Description
PROJECT ON VOLKSWAGEN FINANCIAL ANALYSIS
Volkswagen AG
Financial Analysis
Hamed Akram Youssef
Dr. Mowafak Moustafa
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Reasons for Financial Analysis.
• To use financial statements to evaluate an organisation’s
o Financial performance o Financial position.
• There are two key factors for business survival
o Intercompany basis (within the company itself) o Intercompany basis (between companies) o Industry Averages (against that particular industry’s averages
• There are three key factors for business survival
o Liquidity o Profitability o Solvency
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Introduction to Volkswagen
• Volkswagen (abbreviated VW) is the original and biggest-selling marque of the Volkswagen Group, which now also owns the Audi, Bentley, Bugatti, Lamborghini, SEAT and Škoda marques and the truck manufacturer Scania. • Volkswagen means "people's car" in German, Its current slogan is Das Auto (in English The Car). • Volkswagen operates worldwide, but core market is primarily Europe. • In 2000 Volkswagen spent 3.1 Billion Euros to modernize their factories, • Volkswagen's second-largest market China, spent 1.7 Billion Euros in the Chinese market, selling more than one million vehicles in 2008.
Volkswagen overview.
• Volkswagen shares are primarily traded on the Frankfurt stock exchange, listed under the symbol “VLKAY”. • In 2009 Volkswagen was the third biggest motor vehicle manufacturer, with 6.29 million units delivered to customers, After Toyota and General Motors, and planning to go to No.1 in 2014 • Porsche and Volkswagen Group reached an agreement that they would merge in 2011.
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
VW Competitive Vehicles
Passat Golf
Phaeton
Touareg
New Beetle
Jetta
Volkswagen AG
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Volkswagen AG 10 Year Total Sales Trend
Year 2010 2009 2008 Sales Percent Change
121,697.00
100,303.00 109,451.00 108,897.00
21.3%
(8.4%) 0.5% 3.8%
2007
2006 2005 2004
104,875.00
93,996.00 88,963.00 84,813.00 86,948.00 88,540.00 € Million
11.6%
5.7% 4.9% (2.5%) (1.8%)
2003
2002 2001
Volkswagen AG 10 Year Total Sales Trend Graph
140,000.00 120,000.00 100,000.00 80,000.00 60,000.00 40,000.00 20,000.00 0.00 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Sales € Million
Volkswagen AG 10 Year Net Income Graph
8,000.00 7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 0.00 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Sales € Million
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Horizontal analysis of the Income Statements
Revenue Other Revenue, Total Total Revenue Cost of Revenue, Total Gross Profit Selling/General/Admin Exp., Total Unusual Expense (Income) Other Operating Expenses, Total Operating Income Interest Income (Expense), Net Non-Opts. Income Before Tax Income Tax – Total Income After Tax Minority Interest Net Income Before Extra. Items Total Extraordinary Items Net Income 2010 2009 Amount Percent 121,697.0 100,303.0 21,394.00 21.3% 5,178.0 4,884.0 294.00 6.0% 126,875.0 105,187.0 21,688.00 20.6% 105,431.0 91,608.0 13,823.00 16,266.0 8,695.0 7,571.00 15,500.0 13,276.0 2,224.00 -10.0 -38.0 28.00 -865.0 -785.0 -80.00 7,142.0 715.0 8,994.0 1,767.0 7,227.0 -392.0 6,835.0 0.0 6,835.0 1,855.0 5,287.00 705.0 10.00 1,260.0 7,734.00 349.0 1,418.00 15.1%
87.1% 16.8% -73.7%
10.2% 285.0% 1.4% 613.8% 406.3%
911.0 6,316.00 693.3% 49.0 -441.00 -900.0% 960.0 5,875.00 612.0% 0.0 0.00 960.0 5,875.00 612.0%
€ Million
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Vertical analysis of the Balance Sheet
Assets Cash and Short Term Investments Total Receivables, Net Total Inventory Total Current Assets 2010 Amount Percent 24,171.00 44,134.00 17,631.00 85,936.00 28.1% 51.4% 20.5% 100.0% 2009 Amount Percent 23,869.00 39,784.00 14,123.00 77,776.00 30.7% 51.2% 18.2% 100.0%
Property/Plant/Equipment, Total – Net
Goodwill, Net
37,911.00
3,410.00
33.4%
3.0%
34,947.00
2,929.00
35.2%
2.9%
Intangibles, Net
Long Term Investments
9,694.00
14,168.00
8.5%
12.5%
9,977.00
10,928.00
10.0%
11.0%
Note Receivable - Long Term
Other Long Term Assets, Total Total Assets
44,025.00
4,249.00 199,393.00
38.8%
3.7%
37,606.00
3,017.00
37.8%
3.0% 100.0%
100.0% 177,180.00
€ Million
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Ratios Comparison
Highlighted Ratios
? Debit/equity = Total Liabilities / Shareholders Equity
? Account receivable turnover = Net Credit Sales / Average account receivable
Ratios Comparison
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Conclusion
?A high debt/equity ratio generally means that BMW has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. ? A high Accounts Receivables Turnover ratio implies either that BMW operates on a cash basis or that its extension of credit and collection of accounts receivable is efficient. ?A low Accounts Receivables Turnover ratio implies VLKAY should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm.
