1.Introduction Toyota, which is known as Toyota Motor Corporation is one of the most exciting names in the automobile industry today. Toyota is one of the most competitive companies globally and has enjoyed a record setting success in the last few years. In the most recent years, the global automobile industry has been plagued by high gas prices, and tougher environmental protection laws. Like all automobile manufacturers, Toyota has had its work cut out for them, but to no avail they have been one of the most successful companies to date.
Toyota has also been one of the industries leaders in developing new and innovative technologies that take advantage of the industries current hurdles. One of the most impressive things about this company is the scale, and the global footprint that they currently manage. " Toyota Motor Corporation is one of the world's representative automobile manufacturers, producing vehicles in 26 countries and regions and marketing vehicles in more than 170 countries and regions. In fiscal 2006, on a consolidated basis Toyota provided close to eight million vehicles to customers around the world under the Toyota, Lexus, Daihatsu, and Hino brands. Toyota had more than 280,000 employees at the end of fiscal 2006" (Toyota Motor Corporation, 2006).
One of the most challenging problems the industry has faced in the recent years has been stable sustainable growth, and Toyota has taken this challenge to heart. Toyota has plans to manufacturer, " cars that reflect the needs of customers and society, Toyota will target sustainable growth and contribute to the development of the automobile industry" Toyota Motor Corporation, 2006). There is no doubt that this company will achieve these goals in the future, and it is expected that they will do it with record success just as they have done in the last decade. (Toyota Motor Corporation, 2006). 1.1.History
Toyota Motor Corporation was officially established in 1937 as Toyota Motor Co, even though the company had produced its first vehicle, the G1 truck in 1935 and their first production model, the AA model passenger car in 1936. (Toyota Motor Corporation, 2006) Toyota dates back all the way to 1918 when, "Sakichi Toyoda established Toyoda Spinning & Weaving Co" (Toyota Motor Corporation, 2006).
The original name was Toyoda, but the name was changed before the company went public, because Toyota was believed to be a luckier name than Toyoda. (Toyota Motor Corporation, 2006) By 1947 Toyota had produced more than 100,000 vehicles domestically, and the production of their second model hit the assembly lines. (Toyota Motor Corporation, 2006)
The most amazing thing about Toyota is the early global impact they established in the mid 1900's. Toyota established Ho Tai Motor Co, in Taiwan in 1949, Abdul Latif Jameel Import & Distribution Co. in Saudi Arabia in 1955, Toyota Motor Sales Co. in Thailand in 1957, Toyota Motor Sales, U.S.A. Inc, in 1957 and Toyota Motor Sales Australia Ltd., in 1959. (Toyota Motor Corporation, 2006). This Toyota's early out of the box thinking has led to , " producing vehicles in 26 countries and regions and marketing vehicles in more than 170 countries and regions" (Toyota Motor Corporation, 2006).
The most exciting thing about Toyota's history is how involved they have been in future technologies. Toyota introduced its first Hybrid System in March of 1997, and sales reached 100,000 by March of 2002 (Toyota Motor Corporation, 2006). Toyota is known by some as the founder of hybrid vehicles, and it wasn't long before Nissan agreed to tie with Toyota on hybrid technologies and by the end of 1999 Toyota had their own New York Stock Exchange ticker. One thing is for sure, Toyota is here to stay because Toyota has made its self well known Quality Brand Name over the world. 2.Financial Information
Toyota Motor Corporation has broken their financial records for the last few years running. After taking a good look at their Financial Statements, there is no reason to suspect that they won't continue this streak of amazing success. Toyota has successfully planned their future with new automobile plants in several different countries, joint production agreements, and tie ups with several different companies. While these agreements are promising for the future, Toyotas finances are already in order and as long as they keep things constant financially, they will return record setting numbers for the long term future as well. (Toyota Motor Corporation, 2006)
2.1.Financial Analysis Toyota's financial statements are a strong statement on what lurks in their future, and confirmed after further analysis. Toyota's has a current ratio of 1.07, which is slightly below the industry average of 1.8, but due to their latest acquisitions of a couple of companies in different countries, this is nothing to be alarmed about. (Toyota Motor Corporation, 2006). Toyota's inventory turnover ratio happens to be one of their keys to success. As mentioned previously, the automobile has been plagued by the decrease in growth in proportion to its past.
