IV: FINANCIAL ANALYSIS OF HONDA MOTOR COMPANY: 4.1: Table of data. 4.1.1. Balance Sheets. Yen(millions) Total current assets Finance subsidiariesreceivables, net Investments and advances Net property on operating leases Net property, plant and equipment Other assets Total assets Total current liabilities Long-term debt, excluding current portion Other liabilities Total liabilities Total Honda Motor Co.,
Ltd. shareholders' equity Noncontrolling interests Total equity Total liabilities and equity
Table 4.1: Balance Sheets 4.1.2. Income Statements. Yen(millions)
Net sales and other operating revenue
Cost of sales
Selling, general and administrative Research and development Operating costs and expenses Operating income Other income (expenses) Income before income taxes and equity in income of affiliates Income tax expense Equity in income of affiliates Net income attributable to noncontrolling interests
Net income attributable to Honda Motor Co., Ltd.
Basic net income attributable to Honda Motor Co., Ltd per common share
Table 4.2: Income Statements
Analysis of the financial structure of the company.
4.2.1. Analysis of structural properties. CONSOLIDATED BALANCE SHEET (assets)
Total current assets
Unit: Yen (millions) Difference ± % 2014/2013 448,213
Difference ± % 2013/2012 583,967
Finance subsidiariesreceivables, net
Investments and advances
Net property on operating leases
Net property, plant and equipment
Table 4.3 Analyzes the structure of assets. Looking at our target assets reflects the scale of the Honda company is relatively large, with a manufacturing company is a large-scale analysis shows that the stature and growth commensurate with a leading company the world in the field of industrial production. Through our tables show total assets increased slightly in 2013 compared with 2012, an increase of ¥1,847,758 million, equivalent to 15.68%. By 2014 the total assets of ¥15,622,031 million, an increase of 14.57% compared to 2013. This shows that the size of the company's capital increase, production and business scale has been expanded.
Figure 1: Graph showing total assets (2010-2014). In 2013, Finance subsidiaries-receivables, net increase of ¥423,742 million, an increase of 17.92%. This shows that companies with capital accumulation in the checkout process, so companies need to take steps to reduce the amount receivable. Investments and advances have increased slightly from ¥623,607 million in 2012 increased by ¥668,790 million in 2013, with a growth rate of 7.25%. This shows that the company has invested to expand its market to seek long-term returns. Net property plant and equipment with a strong ¥426,072 million, with a growth rate of 21.59%, showing that the technical facilities of the company have been strengthened, the production scale of the company is increasingly expanding. In addition, the Total current assets task in 2013 was ¥5,323,053 million rose to ¥583,967 million rate is 12.32%, this factor accounts for the largest proportion of the company. By 2014, Total current assets task increased ¥5,771,266 million rose ¥448,213 million equivalent of 8.42%. The increase had a decrease compared to 2012 was 12,32%. Finance subsidiariesreceivables, net increased by 18.99% or ¥529,418 million compared to 2013. Investments and advances increased strongly to reach 817,927 million yen, an increase of 22.30%, this increase is much higher compared to 2012 which suggests that companies tend to invest very high. Net property, plant and equipment increased by ¥418,902 million increase of 17.46%. Compared to the fifth floor at 2012 - 2013, the growth rate tends to decrease. So from the above analysis we can conclude that the asset structure of the company is relatively reasonable, but it can not be concluded that the financial situation of the company as well. As a
business with good financial situation does not only manifest in reasonable structural properties, but also to have a capital to form fixed assets including structured legal and appropriate. The capital structure analysis indicates the ability to financially sponsor of the company as well as the degree of autonomy of the business or the difficulties that the company faces. Therefore, we must continue to carry out structural analysis and capital volatility of the Company. 4.2.2. Analysis of scale and capital structure. Based on data from the accounting balance sheet in 2012, 2013, 2014 tabulation analysis of the changes in the size, capital structure is as follows: FY2014
Total current liabilities
Long-term debt, excluding current portion
Total Honda Motor Co., Ltd. shareholders' equity
Noncontrolling interests Total equity Total liabilities and equity
