Volkswagen AG Financial Analysis
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Volkswagen AG Financial Analysis

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Volkswagen AG Financial Analysis - Submitted as a partial requirement for the fulfillment of Advanced Accounting course - MBA Degree - The German University in Cairo - Spring 2011 - Dr. Mowafak......

Volkswagen AG Financial Analysis - Submitted as a partial requirement for the fulfillment of Advanced Accounting course - MBA Degree - The German University in Cairo - Spring 2011 - Dr. Mowafak Mostafa

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  • Continue or discontinue its main operation or part of its business;Make or purchase certain materials in the manufacture of its product;Acquire or rent/lease certain machineries and equipment in the production of its goods;Issue stocks or negotiate for a bank loan to increase its working capital;Make decisions regarding investing or lending capital;Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.

Transcript

  • 1. Volkswagen AG Financial AnalysisHamedAkramYoussef Dr. Mowafak Moustafa
  • 2. 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.
  • 3. 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.
  • 4. 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
  • 5. 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.
  • 6. 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 Škod a marques and the truck manufacturer Scania.• Volkswagen means "peoples 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,• Volkswagens second-largest market China, spent 1.7 Billion Euros in the Chinese market, selling more than one million vehicles in 2008.
  • 7. 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.
  • 8. 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.
  • 9. VW Competitive Vehicles PassatGolf Touareg Phaeton New Beetle Jetta Volkswagen AG
  • 10. 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.
  • 11. Volkswagen AG10 Year Total Sales Trend Year Sales Percent Change 2010 121,697.00 21.3% 2009 100,303.00 (8.4%) 2008 109,451.00 0.5% 2007 108,897.00 3.8% 2006 104,875.00 11.6% 2005 93,996.00 5.7% 2004 88,963.00 4.9% 2003 84,813.00 (2.5%) 2002 86,948.00 (1.8%) 2001 88,540.00 € Million
  • 12. Volkswagen AG 10 Year Total Sales Trend Graph140,000.00120,000.00100,000.00 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
  • 13. Volkswagen AG 10 Year Net Income Graph8,000.007,000.006,000.005,000.004,000.003,000.002,000.001,000.00 0.00 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Sales € Million
  • 14. 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.
  • 15. Horizontal analysis of the Income Statements 2010 2009 Amount PercentRevenue 121,697.0 100,303.0 21,394.00 21.3%Other Revenue, Total 5,178.0 4,884.0 294.00 6.0%Total Revenue 126,875.0 105,187.0 21,688.00 20.6%Cost of Revenue, Total 105,431.0 91,608.0 13,823.00 15.1%Gross Profit 16,266.0 8,695.0 7,571.00 87.1%Selling/General/Admin Exp., Total 15,500.0 13,276.0 2,224.00 16.8%Unusual Expense (Income) -10.0 -38.0 28.00 -73.7%Other Operating Expenses, Total -865.0 -785.0 -80.00 10.2%Operating Income 7,142.0 1,855.0 5,287.00 285.0%Interest Income (Expense), Net Non-Opts. 715.0 705.0 10.00 1.4%Income Before Tax 8,994.0 1,260.0 7,734.00 613.8%Income Tax – Total 1,767.0 349.0 1,418.00 406.3%Income After Tax 7,227.0 911.0 6,316.00 693.3%Minority Interest -392.0 49.0 -441.00 -900.0%Net Income Before Extra. Items 6,835.0 960.0 5,875.00 612.0%Total Extraordinary Items 0.0 0.0 0.00Net Income 6,835.0 960.0 5,875.00 612.0% € Million
  • 16. 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.
  • 17. Vertical analysis of the Balance Sheet 2010 2009 Assets Amount Percent Amount PercentCash and Short Term Investments 24,171.00 28.1% 23,869.00 30.7%Total Receivables, Net 44,134.00 51.4% 39,784.00 51.2%Total Inventory 17,631.00 20.5% 14,123.00 18.2%Total Current Assets 85,936.00 100.0% 77,776.00 100.0%Property/Plant/Equipment, Total – Net 37,911.00 33.4% 34,947.00 35.2%Goodwill, Net 3,410.00 3.0% 2,929.00 2.9%Intangibles, Net 9,694.00 8.5% 9,977.00 10.0%Long Term Investments 14,168.00 12.5% 10,928.00 11.0%Note Receivable - Long Term 44,025.00 38.8% 37,606.00 37.8%Other Long Term Assets, Total 4,249.00 3.7% 3,017.00 3.0%Total Assets 199,393.00 100.0% 177,180.00 100.0% € Million
  • 18. 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.
  • 19. Ratios Comparison
  • 20. Highlighted Ratios Debit/equity = Total Liabilities / Shareholders Equity Account receivable turnover = Net Credit Sales / Average account receivable
  • 21. Ratios Comparison
  • 22. 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.
  • 23. ConclusionA high debt/equity ratio generally means that BMW hasbeen aggressive in financing its growth with debt. This canresult in volatile earnings as a result of the additional interestexpense. A high Accounts Receivables Turnover ratio implies eitherthat BMW operates on a cash basis or that its extension ofcredit and collection of accounts receivable is efficient.A low Accounts Receivables Turnover ratio implies VLKAYshould re-assess its credit policies in order to ensure thetimely collection of imparted credit that is not earning interestfor the firm.
  • 24. Thank you