Volkswagen Group Financial Analysis 2015

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Table of Contents

Executive summary        

Introduction        

Rationale behind choosing this company        

Financial analysis        

Financial statements analysis        

Vertical analysis        

Horizontal analysis        

Ratios analysis – competitor’s analysis        

Liquidity ratios        

Profitability ratios        

Efficiency Ratios        

Leverage Ratios        

Investments Ratios        

CSR        

The scandal        

The Consequences        

Volkswagen A.G. Corporate responsibility        

Actions        

Conclusions        

References        

Table of figures

Assets        

Income Statement        

Balance sheet        

Income statement        

Current Ratio        

Quick Ratio        

Gross Profit Margin        

Operating Profit Margin        

Net Profit Margin        

Return on Assets (ROA)        

Return on Equity (ROE)        

Return on Capital Employed (ROCE)        

Earnings per share        

Receivables Turnover        

Inventory Turnover        

Payables’ Turnover        

Asset Turnover        

Sales Revenue to Capital Employed        

Gearing ratio        

Debt to Assets        

Debt to Equity        

Interest Coverage Ratio        

Dividend Payout        

Dividends Cover        

Executive summary

This report provides an analysis on the performance of Volkswagen Group, a major EU based car manufacturing company which designs, manufactures and distributes passenger and commercial vehicles, motorcycles, engines, and turbomachinery and offers related services including financing, leasing and fleet management. Based on the company’s Annual Report and external information sources, we used methods such as study, analyze and conclude on the financial statements, identifying and discussing the key accounts, and the major sources of optimism and risks.

Our overall analysis shows that Volkswagen Group is a healthy business with a positive outlook. Financial year 2014 has been successful for Volkswagen group. Despite the political and economic uncertainties, they successfully kept the company on a strong and stable trajectory. They manage to succeed over 10 million deliveries that produced record sales revenues of € 202,5 billion and  operating profit of €12,7 billion.

Introduction

This report aspires to analyze and conclude on the financial data provided by the 2014 annual report of Volkswagen Group, a major car manufacturing company, located in the EU. Motivated by recent ‘’dieselgate’’ scandal we collected information either directly from Volkswagen Group or from external resources and structured them in order to identify the key strong points of the company and the corresponding weaknesses. We performed a similar, but less in-depth, analysis on data collected for two main competitors at the global setting, namely Toyota and Ford

Our tools in this analysis are primarily the financial statements provided by the companies. Exploiting these statements we identify key important accounts, we extract useful information from the notes associated with the annual report, perform an horizontal, vertical and ratio analysis with the data at hand (i.e. for two consecutive financial years, 2013 & 2014).

To the best of our knowledge the data used for the analyses are correct and robust, as backed up by the auditor’s report. There is however, as always in financial accounting, room for misinterpretations and company manipulations of the financial data that we are not able to detect from reading just the annual report. Therefore our conclusions are reserved, and on the grounds the data we processed are indeed a fair and reliable view of reality.

Rationale behind choosing this company

Our rationale behind choosing Volkswagen Group to analyze is threefold: At first and most important, our team is extremely environmental sensitive so we were triggered by the huge scandal of ‘’dieselgate’’, Volkswagen became the target of regulatory investigations in multiple countries, and Volkswagen's stock price fell in value by a third in the days immediately after the news. According to EU commission, cars are responsible for around 12% of total EU emissions of carbon dioxide. Secondly, Volkswagen Group produced the second-largest number of motor vehicles of any company in the world, behind Toyota and ahead of General Motors. It has maintained the largest market share in Europe for over two decades. As of 2013, it ranked ninth in the Fortune Global 500 list of the world's largest companies. Last but not least, Volkswagen Group has a long history from 1937, when it manufactured the car which would become known as the famous Beetle!