Difference ± (2014/2013)
Table 4.4: A breakdown of scale, capital structure. Based on the data above table shows: In 2013, the total capital of the company is ¥13,635,357 million, an increase of 15.68%. In particular, the Total current assets 14.23% increase compared with 2012. Long-term debt, excluding current portion increased by ¥475,844 million, 21.29% respectively. This causes
increased Total liabilities significant number 1,160,237 million yen, an increase of 15.96% compared to 2012. In 2012 Total Honda Motor Co., Ltd. shareholders' equity was ¥4,392,226 million, by 2013 this number increased to ¥5,043,500 million. So there is a heap of additional capital contributions from shareholders to increase investment in business expansion. Total resources of Honda Motor Company Ltd. in 2014 was ¥15,622,031 million, an increase of ¥1,986,674 million to increase the proportion of 14.57%. In particular, increased liabilities ¥1,078,699 million for the 7.91%. The proportion of liabilities is 61.82%, down 0.96% compared to 2014. Sources equity increased to ¥907,975 million rate is 6.66%: The proportion of equity is 38.18%, up 0.96% compared to 2013 This shows the funding policy of the company is using its capital, this is the company policy is maintained through Honda Motor Ltd many years, and increasingly deliver better results, it is evident in the financial position of the company improved throughout 2014. - Liabilities: Total current liabilities increased to ¥622,325 million, rate is 4.56%, increasing the proportion of 0.17%, respectively, from 29.99% to 30.16%, still accounts for the largest proportion of liabilities. Long-term debt, excluding current portion tends to increase with ¥523,221 million, rate is 3.84%, the proportion of long-term debt liabilities in 2014 is 20.70%, up 0.82% compared with the 2013. Meanwhile, Other liabilities ¥66.847 million decrease to 0.49%, rate reduction in 2014 has been very well managed company. - Equity:
Figure 2: Graph showing equity (2010-2014).
Increased in all parts, in the capital owners, ¥907,975 million increase with growth rate is 6.66%, 39.13% proportion of equity ownership. Total Honda Motor Co., Ltd. shareholders' equity increased from 36.99% to 37.89% in 2014, with a growth rate of 6.42% is equivalent to ¥875,479 million. This suggests that the company has additional capital in business activities aimed at expanding the market looking for more profits. Conclusion: Thus, the allocation of capital in Honda Motor Co. Ltd. in 2014 have markedly improved. Total liabilities tends to decrease. Total equity tends to increase. Shows that companies are using their own money to invest in the business. 4.2.3. Analysis autonomy in financing activities. To analyze the degree of independence and financial autonomy of the company, should the criteria "funded ratio":
Coefficient sponsorship (%)
Table 4.5: Table assess the level of financial independence. Looking at the above table we can see, the numbers of indicators reflecting the degree of financial independence from Honda in 2014 increased compared to 2013 and 2012 thus demonstrates the level of financial independence of units has increased over the years. Thus, the financial situation of the company is trending up. However, the amount of capital that the company spent remains limited. This can assess the financial situation of the company is not very convenient. 4.2.4. Analysis of solvency. To assess the solvency of units, need to consider the relationship between solvency and liquidity needs. Solvency of the unit include all properties that are capable unit at current prices in payment at the time of study and are arranged in the order of rotation speed of capital. Demand payment of the unit includes short-term liabilities, long term sorted in order of payment terms.
Table 4.6: The list of general payments. We see the overall solvency of the unit in 2014 increased compared to 2013 and 2012 at the time of 2013 and 2012, the solvency Essential 1.62 times, 1.64 times the time in 2014. This is a fundamental factor contributing to the financial stability of the unit. Ratio of overall units in 2014 compared to 2013 increased from 1.62 to 1.64 with 0.02 pace of 1.2%. This growth rate is small, but the unit also demonstrated the ability to pay the debts of the company is gradually raised to make the financial situation of the unit more stable, positive impact to business operations. * Analysis of the short-term solvency. To analyze the short-term solvency of the Vietnam Dairy Products Joint Stock Company, we determine the reflection coefficient of solvency in the short term.
