"In the name of Allah, most Gracious, most

Compassionate"
Presentation on Financial Analysis
 To: - Madam Shagufta Praveen

Presented By: -
Muhammad Mafeez-ur-Rehman
Muhammad Haris Ali Jadoon
B.B.A-III
Management Sciences
HITEC University
 Contents
Chapter No Chapter Name Slide No
01 What is Financial Analysis
02 Industry for Analysis
03 Economic condition of Industry
04 Trend analysis
05 Industry Analysis
06 Critical Analysis & Future Expectations
 1 – Financial Analysis

҉ Beginning:-
҉ Why important:-
҉ Effect on industry:-
 Formulas used for Analysis

Formulas
Liquidity Ratio
Current Ratio Current Assets / Current Liabilities
Acid Test (Current Assets – Inventories) / Liabilities
Debt to Equity Total Debt / Shareholder’s Equity
Financial Leverage
Debt to Total Asset Total Debt / Total Assets
Ratio
Total Capitalization Long Term Debt / Long Term Debt + Equity
Coverage Ratios Interest Coverage EBIT / Interest Charges
 Formulas
Receivable Turnover Annual Net Credit Sales / Receivables
Average Collection
Days in Year / Receivable Turnover
Period
Activity Ratios Payable Turnover Annual Credit Purchases / Accounts Payable
PT in Days Days in Year / Payable Turnover
Inventory Turnover Cost of Goods Sold / Inventory
Total Assets Turnover Net Sales / Total Assets
Gross Profit Margin Gross Profit / Net Sales
Net Profit Margin Net Profit after Taxes / Net Sales
Profitable
Ratios Return on Investment Net Profit after Taxes / Total Assets

Return on Equity Net Profit after Taxes / Shareholders Equity

2 – Industry for Analysis
҉ Automotive
҉ Companies
i. Volkswagen Group AG
ii. Daimler Chrysler
iii. BMW
iv. Toyota
 Volkswagen Group

Parent Country:
Divisions:
History:
 Daimler Chrysler

Parent Country:
Divisions:
History:
 BMW Group

Parent Country:
Divisions:
History:
 Toyota Group
Parent Country:
Divisions:
History:
3. Economic Condition of Industry

҉Global
҉ In Pakistan
4. Trend Analysis
 Volkswagen Group
2008 2009
Current Ratio 1.17 1.11
Liquidity Ratio
Acid Test 0.90 0.915
Debt to Equity 4.79 5.02
Financial Leverage Ratio Debt to Total Asset 1 1
Total Capitalization 0.65 0.66
Coverage Ratios Interest Coverage 3.12 2.03
Receivable Turnover 0 0
Average Collection Period 0 0
Payable Turnover 0 0
Activity Ratios
PT in Days 0 0
Inventory Turnover 5.4 6.4
Total Assets Turnover 0.67 0.59
Gross Profit Margin 0.11 0.16
Net Profit Margin 0.008 0.044
Profitable Ratios
Return on Investment 0.005 0.026
Return on Equity 0.02 0.13
 7
Graph
6.4

6
5.4
5.02
5 4.79

3.12
3

2.03 2008
2
2009

1.17
1.11
0.90.92 1 1
1
0.66
0.65 0.67
0.59
0.16
0.11 0.04 0.13
0 0 0 0 0 0 0 0 0.01 0.03
0.01 0.02
0
tio st ty et ge ve
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Ra Te qui A ss era o er io o Da o o arg arg m qui
t id E l v rn P rn in rn rn tM tM st E
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rn
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 Daimler Chrysler
2008 2009
Current Ratio 1.06 1.14
Liquidity Ratio
Acid Test 1.00 1.05
Debt to Equity 4.23 4.25
Financial Leverage Ratio Debt to Total Asset 1 1
Total Capitalization 0.60 0.62
Coverage Ratios Interest Coverage 42 -1.92
Receivable Turnover 0 0
Average Collection Period 0 0
Payable Turnover 0 0
Activity Ratios
PT in Days 0 0
Inventory Turnover 28.3 15.4
Total Assets Turnover 0.74 0.61
Gross Profit Margin 0.21 0.17
Net Profit Margin 0.02 -0.33
Profitable Ratios
Return on Investment 0.01 -0.02
Return on Equity 0.05 -0.8
 Graph
2008 2009
45
42
40

