Toyota Corporation Annual Financial Report Analysis

Toyota Corporation Annual Financial Report Analysis
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Introduction
Toyota Motor corporation is an automobile Japanese company formed on the 28th august 1937. Toyota became the largest automobile in 2008 and has since maintained its position as a world leader in the automobile industry. In 2020, the company sold a total of 9.5 million cars globally, about 11.3% decline compared to the previous year. Its success in the automobile industry is not accidental. Toyota has built its brand for so many years by giving strong emphasis on quality design and consistent innovation (Toyota Global, 2021). Its innovation has improved since it was founded with every innovation focused on increasing customer value. Every situation undertaken by the company is strategic. For example, in 1973 when the oil crisis erupted in the American region people sought for smaller and fuel-efficient vehicles in order to survive the tough financial moment. Toyota took advantage of the situation and developed fuel-efficient vehicles, a move that gave them an edge over competitors such as General motors, Volkswagen, and Ford. To this day, it leverages on technology to maintain its market base. By assessing its income statements, balance sheets, and cashflow statement it is possible to understand Toyota’s financial position.
Income statement analysis
Income statement is a core financial statement for any company which shows the profit and loss over a period of time. Net income is arrived at by taking the companys revenue and subtracting all expenses from the companys operating and non-operating expenses. Toyota has one specific revenue stream – product sales which forms the companys total revenue. There is gross profit subtotal which is derived from subtracting the cost of Goods sold from the companys revenue. For example, in 2020/2019 financial year the gross profit was $49,750.19 ($275355.9-$225,605.8). the net income is derived from subtracting the total operating and non-operating expenses, income taxes, research, and development (R&D) expenses, and other expenses. Overall, the net income for the company has been inconsistent in the past ten years. For example, while the figure was high higher at $22,445.85 in 2018, it dropped to $16,945.86 and $19,100.43 in 2019 and 2020 respectively (Toyota Global, 2021). More so, Toyota’s income statement gives the companys net and comprehensive earning from all the sources. For example, income for the company comes from hedges, employee benefit plans, securities, and derivatives. The companys income statement indicates that the company is much more in a better position in terms of revenue and net revenue.
Balance sheet
Balance sheets analyses a companys assets, liabilities, and equity. Toyota increased its liabilities to $293873.3 in 2020 up from $283,828.3 in 2018. The total liabilities have been steadily rising in the past few years. Most of the companys liability increases are in the form of long-term debts due in five and above years. From the analysis it is clear to the investor that Toyota has total current asset of $171,511.3 million and a total current liability of $164,701.9 million in 2019. Ideally, if th...