Financial Analysis of Honda Essay

Words: 4440
Pages: 18


Executive Summary To analyze the financial statement of a select company in the automotive industry for the years 2007, 2008, 2009 and 2010. With the aid of financial reports, such as Balance Sheet, Income Statement, aim to perform an analysis based upon profitability, asset utilization, liquidity and debt utilization in comparison to the industry averages. This will be covered in the primary section of this report. The other section will cover the Horizontal, Vertical and Trend analysis followed by the calculation of the Degree of operating leverage and Degree of Financial leverage. As a conclusion, a summarized analysis for the benefit of shareholders and other stakeholders will be presented. The
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FIN 48 also provides guidance on derecognition, classification, interest and consequences, accounting in interim periods, exposure and change. The assumption of this understanding had no material effect on Honda’s financial stature and outcome. During the fiscal year 2009, a subsidiary of the Company revised its fiscal year-end from December 31 to March 31. Due to this, the Company removed the previously existing 3-month gap between the reporting periods of the organisation and the subsidiary in the consolidated financial statements. The removal of this period represents a revolution in accounting principle and has been reported by retrospective application. The consequence on the retained earnings balance since April 1, 2007 is ¥6,214 million. The consequence of the retrospective application is not significant to the Company’s consolidated financial statements as of and for the year end March 31, 2008, and hence those consolidated financial statements have not been retrospectively ammended.

Strategy and Planning Ahead

Basic Rule

Respect for the individual. The Three Joys (buying, selling and creating)

Sustaining a global viewpoint, we are committed to supplying Company Rule products of the highest quality, yet at a reasonable price for (Mission Statement) worldwide customer satisfaction. 6

In Retrospect to the