Honda Motor Corp Stocks Essay

576 Words 3 Pages
Honda Motor Corp

Honda Motor Corp is a Japanese automobile and motorcycle manufacturer which have multinational presence around the globe. Founded in the year, 1949. The company is the leading manufacturer of motorcycles and eight largest manufacturer of automobiles in the world.
Financial Analysis:
Profit Margin Ratios
These ratios access the profitability of the entity and can said to be the true indicator for accesing the profitability of the concerned company. We will be using these ratios to adjudge how well Honda Motor Corp and General Motor Corp generates operating profits and net profit from its revenue.
Operating Profit Margin: (Operating profit/ Revenues)
Year 2011 2012 2103
Operating Profit Ratio 6.4 2.9 5.5
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High debt to equity ratio is considered undesiarable as more debt indicates high financial risk in the company becasue of which investors might refrain from investing in the company.

Intermediary Analysis:
Our analysis reveals that though Honda Motor Corp was losing its position in 2012 with 11.06% fall in its total revenue. However, company came back strong in 2013 with its revenue increasing by 24% while the operating profiatbility showed an increasing trend from 2.9% to 5.5%. However, over the years comapny have increased use of debt in the cpaital structure.

General Motors
Popularly known as GM in automobile industry, General Motors is a US based automobile giant with multinational presence. Founded in 1908, company is amongst the leading automobile manufacturers in the industry and operates under several brand names.
Financial Analysis:
Profitability Analysis
Operating Profit Margin:
Year 2011 2012
Operating Profit Ratio 5.52 5.16

Net Profit Margin:
Year 2011 2012
Net Profit Ratio 5.04 3.19

Dividend Yield
At present GM Corporation offers dividend yield of 3% while the dividend declared is only $0.30. Another important consideration is that the company issued its IPO only during 2010.

Debt To Equity Ratio
Year 2011 2012
Debt-Equity Ratio 1.57 1.34

Analysing the financial ratios of both the companies and confining the results to 2012 only as GM annual reports are yet to be released, we find that

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