Volkswagen AG

Financial Analysis

Hamed Akram Youssef Dr. Mowafak Moustafa

Road Map
Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.

Road Map
Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.

Reasons for Financial Analysis.

To use financial statements to evaluate an organisations
o Financial performance o Financial position.

There are two key factors for business survival

o Intercompany basis (within the company itself) o Intercompany basis (between companies) o Industry Averages (against that particular industrys averages

There are three key factors for business survival

o Liquidity o Profitability o Solvency

Road Map
Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.

Introduction to Volkswagen
Volkswagen (abbreviated VW) is the original and biggest-selling marque of the Volkswagen Group, which now also owns the Audi, Bentley, Bugatti, Lamborghini, SEAT and koda marques and the truck manufacturer Scania. Volkswagen means "people's car" in German, Its current slogan is Das Auto (in English The Car). Volkswagen operates worldwide, but core market is primarily Europe. In 2000 Volkswagen spent 3.1 Billion Euros to modernize their factories, Volkswagen's second-largest market China, spent 1.7 Billion Euros in the Chinese market, selling more than one million vehicles in 2008.

Volkswagen overview.
Volkswagen shares are primarily traded on the Frankfurt stock exchange, listed under the symbol VLKAY. In 2009 Volkswagen was the third biggest motor vehicle manufacturer, with 6.29 million units delivered to customers, After Toyota and General Motors, and planning to go to No.1 in 2014 Porsche and Volkswagen Group reached an agreement that they would merge in 2011.

Road Map
Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.

VW Competitive Vehicles
Passat

Golf

Phaeton

Touareg

New Beetle

Jetta

Volkswagen AG

Road Map
Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.

Volkswagen AG 10 Year Total Sales Trend

Year 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Million Sales 121,697.00 100,303.00 109,451.00 108,897.00 104,875.00 93,996.00 88,963.00 84,813.00 86,948.00 88,540.00 Percent Change 21.3% (8.4%) 0.5% 3.8% 11.6% 5.7% 4.9% (2.5%) (1.8%)

Volkswagen AG 10 Year Total Sales Trend Graph

140,000.00 120,000.00 100,000.00 80,000.00 60,000.00 40,000.00 20,000.00 0.00 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Sales Million

Volkswagen AG 10 Year Net Income Graph

8,000.00 7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 0.00 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Sales Million

Road Map
Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.

Horizontal analysis of the Income Statements

Revenue Other Revenue, Total Total Revenue Cost of Revenue, Total Gross Profit Selling/General/Admin Exp., Total Unusual Expense (Income) Other Operating Expenses, Total Operating Income Interest Income (Expense), Net Non-Opts. Income Before Tax Income Tax Total Income After Tax Minority Interest Net Income Before Extra. Items Total Extraordinary Items Net Income 2010 2009 Amount Percent 121,697.0 100,303.0 21,394.00 21.3% 5,178.0 4,884.0 294.00 6.0% 126,875.0 105,187.0 21,688.00 20.6% 105,431.0 91,608.0 13,823.00 15.1% 16,266.0 8,695.0 7,571.00 87.1% 15,500.0 13,276.0 2,224.00 16.8% -10.0 -38.0 28.00 -73.7% -865.0 -785.0 -80.00 10.2% 7,142.0 1,855.0 5,287.00 285.0% 715.0 705.0 10.00 1.4% 8,994.0 1,260.0 7,734.00 613.8% 1,767.0 7,227.0 -392.0 6,835.0 0.0 6,835.0 349.0 911.0 49.0 960.0 0.0 960.0 1,418.00 406.3% 6,316.00 693.3% -441.00 -900.0% 5,875.00 612.0% 0.00 5,875.00 612.0%

Million

Road Map
Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.

Vertical analysis of the Balance Sheet

Assets Cash and Short Term Investments Total Receivables, Net Total Inventory Total Current Assets Property/Plant/Equipment, Total Net Goodwill, Net Intangibles, Net Long Term Investments Note Receivable - Long Term Other Long Term Assets, Total Total Assets 2010 Amount Percent 24,171.00 44,134.00 17,631.00 85,936.00 37,911.00 3,410.00 9,694.00 14,168.00 44,025.00 4,249.00 199,393.00 28.1% 51.4% 20.5% 100.0% 33.4% 3.0% 8.5% 12.5% 38.8% 3.7% 2009 Amount Percent 23,869.00 39,784.00 14,123.00 77,776.00 34,947.00 2,929.00 9,977.00 10,928.00 37,606.00 3,017.00 30.7% 51.2% 18.2% 100.0% 35.2% 2.9% 10.0% 11.0% 37.8% 3.0% 100.0%

100.0% 177,180.00

Million

Road Map
Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.

Ratios Comparison

Highlighted Ratios
 Debit/equity = Total Liabilities / Shareholders Equity

 Account receivable turnover = Net Credit Sales / Average account receivable

Ratios Comparison

Road Map
Reasons for Financial Analysis. Introduction of Volkswagen. VW Competitive Vehicles. Volkswagen Profitability Analysis. Horizontal analysis of the Income Statement. Vertical analysis of the Balance Sheet. Ratios Comparison. Conclusion.

Conclusion
A high debt/equity ratio generally means that BMW has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.  A high Accounts Receivables Turnover ratio implies either that BMW operates on a cash basis or that its extension of credit and collection of accounts receivable is efficient. A low Accounts Receivables Turnover ratio implies VLKAY should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm.

Thank you