35

30 28.3

25

20
15.4
15

10

5 4.25
4.23
1.14
1.06 1.05 0.6 -1.92 0 0 0 0 0 0 0 0 0.17 -0.33 -0.02 -0.8
0 1 1 1 0.62 0.74 0.61 0.21 0.02 0.01 0.05
o st ty se
t ge er d er ys er er in in en
t ty
ati Te ui s ra ov rio ov Da ov ov rg rg ui
-5 nt R id Eq l A v e r n P e n in n n a a tm Eq
Ac to ta Co Tu n Tu
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ss
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er To Re
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 BMW Group
2008 2009
Current Ratio 2.08 2.10
Liquidity Ratio
Acid Test 1.75 1.79
Debt to Equity 11.71 12.32
Financial Leverage Ratio Debt to Total Asset 1 1
Total Capitalization 0.83 0.84
Coverage Ratios Interest Coverage 0 0
Receivable Turnover 0 0
Average Collection Period 0 0
Payable Turnover 0 0
Activity Ratios
PT in Days 0 0
Inventory Turnover 14.6 12.47
Total Assets Turnover 1.90 1.54
Gross Profit Margin 14.63 12.47
Net Profit Margin 1.90 1.54
Profitable Ratios
Return on Investment 0.016 0.008
Return on Equity 0.19 0.10
16
Graph
14.6 14.63
14

12.32 12.47 12.47

12 11.71

10

6 2008
2009

2.082.1 1.9 1.9

2 1.79
1.75 1.54 1.54
1 1 0.84
0.83
0 0 0 0 0 0 0 0 0 0 0.02
0.01 0.190.1
0
o st ty et ge er d er ys er er in in en
t ty
Rati Te qui A ss era ov erio ov Da ov ov arg arg m qui
t cid E l v r n P r n in r n r n M M st E
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rr bt To stC le ti le PT r y ts o o In n
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Av
 Toyota Group
2008 2009
Current Ratio 1.01 1.06
Liquidity Ratio
Acid Test 0.85 0.92
Debt to Equity 2.73 2.88
Financial Leverage Ratio Debt to Total Asset 1 1
Total Capitalization 0.40 0.43
Coverage Ratios Interest Coverage 15.89 -50.98
Receivable Turnover 0 0
Average Collection Period 0 0
Payable Turnover 0 0
Activity Ratios
PT in Days 0 0
Inventory Turnover 11.20 11.96
Total Assets Turnover 0.76 0.65
Gross Profit Margin 0.17 0.08
Net Profit Margin 0.001 -0.003
Profitable Ratios
Return on Investment 0.001 -0.002
Return on Equity 0.003 -0.006
 20
Graph
15.89
11.96
11.2
10

2.88
2.73
1.06
1.01 0.92
0.85 1 1 0.40.43 0.76
0.65 0.17
0.08
0 0 0 0 0 0 0 0 0 0 0 0 0-0.01
0
o st ty et ge er d er ys er er in in en
t ty
ati Te ui ss ra ov r io ov Da ov ov rg rg ui
t R
cid Eq l A
ov
e r n P e r n in r n n a a tm Eq
en A to ta Tu on Tu u ur fit
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fit
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ve
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on
rr bt To stC le ti le PT r yT tsT o o In n
Cu
-10 e to re b lec b o ss
e P r
tP
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lA os
s
Ne rn
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Re ge In
To
t G
Re
t
era
Av
2008
-20
2009

-30

-40

-50
-50.98

-60
5-Industry Analysis
 For Year 2009
Volkswagen Daimler Chrysler BMW Toyota
Current Ratio 1.11 1.14 2.10 1.06
Liquidity Ratio
Acid Test 0.915 1.05 1.79 0.92
Debt to Equity 5.02 4.25 12.32 2.88
Financial Leverage
Ratio Debt to Total Asset 1 1 1 1
Total Capitalization 0.66 0.62 0.84 0.43
Coverage Ratios Interest Coverage 2.03 -1.92 0 -50.98
Receivable Turnover 0 0 0 0
Average Collection
0 0 0 0
Period
Activity Ratios Payable Turnover 0 0 0 0
PT in Days 0 0 0 0
Inventory Turnover 6.4 15.4 12.47 11.96
Total Assets Turnover 0.59 0.61 1.54 0.65
Gross Profit Margin 0.16 0.17 12.47 0.08
Net Profit Margin 0.044 -0.33 1.54 -0.003
Profitable Ratios
Return on Investment 0.026 -0.02 0.008 -0.002
Return on Equity 0.13 -0.8 0.10 -0.006
 Graph
20

