Yangon University of Economics

Department of Management Studies

EMBA 19th Batch (Online) MBA 122- Financial Management Group Assignment
Date - 30.11.2022 Group - 10

07 Ko So Pyay Aung 10 Ma Khin Myo Aye

14 Ko Lwin Min Han 25 Ma Thel Su Khine

51 Ko Pyae Phyo Naing 56 Ma Eaindray Oo

71 Ko Aung Myat Thu 58 Ma Su Nandar Oo

Answer

We choose the “Toyota Industries Corporation” public listed company to analysis and advice the current
business not to succumb to such a trap of losing their current and future growth prospects.

Toyota Industries Corporation was established since November 18, 1926.Toyota Industries Corp (TIC)
is a diversified company. It carries out the manufacturing and sale of textile machinery, materials
handling equipment, automobiles, car electronics, vehicles, engines, and car air-conditioning
compressors. It also provides logistics solutions. The company also assembles certain cars and
produces automobile engines under consignment from Toyota Motor Corp. It has manufacturing
facilities in Japan, Sweden, Italy, France, Germany, Poland, Switzerland, the US, Brazil, China,
Indonesia and India. TICO is headquartered in Kariya-shi, Aichi, Japan.

TOYOTA INDUSTRIES CORPORATION Millions of yen (JPY)

Consolidated Statement of Financial Position

2020 2021
Current Asset
Cash and cash equivalents 358,144 238,248
Time deposit with 175,216 353,864
Trade and other Receivable 867,088 962,270
Other financial assets 5,273 5,947
Inventories 255,738 292,461
Income tax receivable 13,756 22,630
Other current assets 64,664 72,658
Total Current Asset 1,739,879 1,948,078

Fixed Asset
Property,Plant and Equipment 991,195 1,043,405
Goodwill and intangiable assets 354,701 363,449
Trade and other Receivable 4,123 3,519
Investment accounted for by the equity menthod 10,991 16,812
Other financial assets 2,120,298 3,051,702
Net defined benefit assets 22,547 33,997
Deferred tax assets 30,877 37,615
Other non current assets 5,034 5,401
Total Fixed Asset 3,539,766 4,555,900

Total Assets 5,279,645 6,503,978

Current Liablities
Trade and other Payable 519,330 613,579
Corporate borns and loans 329,143 435,238
Other financial Liabilities 75,382 78,673
Accrued income tax 20,435 22,786
Provisions 10,300 13,343
Other current liabilities 19,721 24,617
Total current liabilities 974,311 1,188,236

Non-Current Liabilities
Corporate borns and loans 1,010,627 910,124
Other financial Liabilities 85,833 88,364

Net defined benefit liabilities 101,784 104,900

Provisions 7,764 10,225
Deferred tax liabilities 556,880 854,644
Other non current liabilities 21,911 24,937
Total Non-Current Liabilities 1,784,799 1,993,194

Total Liabilities 2,759,110 3,181,430

Equity
Share of equity attributable to owners of the parent
Capital stock 80,462 80,462
Capital surplus 103,515 102,307
Retained earning 1,267,521 1,369,775
Treasury stock (59,307) (59,321)
Other components of equity 1,046,614 1,742,814
Total share of equity attributable to owners of the parent 2,438,805 3,236,037
Non-controlling interests 81,730 86,511
Total Equity 2,520,535 3,322,548

Total Liabilities and owners' equity 5,279,645 6,503,978

- -
Millions of yen (JPY)
Consolidated Statement of Profit or Loss
2020 2021
Net Sale 2,171,355 2,118,302
Cost of Sales (1,664,923) (1,627,894)
Gross profit 506,432 490,408
Selling, general and administrative expensesOther incomeOther expens (381,473) (374,648)
Other income 18,890 18,956
Other expenses (15,615) (16,555)
Operating profit 128,234 118,161
Financial income 74,864 73,999
Financial expenses (8,283) (9,830)
Share of profit/(loss) of investment accounted for by the equity method 1,472 1,682
Profit before income tax 196,287 184,012
Income tax (46,101) (42,576)
Net profit 150,186 141,436

Profit attributable to-

Owners of the parent 145,881 136,700
Non-controlling interests 4,305 4,735

Dividend to owners to the parent 49,677 46,572

Dividend to NCI 2,123 1,627
Total dividend paid 51,800 48,199

Extract from the Annual report of Toyota Motor Corporation

2,020 2,021
Average daily operating cost (days) 5,607 5,486
(COGS+exp/365)

2,020 2,021
Total shares outstanding 325,840,640 325,840,640
Weighted-average no of shares 310,484,000 310,484,000

Exchange rate of USD to JPN 31/12/2020 31/12/2021

103.2405 115.1038
(price at 3-4-20) (the price at 02-04-21)
Market price per share (yen) 4,635.00 9,790.00

