Financial Position Analysis of Mercedes Benz

This study evaluates the financial position of a German based automobile company Mercedes Benz, based on the observations of the balance sheet. The analysis reveals a significant rise in sales and revenue, reduction in expenses and increase in equity.

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International Accounting

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Introduction
The company’s assets, owner’s equity and liabilities are shown in the balance sheet of that
particular organization. This is known as the Financial statement of the organization. The
analysis of this financial statement helps to identify the financial position of an organization.
The aim of this study is to evaluate the financial position of a German based automobile
company Mercedes Benz, based on the observations of the balance sheet.
Financial position
Mercedes Benz which is the Automobile division of the Daimler Group based in Germany
(Mercedes-Benz, 2018). In 2017 there has been an increase in the assets of the company
which is due to the increase in capital expenditure and also increase in the intangible assets of
the company.
Assets
The company has invested an approximate amount of GBP 6.7 billion across the world for
the plant, property and equipment. The net assets of Mercedes Benz have seen a significant
increase of 7% from 2016 to 2017.
Cash and cash equivalents which falls under the current assets of the company has also seen a
significant increase from the year 2016 to the year 2017. This means that the company has
received more money in forms of cash as compared to the previous year.
In 2017 the company has also seen a rise in the various business operation of the company.
According to the Annual report of the company the business growth has increased in the
China and the Asian region. The trade receivables have also seen a significant rise for the
Daimler Group. 43% of the growth in the trade receivables has been accounted by the
Mercedes Benz division of the company.

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The inventories which falls under the Current Assets of the company has increased from
24,426 million euro to 24,492 million euro. An increase in inventories means that the
company has increased its quantity of purchase more. Increase in inventories though increase
the current assets but it indicates increase in cash flow and therefore, effects the cash flow of
the organization (Daimler Annual Report, 2017).
Revenue and EBIT
Mercedes Benz has also seen a rise in the revenue from the year 2016 to 2017. The change in
the percentage of the revenue is 6% from the year 2016 to 2017. In 2017 the sales of the
Mercedes increased by 28%. In the Annual report of the Daimler Group it has been seen that
55.4% of the revenue earned by the company comes from the Mercedes Benz. Thus, from
this data it can be concluded that Mercedes Benz has seen a significant rise in the sales of its
product from the year 2016 to 2017. The EBIT (Earnings before Interest and Tax) has also
increased in the year 2017. This rise in EBIT helped Mercedes Benz to achieve the sale
forecast (Daimler Annual Report, 2017).
Owner’s Equity and Liabilities
Previously the increase in the earnings of the company has been discussed. An increase in the
earnings of the company leads to increase in the equity of the company. According to the
Financial statement of Mercedes Benz it can be seen that the equity has increased from
48,685 million euro in 2016 to 52,936 million euro in 2017.
The financial statement of the company also states that the trade payables of the company has
increased from the previous year to the current year. Increase in trade payables of the
company indicated there has been an increase in the current assets of the company.

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Other financial liabilities of Mercedes Benz have also increased from 2016 to 2017. Increase
in other financial liabilities means the wages and salaries of the employees and the workers of
the company has increased.
Increase in provisions means increase in expenditure. The provision of Mercedes Benz has
decreased from the year 2016 to 2017. This indicates the company has successfully reduced
the expenses in terms of its provision (Daimler Annual Report, 2017).
Conclusion
The aim of this study was to analyze the financial position of the company Mercedes Benz.
Since analysis of Financial position involves utilization of Financial statement of the
company, Therefore, the Balance sheet and the profit and loss statement has been considered
to make the financial position. It can be seen that the company has seen a significant rise in
the sales of the cars across the world from the year 2016 to 2017. It has tried to reduce its
expenditures and aimed at increasing the revenue. The analysis of the financial statement
revealed that the company has easily achieved its sales target in the year 2017.

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Reference List
Daimler, 2017. Daimler Annual Report. [pdf] Available at
<https://www.daimler.com/documents/investors/reports/annual-report/daimler/daimler-ir-
annual-report-2017.pdf> [Accessed 23 October 2018]
Mercedes Benz, 2018. Mercedes-Benz. [online] Available at < https://www.mercedes-
benz.com/en/ >