Financial and Investment Assignment

Names IDs Groups

Shahy Mohamed Hussein 512291843 G7

Khadija Youssef Mohamed 512291904 G8

Loulowa Albahaa Mohamed

512291815 G8
(Team Leader)

Lojaine Mohamed Bassam 512291921 G11

Rawan Tamer Bahgat 512292556 G11

Salma Ashraf Mahmoud 512292031 G11

BMW corporate pro le: BMW Financial Statements 2018-2019

Mercedes corporate pro le: Mercedes Financial Statements 2018-2019
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 Balance Sheet (in millions)
Items BMW Mercedes

2018 2019 2018 2019

Intangible assets 252 405 1,587 58

Property, Plant, and

equipment
11,976 12,473 9,528 230

Investments 3,559 3,762 43,977 56,926

Non-current assets 15,787 16,640 55,092 57,214

Inventories 4,811 5,994 10,524 —

Trade receivables 947 964 2,781 69

Receivables from
subsidiaries
8,570 16,698 29,817 30,644

Other receivables
and other assets
3,595 3,513 4,908 2,047

Marketable
securities
4,080 4,109 7,278 6,165

Cash and cash

equivalents
6,542 6,757 6,354 2,942

Current assets 28,545 38,035 61,662 41,867

Prepaid expenses 535 58 406 285

Surplus of pension
and similar plan
assets over
668 1,086 — —
liabilities

Total assets 45,535 55,819 117,1160 99,366

Share capital 658 659 3,070 3,070

Capital reserves 2,177 2,210 11,480 11,480

Revenue reserves 10,103 10,564 — —

Retained earnings — — 25,182 22,541

Distributable pro t 2,303 1,646 3,477 936

Equity 15,241 15,079 43,209 38,054

Registered pro t-
sharing certi cates
28 28 — —

Pension provisions 214 205 838 94

Other provisions 7,824 8,784 15,595 1,511

Provisions 8,038 8,989 16,433 1,605

Liabilities to banks 545 511 — —

Trade payables 5,560 5,751 7,210 227

Liabilities to
subsidiaries
12,670 21,777 18,838 29,978

Other subsidiaries 285 187 — —

Other liabilities — — 30,394 29,496

Liabilities 19,060 28,226 56,442 59,701

Deferred income 3,168 3,497 1,076 6

Total equity and

liabilities
45,535 55,819 117,160 99,366
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 Income Statement (in millions)
Items BMW Mercedes

2018 2019 2018 2019

Revenues 78,355 84,691 112,491 2,019

Cost of sales -63,841 -70,178 -103,232 -1,959

Gross pro t 14,514 14,513 9,259 60

Selling expenses -4,078 -3,979 -7,904 —

Administrative
expenses
-2,803 -2,776 -2,304 -964

Research and
development -5,859 -5,528 — —
expenses

Other operating
income
2,184 1,295 1,372 88

Other operating
expenses
-1,158 -2,526 -1,664 -360

Result on
investments
2,344 1,858 11,337 -426

Financial result -1,452 39 183 -96

Interest income/
expense
— — -4,202 -24

Income taxes -872 -767 -1,055 44

Pro t after income

tax
2,820 2,129 5,022 -1,678

Other taxes -19 -22 — —

Net pro t 2,801 2,107 5,022 -1,678

Transfer to revenue
reserves
-498 -461 -1,545 2,641

Distributable pro t 2,303 1,646 3,477 963

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Liquidity Ratios:
1) Current Ratio:
current ratio= current assets/ current liability

BMW Current Ratio

2018 2019
28545/ 19060= 1.498 times 38035/ 28226= 1.347 times
This means that the company is able to pay its current liabilities through its current assets,
and 2018 is better than 2019 because in 2018 the ratio is higher.

Mercedes Current Ratio

2018 2019
61662/ 56442= 1.092 times 40257/ 46062= 0.874 times
This means that the company is able to pay its current liabilities through its current assets,
and 2018 is better than 2019 because in 2018 the ratio is higher.
This also means that BMW is able to pay its current liabilities through its current assets
better than Mercedes in both 2018 and 2019 because BMW has the higher ratios.
2) Quick Ratio:
quick ratio= current assets - inventory/ current liability

BMW Quick Ratio

2018 2019
28545 - 4811/ 19060= 1.245 times 38035 - 5994/ 28226= 1.135 times
This means that the company is able to pay its current liabilities through its current assets,
and 2018 is better than 2019 because in 2018 the ratio is higher.

