Financial Statement Analysis-Volkswagen financial performance

Added on - 03 Dec 2019

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Financial Statement Analysis
Executive SummaryFinancial statement may be defined as a formal record of financial activities, position andperformance of an organization. Financial statement represents information of cash flow, incomestatement as well as balance sheet in highly structured manner. Besides this, financial statementanalysis consists of the review and evaluation of financial statements which provides informationabout the financial health and performance of the firm. It enables finance manager to framecompetent strategies and policies which makes contribution in the achievement of organizationalgoals and objectives. The present report will discuss various approaches through which companycan analyze the financial statements of an organization. Besides this, it will also shed light on theinternal and external factors which have high level of influence upon the functions andoperations of Volkswagen. In addition to this, the present will provide information about thefinancial, liquidity and solvency aspect of Volkswagen and Toyota through ratio analysis.
Table of ContentsINTRODUCTION..........................................................................................................................21. Volkswagen financial performance.........................................................................................22. Volkswagen financial position................................................................................................33. Discussion on Volkswagen emissions scandal and its impact................................................54. Innovation and Growth...........................................................................................................65. Future prospectus of Volkswagen...........................................................................................7CONCLUSION AND RECOMMENDATIONS............................................................................8Conclusion...................................................................................................................................8RECOMMENDATIONS............................................................................................................8REFERENCES..............................................................................................................................10APPENDIX....................................................................................................................................121
INTRODUCTIONFinancial statement analysis refers to the evaluation of the income statement, cash flowstatement and balance sheet of an organization. Through this, manager of the company is able toassess the financial health and performance of an organization. It enables manager to framecompetent strategies and policies which helps organization in achieving success on thecompetitive business environment (Brand and et.al, 2014). The present report is based uponVolkswagen which is the most popular German car manufacturer. The company was founded in1946 whose headquarter is situated in Wolfsburg, Germany. It is the second largest auto makerin the world who offers employment opportunity to 588902 people. One of the main purposes ofthis report is to assess the financial health and position of Volkswagen in against to Toyota whois the main competitor of it. In addition to this, the present report will shed light on the scandal ofVolkswagen as well as its impact upon the financial statements of an organization.Analysis1. Volkswagen financial performanceProfitability ratio is one of the main indicator which helps organization and otherstakeholders to make assessment of financial health and performance of Volkswagen and itscompetitor (Brown and et.al, 2015).Analysis of financial performance of Volkswagen:On the basis of ratio analysis it hasbeen identifying that during the period of 2010 and 2011 gross profitability aspects ofVolkswagen shows negative trend in their performance. In the period of 2010 and 2011 companyfails to generate sales which are the main cause behind the negative Gross profitability aspect.Whereas in 2012, 2013 and 2014 gross profitability ratio of Volkswagen is 18.25%, 18.07% and18.04%. This aspect also reflects that profitability aspect of the company is improved ascompared to previous. Nevertheless, gross profitability aspect of the enterprise is still showsdecreasing trend in their profitability aspect.Besides this, net profitability ratio of Volkswagen is 5.36% and 4.60% in 2014 and 2013.Net profitability aspect of an organization is improved as compared to before years but still it isvery low. It shows that company has less amount of profit to distribute dividend among theirshareholders. On the basis of all the above mentioned aspects it can be stated that financial healthand performance of an organization is not sound. Thus, profitability aspect of an organization2