Transcript Financial Ratios

Comparative Analysis between
Dodge and Mitsubishi
Founding of the Dodge motor
car company
 The Dodge brothers John and
Horace

started the company in
Detroit, Michigan

in November 1914.
History of Dodge motor car
company
 1914:
John and Horace Dodge brothers create the
company Dodge.
 1916:
Budd all steel bodywork established and
used frequently.
 1920:
Dodge climbed to second place in overall
sales in US.
 1925:
in US.
Dodge drop's to fifth place in overall sales
 1927:
Breakthrough with an all new 3.7 liter six cylinder car exploding
into the industry, but low sales dropping the company to seventh place
in US car sales.
 1928:
Dodge company sold to Walter Chrysler for $175,000,000.
 1933:
Dodge takes fourth place in car sales of that year.
 1942:
Due to Japan's attack on Pearl Harbor, Dodge passenger car
assembly is shut down in favor of war equipment production.
 1992:
Dodge moved forward with the high
performance Viper.
 2006:
 2007:
Dodge Charger launched.
DaimlerChrysler agreed with Cerberus Capital
Management to sell off its Chrysler Group.
Founding of the Mitsubishi
motor car company
 The Mitsubishi group of
companies is a Japanese
corporate group.
 Mitsubishi was founded by
Iwasaki Yataro.
 Mitsubishi Motors Corporation
found in April 1970.
History of Mitsubishi motor
car company

The Mitsubishi auto division wasn't officially formed until 1970.

1917 Mitsubishi produced Japan's first series production car, the Model A.

1951 The production of Mitsubishi Jeeps began with the Jeep CJ-3B. The
company built jeeps until 1998.

1960 The Mitsubishi 500 was introduced.

1962-1963 The Minica Kei Car and the first family Colt car known as the Colt
1000 was produced.

1971 Mitsubishi sold part of their company to the Chrysler Corporation.

1977 Mitsubishi cars were becoming well established throughout Europe.

1980 1,000,000 Mitsubishi cars had been produced in total.

1982 The American market was introduced to the Mitsubishi brand.

1988 Mitsubishi Motor Corporation went public.

1990 Mitsubishi was assigned a new president by the name of Hirokazu
Nakamura.
Financial Ratios
 Financial ratios are useful indicators of a firm's
performance and financial position, ratios can be used
to analyze trends and to compare the firm's financials to
those of other firms, ratios must be used with other
elements of financial analysis because they do not
provide answers by themselves. There are four
categories of key financial ratios:
 Liquidity Ratios.
 Activity Ratios.
 Leverage Ratios.
 Profitability Ratios.
1) Liquidity Ratios
Measures a firm ability to meet cash needs as they arise
in the future. From the liquidity ratios we will be using
current ratio, quick or acid-test ratio, and the average
collection ratio.
Current Ratio
Acid test ratio
Average Collection Period
2) Activity Ratio
Activity ratios are used to measure the relative
efficiency of a firm based on its use of its assets,
they are important in determining whether a
company's management is doing a good enough job
of generating revenues, cash, etc.
Fixed Asset Turnover
Total Asset Turnover
3) Leverage Ratio
Measure the extent of a firm’s financing with debt
relative to equity and its ability to cover interest and
other fixed charges. From the leverage ratios we
will be using debt ratio, debt to equity, and time
interest ratio.
Debt Ratio
Debt to Equity
Times Interest Ratio
4) Profitability Ratio
Measures the overall performance of a firm and its
efficiency in managing assets, liabilities and equity.
From the profitability ratios we will be using the
operating profit margin, net profit margin, and
return on equity.
Operating Profit Margin
Net Profit Margin
Return on Equity
Conclusion:
1.
From what we have calculated we have found out that:
Liquidity rates of both Dodge and Mitsubishi have been
improving, yet Mitsubishi is doing slightly better than
Dodge
2.
acid test ratio for both firms has increased slightly, yet
Mitsubishi’s acid test ratio has increased a bit further than
what Dodge’s ratio resulting in it becoming less risky.
3.
Dodge has shown more improvement over the year,
Mitsubishi has a higher rate of total assets, resulting in
better-generated results
 Both companies aren’t doing so well in operating
profit yet dodge has got the upper hand in its ratio
rate.
 The return on equity indicates that Dodge has a
higher return in equity than Mitsubishi meaning
that they have used their equity to generate more
profit.
 Therefore, this analysis of ratios indicates that
Mitsubishi is better to invest in since it is
performing better than Dodge.