Mercedes Quick Ratio

2018 2019
61662 - 10524/ 56442= 0.906 times 40257 - 1/ 46062= 0.873 times
This means that the company is able to pay its current liabilities through its current assets,
and 2018 is better than 2019 because in 2018 the ratio is higher.
This also means that BMW is able to pay its current liabilities through its current assets
better than Mercedes in both 2018 and 2019 because BMW has the higher ratios.
Activity Ratios:
1) Inventory Turnover Ratio:
inventory turnover = cost of goods sold / inventory
BMW Inventory Turnover Ratio

2018 2019
-63,841/ 4,811= -13.27 times -70,178/ 5,994= -11.71 times
This means that the inventory turnover of 2019 is better than 2018 because in 2019 the ratio
is higher.

Mercedes Inventory Turnover Ratio

2018 2019
-103,232/ 10,524= -9.81 times -1,959/ 1= -1.959 times
This means that the inventory turnover of 2018 is better than 2019 because in 2018 the ratio
is higher.
This also means that Mercedes’ inventory turnover is better than BMW in 2018 because
Mercedes has the higher ratio, while BMW’s inventory turnover is better than Mercedes in
2019 because BMW has the higher ratio.
2) Average Age Inventory Ratio:
average age inventory= 365/ inventory turnover

BMW Average Age Inventory Ratio

2018 2019
365/ -13.27= -27.5 days 365/ -11.71= -31.17 days
This means that the average age inventory in 2019 is better than 2018 because in 2019 the
ratio is lower.

Mercedes Average Age Inventory Ratio

2018 2019
365/ -9.81= -37.21 days 365/ -1,959= 0.2 days
This means that the average age inventory in 2018 is better than 2019 because in 2018 the
ratio is lower.
This also means that Mercedes’ average age inventory is better than BMW in 2018 because
Mercedes has the lower ratio, while BMW’s average age inventory is better than Mercedes
in 2019 because BMW has the lower ratio.
3) Average Collection Period Ratio:
average collection period= accounts receivable/ (sales/ 365)
BMW Average Collection Period Ratio

2018 2019
13,112/ (78,355/ 365)= 61 days 21,175/ (84,691/ 365)= 91.2 days
This means that the average collection period in 2018 is better than 2019 because in 2018
the ratio is lower.

Mercedes Average Collection Period Ratio

2018 2019
38,506/ (112,491/ 365)= 121.7 days 32,760/ (2,019/ 365)= 5,922 days
This means that the average collection period in 2018 is better than 2019 because in 2018
the ratio is lower.
This also means that BMW’s average collection period is better than Mercedes in both 2018
and 2019 because BMW has the lower ratios.
4) Average Payment Period Ratio:
average payment period= accounts payable/ (purchases/ 365)
Purchases information were not given in the nancial statements of both BMW and
Mercedes.
5) Total Asset Turnover Ratio:
total asset turnover= sales/ total assets

BMW Total Assets Turnover Ratio

2018 2019
78,355/ 45,535= 1.72 times 84,691/ 55,819= 1.52 times
This means that the total asset turnover in 2018 is better than 2019 because in 2018 the
ratio is higher.

Mercedes Total Assets Turnover Ratio

2018 2019
112,491/ 117,160= 0.96 times 2,019/ 99,366= 0.02 times
This means that the total asset turnover in 2018 is better than 2019 because in 2018 the
ratio is higher.
This also means that BMW’s total asset turnover is better than Mercedes in both 2018 and
2019 because BNW has the higher ratios.
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Debt Ratios:
1) Debt Ratio:
debt ratio= total liabilities/ total assets

BMW Debt Ratio

2018 2019
19,060/ 45,535= 0.4% 28,226/ 55,819 = 0.5%
This means that the debt ratio in 2018 is better than 2019 because in 2018 the ratio is lower.

