BMW is the manufacturing company in automobile sector established in Germany in 1913. It is one the leading manufacturing companies in luxury car segment. It deals in the high segment cars and its dealing in not limited to one country but it has its plants in many countries. The number of cars sold by the company every year is around 1.5 million. The company is also searching for new markets to increase their sales as well as profit and so heavily investing in new markets of South America and Brazil. Also, BMW is increasing production of the plants in India and China to meet the required demand.
BACKGROUND
BMW was started in 1913, when Karl Friedrich Rapp, a well known German Aircraft engineer formed Rapp Moteren Werke in Munich. The company manufactured airplane engines. However, Rapp found some problems with the engine.
In 1917, BMW's first aircraft engine was produced, the 6 cylinder type IIIA.
In 1919, the type IV engine set an altitude record of 9760 metres.
The current BMW logo was introduced in 1920, which was based on the circular design of an aircraft propeller.
BMW manufactured first motor-vehicle in 1923. The name of the motor-vehicle was R32, having a flat-twin engine.
In 1929, a new improved version DA2 was launched, built with steel body and 4-wheel brakes.
In 1932, the BMW's first real car "AM4" was manufactured having a 4 cylinder engine with suspension values and double driving carnshafts.
In 1933, BMW launched the model 303 having 6 cylinder engine.
Three years later, the BMW 328 was launched. It was mostly built as a sports car.
After this, BMW 501 luxury sedan was introduced in 1951. It was the time when BMW entered the era of mini-cars.
Today, the Z3, Z8 and all of the 3, 5, 7 series cars and motor sport series model are carrying forward the BMW legacy.
BMW Manufacturing Limited is a UK based company which in involved in the manufacturing of vehicles and accessories. Earlier, it was known as Neutrinorealm limited. The company manufactures a lot of models of cars including Z4 M Coupe, Z4 Roadster, M6 Coupe and M6 Convertible. In the year 2003, the company was one of finalist for the CIPD/ People Management Award. This award is given to those companies which are best in public management services or we can say after sale services. BMW Manufacturing limited was established as a company in march 2000.The company registered their office in bracknell in UK. A German Based Manufacture of cars and motorcycles, Bayerische Motoren Werke AG-BMW subsidized it. In the year 2007, the company was known as BMW Holdings Limited.
APPENDIX
Financial Data of the year of 2008-09
At/for year ended 31st march
2009
2008
Consolidated income statement
(£m)
(£m)
Gross profit
103747
105166
Operating profit/loss
88135
49524
Profit/loss before tax
86750
98304
Profit/loss after tax
78892
70599
Profit/loss for financial year
78892
70599
Consolidated statement of financial position
Total Assets
1186753
1355248
Total Liabilities
(337219)
(584663)
Total Shareholders funds
849534
770585
Cash Flow Statement
Net cash-in flow operat. Activities
159508
135856
Net cash-in flow ret. on investment
4768
3987
Net cash out flow investing activities
(25179)
(20654)
Net cash-in flow from financing
(138701)
(143889)
Balance Sheet: -
2009(£m)
2008(£m)
Fixed Assets
507812
587200
Net Current Assets
678941
768048
Current Liabilities
(284740)
(494436)
Long Term Liabilities
(52479)
(90227)
Total Assets less Current Liabilities
902013
860812
Equity Shareholder Funds
849534
770585
Ratio of company for the year of 2008-09: -
Financial Ratios
31/03/2009
31/03/2008
Current Ratio
2.38
1.55
Liquidity Ratio
2.27
1.49
Shareholder Liquidity Ratio
16.19
8.54
Solvency Ratio (%)
71.58
56.86
Profit Margin (%)
3.56
3.65
Return on shareholder Funds (%)
10.21
12.76
Return on Capital Employed
9.62
11.42
RATIO ANALYSIS
Generally, financial ratios are calculated for the purpose of evaluating aspects of a company's operations and fall into the following categories:
Liquidity ratio : Liquidity ratio is used to measure the firm's ability to meet its current obligations.
Profitability ratio : Profitability ratio is used to measure the management's ability to control expenses and to earn a return on the resources committed to the business.
Company's capacity to pay its liabilities on time.
Efficiency, turnover or activity ratios provide information about management's ability to control expenses and to earn a return on the resources committed to the business.
LIQUIDITY RATIO
Working Capital: - Working capital compares current assets to current liabilities, and serves as the liquid reserve available to satisfy contingencies and uncertainties. A high working capital balance is mandated if the entity is unable to borrow on short notice. The ratio indicates the short-term solvency of a business and in determining if a firm can pay its current liabilities when due.
