BMW and Audi, two German automobile manufacturers, have a reputation for making some of the best cars in the industry. Not only are both companies superior in their production, but their financial statements also indicate stability and efficiency. Looking at financial ratios, we will compare both companies on a basis of management efficiency and debt status. As a bank analyst, we will make a recommendation as to which company would be better to approve a loan for. A recommendation will also be made regarding management effectiveness and which company would make a better investment. BMW has captured the attention of automobile drivers from all around the world with their “Ultimate Driving Machine.” The BMW Company was originally established in Germany and has extended nationally reaching over 12 countries. With Germany and the United States being the top two target countries, BMW has established their products as a combination of luxury, safety, and comfort with product lines to suit all styles of living. Revenues have been increasing each year since before 1996 with profits coming from product line of automobiles and motorcycles. In 2001, BMW came out with a new product group, the Mini. The Mini also contributed to the revenue increase in 2001. BMW has current developments in their sports cars, the Z8. BMW has created a trustworthy name for the automobiles they produce and has all the potential to continue their success in the future. Audi, one of Germany’s first automobile producers, has been designing and building cars since August Horch, its founder, completed his first car in 1901. Over the years following, a series of innovations and mergers have led Audi to the position it is in today. Audi’s subsidiaries include companies to facilitate international operations, part manufacturers, a vehicle customization company, a technology research company, and Lamborghini Corp, a successful sports car manufacturer. Audi’s current developments include its holding the EU Seal of Environmental Protection, and a number of technological advancements, including new car designs and a “seeing car” technology that has been nominated for the German Future award for Technology and Innovation. BMW Audi Profitability Ratios Return on Equity ... ... middle of paper ... ...reflects this. This again shows BMW’s less efficient cost management than Audi. Through Dupont analysis, we have been able to see the specific strengths and weaknesses of BMW and Audi’s management. BMW’s lower profit margin and asset turnover indicate less efficient cost management and asset management. Their debt multiplier indicates that they’re taking advantage of debt, but the benefit of this isn’t realized because of their problems with cost and asset management. Due to Audi’s more efficient use of their assets, and better cost efficiency, it can be said that their management has performed better than BMW’s over the past year. BMW and Audi both build cars that have a reputation for security, reliability and quality. These traits transcend into their financial statements, making both of them a good investment due to their debt status, and management effectiveness. Our recommendation as a bank loan analyst would be for BMW due to its superior liquidity and low risk. When evaluating management performance for equity investment, Audi is clearly a better investment. This is primarily due to its superior asset management, debt allocation, and inventory management.
In this essay I would like to elaborate on the investment analysis of two companies, open a space of possibilities in discourse and practices in order to determine which of the two companies to invest in. The essay will commence with a brief overview of the two companies that are being considered. The latter part of the essay will explain and critique the financial position of the two companies and also the strategy and structure of the organization. For this purpose different financial tools will be used. The conclusion will be description and reasons for the company chosen to invest.
Finally, I will do a financial forecast in order to figure out firms’ ability to repay its loans. I will use simple percentages-of-sales forecasting technique. I will use existing trends in my forecast to show the implications of current policies before making my own recommendations. During my forecast I will use New Era Partners loan to find out the interest rates. I will make the short-term debt as my plug.
DuPont is a very big company with a low debt policy designed to maximize financial flexibility and insulate operations from financial constraints. It is one of the few AAA rated manufacturing companies due its investments are primarily financed from internal sources. However, because prices fell in the 1960’s thus DuPont’s net income fell also. The adverse economic conditions in 1970’s escalated inflation: increase in oil prices increased required inventory investments of the company. 1975 recession negatively affected DuPont’s net income by 33% and returns on capital and earnings per share fell. The company cut dividends in 1974 and working capital investment removed. Proportion of debt increased from 7% in 1972 to 27% in 1975 and interest coverage falls from 38 to 4.6. The company perceived increase in debt temporary but moved quickly to reduce its debt ratio by decreasing capital expenditures. Debt proportion dropped to 20%, interest coverage increased to 11.5 by 1979.
In order to make inferences about a company’s financial condition, its operations, and its attractiveness as an investment we have analyzed financial ratios and compare ratios derived from SVU’s financial statements (see chart 1).
Although most people deem Henry Ford the father of automobiles, most historians agree that the birth of the modern car came about in the 19th century with some previous trial and error designs that led up to what we consider to be automobiles today. Beginning in the late 1700s, European engineers began experimenting with motor powered vehicles. Steam combustion and electric motors had all been attempted by the mid-1800s but had not yet been mastered. Surprisingly, the electric car was the most popular but a battery strong enough to move at more than a few miles per hour had not yet been invented yet. Imagine how different the world would be today if engineers had spent more time on innovating a battery for an electric car rather than creating a brand new engine with emissions which polluted the atmosphere. Automobile pioneers like Ransom E. Olds and Henry Ford c...
