In this assignment, you will have compare the three largest auto manufacturers in the world (Volkswagen, GM and Toyota). You can find the financial statements for these companies using the links below. Make sure you use the statements prepared in the home currency of each company (EUR, USD and JPY respectively). Note that for Toyota you will not use Morningstar as there is no information in JPY. • Volkswagen AG (VOW) • General Motors Co (GM) • Toyota Motor Corp ADR (TM)
1. Using information for last fiscal year, prepare a table comparing the following ratios for the 3 companies (do not take the ratios from the website, compute them using the numbers on the web) (40 points, no words, just a table in excel where you show your formulas) • Gross profit margin • Net profit margin • Return on equity • Return on assets • Collection period (days sales outstanding) • Days sales in inventory • Cash coverage • Debt to equity ratio • Long term debt to equity ratio • Equity multiplier • Earnings per share • Book value per share • Market to book ratio • PE Ratio
2. Answer the following questions (very short answer: just the name of the company, and the ratio you used to decide) (10 points) a. Which company manages its assets more efficiently? b. Which company manages inventory more efficiently? c. Which company manages collections more efficiently? d. Which company is in better shape to face its yearly interest payments? e. Which company is most leveraged?
3. Which of the competitors is growing its sales faster in the last 3 years? What about net profits? (5 points)
4. How do you think that the evolution of the USD vs the EUR and the JPY over the last 3 years affected these companies? (10 points)
5. Discuss the PE ratio for the 3 competitors, why is it so low compared to the one for Apple? (10 points)
6. Discuss the market to book ratio for the 3 competitors, why is it so low compared to the one for Apple? In particular, what explains the one for Volkswagen? (10 points)
7. Taking all the above into consideration, write a short “elevator pitch” recommending your preferred stock from an investing point of view (15 points, 5-6 lines)