Financial Statement Analysis of Volkswagen

FINANCIAL
STATEMENT
ANALYSIS

Table of Contents
INTRODUCTION......................................................................................................................1
Financial statement analysis of Volkswagen....................................................................1
Financial statement analysis of Volkswagen group..........................................................2
Impact of internal and external factors on Volkswagen group.........................................7
Comparative analysis of Volkswagen with the competitor Daimler Co. Ltd...................8
Recommendation to the Volkswagen Group's shareholders...........................................11
CONCLUSION........................................................................................................................12
REFERENCES.........................................................................................................................13

Index of Tables
Table 1: Ratio Analysis of Volkswagen Group (In £)................................................................3
Table 2: Ratio Analysis of Daimler Co. Ltd. (In £)...................................................................8
Illustration Index
Illustration 1: Profitability ratio- Volkswagen Group................................................................4
Illustration 2: Debt and equity chart...........................................................................................4
Illustration 3: Current assets and Current liability.....................................................................5
Illustration 4: Net profit ratio of Volkswagen Group and Daimler Co. Ltd...............................9
Illustration 5: Earning per share of Volkswagen Group and Daimler........................................9

INTRODUCTION
Every organization needs to prepare the financial statement so as to know their profits
and financial position. Moreover, financial statement helps the organization for analysis
purpose. Volkswagen is a German automotive manufacturing company started its operations
from 28 May, 1937. Headquarter of the company is situated in Wolfsburg, Lower Saxony.
The parent company of Volkswagen is Volkswagen Group. However, Audi, Skoda, Bentley,
Seat are its subsidiaries. The aim of the company is to become the largest car maker in the
world till the year 2018 and so on. The company is operating at international level and ranked
ninth in the fortune global 500 (Ormiston and Fraser, 2013). There are two division
established in the company involves automotive division and financial service division.
Production of cars and commercial vehicles such as trucks, buses and other auto parts have
taken place in the automotive division. However, facilities such as financing, banking, leasing
and dealing with customers prevail in the financial division. The report presents an analytical
view of Volkswagen's financial statements. Moreover, Daimler co. Ltd. is also analysed for
making comparative analysis of Volkswagen.
Financial statement analysis of Volkswagen
There are different approaches available to the company for analytical purpose. Such
analysis will help the company so as to make better and effective business decisions (Griffin,
2015). Financial statement analysis is the process of reviewing the financial statement so as
to identify the changes in different components such as assets, liabilities as well as income
and expenditures. It is important for different users such as investors, creditors, managers,
employees, shareholders, government and competitors.
Tradition Approach: Under the traditional approach, the company evaluate the
previous data that were reported in the previous financial statements. The approaches are
described below:
Comparative financial statements: It helps in identifying the business process over the
time period (Persons, 2011). It helps in making comparison between the income statement
and balance sheet for two different periods. Thus, it can be said that it helps in making
comparison the business operation results and financial status.
Common size financial statements: The limit of comparative financial statement is
that it determined the changes in absolute terms. However, common size statement helps in
identifying the changes in terms of percentage by taking a common base year. Thus, it can be
said that it overcomes the limits of comparative financial statements.
1 | P a g e