10

-10

Volkswagen AG
Daimler Chrysler
-20
BMW
Toyota

-30

-40

-50

-60
 For Year 2008
Volkswagen Daimler Chrysler BMW Toyota
Current Ratio 1.17 1.06 2.08 1.01
Liquidity Ratio
Acid Test 0.90 1.00 1.75 0.85
Debt to Equity 4.79 4.23 11.71 2.73
Financial Leverage
Debt to Total Asset 1 1 1 1
Ratio
Total Capitalization 0.65 0.60 0.83 0.40
Coverage Ratios Interest Coverage 3.12 42 0 15.89
Receivable Turnover 0 0 0 0
Average Collection
0 0 0 0
Period
Payable Turnover 0 0 0 0
Activity Ratios
PT in Days 0 0 0 0
Inventory Turnover 5.4 28.3 14.6 11.20
Total Assets
0.67 0.74 1.90 0.76
Turnover
Gross Profit Margin 0.11 0.21 14.63 0.17
Net Profit Margin 0.008 0.02 1.90 0.001
Profitable Ratios Return on
0.005 0.01 0.016 0.001
Investment
Return on Equity 0.02 0.05 0.19 0.003
45
Graph
40

35

30

25

20

15

10

Volkswagen Daimler Chrysler BMW Toyota

6. Critical Analysis & Future
Expectations
 Volkswagen Group
Values 2008 2009
Current Assets 76,163  77,776
Current Liabilities  64,802  69,534
Inventories’  17,816  14,124
Total Debt  167,919 177,178 
Shareholders’ Equity  35,011 35,281 
Total Assets  167,919 177,178 
Long Term Debt  65,729 70,215 
EBIT  12,108 8,005 
Interest Charges  3,879 3,928 
Annual Net Credit Sales  0 0 
Receivables  31,855 33,174
Annual Credit Purchases  0 0 
Accounts Payable  9,676 10,225 
Cost of Goods Sold  96,612 91,608 
Net sales  113,808 105,187 
Gross Profit  13,579 17,196 
Net Profit after Taxes  911 4,688 
 2008 2009 Change
Current Ratio 1.17 1.11 - 5.1 %
Liquidity Ratio
Acid Test 0.90 0.915 1.6 %
Debt to Equity 4.79 5.02 4.8 %
Financial Leverage Ratio Debt to Total Asset 1 1 -
Total Capitalization 0.65 0.66 1.5 %
- 34.9 %
Coverage Ratios Interest Coverage 3.12 2.03

Receivable Turnover 0 0 -
Average Collection Period 0 0 -
Payable Turnover 0 0 -
Activity Ratios
PT in Days 0 0 -
Inventory Turnover 5.4 6.4 18 %
Total Assets Turnover 0.67 0.59 - 11 %
Gross Profit Margin 0.11 0.16 45 %
Net Profit Margin 0.008 0.044 450 %
Profitable Ratios
Return on Investment 0.005 0.026 420 %
Return on Equity 0.02 0.13 550%
 Daimler Chrysler
Values 2008 2009
Current Assets 55,389  54,280 
Current Liabilities 52,128  47,538 
Inventories’ 2,717  4,232 
Total Debt 132,225  128,821 
Shareholders’ Equity 31,222  30,261 
Total Assets 132,225  128,821 
Long Term Debt 47,313  49,456 
EBIT 2,730  -1,513 
Interest Charges 65  -785 
Annual Net Credit Sales  0 0 
Receivables 5,285  6,999 
Annual Credit Purchases  0 0 
Accounts Payable 6,478  5,622 
Cost of Goods Sold 76,910  65,567 
Net sales 98,469  78,924 
Gross Profit 21,559  13,357 
Net Profit after Taxes 1,704  -2,644 
 2008 2009 Change
Current Ratio 1.06 1.14 7.5 %
Liquidity Ratio
Acid Test 1.00 1.05 4.7 %
Debt to Equity 4.23 4.25 0.47 %
Financial Leverage Ratio Debt to Total Asset 1 1 -
Total Capitalization 0.60 0.62 3.3 %
Coverage Ratios Interest Coverage 42 -1.92 - 104 %
Receivable Turnover 0 0 -
-
Average Collection Period 0 0

