1

NAME: LEE ERN HUI (0319703)

: MOK PO YI (0318207)

: LOH WEI LING (0319225)

COURSE NAME: FOUNDATION IN NATURAL AND BUILT

ENVIRONMENT

SUBJECT CODE: ACC30205

ASSIGNMENT: FINANCIAL RATIO ANALYSIS

COMPANY NAME:YAMAHA CORPORATION

LECTURER: MR. CHANG JAU HO

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TABLE OF CONTENT:

1. BACKGROUND OG OF YAMAHA CORPORATION

2. RECENT DEVELOPMENT

3. PROFITABILITY RATIO

4. STABILITY RATIO

5. PRICE EARNING RATIO

6. INVESTMENT RECOMMENDATON

7. APPENDIX

8. REFERENCES

3

HISTORY

In 1897, Nippon Gakki Co., Ltd. Which is the current Yamaha Corporation is

established with capital of 100,000 yen. Later on 1949, Yamaha Corporation list its

shares on Tokyo Stock Exchange.1955, Yamaha Motor Co.Ltd was founded by

Genihi Kawakami and he was also the first president of Yamaha. Nippon Gakki

Hamana Factory was the first factory established and was located in Hamakita-cho.

There was also the first place where they produce their first product which was the

125cc Yamaha motorcycle “YA-1”. Later in year 1958, Yamaha "YA-2" becomes

first motorcycle to win Japan's "Good Design Award". In the same year Yamaha

also establishes their first overseas subsidiary in Mexico. In year 1966, Yamaha

Music Foundation was established and the company also expands into Europe with

the founding of Yamaha Europa GmbH, in West Germany. 1968, Yamaha issue

shares at market price for the first time in Japan. Nippon Gakki Co., Ltd was

changed to Yamaha Corporation to mark its 100th years in business. A music

entertainment business holding company was then created on 2007. Later on 2008,

Yamaha renew its Yamaha Ginza Building, including concert hall, music studio

and many more. They also manufacture Japanese boats to assists the Great East

Japan Earthquake in 2011. In 2012, Yamaha established ASEAN Integrated

Development Center to promote globalization of manufacturing, engineering, and

also marketing functions.Company founder Genichi Kawakami was rewarded as

Japan Automotive Hall of Fame in the same year. Yamaha Corporation has

recently been named Thomson Reuters 2014 Top 100 Global Innovator.

Yamaha was named based on the high appraisal of its intellectual property

activities in Japan and overseas. This is the second time for Yamaha to be selected,

after the first time in 2011.

4

RECENT DEVELOPMENT

On 21th November 2014,Yamaha Corporation's SILENT Brass™ won a

Design for Asia Awards. It was hosted by the Hong Kong Design

Centre.Yamaha Corporation has become a official sponsor of a factory

racing team which is Movistar Yamaha MotoGP that compete in

Yamaha world motorcycle racing championship.

At the 2014 Frankfurt Messe, new products under the new slogan

“Passion and Performance”. Their purpose of creating this is to ensure

they can meet the needs and desire of their customers.

Furthermore, Yamaha Corporation recently been awarded second time

as Thomson Reuters 2014 Top 100 Global Innovator. As they have high

appraisal from its intellectual property activities in overseas and Japan.

5

Profitability

Profitability Ratios 2012 2013 Interpretation

Return on Equity ( ROE )

𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭

𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐎𝐄 𝐱𝟏𝟎𝟎%

−29381

(203050 + 234793)/2x100%

=−29381

218921 .5x100%

= -13.4%

4122

(203050 + 205363)/2x100%

=4122

204206.5x100%

= 2.0%

During the period of 2012

to 2013, ROE has increase from -13.4% to 2.0%. This means that Yamaha is getting more return from

the capital than last year

Net Profit Margin Ratio ( NPM )

𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭

𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬𝐱𝟏𝟎𝟎%

−29381

356616x100%

= -8.2%

4122

366941x100%

=1.1%

During the period of 2012 to 2013, NPM has increased from -8.2% to

1.1%. This means that Yamaha is getting better at controlling their expenses

Gross Profit Margin Ratio ( GPM )

𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭

𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬𝐱𝟏𝟎𝟎%

124975

356616x100%

= 35.0%

128680

366941x100%

=35.1%

During the period of 2012 to 2013, GPM has

increases from 35.0% to 35.1%. This means that Yamaha is getting better at

controlling their cost of good sold (COGS)

Selling Expenses Ratio ( SER ) 𝐓𝐨𝐭𝐚𝐥 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬

𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬𝐱𝟏𝟎𝟎%

58423

356616x100%

= 16.4%

59733

366941x100%

=16.3%

During the period of 2012 to 2013, SER has decreased from 16.4% to

16.3%. This means that Yamaha is getting better at controlling their sell ing expenses.

General Expenses Ratio

( GER ) 𝐓𝐨𝐭𝐚𝐥 𝐆𝐞𝐧𝐞𝐫𝐚𝐥 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬

𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬𝐱𝟏𝟎𝟎%

58423

356616x100%

= 16.4%

59733

366941x100%

=16.3%

During the period of 2012

to 2013, SER has decreased from 16.4% to 16.3%. This means that Yamaha is getting better at

controlling their genral expenses.

