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Example research essay topic: Receivable Turnover Toyota Motor - 3,099 words

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Toyota Motor Corporation General Information Toyota Motor Corporation was founded by Kiichiro Toyoda who was born in 1894. According to Toyota's Website, the company was established on August 28, 1937. Toyota Motor Corporation is the eighth largest company in the world and the second largest automaker in the world that assembles and manufactures trucks, automobiles, buses and robots. Toyota Motor is Japanese Multinational Corporation with 285, 977 employees.

Head Office 1 Toyota-Cho, Toyota City, Aichi Prefecture 471 - 8571, Japan Phone: (0565) 28 - 2121 Chief Officers According to information provided by Finance Yahoo. com (Toyota Motor Corp. (TM) Profile), key executives of Toyota Motor Corporation are as follows: Mr. Katsuaki Watanabe, President and Member of the Board; Mr. Fuji Cho, Chairman; Mr. Tatsuo Matsuura, Director, Chairman of Toyota Material Handling USA Inc. and Chief Exec.

Officer of Toyota Industrial Equipment Manufacturing in Irvine; Mr. Takeshi Suzuki, Chief Fin. Officer, Chief Accounting Officer, Chief Information Systems Officer, Sr. Managing Director; Dr. Takis Athanasopoulos, Managing Officer of Toyota Motor Corp. (TMC), Exec.

VP of TME of TMEM; Mr. Jim Press, Chief Operating Officer Product Line-up As far as Toyota Corporation is a car manufacturer, it has 52 overseas manufacturing companies in 27 countries (Toyota Website, Company Profile). According to Location of Toyota Facilities from Toyota Website, the company manufactures such cars like Action, Alphard, Auris, Avalon, AVANZA, Avensis, Ago, bB, Beta, Brevis, Calling, Camry, Camry Solara, Century, Coaster, Corolla, Corolla Also, Corolla Fielder, Corolla Space, Corolla Verso, Crown Athlete, Crown Majesty, Crown royal, Dyna, Estima, FJ Cruiser, Fortune, Harrier, Have, Hilux, Hilux Surf/ 4 Runner, Hilux VIGO, Ipsum, Isis, ist/Scion xA, King Innova, Kruger/Highlander, Land Cruiser 70, Land Cruiser 100, Land Cruiser Cygnus, Land Cruiser Prado, Literacy, Mark X/Re, Mark II But, Matrix, MR-S, Noah, Passo, Porte, Premio, Prius, Proof, Program, Ratios, Raum, RAV 4, Regius Ace, Rush, Sequoia, Sienna, SIENTA, Sound Vios, Succeed, Tacoma, Townave, Toyoace, Tundra, Vios, Vitz/Yaris, Very, and WISH. Toyota Corporation also offers Lines Product line-up: ES, GS, GX, IS, LS, LX, RX, and SC. The company operates in three segments: Automotive Operations (design, manufacture, assembly, and sale of passenger, recreational and sport cars, trucks and minivans, and component parts and accessories (Finance Yahoo. com) Financial Service Operations (provides finance to Toyota's dealers and their customers concerning purchase or lease of Toyota cars; retail leasing, retail financing, insurance, wholesale financing, credit cars and mortgage loans (Finance Yahoo.

com) Other Operations (designs and manufactures prefabricated housing and information technology related businesses, including intelligent transport systems and an e-commerce marketplace, called Yahoo. com (Finance Yahoo. com) ). Now lets examine Toyota's activity during the previous year.

According to the Toyota Website (Toyota Company, News) on January 25, 2005 Toyota's plant in Guangqi starts to manufacture engine parts. According to Toyota News Release dd. January 17, 2005, Guangqi Toyota Engine Co. , Ltd. (GTE) started to manufacture engine parts as a part of joint venture project TMC/ Guangzhou Automobile. In addition, the plant will manufacture 2. 4 -liter gasoline AZ engines. In February 2005 Toyota Motors assembles and launches fully redesigned Vitz.

According to Toyota News Release dd. February 1, 2005, redesigned Vitz based on a Proud of My Compact development concept is the second generation of Vitz launched through Netz Toyota dealers with monthly sales target of 10, 000 units. The car is offered in three modifications (1. 0 -liter, 1. 3 -liter and 1. 5 -liter engines) with Super CVT-I, traction control, newly developed suspension and intelligent package. According to Toyota News Release dd.

February 2, 2005 the company celebrates grand opening of Toyota Motor Manufacturing de Baja California (TMMBC) the first full-scale operation in Mexico. The plant has approximately 650 employees. It started production of Tacoma trucks and truck beds and plans to product 180, 000 truck beds and 30, 000 Tacoma vehicles per year. As per Toyota News Release dd. February 24, 2005 Toyota Kirloskar Motor Private Limited (TKM) announced production of completely new type of minivan Innova. This minivan was invented as a part of the IMV (Innovative International Multipurpose Vehicle) Project.