The purpose of this paper is to provide data and analysis of PepsiCo, Inc. and The Coca-Cola Companies financial statements so that a potential investor can make an educated decision about where to place their money. The paper shows a vertical analysis of each company’s consolidated balance sheet, a horizontal analysis of their consolidated statement of income ratios showing solvency, liquidity and profitability.
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.
Company Overview: Bayerische Motoren Werke AG (BMW) is a German holding company and automobile manufacturer that focuses on the automobile and motorcycle markets worldwide. Franz Josef Popp founded the company in March 1916. BMW is headquartered in Munich, Bavaria, Germany. It also owns and produces Mini cars, and is the parent company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad. It divides its activities into the three main segments: Automobiles, Motorcycles and Financial Services. Its BMW automobile range encompasses the 1 Series, including three-door, five-door, coupe and convertible models; the 3 Series, including sedan, touring, coupe and convertible models; the brand new 4 series, featuring an only coupe design; the 5 Series, available in sedan and touring models; the 6 Series, available as a coupe or convertible; the 7 Series large sedan; the Z4 roadster and coupe; the sports utility vehicles, X3, X5 and X6 and M models, such as M3, M5 and M6. It has producing, assembly, service and sales subsidiaries throughout the world. For the sake of this project, I will be focusing on BMW’s automobile range mentioned above but specifically the 3 series line. The BMW 3 series proves to be the most profitable line due to its relatively low cost and affordability whilst featuring the thrill and power of a German engineered vehicle.
Porsche highly motivate their engineers to innovate and they open their eyes to external technology development and they are open minded to adopt external technologies to Porsche to make their products competitive and environmental friendly.
There is a range of criteria relevant for a decision of financing a new venture. To construct my list for the evaluation of a new company as an opportunity I have selected to refer to t...
The financial position of a company offers great insight on the performance of the company on short-term and long-term basis. This work argues that Facebook Inc. is a company with a subjective investment portfolio. The purpose of this paper is to use ratio analysis to determine the position of the Facebook as an investment destination. The first section explores two ratios and their implications to a potential investor. The second part evaluates whether Facebook is bankrupt. The succeeding section offers advice to potential investors. The work culminates by highlighting key points and making necessary recommendations.
Bayerische Motoren Werke AG, shortly known as BMW, is a German manufacturer of luxurious automobiles and motorcycles. BMW group is not simply one name: it is also the parent company of other premium brands such as the MINI, the Rolls-Royce and the motorcycling company Husqvarna. For the purpose of providing a maximum of details, this essay will just focus on the automobile part of BMW as it is more significant than the motorcycle segment and since they have a lot of overlapping factors.
At the time, the merger of Daimler-Benz and Chrysler was unequalled in size and involved high risks. The reason Benz and Chrysler merging was not s...
Another strategy used by BMW to differentiate itself from other automakers in the market is the proactive usage of technology and innovativeness in the development of products. From the early 1990’s, BMW has been on the forefront of incorporating technology in its designs in line with the technological advances of the modern world. This has led to the creation of inventive products. The uniqueness of these auto products put BMW in a position of advantage. The development of the hydrogen car as early as 2000 was an indicator of the company’s innovative strategy. In addition, the company also presents itself as environment friendly creating a whole range of vehicles in this category. This is a differentiation strategy meant to boost the company’s image and reputation amongst customers. In addition, this gives the environment conscious customers a variety of products to choose from giving BMW an upper hand in the industry.
The global company Mercedes-Benz is considered one of the most successful and well-known automotive companies worldwide. Since 1886, the company’s founders Gottlieb Daimler and Carl Benz made history with the invention of the automobile, including the Daimler Group, which is one the biggest producers of premium cars and the world’s biggest manufacturer of commercial vehicles globally (Daimler, 2013). Their main focus is innovation, safety, technology, style, brand image, expansion, and superior automobiles by offering the best of the best to consumers worldwide. The brand’s philosophy is to continuously create radically new products to advance the cause of human mobility. It is also the number one luxury brand in the United States and Germany while continuously expanding in China and Russia as well (Interbrand, 2013). Mercedes-Benz has a great selection on divisions such as cars, trucks, vans, buses, and financial services offered to any consumer or business. Their global reach has increased tremendously by including production facilities in 17 countries on five continents and having 93 locations worldwide. As a pioneer of automotive engineering, their strategy is to continue the same pioneer role with the ongoing development of mobility, especially in the areas of safety and sustainability (Daimler, 2013). It is very essential for the company to focus on consumers’ needs and their highly well known brand in a competitive global economy. That is why the company Mercedes-Benz releases a brand new model every year to stay on top of its competitors by improving previous models. Some strategies practiced are global marketing, global product development, global product pricing, global advertising, global distribution, an...