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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Volkswagen AG Financial Analysis
1.
2. Volkswagen AG
Financial Analysis
Hamed
Akram
Youssef
Dr. Mowafak Moustafa
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. 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.
5. Reasons for Financial
Analysis.
⢠To use financial statements to evaluate an organisationâs
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 industryâs averages
⢠There are three key factors for business survival
o Liquidity
o Profitability
o Solvency
6. 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.
7. 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 Ĺ kod
a 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.
8. Volkswagen overview.
⢠Volkswagen shares are primarily traded on the Frankfurt
stock exchange, listed under the symbol âVLKAYâ.
⢠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.
9. 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. 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.
12. Volkswagen AG
10 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
13. 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
14. 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
15. 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.
16. Horizontal analysis of the Income Statements
2010 2009 Amount Percent
Revenue 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 â 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 0.00
Net Income 6,835.0 960.0 5,875.00 612.0%
⏠Million
17. 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.
18. Vertical analysis of the Balance Sheet
2010 2009
Assets
Amount Percent Amount Percent
Cash 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 â 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
19. 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. 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.
24. Conclusion
ďA 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.
ď 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.
ďA 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.
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.