Mercedes Debt Ratio

2018 2019
56,442/ 117,160= 0.48% 59,701/ 99,366= 0.6%
This means that the debt ratio in 2018 is better than 2019 because in 2018 the ratio is lower.
This also means that BMW’s debt ratio is better than Mercedes in both 2018 and 2019
because BMW has the lower ratios.
2) Equity Multiplier (EM) Ratio:
EM= total assets/ common stock equity

BMW EM Ratio

2018 2019
45,535/ 15,241= 2.988 times 55,819 / 15,079= 3.7 times
This means that the equity multiplier ratio in 2018 is better than 2019 because in 2018 the
ratio is lower.

Mercedes EM Ratio

2018 2019
117,160 / 43,209= 2.71 times 99,366 / 38,054= 2.61 times
This means that the equity multiplier ratio in 2019 is better than 2018 because in 2019 the
ratio is lower.
This also means that Mercedes’ equity multiplier ratio is better than BMW in both 2018 and
2019 because Mercedes has the lower ratios.
 3) Times Interest Earned Ratio:
times interest earned ratio= (operating pro t) EBIT/ interest

BMW Times Interest Earned Ratio

2018 2019
2,344/ 232= 10.1 times 1,858/ 233= 7.97 times
This means that the times interest earned ratio in 2018 is better than 2019 because in 2018
the ratio is higher.

Mercedes Times Interest Earned Ratio

2018 2019
11,337/ -4,202= -2.698 times -426/ -24= 17.75 times
This means that the times interest earned ratio in 2019 is better than 2018 because in 2019
the ratio is higher.
This also means that BMW’s equity multiplier ratio is better than Mercedes in 2018 because
BMW has the higher ratios, and Mercedes’ equity multiplier ratio is better than BMW in 2019
because Mercedes has the higher ratios.

Pro tability Ratios:

1) Gross Pro t Margin Ratio:
gross pro t margin ratio= gross pro t/ sales

BMW Gross Pro t Margin Ratio

2018 2019
14,514/ 78,355= 0.185% 14,513/ 84,691= 0.171%
This means that the contribution of units sold to pro t in 2018 is better than 2019 because
in 2018 the ratio is higher.

Mercedes Gross Pro t Margin Ratio

2018 2019
9,259/ 112,491= 0.082% 60/ 2,019= 0.03%
This means that the contribution of units sold to pro t in 2018 is better than 2019 because
in 2018 the ratio is higher.
This also means that BMW’s contribution of units sold to pro t is better than Mercedes in
both 2018 and 2019 because BMW has higher ratios.
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 2) Operating Pro t Margin Ratio:
operating pro t margin ratio= operating pro t/ sales

BMW Operating Pro t Margin Ratio

2018 2019
2,344/ 78,355= 0.03% 1,858/ 84,691= 0.02%
This means that the operating pro t compared to sales in 2018 is better than 2019 because
in 2018 the ratio is higher.

Mercedes Operating Pro t Margin Ratio

2018 2019
11,337/ 112,491= 0.1% -429/ 2,019= -0.21%
This means that the operating pro t compared to sales in 2018 is better than 2019 because
in 2018 the ratio is higher.
This also means that Mercedes’ operating pro t compared to sales is better than BMW in
2018 because Mercedes has a higher ratio, while BMW’s operating pro t compared to sales
is better than Mercedes in 2019 because BMW has the higher ratio.
3) Net Pro t Margin Ratio:
net pro t margin ratio= net pro t after tax/ sales
(net pro t after tax or earning available for common stockholders)

BMW Net Pro t Margin Ratio

2018 2019
2,801/ 78,355= 0.035% 2,107/ 84,691= 0.024%
This means that the percentage of net pro t for sales in 2018 is better than 2019 because in
2018 the ratio is higher, and this is due to either an increase in sales or decrease in costs.