Production of five newly developed cars under this project began in Indonesia and Thailand. Innova was manufactured by TKM especially for the Indian market. In March 2005 Toyota Corporation launches new Hilux Pickup. On March 22, 2005 Tianjin FAW Toyota Motor Co, Ltd starts production of Crown in China.

In March Toyota starts new diesel engine production in Poland. In April 2005 the company announces Next-Generation Telematics Service G-BOOK ALPHA, unveils IMV Series Hilux Pickup in South Africa, and opens Camry plant in Russia. In May 2005 Toyota Corporation develops high-pressure hydrogen tanks for fuel cell vehicles, starts production of hybrid vehicles in North America, and officially opens TPCA Car Production Plant in Kolin, Czech Republic. In June 2005 Toyota Corporation develops new vehicle safety technologies.

In July 2005 the company expands North American Manufacturing Operations (New Canadian Plant) in order to manufacture RAV 4 from 2008. In August 2005 Toyota Corporation together with FAW launches Prius in Changchun, China. In September 2005 the company makes modifications in pre-crash safety system with driver-monitoring function. In October 2005 Toyota Corporation launches new model Ratios. In November 2005 the company launches new RAV 4 and Beta in Japan. Finally, in December 2005 Toyota's plant Sichuan FAW Toyota starts production of Prius in Changchun, China.

On December 26, 2005 the company announces fully redesigned bB. Over the last year Toyota Motor Corporation also launches Lexus brand in Japan. Outside Japan, in the Czech Republic, the car manufacturer starts joint production of Ago together with PSA Peugeot Citroen. In India, South Africa and Argentina Toyota Motor Corporation starts IMV Project (Toyota Website. Company profile. Overview).

Lets analyze Toyota Motor Corporations financial condition. Liquidity Ratios: Current Ratio Liquidity Ratios March 2006 March 2005 March 2004 March 2003 Current Assets 91, 196. 00 88, 076. 00 83, 721. 00 71, 732. 00 Current Liabilities 85, 194. 00 76, 760. 00 71, 889. 00 58, 685. 00 Current Ratio 1, 070 1, 147 1, 164 1, 222 Current Ratio indicates the ability of the company to meet short-term debt obligations. It is a test of liquidity of the company. In order to calculate current ratio, we divide current assets by current liabilities on the balance sheet (Marketwatch. com TM Balance sheet). According to our calculations, Toyota's current ratio for the year 2006 is 1, 07 compared to 1, 22 in 2003.

It means that in 2003 Toyota was in better position concerning meeting of its short-term obligations. Ratio 1, 06 means that Toyota Corporation is in relatively good position (average) concerning meeting of its short-term obligations. Liquidity Ratios: Quick Ratio Liquidity Ratios March 2006 March 2005 March 2004 March 2003 Current Assets 91, 196. 00 88, 076. 00 83, 721. 00 71, 732. 00 Current Liabilities 85, 194. 00 76, 760. 00 71, 889. 00 58, 685. 00 Current Inventory 13, 770. 00 12, 192. 00 10, 250. 00 8, 534. 00 Quick Ratio 0, 90 0, 988 1, 02 1, 076 Lets calculate Toyota's Quick Ratio. Quick ratio indicates the companys liquidity and ability to meet its obligations. It is calculated by subtracting current inventories from current assets and dividing by current liabilities. Quick ratio shows financial weakness or financial strength of the company (the lower number means weaker position, whereas the higher number means stronger financial position) (Marketwatch.

com TM Balance sheet). According to our calculations, quick ratio for Toyota Corporation decreased (0, 90 in 2006 compared to 1, 076 in 2003), therefore, financial position of Toyota Corporation became weaker compared to year 2003. Profitability Ratios: ROA Profitability Ratios March 2006 March 2005 March 2004 March 2003 Net Income 11, 681. 00 10, 907. 00 10, 995. 00 6, 247. 00 Total Assets 244, 075. 00 227, 046. 00 208, 537. 00 167, 662. 00 ROA 0, 0478 0, 048 0, 052 0, 037 Lets calculate Toyota's ROA ratio that is aimed to measure the companys success in generating income. Return on Assets indicates dollars in income earned by the company on its assets.

Return on Assets = Net Income/ Total Assets (Marketwatch. com TM Balance sheet and Income Statement). According to our calculations, ROA 2006 is quite stable compared to ROA 2005, but is weaker than ROA 2004. Profitability Ratios: ROE Profitability Ratios March 2006 March 2005 March 2004 March 2003 Net Income 11, 681. 00 10, 907. 00 10, 995. 00 6, 247. 00 Total Owners Equity 89, 711. 00 84, 389. 00 77, 383. 00 59, 243. 00 ROE 0, 13 0, 129 0, 142 0, 105 Lets calculate Toyota's ROE.

