Toyota Motor Corporation Case Study

Toyota Motor Corporation operates in the automotive industry worldwide. It engages in the design, manufacture, assembly, and sale of passenger cars, recreational and sport-utility vehicles, minivans and trucks, and related parts and accessories. The company offers hybrid vehicles primarily under the Prius brand, which run on a combination of gasoline and electric power. Its products also comprise conventional engine vehicles, including subcompact and compact cars consisting of Corolla sedan and Yaris brands; mini-vehicles, passenger vehicles, commercial vehicles, and auto parts; mid-size models comprising Camry, Mark X, Premio, Allion, Blade, and Avensis brands; and luxury models encompassing Lexus, Crown, and Century limousine. In addition, Toyota offers sports and specialty vehicles, which include Lexus SC430 and Scion tC brands; recreational and sport-utility vehicles and pickup trucks that comprise Tacoma and the Tundra pickup trucks, as well as 4Runner, FJ Cruiser, Highlander, Land Cruiser, RAV4, Sequoia, and Sienna; minivans and cab wagons that primarily include Alphard, Sienna, Estima, Hiace, Regius Ace, Noah, and Voxy, as well as Wish, Sienta, and Isis brands; trucks consisting of large trucks with a load capacity of over 10 tons, medium trucks with a load capacity between 4 and 8 tons, and small trucks with a load capacity of between 2 and 4 tons; and buses, including large to medium buses used primarily as tour buses, public buses, small buses, and micro-buses. Further, the company provides finance to dealers and their customers for the purchase or lease of Toyota vehicles. Additionally, it engages in the design and manufacture of prefabricated housing and information technology-related businesses, including intelligent transport systems and an e-commerce marketplace, called Gazoo.com. Toyota was founded in 1933 and is headquartered in Toyota City, Japan.

Year over year, Toyota Motor Corp. has been able to grow revenues from Ґ20.1T to Ґ22.7T. This shows the good marketing strategy of the Company. Most impressively, the company has been able to reduce the percentage of sales devoted to selling, general and administrative costs from 11.04% to 10.94%. This was a driver that led to a bottom line growth from Ґ1.4T to Ґ1.6T.

However, this is to be mentioned that the interest expense has also increased by more than 128% and Minority Interest in Earnings declined by more than 41%.

Although debt as a percent of total capital increased at Toyota Motor Corp. over the last fiscal year to 49.32%, it is still in-line with the Automobiles industry's norm. Additionally, even though there are not enough liquid assets to satisfy current obligations, Operating Profits are more than adequate to service the debt. Accounts Receivable are typical for the industry, with 32.24 days worth of sales outstanding. Last, Toyota Motor Corp. is among the least efficient in its industry at managing inventories, with 34.05 days of its Cost of Goods Sold tied up in Inventories.

Ratios:

Return on Assets 4.73%

Return on Capital 6.17%

Return on Equity 15.48%

Gross Margin 19.30%

Total Assets Turnover 0.8

Accounts Receivables Turnover 13.2

Fixed Assets Turnover 4.6

Inventory Turnover 10.8

Current Ratio 1.00

Quick Ratio 0.8

Total Debt/Equity 105.1

Total Liabilities/Total Assets 63.5

Growth over previous year:

Total Revenue 13.00%

Gross Profit 12.51%

Receivables 7.84%

Inventory 12.58%

Capital Expenditures -4.03%

Cash From Ops. 21.72%

Cash Flows:

Currency Japanese Yens 2004 2005 2006 2007

NET INCOME 1,162,098 1,171,260 1,372,180 1,644,032

DEPRECIATION & AMORTIZATION 969,904 997,713 1,211,178 1,382,594

(Gain) Loss from Sale of Asset 39,742 49,159 54,981 50,472

(Gain) Loss on Sale of Investment 3,063 2,324 4,163 4,614

Other Operating Activities -38,439 31,778 57,122 100,254