Financial statement analysis-docx

Added on - 03 Dec 2019

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Financial statement analysis
Table of ContentsINTRODUCTION......................................................................................................................1Approaches to analyze the financial statement of the company............................................1Ratio Analysis for Volkswagen group...................................................................................3Impact of internal and external factors on the business.........................................................7Comparative study of Financial statement analysis of Volkswagen with Daimler Co. Ltd..8Recommendation to the shareholders of the company........................................................11REFERENCES.........................................................................................................................13
List of tablesTable 1: Ratio analysis – Volkswagen group.............................................................................3Table 2: Ratio analysis - Daimler...............................................................................................9List of figuresFigure 1: Profitability ratios – Volkswagen...............................................................................4Figure 2: Debt- equity ratio – Volkswagen................................................................................5Figure 3: Liquidity position – Volkswagen...............................................................................5Figure 4: Comparison of net profit ratio for Volkswagen and Daimler...................................101|P a g e
INTRODUCTIONVolkswagen is a German automobile manufacturing company which was established inthe year 1937 and it is headquartered in Wolfsburg, Lower Saxony. Volkswagen AG is theparent company of Volkswagen group whereas Audi, Skoda, Seat and Lamborghini are itssubsidiary companies. The activities of Volkswagen group falls in an automotive industryand it was the second largest auto maker in the world in the year 2012. Presently, thecompany aims at becoming the world's largest car maker by the year 2018 (Robinson and et.al., 2015). Volkswagen group consists of two divisions; automotive division and financialservices division. The automotive division deals with production of passenger cars, lightcommercial vehicles, trucks and buses and sale of genuine parts. On the other hand, thefinancial services division emphasizes on dealer and customer financing, leasing, bankingand insurance activities, fleet division and mobility offerings. It is a large internationalcorporation in charge of multiple car and truck brands. The company conducts itsmanufacturing and assembling activities in different part of the world. In the presented report,we analyse the financial statements of Volkswagen group by adopting ratio analysis method.On contrary, it's financial statements will also analyse with the competitor Daimler Co. Ltd.Approaches to analyse the financial statement of the companyFinancial statements are basically summary of operating, financing and investingactivities of the company. Financial statements analysis is the process of reviewing andevaluating company's financial statement to make better economic decisions. Financialstatement analysis is an effectual device to review prosperity and reliability of financialstatement. The main aim of this analysis is to provide useful information to different users offinancial statement. It facilitates the investors and creditors to evaluate past performance andfinancial status. Moreover, it helps in predicting future performance of the company (Wahlen,Baginski and Bradshaw, 2014). There are two approaches to analyse financial statements:traditional and modern approach. Traditional approach emphasizes on evaluating financialdata in financial statements and considers income statement as well as balance sheet. Underthis approach, ratio analysis, common size statement and comparative financial statementanalysis can be used. However, Modern approach is not only based on historical datacontained in income and balance sheet but also uses other financial statements such as cashflow and fund flow. Under this approach, Modern statistical and mathematical tools are usedto analyse financial statements.1|P a g e