Long term Debt 31/12/2020 31/12/2021

Corporate borns and loans 1,010,627 910,124
Other financial Liabilities 85,833 88,364

Net defined benefit liabilities 101,784 104,900

TOTAL 1,198,244 1,103,388

Non cash items (extract from cash flow)

Depreciation and amortization 208,312 209,839
impairment losses 2,496 3,008
Interest and divident income (74,152) (72,429)
Share of profit/(loss) of investment accounted for by the equity method (1,472) (1,682)
135,184 138,736
EBIT 204,570 193,842
339,754 332,578

2,020 2,021
Trade notes and account receivable 354,322 405,571
(Extract from Clause-6)

2020 2021
Liquidity Ratio
1) Curent Ratio =Current Asset / Current Liabilities =Current Asset / Current Liabilities
=1739879/974311 =1,948,078/1,188,236
1.79 times 1.64 times

2) Quick Ratio =(Current Asset- Inventory )/ Current Li=(Current Asset- Inventory )/ Current Liab
=(1739879-255738)/974311 =(1,948,078-292461)/1,188,236
1.52 times 1.39 times

3) Cash Ratio =Cash / Current Laibilities =Cash / Current Laibilities

=358144/974,311 =238248/1,188,236
0.37 times 0.2 times

4) Net working Capital to total Asset =Net Working Capital / Total Assets =Net Working Capital / Total Assets
=765,568/5,279,645 =759,842/6,503,978
0.15 times 0.12 times

5) Interval measure =Current Assets/ Average daily operatin

=Current Assets/ Average daily Op cost
=1,739,879/5,607 =1,948,078/5,486
310.33 days 355.07 days
2020 2021
Financial Leverage Ratio
6) Total Debt ratio =(Total assets-Total equity)/ Total asset=(Total assets-Total equity)/ Total assets
('=Total debt/ Total assets) ('=Total debt/ Total assets)
=(5,279,645-2,520,535)/5,279,645 =(6,503,978-2,520,535)/6,503,978
0.52 times 0.49 times

7) Debt-equity ratio =Total debt/total equity =Total debt/total equity

=2759110/2,520,535 =3181430/3322548
1.09 times 0.96 times

8) Equity multiplier =Total assets/ Total equity =Total assets/ Total equity
=5,279,645/2,520,535 =6,503,978/3322548
 2.09 times 1.96 times

9) Long term debt ratio =Long term debt/ (Long term debt+Total
=Long
equity)
term debt/ (Long
term debt+Total equity)

=1198244/(1198244+2,520,535) =1103388/(1103388+3,322,548)
0.32 times 0.25 times

10) Time interest earned ratio =EBIT/interest =EBIT/interest

=204,570/8,283 =193,842/9,830
24.7 times 19.72 times

11) Cash coverage ratio =(EBIT+depreciation) / interest =(EBIT+depreciation) / interest

=(204,570+208,312/8,283 =(193,842+209,839)/9,830
41.02 times 33.83 times
2020 2021
Asset Management Ratio
12) Inventory turnover =Cost of good sold / inventory =Cost of good sold / inventory
=1,664,923/255,738 =1,627,894/292,461
6.51 times 5.57 times

13) Days' sale in inventory =365/ inventory turnover =365/ inventory turnover
=365/6.51 =365/5.57
56.07 days 65.57 days

14) Receivable turnover =Sales/ Account receivable =Sales/ Account receivable

=2,171,355/354,322 =2,118,302/405,571
6.13 times 5.22 times

15) Days' sale in receivable =365/ Receivable turnover =365/ Receivable turnover
365/6.13 365/5.22
59.56 days 69.88 days

16) NWC Turnover =Sale / NWC =Sale / NWC

=2,171,355/765,568 =2,118,302/759,842
2.84 times 2.79 times

17) Fixed asset turnover =Sales/Net fixed assets =Sales/Net fixed assets
=2,171,355/3,539,766 =2,118,302/3,539,766
0.61 times 0.46 times

18) Total asset turnover =Sale / Total assets =Sale / Total assets
=2,171,355/5,279,645 =2,118,302/6,503,978
0.41 times 0.33 times
2020 2021
Profitibility Ratio
19) Profit Margin =Net income / Sales =Net income / Sales
=150,186/2,171,355 =141,436/2,118,302
6.92 % 6.68 %

20) Return on asset (ROA) =Net income / Total assets =Net income / Total assets
=150,186/5,279,645 =141,436/6,503,978
2.84 % 2.17 %

21) Return on equity (ROE) = Net income / Total equity = Net income / Total equity
=150,186/2,520,535 =141,436/3,322,548
5.96 % 4.26 %
2020 2021
Market Value Ratio
22) Earning per share (EPS) =Net income/ shares outstanding =Net income/ shares outstanding
=150,186/325,840,640 =141,436/325,840,640
JPY 460.92 JPY 434.06

23) PE ratio =Market price per share/ EPS =Market price per share/ EPS
=4,635/JPY 460.92 =9,790/JPY 434.06
10.06 times 22.55 times

24) Price-sale ratio = Price per share/ Sale per share = Price per share/ Sale per share
=4,635/6,663.86 =9,790/6,501.04
0.7 times 1.51 times

(Sale per share=Sales/shares outstan 6,663.86 6,501.04

25) Market to book ratio =Market value per share / Book value p =Market value per share / B.V per share
= =
0.6 times 0.96 times

(Book value per share= Total equity/shares

7,735.48
outstanding) 10,196.85

Finding Operating cycle & Cash conversion cycle?