Activity Ratios Payable Turnover 0 0 -

PT in Days 0 0 -
Inventory Turnover 28.3 15.4 - 45 %
Total Assets Turnover 0.74 0.61 - 17.5 %
Gross Profit Margin 0.21 0.17 - 19 %
Net Profit Margin 0.02 -0.33 - 1750 %
Profitable Ratios
Return on Investment 0.01 -0.02 - 300 %
Return on Equity 0.05 -0.8 - 1700 %
 BMW
Values 2008 2009
Current Assets 16,619  17,571 
Current Liabilities 7,974  8,347 
Inventories 2,586  2,620 
Total Debt 23,316  24,647 
Shareholders’ Equity 1,991  2,001 
Total Assets 23,316  24,647 
Long Term Debt 10,004  10,946 
EBIT 395  605 
Interest Charges 0  0 
Annual Net Credit Sales 0  0 
Receivables 7,703  7,769 
Annual Credit Purchases 0  0 
Accounts Payable 1,276  1,548 
Cost of Goods Sold 37,833  32,676 
Net sales 44,313  37,980 
Gross Profit 6,480  5,301 
Net Profit after Taxes 384  202 
 2008 2009 Change
Current Ratio 2.08 2.10 0.96 %
Liquidity Ratio
Acid Test 1.75 1.79 2.2 %
Debt to Equity 11.71 12.32 5.2 %
Financial Leverage Ratio Debt to Total Asset 1 1 -
Total Capitalization 0.83 0.84 1.2 %
Coverage Ratios Interest Coverage 0 0 -
Receivable Turnover 0 0 -
-
Average Collection Period 0 0

Activity Ratios Payable Turnover 0 0 -

PT in Days 0 0 -
Inventory Turnover 14.6 12.47 - 14.5 %
Total Assets Turnover 1.90 1.54 - 18.9 %
Gross Profit Margin 14.63 12.47 - 14.7 %
Net Profit Margin 1.90 1.54 - 18.9 %
Profitable Ratios
Return on Investment 0.016 0.008 - 50 %
Return on Equity 0.19 0.10 - 47 .3 %
 Toyota
Values million ¥ 2008 2009
Current Assets 12,086,227  11,298,929 
Current Liabilities 11,940,742  10,589,293 
Inventories 1,825,716  1,459,394 
Total Debt 32,458,320  29,062,037 
Shareholders’ Equity 11,869,527  10,061,207 
Total Assets 32,458,320  29,062,037 
Long Term Debt 7,991,384  7,872,007 
EBIT 70,229  -102,180 
Interest Charges 4,419  2,004 
Annual Net Credit Sales 0  0 
Receivables  4,301,142 3,891,406 
Annual Credit Purchases  0 0 
Accounts Payable  2,212,773 1,299,455 
Cost of Goods Sold  20,452,338 17,468,416 
Net sales  24,820,510 19,173,720 
Gross Profit  4,368,172 1,705,304 
Net Profit after Taxes  45,995 -68,388 
 2008 2009 Change
Current Ratio 1.01 1.06 4.9 %
Liquidity Ratio
Acid Test 0.85 0.92 8.2 %
Debt to Equity 2.73 2.88 5.4 %
Financial Leverage Ratio Debt to Total Asset 1 1 -
Total Capitalization 0.40 0.43 7.5 %
Coverage Ratios Interest Coverage 15.89 -50.98 - 420 %
Receivable Turnover 0 0 -
-
Average Collection Period 0 0

Activity Ratios Payable Turnover 0 0 -

PT in Days 0 0 -
Inventory Turnover 11.20 11.96 6.7 %
Total Assets Turnover 0.76 0.65 - 14 %
Gross Profit Margin 0.17 0.08 -52.9 %
Net Profit Margin 0.001 -0.003 - 400 %
Profitable Ratios
Return on Investment 0.001 -0.002 - 300 %
Return on Equity 0.003 -0.006 - 300 %