Hyundai Case Study Solution

The net income of Hyundai Motors from the year 2011 to 2015, had increased during the year 2012 to 2013 at the rate of 11.62 % and fell drastically in the subsequent year 2014 by 34.5% indicating the company’s bottom line performance and profitability position. Jurevicius (2016, online) highlights the reasons for the increase in Hyundai’s revenue in the last 3 years, however, the profit had gone down to a significant proportion which was due to poorly managed operations of the company. The decline of the company’s profit margin had also lead to inefficient company’s management and poor top management’s decisions.From 2011 to 2012, the sales of Hyundai Motors increased by 8.5%, while the cost of goods sold decreased from 76.91% to 75.71%, showing a steady fall in company expenditure. As a result, the …show more content…
While it’s far from the largest amount spent on R&D in the industry, the money is spent very effectively by Hyundai.The current ratio is reflecting the satisfactory current position of the firm as it is near approximately 2:1. It's the time it takes to convert a company's working capital assets into cash to pay its current obligations that is the key to its liquidity. Both the companies - Hyundai & Honda motors have had the current ratio above 1. But, Hyundai is in a better liquidity position than Honda as it has an ample margin of assets over current liabilities, a seemingly good current ratio whereas Honda has very poor current asset/liability margin of safety and a weaker current ratio. When it comes to converting assets into liquidity in near future, Hyundai Motors seems more favourable than Honda.Higher the asset turnover ratio, better is the performance of the company. In this case, Hyundai’s ratio has been going down from 2011 to 2015 while Honda’s ratio has been maintaining a consistency and not having a huge impact on the growth. This provides a clearer picture of asset use