Mercedes Net Pro t Margin Ratio

2018 2019
5,022/ 112,491= 0.045% -1678/ 2,019= -0.83%
This means that the percentage of net pro t for sales in 2018 is better than 2019 because in
2018 the ratio is higher, and this is due to either an increase in sales or decrease in costs.
This also means that Mercedes’ percentage of net pro t for sales is better than BMW in
2018 because Mercedes has the higher ratio, while BMW’s percentage of net pro t for sales
is better than Mercedes in 2019 because BMW has the higher ratio.
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 4) Return On Total Assets (ROA) Ratio:
ROA ratio= net pro t after tax/ total assets
(net pro t after tax or earning available for common stockholders)

BMW ROA Ratio

2018 2019
2,801/ 45,535= 0.061% 2,107/ 55,189= 0.038%
This rate refers to the pro tability of the pound that is invested in this company, and it turns
out that the pro tability of the pound that was invested in 2018 is better than 2019 because
in 2018 the ratio is higher.

Mercedes ROA Ratio

2018 2019
5,022/ 117,160= 0.042% -1678/ 99,366= -0.016%
This rate refers to the pro tability of the pound that is invested in this company, and it turns
out that the pro tability of the pound that was invested in 2018 is better than 2019 because
in 2018 the ratio is higher.
This means that BMW’s pro tability of the pound that was invested is better than Mercedes
in both 2018 and 2019 because BMW has the higher ratios.
5) Return On Equity (ROE) Ratio:
ROE ratio= net pro t after tax/ common stock equity
(net pro t after tax or earning available for common stockholders)

BMW ROE Ratio

2018 2019
2,801/ 15,241= 0.183% 2,107/ 15,079= 0.139%
This rate refers to the pro tability of the pound that is invested from the owner’s money, and
it turns out that the pro tability of the pound that was invested from the owner’s money in
2018 is better than in 2019 because in 2018 the ratio is higher.

Mercedes ROE Ratio

2018 2019
5,022/ 43,209= 0.12% -1678/ 38,054= -0.044%
This rate refers to the pro tability of the pound that is invested from the owner’s money, and
it turns out that the pro tability of the pound that was invested from the owner’s money in
2018 is better than in 2019 because in 2018 the ratio is higher.
This means that BMW’s pro tability of the pound that was invested from the owner’s money
is better than Mercedes in both 2018 and 2019 because BMW has the higher ratios.
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Market Ratios:
1) Price/ Earning (P/E) Ratio:
P/E ratio= market price per share/ earning per share

BMW P/E Ratio

2018 2019
1.2914/ 0.0502= 25.72 times 110.29/ 0.01= 110.29 times
This means that the P/E ratio is better in 2019 than 2018 because in 2019 the ratio is higher.

Mercedes P/E Ratio

2018 2019
50.57/ 7.94= 6.36 times 46.09/ 2.42= 19.04 times
This means that the P/E ratio is better in 2019 than 2018 because in 2019 the ratio is higher.
This also means that BMW’s P/E ratio is better than Mercedes in both 2018 and 2019
because BMW has the higher ratios.
2) Price/ Book Value (P/BV) Ratio:
P/BV ratio= market price per share/ book value per share

BMW P/BV Ratio

2018 2019
1.2914/ 0.17= 7.59 times 110.29/ 0.16= 7.67 times
This means that the P/BV ratio is better in 2019 than 2018 because in 2019 the ratio is
higher.

Mercedes P/BV Ratio

2018 2019
50,57/ 40.15= 1.25 times 46.09/ 34.6= 1.33 times
This means that the P/BV ratio is better in 2019 than 2018because in 2019 the ratio is
higher.
This also means that BMW’s P/BV ratio is better than Mercedes in both 2018 and 2019
because BMW has the higher ratios.
 3) Dividends Yield Ratio:
dividends yield ratio= annual dividend per share/ stock price

BMW Dividends Yield Ratio

2018 2019
0.04/ 109.92= 3.63% 0.03/ 110.29= 2.72%
This means that what the investor gets from the dividends compared to the share price in
2018 is better than 2019 because in 2018 the ratio is higher.

Mercedes Dividends Yield Ratio

2018 2019
3.02/ 50.57= 0.05% 0.82/ 46.09= 0.01%
This means that what the investor gets from the dividends compare to the share price in
2018 is better than 2019 because in 2018 the ratio is higher.
This also mens that what the investor gets from the dividends compare to the share price in
BMW is better than Mercedes in both 2018 and 2019 because BMW has the higher ratios.

