BUSINESS &

FINANCIAL
ANALYSIS
From 2009 to
2011

RAP
PRESENTATION
Presented by:sample

INTRODUCTION
Topic:
The Business and Financial Performance of an Organization over a
three year period
Organization:
Toyota Motor Corporation
Reason:
- Studied in ACCA Courses in detail
- To apply my book knowledge to real world organization
- Availability and accessibility of information
Objectives:
Access the business and financial performance of Honda Motor
Corporation Limited (HMC), in the light of the recent natural
disasters, and the other challenges surrounding the company over
the three years including the fast changes occurring in the
automobile industry, global financial meltdown, and strong
competition from Toyota Motor Corporation (TMC).

ACCOUNTING & BUSINESS

TECHNIQUES
SWOT analysis can be a useful way of summarising the
relationship between environmental influences and core
organisation's or a strategy's internal Strengths and
Weaknesses, and its external Opportunities and Threats.
competencies and hence framing the agenda for developing
new strategies. It can be simply understood as the
examination of an organisation's or a strategy's internal
Strengths and Weaknesses, and its external Opportunities
and Threats.
Financial analysis is the selection, evaluation, and
interpretation of financial data, along with other pertinent
information, to assist in investment and financial decision
making. Financial analysis may be used internally to evaluate
issues such as employee performance, the efficiency of
operations, and credit policies, and externally to evaluate
potential investments and the credit-worthiness of borrowers,
among other things.

ANALYSIS SWOT
Strengths

Weaknesses

1. Large number of outlets and

dealers
2. Strong brand recognition
3. Innovative products
4. High Market Share in US, one
of the business hubs of the
world.

1. Lack of geographical
diversification (most of sales in
Asia & US)
2. Severe quality issues (recalls
of millions of cars)
3. Almost no market share in
Europe
4. Too much reliance on Accord
Threats
and Civic
1. Global financial crises hurting
consumer confidence
2. Increased competition faced
from Toyota
3. Very strong yen () makes
exports expensive
4. Increased cost of regulations

Opportunities
1. Increase production of greener cars
2. Strong performance of financial
services stream that can become a
constant part of the business.
3. Increase in product line
4. Increase in European markets

ANALYSIS FINANCIAL
ANALYSIS
REVENUE:

Total Revenue (Amounts in Trillions) The sales revenue of the

company has been severely
Net Sales
hit by the financial crises
and currency fluctuations in
all the years under review.
The decrease in unit sales
was almost in all the
regions and products due to
12.00
the financial crises as the
10.01
8.94
8.58
customers moved to more
fuel efficient (compact cars)
though it was partially
offset by increase in
2008
2009
2010
2011
revenue from financial
services because of the

ANALYSIS FINANCIAL
ANALYSIS
ROE

PERFORMANCE - HONDA (In Trillions)

Revenue

Cost of Production

10.01

Honda

11.7%

6.50

6.42

6.0%
3.3%

2.59

2.44

2.16

2008
2009

2010

Toyota

13.7%
12.8%

8.94

8.58

7.42

Gross Profit

2009
-4.1%

1.9%
2010

3.7%
2011

2011

With the prices of raw materials rising, financial meltdown

prevailing, Honda has done really well in keeping costs of production
down and so has resulted in the increase in gross profits in 2010
and 2011. The increased gross profit was turned into net income
with the help of other increases in income from affiliates etc that
was the reason for the increase in ROE.

ANALYSIS FINANCIAL
ANALYSIS
It can be easily seen in the graph
that Honda has been earning
more per share invested in it by
its shareholders in all the three
years under review. This has been
achieved by a higher net income
and so is a better investment
option than Toyota.
Price-Earnings Ratio
Honda

30.66

28.30

22.31
10.57

(24.62)

2010

Honda

2011

Toyota
295.67

147.91
75.5

2009
-126.72

Toyota
61.65

2009

Earnings Per Share ()

118.38

60.75

2010

2011

Despite a loss in 2009, the higher

market price and a lower EPS has
resulted in a higher P/E ratio for
Toyota in the last couple of years
under review. This means that the
quality performance of Honda has
not affected the share confidence
and they still take Toyota to be
higher than Honda.

CONCLUSION
After spending the last couple of months researching about Honda
Motor Corporation Limited and after carrying out the analysis it can
be easily said that despite the recent natural disasters the company
has done well in the three years. The company faces severe
competition from Japanese as well as international car makers
because of its strong international presence. The global meltdown
has resulted in the shrinkage in consumer spending along with the
increase in the value of yen () making the exports expensive and
hence less competitive. Furthermore, the auto-industry today is
moving on a very fast lane of technology and so Honda also faces a
very difficult challenge of facing technological innovations. Despite all
these factors, Honda has done considerably well when it is compared
with the performance of the market leader, Toyota.