Thank you
doc_365624100.pptx
PROJECT ON VOLKSWAGEN FINANCIAL ANALYSIS
Volkswagen AG
Financial Analysis
Hamed Akram Youssef
Dr. Mowafak Moustafa
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Reasons for Financial Analysis.
• To use financial statements to evaluate an organisation’s
o Financial performance o Financial position.
• There are two key factors for business survival
o Intercompany basis (within the company itself) o Intercompany basis (between companies) o Industry Averages (against that particular industry’s averages
• There are three key factors for business survival
o Liquidity o Profitability o Solvency
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Introduction to Volkswagen
• Volkswagen (abbreviated VW) is the original and biggest-selling marque of the Volkswagen Group, which now also owns the Audi, Bentley, Bugatti, Lamborghini, SEAT and Škoda marques and the truck manufacturer Scania. • Volkswagen means "people's car" in German, Its current slogan is Das Auto (in English The Car). • Volkswagen operates worldwide, but core market is primarily Europe. • In 2000 Volkswagen spent 3.1 Billion Euros to modernize their factories, • Volkswagen's second-largest market China, spent 1.7 Billion Euros in the Chinese market, selling more than one million vehicles in 2008.
Volkswagen overview.
• Volkswagen shares are primarily traded on the Frankfurt stock exchange, listed under the symbol “VLKAY”. • In 2009 Volkswagen was the third biggest motor vehicle manufacturer, with 6.29 million units delivered to customers, After Toyota and General Motors, and planning to go to No.1 in 2014 • Porsche and Volkswagen Group reached an agreement that they would merge in 2011.
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
VW Competitive Vehicles
Passat Golf
Phaeton
Touareg
New Beetle
Jetta
Volkswagen AG
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Volkswagen AG 10 Year Total Sales Trend
Year 2010 2009 2008 Sales Percent Change
121,697.00
100,303.00 109,451.00 108,897.00
21.3%
(8.4%) 0.5% 3.8%
2007
2006 2005 2004
104,875.00
93,996.00 88,963.00 84,813.00 86,948.00 88,540.00 € Million
11.6%
5.7% 4.9% (2.5%) (1.8%)
2003
2002 2001
Volkswagen AG 10 Year Total Sales Trend Graph
140,000.00 120,000.00 100,000.00 80,000.00 60,000.00 40,000.00 20,000.00 0.00 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Sales € Million
Volkswagen AG 10 Year Net Income Graph
8,000.00 7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 0.00 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Sales € Million
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Horizontal analysis of the Income Statements
Revenue Other Revenue, Total Total Revenue Cost of Revenue, Total Gross Profit Selling/General/Admin Exp., Total Unusual Expense (Income) Other Operating Expenses, Total Operating Income Interest Income (Expense), Net Non-Opts. Income Before Tax Income Tax – Total Income After Tax Minority Interest Net Income Before Extra. Items Total Extraordinary Items Net Income 2010 2009 Amount Percent 121,697.0 100,303.0 21,394.00 21.3% 5,178.0 4,884.0 294.00 6.0% 126,875.0 105,187.0 21,688.00 20.6% 105,431.0 91,608.0 13,823.00 16,266.0 8,695.0 7,571.00 15,500.0 13,276.0 2,224.00 -10.0 -38.0 28.00 -865.0 -785.0 -80.00 7,142.0 715.0 8,994.0 1,767.0 7,227.0 -392.0 6,835.0 0.0 6,835.0 1,855.0 5,287.00 705.0 10.00 1,260.0 7,734.00 349.0 1,418.00 15.1%
87.1% 16.8% -73.7%
10.2% 285.0% 1.4% 613.8% 406.3%
911.0 6,316.00 693.3% 49.0 -441.00 -900.0% 960.0 5,875.00 612.0% 0.0 0.00 960.0 5,875.00 612.0%
€ Million
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Vertical analysis of the Balance Sheet
Assets Cash and Short Term Investments Total Receivables, Net Total Inventory Total Current Assets 2010 Amount Percent 24,171.00 44,134.00 17,631.00 85,936.00 28.1% 51.4% 20.5% 100.0% 2009 Amount Percent 23,869.00 39,784.00 14,123.00 77,776.00 30.7% 51.2% 18.2% 100.0%
Property/Plant/Equipment, Total – Net
Goodwill, Net
37,911.00
3,410.00
33.4%
3.0%
34,947.00
2,929.00
35.2%
2.9%
Intangibles, Net
Long Term Investments
9,694.00
14,168.00
8.5%
12.5%
9,977.00
10,928.00
10.0%
11.0%
Note Receivable - Long Term
Other Long Term Assets, Total Total Assets
44,025.00
4,249.00 199,393.00
38.8%
3.7%
37,606.00
3,017.00
37.8%
3.0% 100.0%
100.0% 177,180.00
€ Million
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Ratios Comparison
Highlighted Ratios
? Debit/equity = Total Liabilities / Shareholders Equity
? Account receivable turnover = Net Credit Sales / Average account receivable
Ratios Comparison
Road Map
• • • • • • • • Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.
Conclusion
?A high debt/equity ratio generally means that BMW has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. ? A high Accounts Receivables Turnover ratio implies either that BMW operates on a cash basis or that its extension of credit and collection of accounts receivable is efficient. ?A low Accounts Receivables Turnover ratio implies VLKAY should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm.
Thank you
doc_365624100.pptx