Financial Expenses Ratio ( FER ) 𝐓𝐨𝐭𝐚𝐥 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬

𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬𝐱𝟏𝟎𝟎%

1139

356616x100%

=0.3%

1419

366941x100%

=0.4%

During the period of 2012 to 2013, FER has increased from 0.3% to 0.4%. This

means that Yamaha is getting worse at controlling their financial

expenses

6

Stability

The following table shows the calculations and interpretations from the yaer of 2012 to 2013 ( Yens in

millions )

Financial Stability Ratios 2012 2013 Interpretations

Working Capital Ratio ( WCR )

𝐓𝐨𝐭𝐚𝐥 𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐚𝐬𝐬𝐞𝐭

𝐓𝐨𝐭𝐚𝐥 𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬

188952

72829

= 2.59:1

197902

71550

= 2.77 : 1

During the 2012-2013 period, the WCR has increased from 2.59:1 to 2.77:1. This means that the business ability to pay current liabilities with current assets is getting better. In

addition, it does satisfy the minimum requirement of 2:1

Total Debt Ratio ( TDR ) 𝐓𝐨𝐭𝐚𝐥 𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬

𝐓𝐨𝐭𝐚𝐥 𝐚𝐬𝐬𝐞𝐭𝐬𝐱𝟏𝟎𝟎%

159777

366610x100%

=43.6%

160972

390610x100%

=41.2%

During the 2012-2013 period, the TDR has decreased from

43.6% to 41.2%. This means that the business total debt has reduced. In addition, it is still exceed the maximum limit by 50% .

Inventory Turnover Ratio ( ITR )

365÷ 𝐂𝐨𝐬𝐭 𝐨𝐟 𝐠𝐨𝐨𝐝 𝐬𝐨𝐥𝐝

𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐢𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲

365

÷231659

(77146 + 71659)/2

= 365 ÷231659

74402 .5

= 117.7days

365

÷238261

(82014 + 77146)/2

=365 ÷238261

79580

= 121.7days

During the 2012-2013 period, the ITR has increased from 117.7days to 121.7days. This means that the business is selling their goods at a slower rate.

Debtor Turnover Ratio ( DTR)

𝟑𝟔𝟓 ÷𝐂𝐫𝐞𝐝𝐢𝐭 𝐬𝐚𝐥𝐞𝐬

𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐝𝐞𝐛𝐭𝐨𝐫

365 ÷45634

46060

=368.7days

365 ÷52069

48851.5

=331.8days

During the 2012-2013 period, the DTR has decreased from 368.7days to 331.8days. This means that the business is getting faster in collecting debts.

Interest Coveragee Ratio ( ICR ) 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐞𝐱𝐩𝐞𝐧𝐬𝐞𝐬+ 𝐍𝐞𝐭 𝐩𝐫𝐨𝐟𝐢𝐭

𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬

304 + (−29381)

304

= ( - )

259 + 4122

259

=16.9times

During the year of 2012 there was a net loss. ICR cannot be calculated.

7

P/E Ratio

=Current share price

Earning per share

=14.59

0.91

=16.0

With a 16.0 of P/E ratio, this means that investor of Mc Donalds has to wait about 16 years to recoup his or her investment

8

INVESMENT RECOMMENDATION

From the profitability ratio, there was a increase in the return on equity

(ROE) in 2012 compared to 2013. This is a advantage for the company.

For net profit margin (NPM), it has increased shows that Yamaha

Corporation is getting better at controlling their expenses. Furthermore,

for the gross profit margin ratio (GPM), the ability of the company to

control their cost of goods solids is also getting better. Based on the

selling expenses ratio (SER), it shows that Mc Donald’s is improving at

controlling their selling expenses which is also a good thing. Moreover,

the company is also getting better at controlling their general expenses

can be seen where there is a fall in 2013 compared to 2012.

Besides, for the financial stability ratio, the working capital ratio (WCR)

has increased from 2.59:1 in 2012 to 2.77:1 in 2013. This is an

improvement of the company to pay their current liabilities with current

assets in a shorter time as it does not satisfy the minimum requirement

of 2:1. The decrease in the total debt ratio (TDR) shows that the

business’ debt has reduced compared to the year before which is a good

thing. For inventory turnover (ITR), during the 2012-2013 period,

the ITR has increased from 117.7days to 121.7days. This

stats that the business is selling their goods at a slower

rate. The debtor turnover ratio (DTR) of Yamaha Corporation has

decreased from 368.7days to 331.8days. This means that the

business is getting slower in collecting debts, it is a

promising thing to see.During the year of 2012 there was a net

loss. ICR cannot be calculated.

9

APPENDIX

Balance Sheet of Yamaha for 2011, 2012 &2013

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11

Consolidated Statement of Cash Flow

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Income Statement of Yamaha for 2011, 2012 &2013

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Yamaha Current Share Price

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REFERENCES

1.http://www.yamaha.com/about_yamaha/ir/publications/pdf-data/2013/ann/an-2013e.pdf

2. http://quotes.wsj.com/JP/7951

3. http://finance.yahoo.com/q/is?s=YAMCY+Income+Statement&annual

8. http://www.yamaha.com/about_yamaha/corporate/history/

5.http://www.yamaha-motor.com/corporate/foundinghistory.aspx