Download - 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
Profitability Ratios
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
Profitability Ratios
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.