2014 Chỉ số hiện hành
Chênh lệch 2012 ± % (2014/2013) 1.93 -0.05 -2.75
Chênh lệch ± % (2013/2012) 0.05 2.83
Table 4.7: Table evaluate the short-term solvency. Solvency coefficient of short-term debt decreased in 2013 compared to 2012 was 0.02, 1.52% speed reduction. Meanwhile, the 2014 ratio fell 0.08 short time, or 6.15% decrease compared to 2013 units. Demonstrate progress has been made in improving the financial situation. However, in both years, the solvency ratio of short-term debt is higher than 1 unit demonstrates that there is sufficient short-term assets to pay short-term liabilities. From a shortterm payment situation we see on the solvency of short-term debt is relatively good unit.
4.3.1. The report analyzed the results of operations:
To control the operations and business performance, consider the fluctuation of the items in the statement of earnings. We need to analyze and compare the rates and rate fluctuations between the years of each indicator on report operating results. To report analyzes business results in 2014 to compare the 2013 targets on reported operating results for the 2014 targets. Table 4.8: A breakdown of reported operating results
Unit: Yen (millions) Difference
Net sales and other operating revenue
Income before income taxes and equity in income of affiliates
Income tax expense
Equity in income of affiliates
Net income attributable to noncontrolling interests
Cost of sales Selling, general and administrative Research and development Operating costs and expenses Operating income Other income (expenses)
Net income attributable to Honda Motor Co., Ltd. Basic net income attributable to Honda Motor Co., Ltd per common share
From the analysis shows: - The total profits of the company increased ¥155,667 million equivalent to 73.61% compared with the year 2012. By 2014, net income attributable to Honda Motor Co., Ltd. is
¥574,107 million rose 56.37%. Thus we can see that the net income attributable to Honda tends to decrease. - In recent years a number of economies are more volatile and more difficult very particular peers, as well as general company announced losses. This number is impressive result. Given that the company had an effective year. Achieving this result is likely due to better cost management and focus on the product added value. Specifically: - Net sales and other operating revenues in 2013 increased by ¥1,929,852 million, an increase of 24.28%. In 2014 revenue increased by 18.89% (¥11,842,451 million). This figure shows that the company's revenue decreased while the amount of investment the company has grown, so companies need to take measures to improve the financial situation at present. - Net profit from business operations of the company increased by ¥205,471 million equivalent to 37.71% compared with 2013, an increase of 135.48% compared to 2012. - In the men's 2013 Profit before income taxes and equity in earnings of affiliates increased ¥231,488 million equivalent to 89.93%. - Earnings before income taxes and equity in earnings of affiliates increased ¥240,049 million equivalent to 49.10%. Net sales : Yen (millions) Japan North America Europe Asia Other
FY2010 70,461 103,956 124,665 461,067 380,143
FY2011 70,244 96,664 103,890 577,669 439,727
FY2012 72,915 97,306 96,146 579,562 502,899
FY2013 72,949 112,176 86,424 667,473 400,527
FY2014 79,455 141,563 102,634 868,464 471,515
Table 4.9: Net sales table selling motorcycles. Net sales : Yen (millions) Japan North America Europe Asia Other
1,383,855 3,013,432 575,326 1,041,258 540,977
1,310,734 3,252,852 441,696 1,221,704 567,112
1,329,645 2,855,683 355,963 836,301 428,383
1,462,664 3,905,276 388,464 1,385,449 567,363
1,714,752 4,717,769 487,673 1,599,069 657,097
Table 4.10: Net sales table selling cars. The increase in revenue was mainly due to the growth of automobiles and motorcycles:
Besides, the wide distribution network in the world carved with production facilities authorized in the country has increased revenue by increasing the number of products and product quality are more advanced day. Cost of sales in absolute terms increased from ¥7,345,162 in 2013 to ¥8,761,083 million in 2014 equivalent to the rate of 19.28%. Selling expenses and general manager in 2014 reached ¥1,696,957 million, equivalent to 18.86% compared to 2013, this increase is still lower than the growth in revenue. Therefore, to obtain 100 in revenue in 2014 spent less than the cost of sales. In other words businesses save costs business more efficient. Cost of research and development rose 13.18% or ¥73,860 million. This shows that the company has invested in research and development to produce new products to meet market demand and to compete with other competitors. Income tax expenses increased by ¥73,686 million equivalent to 41.17% of the income showed strong growth that the company is pleased the company is worth: Equity in earnings of affiliates in 2014 reached ¥132,471 million, an increase of ¥49,748 million equivalent to 60.14%: Demonstrated that the company's branch operations effectively.
