S Nelson Annual Report

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Transcript S Nelson Annual Report

Annual Report
Nissan Motor Co., Ltd.
Scott Nelson
ACG2021 sec 080
Executive Summary
• Overall Nissan Motor Co., Ltd. Has shown
strong growth in the past few years. As can
be seen in their annual report Nissan is
producing steady growth through expansion
and efficiency. This is a company that is a
growing force in the market, and it is setting
its business operations up in ways that will
sustain that growth.
Part A. Introduction
CEO - Carlos Ghosn
Home Office - Tokyo, Japan
End Date Last Fiscal Year – March 31, 2004
Primary Product/Service – Automobiles
Main Geographic Area of Activity – Nissan has
production facilities in the US, Mexico, Spain,
Britain, and Japan, and sells its vehicles
throughout the world.
Part A. Audit Report
• The company independently auditing Nissan
Motor Co., Ltd. is Shin Nihon & Co., Ernst &
Young International.
• The auditors said that the company was run in a
manner that is consistent with industry standard.
They noted, as Nissan had earlier disclosed, that
Nissan had changed its method of accounting for
certain assets and liabilities.
Part A. Stock Market Information
$ At the close of trading September 30, 2005 each share
of the companies stock was valued at $22.98.
$ The stock had a 52 week high of $23.16/ share and a
52 week low of $19.25/share.
$ On March 31, 2005 Nissan paid a $.29 dividend per
• Based on personal experience with the Nissan product,
its recent long term investments and its current stock
strength, I feel that Nissan Stock is a good investment
to buy or hold.
Part B. Industry Situation and
Company Plans
Nissan is a major player in the fiercely
competitive global vehicle market. In a
recent letter to stockholders, Nissan
President and CEO, Carlos Ghosn, said,
“Nissan is steadily moving forward in the
right direction.” He feels that the company
will soon see the positive results of its
investments in research and development.
Part C. Income Statement
Billions US Dollars
• The income statement
is done in a multi step
% With a 15% increase
in net income, and
increases in both other
categories, Nissan
shows strong growth.
Gross Profit
Operating Income
Net Income
Part C. Balance Sheet
The growth of Nissan Motor Co. is shown by the increases in
its balance sheet amounts. The largest percent change can be
seen in the liabilities categories, reflecting the companies
recent wave of investment in long term assets.
In Billions
US Dollars
Assets =
Liabilities +
Stock Holders
March 31,
March 31,
Part C. Statement of Cash Flows
¥ Cash flows from operations exceed net income by
80.2 billion Yen in 2002 and by 293.7 billion Yen
in 2003.
• The company is growing by investing in research
and development of new models and through
higher production volume capabilities that can
satisfy higher demands.
• Retained earnings are the companies main source
of financing.
 Cash has increased over the past two years.
Part D. Significant accounting
Policies relating to:
• Revenue Recognition - Freight on board shipping
$ Cash - anything that can be made liquid in under 3 months
• Short-term investments – cost of Securities sold calculated with
moving average method
• Inventories – are stated at cost using FIFO method
• Property and Equipment – determined with the straight line method
(maintenance and repair charged to cost account)
 These categories as well as retirement benefits, currency rates, retained
earnings recognition, leases, subsidiary and affiliate acquisitions and
changes in methods are all titles in the list of topic of the notes to the
financial statements.
Part E. Financial Analysis
Liquidity Ratios
• Working Capital - 664.5 million Yen
• Current Ratio - 1.21
• Receivable Turnover - 2.79
• Average Days Sales Uncollected - 7.6
million Yen
• Inventory Turnover - 9.78
• Average Days’ Inventory on Hand - 37.3
Part E. Financial Analysis
Profitability Ratios
%Profit Margin - 6.7%
• Asset Turnover - .95
%Return on Assets – 6.4%
%Return on Equity – 25%
Part E. Financial Analysis
Solvency Ratio
%Debt to Equity - 283%
• Nissan’s debt to equity ratio is very high
indicating heavy creditor financing. This is
due to a high number of recent long term
investments which could cause problems in
an economic slowdown because Nissan
must continue to pay those who financed its
investment loans regardless of income.
Part E. Financial Analysis
Market Strength Ratios
• Price/Earnings per
Share – 10.1 times
$ This number shows us
that every $10.08 in
stock bought by
investors generates $1
in earnings.
% Dividend Yield – 1.3%
$ This ratio measures
one way in which
investors make money
on stocks. In this case
each dollar invested
will see an annual
dividend of about $.01.
ymbol=NSANY, accessed 9/30/2005.
S/index.html, accessed 9/29/05.
LIBRARY/AR/index.html, accessed 9/29/05.
MESSAGE/index.html, accessed 9/30/05.
http://www.hoovers.com/nissan/--ID__41879--/free-cofactsheet.xhtml, accessed 10/01/05.