It can be expressed as :
Liquidity ratio = Current Assets - Current Liabilities
QUICK RATIO
Quick ratio is a measurement of the liquidity position of the business. The quick ratio compares the cash plus cash equivalents and accounts receivable to the current liabilities. The primary difference between the current ratio and the quick ratio is the quick ratio does not include inventory and prepaid expenses in the calculation. Consequently, a business's quick ratio will be lower than its current ratio. It is a stringent test of liquidity.
It can be expressed as :
Quick Ratio = Securities + Cash + Marketable Accounts Receivable Current Liabilities
PROFITABILITY RATIOS
Return on Capital Employed
Return on capital employed ratio reflects the overall profitability of the business. It is calculated by comparing the profit earned and the capital employed to earn it.
It can be expressed as :
Return on Capital Employed = Profit before Interest, Tax and dividend *100
Capital Employed
Return on shareholder's funds
Return on shareholder's funds ratio reveals how profitably the proprietor's funds have been utilized by the firm.
Net profit after interest & tax /total shareholder's funds
This ratio shows the relationship between net profit and sales.
It can be expressed as :
Net Profit Ratio = Net Profit * 100
Net Sale
Earnings Per Share
Earnings per share ratio measures the profit available to the equity shareholders on a per share basis. All profits left after payment of tax and preference dividend are available to equity shareholders.
It can be expressed as :
EPS = Net Profit - Dividend on Preference Shares
No of equity shares
Dividend per Share
Dividend per share is the dividend distributed to equity shareholders divided by the no. of equity shares.
It can be expressed as :
DPS = Dividend paid to Equity Shareholder
No. of Equity Shares
SOLVENCY RATIOS
Debt Equity Ratio
Debt equity ratio explains the relationship between the long term debts and share holders' funds.
It can be expressed as :
Debt Equity Ratio = Debt
Equity
Debt to Total Fund Ratio
Debt to total fund ratio is a variation of the Debt Equity Ratio and gives the same indication as the debt equity ratio. In this ratio, debt is expressed in relation to total funds.
It can be expressed as :
Debt Total Funds Ratio = Debt
Equity + Debt
ANALYSIS OF THE STATEMENT
Financial Highlights
Total gross profit of £ 103747 million in the year 2009,less than 2008 in which gross profit was £ 105166 million.
Operating Profit of £88135 million, 97.2% increase in 2009 as compared to 2008.
Profit/loss for the financial year increase from £ 70599 million in 2008 to £ 78892 million in 2009.
Dividend per share of .30 euros, in the year 2009.
In the analysis we take BMW Manufacturing Limited Company in the automobile sector.
In that analysis we get some ratios from the balance sheet, profit and loss account and the income statement. So analyses of this company are as follows:-
In the all sector we calculate liquidity ratio, solvency ratio, current ratio and profitability ratio.
The BMW has the current ratio in 2008 1.55 and in 2009 2.38, moderate change in current ratio.
Liquidity Ratio of the BMW in 2008 is 1.49 and in 2009 is 2.27, moderate change in liquidity ratio.
In the Shareholder Liquidity ratio the BMW has in 2008 8.54 value and in 2009 has 16.19 value.
In Solvency (%) ratio BMW in 2008 is 56.86 and in 2009 are 71.58.
Profit Margin deccreases from 2008 to 2009. It deccreases by .09%. In year 2008 the Profit Margin are 3.65% and in the year 2009 the profit margin was 3.56%. So, the company makes less profit from past year.
In the return on shareholder fund ratio, the BMW has value in 2008 12.76 and in 2009 is 10.21.
In return on Capital Employed ratio, BMW in 2008 is 11.42 and in 2009 are 9.62.
In the analysis of the automobile sector we take BMW Manufacturing Limited Company. In that analysis we get the data of two years of the company. So the analysis of the company is as follows:
In the BMW in 2009, Assets less Current Liabilities are 902013million pounds and 860812 million pound in 2008 year.
In BMW in the 2009, Equity Shareholder Funds are 849534 million pound and in 2008 is 770585 million pound.
In the BMW the total assets and the total liabilities of the company shows the growth rate from the past year which is 2008 to 2009.
Conclusion: -
BMW is the largest automobile company selling about 1.5 million cars worldwide every year.
It has invested in new markets of South America and Brazil.
It has also increased production in plants of India and China to meet the record demand.
The gross profit of the company was 103797 million pounds in 2009.
The company has launched convertible 6 series n 7 series cars to increase demand.
The company has strong balance sheet and sale and so looking to make record profits in 2011.