With that said, Toyota had another record breaking year for sales. Toyota has an inventory turnover ratio of 12.37, which is well above the industry average of 8.2. (Toyota Motor Corporation, 2006). Toyota's total assets turnover ratio is .69 which is within the industry's standards of .6. (Toyota Motor Corporation, 2006). Toyota is impressive when it comes to their total debt to total assets ratio. Currently they have 61.1% of their debt financed, while the average for the industry is high at 85.3%. (Toyota Motor Corporation, 2006). Toyota has its own financial subsidiary and uses it to their advantage by keeping down how much debt they incur. (Toyota Motor Corporation, 2006).
Toyota's return on assets is strong at 7.3, even though it is slightly below the industry average. Some of the things that fool you while looking at the financial statement only are the facts that Toyota has had some newer acquisitions that haven't had an opportunity to make their intended profit. (Toyota Motor Corporation, 2006). While nothing points to Toyota not making their planned profit, there is always that risk you run in business. Their profit margin is .95, and this would raise the red flag, but then again they just got done acquiring new assets that have yet to be able to return anything yet.
(Toyota Motor Corporation, 2006). All in all, Toyota has very strong marks in their industry and has chosen to take their money, reinvest part of it, and retain the rest. They have been able to increase their retained earnings each year, payout an increasing dividend each year, and expand their market globally. Toyota has been proud to continue to offer increasing dividends to their shareholders, all while retaining earnings, and purchasing new assets. Toyota is going to continue its success in the future, despite a few shaky numbers on their financial statements.
3.Mergers and Acquisitions Toyota is no stranger to acquisitions and mergers. Although the list is too long to list in this report, Toyota has made more than 100 acquisitions and or investments over its life. Toyota is known more for acquisitions, forming companies, and producing quality named products in other countries. In fact, most of the acquisitions that Toyota has made span the globe, while they maintain few corporations in Japan. (Toyota Motor Corporation, 2006) Many of the acquisitions are in form of automobile plants or sales corporations in foreign countries. 4.Competition and Foreign Interests
There are many companies that compete with Toyota, and although Toyota might not maintain or have a monopoly in any one country, they are perhaps one of the most diverse companies in the world. This diversity has and will help them sustain in a market that will most likely see a shaky near future. Toyota's foreign interests are perhaps one of its greatest strategies. Toyota has stake in many countries around the world, and enjoys both failure and success all around the world. This foreign interest helps Toyota sustain growth and mitigate shaky markets, by playing all aspects of the market. If anything is for sure, Toyota is more likely to expand its current global footprint.
5.Future Expectations With some of the industries better numbers, especially during a hard time for the automobile market, one should expect that Toyota will continue its own record breaking success in the future. Toyota is perhaps one of the most diverse corporations in the world, and they have placed themselves firmly in many different companies.
(Toyota Motor Corporation, 2006). They have manufactured some of the best automobiles money can buy, and look to take a pave the way for the manufacturing of automobiles in the future. With the success that they have had with their hybrids and the plan to convert all of their makes and models to hybrid technology, this corporation is here to stay and will most likely be the one raising the bar. 6.Conclusion
Toyota will continue to enjoy the success that they have ridden in the last decade, specifically the last 4 years. Dividends, retained earnings, and investments will have continued success, as Toyota plans to devote its efforts to sustain growth. Sustaining growth will require Toyota to stay on top of the market in North America, specifically the market for the Toyota Camry (Toyota Motor Corporation, 2006). Toyota plans on taking the Camry from a car that is highly reliable and making it highly remarkable car that has improved looks and features (Toyota Motor Corporation, 2006).
Camry is the best selling vehicle manufactured by Toyota, and will continue its success. Toyota has also broken the hybrid market wide open, and has tied up with a couple of companies in this arena. They plan on manufacturing all of their makes and models with hybrid technologies in the near future (Toyota Motor Corporation, 2006). Toyota is one of he best companies in regards to this new technology market. Toyota has been successful since it inception with acquisition, and foreign investment (Toyota Motor Corporation, 2006).
Toyota will continue to be one of the most diversified companies in the world, and will continue to have big success in a market that has been plague by growth. (Toyota Motor Corporation, 2006). I predict that Toyota's financial statements will iron out as soon as their assets get to work. They have been and will continue to be successful in the near term and long term future. References
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