also
good there is lack consistency and it may change over a period of time as it can be seen from the
earlier years.
There is much similarity in turnover ratio and both companies have favorable conditions but there is
again consistency in Toyota when compared to Ford like for example the receivable turnover for 2003
was 68.32 times and now(2013) it is 1.76 times so it shows lack of consistency on the part of Ford.

Conclusion
The conclusion derived from the above analysis is very much clear that Ford though a very big brand
in the world is still lagging behind Toyota in terms of financial power, overall productivity and
consistency in performance. The ratios show us a clear picture that Ford is not as consistent as Toyota.
From the Indian perspective Toyota is way ahead of Ford because of many reasons firstly it has failed
to cater to every segment on the other hand Toyota has very well understood the Indian market and has
launched different cars over the years as and when they have that the particular segment is mature
enough.
Ford should now take corrective action and target all those segments where Toyota already is this will
lead to more profit and revenue for the firm. Growing market like India is vital for any car
manufacturer to keep earning profits and also generate revenue.
Ford with the launch of Eco-Sport has shown aggressiveness and the car is huge hit in urban areas.
Decision like these will help them to generate more demand.
Toyota can easily be said as the number one car manufacturer in the world as they have worked upon
quality in every field to create a brand name for them which has become like a synonym for quality.
They have been doing well in India be it commercial sector or household sector, they have understood
the market well and acted accordingly.

Reference

http://financials.morningstar.com/

Based on the presentation by Dr Agata Kocia

Based on the presentation by PAWE ORZECHOWSKI, MACIEJ OWIT & ANDRZEJ

BENCZEK.