Analyzed Financial Report 2010-11

8/6/2019 Analyzed Financial Report 2010-11

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Analyzed Financial Report 2010-11


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INTRODUCTION

Respect for the Individual

The Three Joys

The Joy of Buying The Joy of Selling

The Joy of Creating

Respect for the Individual Its establishment in 1948


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INTRODUCTION

Creating, providing products of thehighest quality at a reasonable price

It is world's largest motorcyclemanufacturer and one of the leadingautomakers

It also manufacture general-purposeengines

i.e, Generator


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VISION

Focusing on satisfaction (customers,

associates and shareholders) with

challenging spirit and flexibility, we arededicated to supplying latest generation

cars with advanced technology, greater

fuel efficiency and competitive prices,

along with friendly and efficient after salesback up, maintaining quality as core of

all activities


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Economical Analysis The World economy has started

showing improvement

Pakistan economy is also on therevival path

There was above target recovery in

manufacturing sector

mixed growth in the agriculture andservice sector


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Economical Analysis GDP growth will remain in the range of 3.0% to

3.5%

During the last 62 years the average GDP has beenover 5% with a positive GDP growth among the few

countries The exports

for the first three quarters US$ 14.4 billion, up 6%,

last year, at US$ 22.4 billion to 21.8%

The revenue collection

was Rs 910 billion up 9.1%

The inflation remained

at 12%, as compared

to last year over 15%


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Economical Analysis The country is moving towards the

political maturity

What is needed, to bring the 57% underground economy

to taxes and,

access to our own economy to ourselves

due to imports illegal and irregular - smuggling, under

invoicing and misdeclarations


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AutomobileIndustry Analysis

The quarter over quarter analysis showsthe gradual increase in production; 20% in Apr-Jun 2009 quarter

22% in Jul-Sep 2009 quarter 10% in Oct-Dec 2009 16% in Jan-Mar 2010 quarter

March 2010 total production was recorded at 32,639 units

there was marginal growth of 1.5% in April 2009 to March 2010, as 107,648

units were produced against 106,025 units in the year 2008-09


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Automobile Industry Analysis2008-09 Category Q1 Q2 Q3 Q4 2009-10 Inc/Dec %

39,599 Up to 800cc 6,070 7,982 9,397 9,976 33,425 -15.6%

25,748 801cc to 1299cc 3,110 5,504 6,229 5,349 20,192 -21.6%

40,678 1300cc & above 11,855 12,236 12,626 17,314 54,031 32.8%

106,025 Total Passenger

Cars

21,035 25,722 28,252 32,639 107,648 1.5%

52,098 Tractors 18,307 15,171 18,856 18,851 71,185 36.6%

25,848 LCV, Buses,Trucks etc

3,939 4,574 5,213 5,502 19,228 -25.6%

479,356 Motorcycles 145,473 164,679 185,607 184,511 680,270 41.9%

663,327 Total 188,754 210,146 237,928 241,503 878,331 32.4%

0

1 0 0 , 0 0 0

2 0 0 , 0 0 0

3 0 0 , 0 0 0

4 0 0 , 0 0 0

5 0 0 , 0 0 0

6 0 0 , 0 0 0

7 0 0 , 0 0 0

8 0 0 , 0 0 0

Up to

800cc

801cc to

1299cc

13 00 cc &

above

Total

Passenger

Cars

Tractors LCV,

Buses,

Trucks etc

Motorcycles2008-09

2009-10


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Company Analysis

The company produced

11,980 units March 31, 2010 against

12,780 last year

The sales were

12,344 units against

12,502 units last year

The industry has started showingimprovement and the company hopes toincrease sales volumes in the comingquarters.


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Company Analysis

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2006 2007 2008 2009 2010

Produ ion nd S l (Uni )

Production nit

Sale nit


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PEST Analysis POLITICAL

Government imposes limit on thenumber of parts to be imported.

Legislations require locally madeparts to be internationalstandards compliant.

Pressure to produce cars with

cleaner emissions. ECONOMICAL

Rise in inflation has forced Hondaand other car manufacturers toincrease their prices.

As parts are imported, the effectof Exchange rate and theweakness of Pakistani rupeemake cars more expensive.

Cost of Petrol has led Honda toaccommodate for the market byintroducing more economicalcars.

SOCIAL

Increased desirability ofpersonalized/customized Cars inPakistan. Honda is a leadingmanufacturer of cars so it shouldgive attention to thisphenomenon too.

More People have desire for citycars. This has meant Honda hasto create smaller and economiccars. As we interviewed HondasSales Manager, he felt the needto provide 800CC cars.

Tsunami in Japan is going toaffect the prices of cars and theirparts.

TECHNOLOGICAL

Honda has introducedElectronically Controlled PowerSteering, Accelerator withSensors, G.P.S, etc.


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Financial Analysis

Financial ratios are useful indicators of a firm'sperformance and financial situation

Liquidity ratios Provide information about a firm's ability to meet its short-

term financial obligations

Asset Management Ratios: Asset turnover ratios indicate of how efficiently the firm

utilizes its assets.

Financial Leverage Ratios Provide an indication of the long-term solvency of the firm

Profitability Ratios

Offer several different measures of the success of the firm atgenerating profits.

Markets Ratios Dividend policy ratios provide insight into the dividend policy

of the firm and the prospects for future growth. Twocommonly used ratios are the dividend yield and payout ratio


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Financial Analysis

Liquidity ratios Provide information

about a firm's abilityto meet its short-

term financialobligations

Ratios 2006 2007 2008 2009 2010

CurrentRatio

1.1 0.94 0.80 0.70 0.6

QuickRatio

0.4 0.23 0.24 0.15 0.2

0

0.2

0.4

0.6

0.8

1

1.2

2006 2007 2008 2009 2010

Current Ratio

Quick Ratio


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Financial Analysis

Asset ManagementRatios

indicate of how

efficiently the firmutilizes its assets.

2006 2007 2008 2009 2010

Inventory

Turnover

(Days)

55 74 56 60 60

Total Asset

turnover

2.8 2.1 2.2 1.4 1.8

0

10

20

30

4050

60

70

80

2006 2007 2008 2009 2010

year

Asset Management Ratios

Total Asset turnover

Inventory Turnover (Days)


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Financial Analysis

Debt Management Ratios attempt to measure the firm's

use of Financial Leverage and

ability to avoid financial distress

in the long run, also known asLong-Term Solvency Ratios

2007 2008 2009

Debt/Equity

(Times)

2.40 1.11 2.52

Times Interest

Earned

(Times)

-0.58 1.27 -1.79

t t R ti

-2.5

-2

-1.5

-1

-0.5

0

0.51

1.5

2

2.5

3

2007 2008 2009

Debt/Eq

ty (

imes)

Times I

terestE

rned (Times)


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Financial Analysis


Offer several differentmeasures of the successof the firm at

generating profits.

2006 2007 2008 2009 2010

NetProfit

Margin

6.7 -15.7 79.3 -4.4 -2.7

Return on

Asset

25.8 -6.8 1.8 -10.0 -22.3

Return onEquity

30.0 -10.3 2.6 -13.3 -35.5

Earning

Per

Share

16.8 -3.7 0.5 -2.8 -6.0

-40

-20

0

20

40

60

80

2006 2007 2008 2009 2010


Net Profit Margin

Return on Asset

Return on Equity

Earning Per Share


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Summarised

Suggestion

Increase dividend payout to attractshareholders.

Honda should continue their salespolicy. Increment in sales issatisfactory.

Increase its short term debt paying

ability. Increase its efforts to make more

return on investment.

Analyzed Financial Report 2010-11

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