Operating cycle

(Inventory period) = 365/ Inventory turnover

26) Inventory period 365/ Inventory turnover 365/ Inventory turnover 2021 So the inventory period is about 56days for year of 2021, In other words, inventory
365/6.51 365/5.57 sat for about 56 days before it was sold.
56.067 days 65.529 days So the inventory period is about 66 days for year of 2022, In other words, inventory
2022
sat for about 66 days before it was sold.
(Account Receivable period) = 365/ Account receivable turnover
27) Account Receivable period 365/ Account Receivable turnover 365/ Account Receivable turnover 2021 The receivable period is also called the days' sales in receivable or the average
365/6.13 365/5.22 collection period. The customer took an average of 60 days to pay.
59.543 days 69.923 days
2022 The customer took an average of 70 days to pay.
(Operating cycle) = Inventory period + Account Receivable period
28) Operating cycle 56.067 + 59.543 65.529+69.923 2021 On average, 116 days elapse between the time we acquire inventory and, the time
we collect for the sale.
115.61 days 135.452 days
2022
On average, 135 days elapse between the time we acquire inventory and, the time
Cash Conversion cycle ? we collect for the sale.

Payable Period = 365 / Payable turnover

29) Payable turnover cogs / payable cogs / payable
1,664,923 / 263,844 1,627,894/322,811
 6.31 days 5.042 days

30) Payableperiod 365/Payable turnover 365/payable turnover 2021 Took an average of 58 days to pay the bills.
365/6.31 365/5.042 2022 Took an average of 72 days to pay the bills.
57.844 days 72.391 days

Cash Conversion cycle = Operating cycle - Payable Period 2021

On Average, there is a 58 days delay between the time we pay for merchandise and
the time we collect on the sale.
31) Cash Conversion cycle OC - Payable Period Oc - Payable Period On Average, there is a 63 days delay between the time we pay for merchandise and
115.61-57.844 135.452-72.391 2022 the time we collect on the sale.
57.766 days 63.061 days

(I) Liquidity Ratio

(1) Current Ratio

Current ratio is above 1 for both years, but 2020 is stronger than 2021. It means TIC
can exactly pay off all all its current liabilities with its current assets.

(2) Quick Ratio

The quick ratio is a stricter test of liquidity than the current ratio. The quick ratio only considers certain
current assets such as receivables, and marketable securities. It considers more liquid assets such as
cash, accounts receivable and marketable securities, ignored

inventories because it is less liquid. Quick ratio for both years are above 1 and, 1.52 times for
2020 and 1.39 times for 2021 respectively.

(3) Cash Ratio

The cash ratio is the one of tests of liquidity further. This ratio is consider most liquidity assets, cash.
Cash ratio in FY2021 are declined to 0.2 times. Even cash are reduced rather than
2020, time deposit is raised than 2020.

(4) Net working Capital to total Asset

A relatively low value might indicate relatively low levels of liquidity. Here, this ratio work out to be
0.15 times for 2020 and 0.12 times for 2021. These ratio are not say low value. So, the Company's
liquidity are also can't say low levels of liquidity.

(5) Interval measure

The interval measures indicate how long the company can operate until it needs another round of
financing. The interval measures of TIC is 310 days for 2020 and 355 days for 2021, Based on thid,TIC
could hang on for almost one year in 2021. It is increased than 2020 , 10 months.

(II) Financial Leverage Ratio

(1) Total Debt ratio , Debt-equity ratio, Equity multiplier
The debt to equity ratio shows a company’s financial leverage by comparing its total liabilities to its
shareholder equity. A high debt to equity ratio show a higher risk to investors and shareholders. In TIC,
debt to equity ratio for 2020 is 1.09 times, this mean that for every dollar in equity, the firm has 1.09
dolor in leverage. That is over 1 average industry practice but the appropriate debt to equity ratio varies
by industry. In 2021, debt to equity ratio is reduced to 0.96 times. It can say turn to good condition than
FY2020 but it still high compared to the average industry.
(2) Long term debt ratio

The Long-term Debt to Equity is a measure of a company's financial leverage. When the ratio is
comparatively high, it implies that a business is at greater risk of bankruptcy. In TIC, long term debt
ratio is 0.32 for 2020, it means every one dolor in equity , the firm has 0.32 cents in LTD. At 2021,
LTD ratio is reduced to 0.25 since some repayment make to corporate borns and loans.

