Toyota Motor Corporation: Debt and Equity Financing Analysis - FY2017

This report provides a financial analysis of Toyota Motor Corporation (TMC) based on its FY2017 financial statements. The analysis focuses on the company's financing mix, specifically examining its debt and equity structure. The report highlights that the majority of TMC's incremental funding comes from long-term debt, while equity is primarily composed of retained earnings. The debt-to-equity ratio is considered healthy, allowing for further debt financing. The report also details the sources of equity, including AA class shares and treasury stock, though the issuance of common stock is limited. It further breaks down the components of short-term and long-term debt, including unsecured and secured loans, notes, and capital lease obligations, along with the currency breakdown of long-term debt and the expected maturity schedule. The analysis relies on data from TMC's SEC filings and website.

TOYOTA MOTOR CORPORATION
CURRENT FINANCING MIX
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TOYOTA MOTOR CORPORATION
Based on the financial statements of the company i.e. TMC for FY2017, it is apparent that
majority of the incremental funding for the company comes from raising debt that too in
particular long term debt. With regards to equity, the majority component of equity belongs
to the retained earnings which stand at 17,601 trillion yen out of the total shareholder equity
of 18,123 trillion yen. Further considering the debt and equity as on March 31, 2017, it is
apparent that the debt equity ratio of company is quite healthy ( < 0.75 ) which allows the
company to raise additional debt financing (TMC, 2017).
Equity
One of the mechanisms to raise equity is through the issue of AA class shares. These were
first issued in the year 2015 and the relevant details are summarised below (TMC, 2017).
The company has not raised any incremental capital in the last three financial year through
the issue of common stock as indicated from the table below (TMC, 2017).

TOYOTA MOTOR CORPORATION
However, the company tends to raise some funding through the issue of treasury stock as
indicated below (TMC, 2017).
However, typically only a limited financing is done in this manner and also these shares are
repurchased from time to time and also some are retired.
Debt
The short term debt for the company comprises of bank loans and also commercial paper, the
details of which are as highlighted below (TMC, 2017).
The long term debt for the company consists of the following (TMC, 2017).
 Unsecured loans from banks
 Secured loans from banks
 Medium term notes issued by consolidated subsidiaries
 Unsecured notes issued by the parent company

TOYOTA MOTOR CORPORATION
 Unsecured notes issued by consolidated subsidiaries
 Secured notes issued by consolidated subsidiaries
 Capital lease obligations (long term)
The break-up of the long term debt is indicated below (TMC, 2017).
It is also apparent from the above details that the debt is floating and not fixed which is
apparent from the altering interest rate from year to year.
The currency breakup of the long term debt as on March 31, 2017 is indicated below (TMC,
2017).
 US Dollars (51%)
 Japanese Yen (11%)
 Australian Dollar (10%)
 Euros (9%)
 Other Currency (19%)

TOYOTA MOTOR CORPORATION
Additionally, the expected amount due for maturity in the next five years for the company is
as highlighted below (TMC, 2017).
Reference
TMC (2017), SEC Filings- Form 20-F, TMC website, [Online] available at
http://www.toyota-global.com/pages/contents/investors/ir_library/sec/pdf/20-
F_201703_final.pdf [Accessed August 22, 2017]