This ratio will help us to measure success of Toyota Corporation in generating income. Return on Equity indicates dollars in income earned by the company on its shareholders equity. Return on Equity = Net Income/ Total Owners Equity (Marketwatch. com TM Balance sheet and Income Statement). According to our calculations, Toyota's return on equity is weaker compared to 2004 but a bit stronger than ROE 2005. Tt means the Toyota Corporation generated more profit in 2006 with the money shareholders have invested compared to year 2005.

Profitability Ratios: Net Profit Margin Profitability Ratios March 2006 March 2005 March 2004 March 2003 Net Income 11, 681. 00 10, 907. 00 10, 995. 00 6, 247. 00 Total Revenue 179, 083. 00 172, 749. 00 163, 637. 00 128, 965. 00 Net Profit Margin 0, 065 or 6. 5 % 0, 063 or 6. 3 % 0, 067 or 6. 7 % 0, 048 or 4. 8 % Net Profit Margin indicates the dollars in income that the company earns in each dollar of sales. In order to calculate Toyota Corporation Net Profit Margin we need to divide Net Income by Total Revenue (Marketwatch. com TM Balance sheet and Income Statement). According to our calculations, Toyota's Net Profit Margin 2006 increased compared to 2005 but it is less than NPM 2004. Profitability Ratios: EPS Profitability Ratios March 2006 March 2005 March 2004 March 2003 Net Income 11, 681. 00 10, 907. 00 10, 995. 00 6, 247. 00 Basic Weighted Shares Outstanding 1, 626. 73 1, 648. 05 1, 694. 54 1, 725. 81 EPS 7. 18 6. 62 6. 48 3. 52 EPS indicates Earnings per Share. Lets calculate Toyota Corporation Earnings per Share.

EPS = Net Income / Weighted Average Common Shares. According to our calculations we notice that Earnings per Share increase compared to the previous years. It indicates that Toyota's business is more profitable enough to pay the shareholders dividends in time. Besides, higher EPS attracts more investors to acquire shares of the company. Leverage Ratios: Debt to Equity Leverage Ratios March 2006 March 2005 March 2004 March 2003 Total Liabilities 154, 364. 00 142, 656. 00 131, 154. 00 108, 419. 00 Stockholder's Equity 89, 711. 00 84, 389. 00 77, 383. 00 59, 243. 00 Debt to Equity 1. 72 1. 69 1. 69 1. 83 Debt to Equity indicates ability of the company to borrow and repay money because it shows the direct proportion of debt to equity capital. In order to calculate Toyota Corporations Debt to Equity ratio we need to divide Total liabilities by Stockholder's Equity.

As we can see, Toyota's debt to equity ratio is quite stable that means that the company is in favorable financial conditions. Leverage Ratios: Equity Multiplier Leverage Ratios March 2006 March 2005 March 2004 March 2003 Total Assets 244, 075. 00 227, 046. 00 208, 537. 00 167, 662. 00 Stockholder's Equity 89, 711. 00 84, 389. 00 77, 383. 00 59, 243. 00 Equity Multiplier 2. 72 2. 69 2. 69 2. 83 Equity Multiplier is used to measure leverage ratio. In order to calculate Toyota Corporations Equity Multiplier we need divide Total Assets by Total Stockholder's Equity. According to our calculations, Equity Multiplier 2006 is a little bit higher than in 2005 and 2004.

Higher Equity Multiplier reflects higher financial leverage that means that Toyota Motor Corporation is relying more on debt to finance its assets. Leverage Ratios: Debt to Asset Ratio Leverage Ratios March 2006 March 2005 March 2004 March 2003 Total Liabilities 154, 364. 00 142, 656. 00 131, 154. 00 108, 419. 00 Total Assets 244, 075. 00 227, 046. 00 208, 537. 00 167, 662. 00 Debt to Asset Ratio 0. 6324 0. 6283 0. 6289 0. 6466 Debt to Asset Ratio is used to measure what proportion of debt a firm has relative to its assets. In order to calculate Toyota Corporations Debt to Asset Ratio we need to divide total liabilities by total assets. According to our calculations, debt to asset ratio increased compared to D/A ratio 2005 and 2004. As far as ratio less than 1 means that Toyota Corporation has less debt than assets, increase of D/A ratio means that the company is in more favorable position compared to the previous years Activity Ratios: Inventory Turnover Activity Ratios March 2006 March 2005 March 2004 March 2003 Cost of sales 133, 938. 00 129, 178. 00 122, 061. 00 95, 404. 0 Inventories 13, 770. 00 12, 192. 00 10, 250. 00 8, 534. 00 Inventory Turnover 9. 72 10. 59 11. 90 11. 17 Inventory Turnover indicates the number of times the company have turned its inventory.

