Overall, Solvency and liquidity analysis are equally important in financial statement analysis. Volkswagen low debt to equity ratio combined with low financial leverage and its ability to meet long-term obligations indicates lower risk of insolvency. On the other hand, BMW having a higher leverage and higher debt to equity as compared to Volkswagen and combined with steady cash flows indicates lower risk of nonpayment of interest and debt principal.
Cash Flow Statement Analysis
Cash Flow statement analysis reflects the liquidity and solvency of Volkswagen and its ability to generate cash flows in future circumstances. …show more content…
Cremes (2015) describes in the article, Volkswagen clarifies that the Auxiliary Emission Control Devices (AECD) installed into its engines was not designed to cheat pollution tests, but to maximise its performance under different driving conditions.
Engineering360 News Desk (2015) Volkswagen has outline spending reductions plan on its capital expenditure through 2019 and on moving away from diesel to development of modular electric and hybrid system to speed up on efficiency saving. Volkswagen also plans to change its diesel technology in North America and Europe, adopting selective catalytic converter technology that injects urea into the exhaust stream in order to neutralize nitrogen oxide (NOx)