Financial Ratio Analysis: Daimler Group and Bmw Group Essay

2075 WordsJan 19, 20139 Pages
To: Board Directors of Daimler Group 2012 Financial Analysis: A comparison between Daimler Group and BMW Group Abstract In this report, we calculate and compare the financial performance between Daimler Group and BMW Group in two financial years 2010-2011. The objective is to analyse the financial performance of both groups and identify our company’s position, thus suggesting the potential areas for improvement for our company. I) Introduction In this report, we analyse and compare the financial performance between BMW Group and Daimler Group in 2010 and 2011 using financial ratios analysis. The BMW Group and Daimler Group are two of Germany’s largest industrial companies and are among the most successful car and motorcycle…show more content…
This ratio has most definitely been affected by the investment in new non-current assets by both groups but Daimler has managed to use these assets to generate more revenue than BMW but still has used its new non-current assets efficiently to generate a sales revenue which would in turn lead to a ratio higher than the previous year’s ratio figure. The sales revenue to working capital explains how well the company is using its working capital to generate sales revenue. It is one of the best ways to watch the changes in cash overtime, this is important because the company needs cash to operate. Daimler has experienced a significant decrease in this ratio and BMW, the opposite occurred. This could be as result of fluctuations in the current assets and liabilities of both companies. The inventory turnover period ratio measures the length of time stock is held within the business. Both companies are now holding stock for longer than they did in 2010. It takes Daimler 77 days to sell its products while it takes BMW 65days. Both results are quite high but BMW has an advantage. This means that BMW has fewer inventories in store than Daimler at the end of the year, which means lower holding costs for BMW. The trade receivables period ratio calculates how long it takes the company to collect payments from its customers. A business will naturally be concerned with the amount of funds tied up in trade receivables and try to

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