4.3.2. Analysis of the cash flow statement: Report cash flow is a useful source of information for assessing the ability to generate cash, solvency or capital requirements of a business loan. Cash flow statement is a summary table to answer the question "of corporate money comes from and how used, for what purpose?" It also enables us back to why businesses are profitable that borrowers must pay taxes or state bankruptcy is because there is no debt payments ... Thus, the analysis of the cash flows of an enterprise is one of the important pillars for the administrator is able to capture the true financial situation of the company. So the financial situation of how Honda is reflected through the cash flow situation of the company in 2014. Difference Indicators Cash flows from operating activities Cash flows from investing activities Free cash flow
Cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the period
Table 4.11: Reporting cash flows. Based on the above table it is easy to see, first formed in terms of cash flow from operations in 2014, the net cash flow from business operations and financial performance remaining balance revenue expenditure respectively ¥428,447 million and ¥ 250,988 million while net cash flow from investing activities was net revenue expenditure was ¥638,988 million shortage: On the basis of the balance between revenue and expenditure of money, the amount of net cash flow in 2014 -¥37,214 million, and net amount of cash flow in 2013 is - ¥40,985 million. In 2014 the company has expanded its production scale, and on this basis has grown operate effectively.
Figure 3: Graph showing cash flows (2010-2014). So on average in 2014, only the operations only produce business and financial operations are excess payments during the investment activity, the deficiency payment. However, the results still showed a positive sign and reasonable. Because, in the investment stage facilities company has cash balance of production and business activities. From table analysis Cash Flow Report shows that, of the cash flows Honda Company is primarily generated from operating activities and financing activities * In 2013, net cash flow from operating activities was ¥800,744 million, suggesting business activity increases the amount of units. - Cash flow from financing activities was ¥119,567 million. - Cash flow from investing activities is ¥-1,069,756 million. Investment proved to reduce the amount of units. Although this activity creates a huge amount of money but besides that the amount paid is greater than the amount of money generated should be negative. *In 2014, net cash flow from operating activities was ¥1,229,191 million, an increase of ¥428,447 million compared to 2013 with 53.51% relative reduction. - Business activities have a positive cash flow. This is the sign of a healthy, optimistic about the ability to secure money for production and business activities. Thus, summary cash flow from operating activities provide basic information to assess
the ability to generate cash from operations Honda. The company has a healthy financial situation, pay the debts, maintenance activities, pay dividends and undertake new investment activities without external sources of finance. - Cash flow from investing activities is ¥-1,708,744 million, an increase of ¥638,988 million compared with 2013 increased by 59.73% relative. Looking at the cash flow statement. We see the net flow of investment is ¥-1,708,744 million. This is not necessarily a bad sign for production and business activities. On the other hand, suppose if the net cash flows from investing activities positive (revenues> expenses) is not necessarily good because, while the results of the proceeds from the sale of fixed assets and the recovery of capital investments own more than the amount spent to expand investment, fixed asset purchases and increased financial investment. In other words, this means a contraction in investment activities. - Net cash flow from financing activities was ¥370,555 million yen rose versus ¥250,988 million in 2013 to 209.91% of relative. So in 2014 financial performance has brought a major source of revenue for the company. Through analysis of the cash flows on, we see, Honda is a company that has potential indeed. The company not only creates brackish i recorded in the profit, but the profit is actually generated, reflected by positive net cash flow of the company during the year. Ability to generate cash and pay the company are also appreciated. Mobilization policies of major transport company is using its own internal resources, this reaffirms the company's financial good health. Besides the company is also a policy of reasonable use of the investment process, expand market share, increase product quality floor ... prestige in the market continue to hold a leading position. The above analysis shows that remittance flows through two in 2013, 2014 is consistent with the characteristics of business of the Company Honda.
