Evaluation of the business and financial performance of Toyota

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  1. Introduction

Having completed all of my Fundamental ACCA papers and started on the professional modules, it was only natural for me to attempt earning a degree in Accounting to further affirm myself as a qualified accountant. Moreover, holding more than 10 years’ experience as a Financial Operations Officer, I was fully convinced in my capacities to successfully complete the Research and Analysis Project. Hence, soon after the completion of my Professional Ethics Module, I decided to undertake this project.

  1. Reason for selection of topic

Since I have had so far the best results in paper F7, that is, Financial Reporting, and as my mentor and peers have so recommended me, I have opted to choose, for my project, the topic 8: “An analysis and evaluation of the business and financial performance of an organization over a three year period.”

  1. Reason for selection of company

The organization I have chosen to do my project on is the Toyota Motor Corporation (TMC) and its competitor is to be the Honda Motor Company (HMC), both of which are international organizations having their roots in Japan.

I have selected these companies due to the following reasons:

  • As the companies are of international renown, there is information readily available about them in the media and online.
  • Information concerning their financial statements and other business information can be obtained from their websites.
  • The companies are of comparative size and influence, hereby allowing clear and fair contrast to be established.
  • The companies being based in the same country, their financial documents are released in the same currency, increasing the ease of comparison.
  • These companies are considered to be close competitors in the world market, justifying their comparison.
  1. Introduction to company

Founded in Japan on the 28th of August 1937, TMC is today one of the world’s largest and most appreciated automobile manufacturers, dealing with over 52 manufacturing companies spread over nearly 30 countries. The vehicles are sold in over 160 countries worldwide. (www.toyota-global.com)

The company offers a diverse variety of products ranging from trucks, luxury cars, buses, vans to sports vehicles. The corporation also manufactures vehicles such as minivans, trucks and buses via its subsidiary companies Daihatsu and Hino Motors. Furthermore, automotive parts are manufactured for use by the company as well as sale to others.

A non-extensive list of the models sold by the company is shown:

Cars

86 Auris Avalon Avensis

Corolla Prius Yaris

MPVs and Vans

Fortuner Innova Verso

SUVs

Hilux Land Cruiser 200 Sequoia

Commercial Vehicles

Coaster Dyna

(Toyota global, Accessed in March 2014)

2. RAP Objectives and Research Questions

2.1 Project Objectives

For my project to follow the SMART framework, that is, it to be Specific, Measurable, Attainable, and Relevant and Time-bound, I have set myself some project objectives:

  • The assessment of the financial performance and the state of affairs of the Toyota Motor Corporation over a span of three years
  • The development of my own understanding of business frameworks via the analysis of a particular organization
  • The discussion of the primary relationship between a company’s objectives and its subsequent performance
  • The upgrading of my presentation skills, computer literacy and research methods

I have assessed the following points pertaining to the company in order to meet the project objectives:

  • The investments made
  • The efficiency of company policies
  • The rate at which sales have grown
  • The market shares
  • The profit margin
  • The liquidity ratios
  • The investor ratios

2.2 Research Approach

To ensure that my project follows the question guidelines and remains clearly presented, I have had the following questions as a starting point. These also give direction to the project.

  • What objectives have I set myself?
  • How am I to gather information for the purpose of the project?
  • How should I interpret the information collected in the course of the project?
  • What will I learn after carrying out my research?
  • How will I present the project clearly to maximize understanding?
  • How efficiently will I show the relationship between the company aims and its performance?
  • What techniques will I use to evaluate the performance objectively?

The following research approach was adopted in order to lead this project to fulfillment:

  1. I chose a topic to consider and the companies to base my project on.
  2. I collected data from multiple sources.
  3. I extracted only the information relevant to my project from all the data collected.
  4. I analyzed and evaluated the data obtained, first comparing financial information over the three year period and then using the non-financial information in order to have a better idea of the relationship between company policies and financial performance.
  5. I conducted regular meetings with my mentor in order to review my project and ensure it was brought to fulfillment in a logical, strategic and conclusive manner.
  6. I reflected on the quality of my work and tried to establish how my working method has affected the end product.

2.3 Sources of information

  1. Several websites including the official company website
  2. Several textbooks were used to obtain much information relative to business analysis and evaluation.
  3. The Annual Reports of the Toyota Motor Corporation have represented a significant source of Information regarding Financial Statements, Investor Information and Balance Sheets.
  4. Analyst reports have been made use of in order to have a better understanding of the Toyota Motor Corporation’s standing in the World market.
  5. Online articles from a multitude of magazines such as The Guardian, The Economist and Times Magazine.
  6. Publications by the Chamber of Commerce of Mauritius
  7. Business channels on television

2.4 Limitations of the information gathered

The following limitations are applicable to the information obtained:

  • Due to the high volume of data available from secondary sources, it was strenuous to extract and interpret data, leading to a high consumption of time.
  • It was difficult to determine the validity, relevancy and objectivity of the information collected.
  • Due to a scarcity of primary information, there was less insider information available to understand the internal workings of the company

2.5 Ethical Considerations

Since there was no direct contact with employees of the Toyota Motor Corporation, the ethical considerations concerning the unbiased processing of data and the respect for the privacy of the company workings were not applicable for the duration of the project.

However, multiple other ethical issues have had to be addressed:

  • It was to be ensured that the data obtained was reliable, real and relevant.
  • It was to be ensured that the sources of data were properly credited
  • Subjective views were minimised as far as possible
  • Attempts were made to eliminate plagiarism

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