In other words it shows the number of times inventory has been turned over (sold and replaced)... In order to calculate Toyota Corporations Inventory Turnover we need divide cost of goods sold by average or current period of inventory. According to our calculations, Toyota's inventory turnover is quite high and is the sign of the companys efficiency. However, the inventory turnover for the periods of 2005 and 2006 decreased insignificantly compared to year 2004. Activity Ratios: Accounts Receivable Turnover Activity Ratios March 2006 March 2005 March 2004 March 2003 Total Net Sales 179, 083. 00 172, 749. 00 163, 637. 00 128, 965. 00 Accounts Receivable 16, 826. 00 15, 080. 00 14, 492. 00 12, 278. 00 Accounts Receivable Turnover 10. 64 11. 45 11. 29 10. 50 Accounts Receivable Turnover indicates the number of times accounts receivable are paid and reestablished during the defined accounting period and shows the degree of realization risk in accounts receivable. In order to calculate Toyota Corporations Accounts Receivable Turnover we need to divide Total Net Sales by Accounts Receivable.

According to our calculations, the turnover is a little bit lower compared to years 2005 and 2004 that means that business is collecting its receivables slower than in 2004 - 2005. Activity Ratios: Accounts Receivable Turnover Activity Ratios March 2006 March 2005 March 2004 March 2003 Total Net Sales 179, 083. 00 172, 749. 00 163, 637. 00 128, 965. 00 Total Assets 244, 075. 00 227, 046. 00 208, 537. 00 167, 662. 00 Total Assets Turnover 0. 733 0. 760 0. 784 0. 769 Total Assets Turnover indicates how effectively the assets are used to produce revenue. In order to calculate Toyota Corporations Total Assets Turnover we need to divide net sales to total assets. According to our calculations, total assets turnover also decreased compared to TAT 2005. Key Measures (11 / 27 / 06) Latest 12 Months / Most Recent Quarter Company Industry S&P 500 P/E 14. 2 37. 1 17. 7 Price/Book 2. 28 1. 65 2. 84 Market to Book Ratio indicates is aimed to show the value of a company, by comparing the book value and market value. P/E ratio is price earnings ratio that measures the companys current earnings (Market Price of Common Share / Earnings Per Share).

In order to calculate Toyota Corporations Market to Book Ratio we need to put the market value of Toyota Corporation (price per share X total number of shares outstanding) divided by equity portion of a company's balance sheet, which is book equity. The figures at the table shows us the relationships between share prices and earnings According to the results of our analysis we come to conclusion that Toyota Corporation continued its growth over the long-term period. The company introduced number of new items and started a number of priority projects including construction and launching of new plants in Thailand, USA and Russia. Toyota Corporation developed integrated structures in conjunction with procurement, production and sales (Consolidated 4).

Under conditions of recovery of Japanese economy Toyota's vehicle sales increased by 7. 5 % compared to 2004 results because of marketing efforts, cost reduction efforts and the effects of changes in exchange rates. In result of this operations, net revenues also increased and operating income decreased compared with FY 2005 results. References: Finance Yahoo. com. Toyota Motor Corp. (TM).

Profile. Retrieved November 28, 2006. web Financial Summary. FY 2006 Semi-Annual. Retrieved November 28, 2006. web Hoovers.

com Annual Income Statement. Retrieved November 28, 2006. web Marketwatch. com. Income Statement. Retrieved November 28, 2006.

web Marketwatch. com TM Balance sheet. Retrieved November 28, 2006. web Toyota News Release (January 17, 2005). Guangqi Toyota Engine Co. , Ltd. Starts Making Engine Parts.

Retrieved November 28, 2006. web Toyota News Release. (February 2, 2005). TOYOTA CELEBRATES GRAND OPENING OF TIJUANA PLANT. Retrieved November 28, 2006. web Toyota News Release. (February 24, 2005). Toyota Kirloskar Launches Production of Innova Minivan IMV Project Expands to Include India Retrieved November 28, 2006.

web Toyota News Release (February 1, 2005). Toyota Releases Fully Redesigned Vitz. Retrieved November 28, 2006. web Toyota Website, Company Profile.

Manufacturing. Location of Toyota Facilities. Retrieved November 28, 2006. web Toyota Website, Company Profile.

Manufacturing. Worldwide operations. Retrieved November 28, 2006. web Toyota Website.

Company profile. Overview. Retrieved November 28, 2006. web Toyota Website. Toyota Company. News.

Retrieved November 28, 2006. web


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