4.3.3. Analysis of the financial statements for the detection of financial risks. To analyze the financial risks we first consider debt settlement risks affecting the production and business operation of the unit. Debt Settlement risk occurs when not enough or businesses can not afford to pay. Therefore, to analyze our payment risk analysis focus and ability to pay its debts and short-term debt limit. 2014
Difference ±(2014/2013) %
Difference ±(2013/2012) %
Ratio of general
Ratio of shortterm
Table 4.12: Table payment risk analysis. Ability to pay short-term debt and reduce the overall solvency of the unit in 2014 increased slightly compared with 2013, in 2012 but remained low, indicating the unit has been made in the payment of debts make the financial situation of the financial units encouraging. In addition, to detect financial risks, we consider the indicators reflecting the relationship between accounts receivable compared with liabilities (H) of the unit.
The percentage of receivables against payables
Table 4.13: Table percentage of receivables versus payables. This indicator at 3 years is less than 100% debt units proved more sellers than buyers of debt.Thus, the debt situation of the unit positive impact to the financial performance of the unit.
4.3.4. Analysis of the relationship between the financial reporting. Besides analyzing each financial reports, analyzing the relationship between the financial statement analysts will comprehensively assess the financial situation of enterprises. To analyze the relationship between the report we focus primarily on the analysis of generalized business performance, effective use of long-term assets, efficient use of short-term assets. Net sales and other operating revenue
Income before income taxes and equity in income of affiliates
Net income attributable to Honda Motor Co., Ltd.
Total Honda Motor Co., Ltd. shareholders' equity
Return on Assets (ROA)
Return on Sales (ROS)
Return on Equity (ROE)
Table 4.14: Table generalized analysis business performance.
4.3.5. Analysis of business performance generalizations. * Coefficient of profit after tax to assets (ROA) was 0.29 in 2013, meaning that for every 100 properties are at potentially lucrative copper is 29 higher than in 2012 is 18 copper while the eastern profitability is much higher at 39 compared to 2 in 2012 and 201. We see, ROA increased 61.11% compared with 2012 and a downward trend in 2014 is 34.48% with an increase. However this increase remained high efficiency demonstrated good properties, such as factors contributing improve capital efficiency. * Return on equity (ROE) of the Corporation in 2014 was 1.05. That is when the other factors constant, a contract equity participation in production and business activities will generate profits here at 1.05 a profit is very attractive for investors because this ratio is relatively high, in 2013, a contract equity participation in a co-production of business activities will be 0.78 in profit: 2014 compared to 2013 increased 0.27 this increase is due to two reasons: - The Company uses the asset effectiveness is demonstrated by the increase in asset turnover.
Asset Turnover (Round)
Table 4.15: Asset Turnover. - Maintain a good level of gross profit in difficult times and have policies to control costs better through increased profit margin on sales. Now that we see that the strength of the profitability of equity of the Company has increased over 3 years is due to the profit after tax of the company and increase net revenue of the Corporation is increased in accordance with the law, besides the equity ownership has increased over the years which suggests that the company has funded quite good and effective use. In 2014 the economic situation, with major macroeconomic fluctuations and unpredictable as hyperinflation, frozen credit markets, recession ... so many businesses, including business activities in the same field has suffered huge profits decline. However, the results of the Honda business in 2014 showed that the profitability of the company are very impressive improvement compared to the same period last year. This shows that the assertion of product quality, reputation, has helped Honda increase its competitive position, market share of greater than other companies in the same industry. 4.4.
Financial strategy for the company Honda.