(3) Time interest earned ratio and Cash coverage ratio

Even time interest earned ratio is declined in 2021 to 19.72 from 24.7 times, it still cover. Cash ratio
also the same condition with the time interest earned ratio declined in 2021 to 33.83 from 41.02 times.

(III) Asset Management Ratio

Inventory turnover is more quickly in 2021 than 2020 but inventory holding period is long in 2021 than
2020 about 10 days. Receivable turnover in 2021 is 5.22 times, TIC collected its outstanding credit
accounts and reloaned the money 5.22 times. TIC collects on its credit sales in 70days, it take more time
10 days than 2020 credit collected days.

(IV) Profitability Ratio

It is used by companies to provide useful insights into the financial well-being and performance of the
business.

(1) Profit Margin

Profit margin ratio measures the amount of net profit a company obtains per dollar of revenue gained. It
is important in day-to-day financial analysis. TIC's profit margin is declined
6.92% in FY 2020 to 6.68 % in FY2021. We can say profit margin of TIC is low but it can be different
depending on which industry the company is in. Operating profit for FY2021 was
118.1 billion yen, a decrease of 10.1 billion yen, or 8%, from the previous fiscal year.

(2) Return on asset (ROA)

The ROA is an important ratio in analyzing a company’s profitability. The ratio is typically used when
comparing a company’s performance between periods. ROA is also declined in FY 2021 compared to
the FY2020 by 0.67%.

(3) Return on equity (ROE)

ROE is a measure of how the stockholders fared during the year. Because benefiting shareholders is our
(IV) Profitability Ratio

It is used by companies to provide useful insights into the financial well-being and performance of the
business.

(1) Profit Margin

Profit margin ratio measures the amount of net profit a company obtains per dollar of revenue gained. It
is important in day-to-day financial analysis. TIC's profit margin is declined
6.92% in FY 2020 to 6.68 % in FY2021. We can say profit margin of TIC is low but it can be different
depending on which industry the company is in. Operating profit for FY2021 was
118.1 billion yen, a decrease of 10.1 billion yen, or 8%, from the previous fiscal year.

(2) Return on asset (ROA)

The ROA is an important ratio in analyzing a company’s profitability. The ratio is typically used when
comparing a company’s performance between periods. ROA is also declined in FY 2021 compared to
the FY2020 by 0.67%.

(3) Return on equity (ROE)

ROE is a measure of how the stockholders fared during the year. Because benefiting shareholders is our
goal, ROE is, in an accounting sense, the true bottom-line measure of performance. In FY 2020, ROE is
5.96%, this mean every dolor in equity, TIC generated 5.96 cents in profit. In FY 2021, ROE is
declined to 4.26%.

(V) Market Value Ratio

(1) Earning per share (EPS)

EPS indicates a company’s ability to produce net profits for common shareholders. FY2020, JPY460.92
mean that every share receives an equal slice of the pie of net income, they would each
receiveJPY460.92. FY2021, JPY434.06 mean that every share receives an equal slice of the pie of net
income, they would each receiveJPY434.06. EPS is declined by JPY26.86 in every share in 2021.

(2) PE ratio

The Price Earnings Ratio (PE Ratio) is the relationship between a company’s stock price and earnings
per share (EPS). In FY 2021, PE ratio is raised to 22.55 times almost twice (In FY2020, only 10.06
times) . It can say that TIC sell for almost 22.55 times earnings. The market share price is high to
almost double to JPY9790 from JPY4635.

(3) Price-sale ratio

P/S ratio is used to measure the total value that investors place on the company in comparison to the
total revenue generated by the business. And also P/S ratio is one of the easiest ways to understand the
valuation of a company. P/S ratio is almost raised double in FY
2021 than FY2020 due to the increased of market share price.

(4) Market to book ratio

The Market to Book ratio is a financial valuation metric used to evaluate a company’s current market
value relative to its book value. A low ratio (less than 1) could indicate that the stock is undervalued
(i.e. a bad investment), and a higher ratio (greater than 1) could mean the

stock is overvalued (i.e. it has performed well). Market to book ratio for 2020 is 0.6 times, then
for 2021 is 0.96 times. TIC is well performed in FY2021 but it is still under 1.

Conclusion (Our comments)

After overall reviewed the ratio analysis, We found that some weak points in TIC are as follow,

Liquidity ratios are important to investors and creditors to determine if a company can cover their short-
term obligations, and to what degree. After calculating and testing of liquidity, the Toyota Industries
Corporation (TIC)'s is healthy liquidity ratio is more likely to be proved for credit. TIC has the ability to