FINA3314: Financial Statement Analysis Comparative ration analysis- Ford and Toyota   Done by: Ebtihal Al-Arbash 200700761 Saba Soliman Al-Mohawis 201000230 Haneen Al-Farwan Fall 2012

Table of content Abstract Introduction Ratio analysis of Toyota and Ford Brief history of the Ford and Toyota Profitability analysis Liquidity analysis Current assets SWOT analysis Findings Conclusion

abstract Ford Company has been in operation since 1903 when Sir Henry Ford with his other associates established it. Kiichiro Toyoda established Toyota Corporation in 1936. The two companies have grown to become one of the two largest vehicle industry in the world

Introduction The two companies control specified market size in the industry. Toyota is a motor company established in Japan, Asia while Ford is a motor company established in North America. Despite the different locations, the two companies face each other in terms of competition where each of the players is trying to increase their market size. Ford has been associated with the manufacture of exceptionally powerful vehicles, which are considered as heavy consumers of fuel. Which is opposite of Toyota. Toyota has been engaged in making of vehicles, which have low fuel consumption and usage.

Brief history of both Ford and Toyota Toyota Corporation The founding name for Toyota Motor Corporation was Toyoda, which was changed in the following year to Toyota due to superstitious reasons. Initially the company engaged in production of exceptionally light cars and tracks for the Japanese and outside market. 1980 it was forced to open a branch in the United States due to the heavy tax impositions established on its products. In the year 1990, Toyota started to include in its manufacturing luxury vehicles, sports vehicles, full sized trucks and pickups (Grant 2010). The company went from being private to public in 1999. In 2009, Toyota was recognized as the biggest car manufacturer in the world.. Ford Company It was started with a mere $28,000 in cash when being established. The company went public on 1956 Feb 24. At the time, the company had approximately four hundred shareholders. The company is based in the United States in Dearborn Michigan. The company enjoys a wide market of over two hundred markets across the six continents. Ford is currently rated as the fourth largest company in vehicle industry. The chief brands for the Ford Motor Company are Volvo, Lincoln, Mercury and Ford. The market for the Ford vehicles has been on increase especially in countries in Europe (Grant 2010). .

SWOT analysis of Toyota and Ford Companies Ford Company Strengths 1. Ford is a well-known brand 2. the hybrid technology Weakness 1. weak sales. 2. lack of flexibility of the company to suit market changes. Opportunities 1. the ability of the company to manufacture hybrid vehicles, which are eco friendly. 2. the role it plays in appealing to the people as a national brand during the period of crisis. Threats 1. the evolution of the crisis that the Ford Company has been facing. 2. The production process of the company has to improve or the company will have to appeal for help to the public.

SWOT analysis of Toyota and Ford Companies Toyota Corporation Strengths 1. hybrid technology. 2.the ability of the company to manage during the time of crisis compared to Ford Company. This is due to presence of more retained returns or profits to attend to crisis (Lee 2009). Weakness 1. lack of protection against changes in demand and prices. 2. the company converts its invoices in terms of yen instead of dollars (Lee 2009). . Opportunities 1.promotes the manufacturing of cars that are environmental friendly. 2. less risk of crisis compared to the Ford Company. (Lee 2009). Threats Currently Toyota Corporation is engaging in production of heavy engine vehicles. The corporation to the threat of being exposed to high production costs that cannot be met by the sales returns.

profitability analysis: Findings profitability analysis: ROA ratio is above the 0.2% ROA that is in negative Healthy Entity the ROE, the Toyota Company has been able to operate in a value close to 20% Ford has been operating in a value close to 20% but has been on a decline that is necessary for a healthy entity that is required for a strong company. Strong Company

Current liabilities Crisis Management liquidity analysis : Ford Company has limited assets that can be converted to cash to attend to its short-term debts. that is in negative Toyota Corporation has a high value of assets that can be converted to cash to pay its short-term debts. Current liabilities It becomes certain that the rate of utilization of the current assets against current liabilities of the Toyota Corporation is high compared to Ford Crisis Management Toyota Corporation is in a positive position to manage the crisis. This is converse to the Ford Company. This is due to in time of the crisis the Ford company may need an external help to manage its crisis.

Conclusion The crisis has made the Ford Company to operative in term of negative operations where it cannot cover its production process. The company has a production process that is expensive to cover by the returns made in the sales. This is converse to Toyota Corporation. Toyota Corporation has been able to produce cars, which are cheap with a production process that is easily covered with the returns on the sales. This has been the reasons for the success story of Toyota Corporation and a failure story for Ford Company.

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