In summary, the nancial analysis of BMW and Mercedes for the years 2018 and 2019 has
revealed several key ndings.

Liquidity Ratios:
- Both companies have improved their current liquidity in 2019 compared to 2018.
- BMW's current liquidity is consistently higher than Mercedes-Benz's in both years.

Activity Ratios:
- Both companies have improved their total asset turnover in 2019 compared to 2018.
- BMW’s total asset turnover is consistently higher than Mercedes’ in both years.

Debt Ratios:
- BMW's debt ratio is consistently lower than Mercedes' in both years.
- BMW's equity multiplier ratio is consistently lower than Mercedes' in both years.

Pro tability Ratios:

- Both companies have improved their gross pro t margin ratio in 2019 compared to 2018.
- BMW's gross pro t margin ratio is consistently higher than Mercedes' in both years.
- Mercedes' operating pro t margin ratio is higher than BMW's in 2018 but lower in 2019.
- BMW's net pro t margin ratio is consistently higher than Mercedes' in both years.
- Both companies have improved their return on total assets (ROA) ratio in 2019 compared to 2018.
- BMW's ROA ratio is consistently higher than Mercedes' in both years.
- Both companies have improved their return on equity (ROE) ratio in 2019 compared to 2018.
- BMW's ROE ratio is consistently higher than Mercedes' in both years.

Market Ratios:
- Both companies have improved their price/ earnings (P/E) ratio in 2019 compared to 2018.
- BMW's P/E ratio is consistently higher than Mercedes' in both years.
- Both companies have improved their price/ book value (P/BV) ratio in 2019 compared to 2018.
- BMW's P/BV ratio is consistently higher than Mercedes' in both years.
- BMW's dividends yield ratio is consistently higher than Mercedes' in both years.
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 Recommendations: Based on the analysis, it appears that BMW has a stronger nancial position
than Mercedes, particularly with regards to liquidity, activity, and pro tability ratios. However, further
investigation may be necessary to determine the reasons behind these di erences and any potential
risks or opportunities for each company. It may also be worthwhile to analyze the companies' cash
ow statements and other nancial statements to gain a more comprehensive understanding of their
nancial positions and performance over time. Additionally, it may be bene cial to consider external
factors such as industry trends, economic conditions, and regulatory environments that could
impact the companies' nancial performance and strategies moving forward.

Summary Of All Ratios

Ratios BMW Mercedes

2018 2019 2018 2019

Current Ratio 1.498 times 1.347 times 1.092 times 0.874 times

Quick Ratio 1.245 times 1.135 times 0.906 times 0.873 times

Inventory Turnover Ratio -13.27 times -11.71 times -9.81 times -1,959 times

Average Age Inventory Ratio -27.5 days -31.17 days -37.21 days 0.2 days

Average Collection Period Ratio 61 days 91.2 days 121.7 days 5,922 days

Average Payment Period Ratio no data no data no data no data

Total Asset Turnover Ratio 1.72 times 1.52 times 0.96 times 0.02 times

Debt Ratio 0.4% 0.5% 0.48% 0.6%

Equity Multiplier (EM) Ratio 2.988 times 3.7 times 2.71 times 2.61 times

Times Interest Earned Ratio 10.1 times 7.97 times -2.698 times 17.75 times

Gross Pro t Margin Ratio 0.185% 0.171% 0.082% 0.03%

Operating Pro t Margin Ratio 0.03% 0.02% 0.1% -0.21%

Net Pro t Margin Ratio 0.035% 0.024% 0.045% -0.83%

Return On Assets (ROA) Ratio 0.061% 0.038% 0.042% -0.016%

Return On Equity (ROE) Ratio 0.183% 0.139% 0.12% -0.044%

Price/ Earning (P/E) Ratio 25.72 times 110.29 times 6.36 times 19.04 times

Price/ Book Value (P/BV) Ratio 7.59 times 7.67 times 1.25 times 1.33 times

Dividends Yield Ratio 3.63% 2.72% 0.05% 0.01%

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