To assess the level of management, executive producer of a business enterprise, it is used as a measure of production efficiency of the enterprise business. Production and business effectiveness is evaluated on two angles: economic efficiency and social performance. Within the scope of corporate governance, it is primarily interested in economic efficiency. This is an economic category reflects the utilization of corporate resources to achieve the best results with the most reasonable cost. Thus the economic resources especially funds of enterprises have a huge impact on the efficiency of production and business enterprises. Therefore, improving the efficiency of capital is required nature and often mandatory for businesses. Efficiency rating which will help us to see the performance in general business management and in particular the use of capital. Above, we have analyzed each common traits, individual financial situation of Honda Motor Company. From this analysis, partly to see the positive aspects and limitations exist. For the positive side, the enterprise should continue to develop further, while the surface is limited to strive to find remedies. To survive was difficult to stand even more difficult. Now, the problem is now overcome the difficulties incurred in the enterprise. These problems hinder the path of business development. From that judgment, plus an understanding of the business situation, 8 group strongly suggest some recommendations to the desired small contribution to the development of the whole
4.4.1. Measures to increase the efficiency of fixed capital. Fixed asset management: production line layout reasonable, mining capacity and improve operating efficiency of machinery, solving all the fixed assets no longer needed or outdated also consistent with the scale of production to recover fixed capital investment more modern machinery and equipment to improve product quality. Or put into rotation, added to liquid assets to produce more business. For effective use of fixed capital in production and business activities, often need to implement measures to not only preserve but also to develop the fixed capital of the business after each business cycle. The essence is to ensure monetary amounts of capital to the end of a cycle, with the number of capital can now withdraw or extend the amount of capital that businesses spent initially to purchase investment fixed assets at current prices. Must appreciate the value of fixed assets, facilitate accurate reflection of the state of affairs of fixed capital, to preserve capital. Timely adjustments to facilitate exactly calculation of depreciation expense, not to lose WC. Determining the right time to use the fixed assets to determine the appropriate level of depreciation, not to lose capital and minimize adverse h¬uong image of intangible amortization. Improving the efficiency of fixed assets of the business is all about time and productivity. Timely disposal of fixed assets are not needed or did h¬u damage, no excessive reserves of fixed assets not needed. Well done maintenance mode, repair, preventive fixed assets not to happen down of fixed assets hu¬ tr¬uoc h¬u down time or unusual damage to stop production. In the case of fixed assets to conduct major repairs to consider, carefully calculate its performance. That is, considered between costs should spend the first new shopping t¬u fixed assets to make a decision accordingly. Enterprises must actively implement measures to prevent risks in the business to limit losses of fixed capital due to the objective reasons nhu¬: property insurance, the financial reserve fund ...
4.4.2. Measures to increase the efficiency of working capital. Through analysis of the use of working capital Honda Motor Company in recent years shows the capital needs of the company is very large but regular working capital is not sufficient to meet demand. So that led to the company to raise outside capital to finance working capital needs. Working
capital deficiency caused major debt situation. To avoid this situation when the construction company working capital levels should be based on the specific situation in tr¬uoc of a construction company working capital norms consistent with the financial situation of enterprises do not cause shortage of working capital. At the same time to build working capital norms for each quarter, each month to plan production suitable not wasters in the period. While the Company's working capital, the company still missing other objects are still occupied, this is not reasonable. So the debt collection business in the future need of a resolute d¬uoc. In addition, businesses should also consider the liabilities for each customer t¬uong. If customers have low prestige, now wants to sell should not be too wide to avoid risk. For trade credit policy th¬uong reasonable business need to assess your level of risk or reputation of the client. Need to carefully evaluate the impact of policies sold subject to corporate profits. To assess the level of risk can be found in the sale of products can now consider the aspects nhu¬ prestige level of the customer, general financial condition of the company, the value of the products used to guarantee credit. In general, for each policy sold subject to business need careful assessment in accordance with the following main parameters: - Number of products l¬uong d¬uoc expected consumption. - Selling price. - The additional costs incurred for increasing the debt. - The discount accept. - The average debt collection period for the debt. - Predict the number of customer accounts receivable. The remedies and limited customer accounts receivable: - Create a good image for your business to meet customer demand for such products quality, delivery on time ... from which customers can easily arise goodwill in their business transactions. - Reduced price for customers ordering in bulk, or early payment - Reminders, urging customers to their debts to their business when they are due. - Agreement with the payment if the material is not enough business to pay cash but with materials stored in the warehouse, it helps firms solve a debt capital for inventory and helps businesses their part to save costs when buying materials outside the business conditions are common materials. - If your debts are too many businesses that can not afford the payment, then we can use that debt to contribute capital to the business. - Check the level of credibility and solvency of their business prior to selling debt.
- For bad debts should use measures such as reducing and reschedule if the solvency of troubled businesses, sold debt for the debt buying business, legal use tool. - At the same time in the stage of working capital reserves also make efficient use of working capital decreases. When determining production needs during the early years of the company should determine the appropriate reserves and rapid liberation of reserve assets if there is excess.