Bmw and Audi Management Analysis

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Management Analysis

December 12, 2002

George Kantor

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Julianne Crum

BMW and Audi, two German automobile manufacturers, have a reputation for making some of the best cars in the industry. Not only are both companies superior in their production, but their financial statements also indicate stability and efficiency. Looking at financial ratios, we will compare both companies on a basis of management efficiency and debt status. As a bank analyst, we will make a recommendation as to which company would be better to approve a loan for. A recommendation will also be made regarding management effectiveness and which company would make a better investment.

BMW has captured the attention of automobile drivers from all around the world with their “Ultimate Driving Machine.” The BMW Company was originally established in Germany and has extended nationally reaching over 12 countries. With Germany and the United States being the top two target countries, BMW has established their products as a combination of luxury, safety, and comfort with product lines to suit all styles of living. Revenues have been increasing each year since before 1996 with profits coming from product line of automobiles and motorcycles. In 2001, BMW came out with a new product group, the Mini. The Mini also contributed to the revenue increase in 2001. BMW has current developments in their sports cars, the Z8. BMW has created a trustworthy name for the automobiles they produce and has all the potential to continue their success in the future.

Audi, one of Germany’s first automobile producers, has been designing and building cars since August Horch, its founder, completed his first car in 1901. Over the years following, a series of innovations and mergers have led Audi to the position it is in today. Audi’s subsidiaries include companies to facilitate international operations, part manufacturers, a vehicle customization company, a technology research company, and Lamborghini Corp, a successful sports car manufacturer. Audi’s current developments include its holding the EU Seal of Environmental Protection, and a number of technological advancements, including new car designs and a “seeing car” technology that has been nominated for the German Future award for Technology and Innovation.

BMW Audi

Profitability Ratios

Return on Equity 0.173 0.034

Profit Margin 0.048 0.068

Return on Assets 0.036 0.177

Asset Utilization Ratios

Inventory Turnover 8.545 15.061

Total Asset Turnover 0.750 1.957

Liquidity Ratios

Current Ratio 4.46 0.737

Quick Ratio 3.82 0.429

Debt Utilization Ratios

Debt to Total Asset 0.638 0.614

Times Interest Earned 29.439 14.296

Profitability Ratios: measure the percentage returns a company makes relative to its