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Corporate Finance Analysis

Ford Motor Company and Toyota Motor Corporation
by

Jefferson Kwong

on 27 August 2013

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Transcript of Corporate Finance Analysis

Corporate Finance Analysis
Corporate Governance
Ford Motor Company
CEO - Alan Mulally
Power with shareholders

Toyota Motor Corporation
CEO - Akio Toyoda
Power with management
Shareholder Analysis
Risk and Return
Measuring Investment Returns
Ford (2012 book values)
Return on Equity = 18.29%
Return on Capital = 6.71%

Toyota (2013 book values)
Return on Equity = 4.24%
Return on Capital = 5.80%
Capital Structure Choices
Ford (Q2 2013 book values)
Debt to Equity: 7.7 to 1

Toyota (2013 book values)
Debt to Equity: 1.1 to 2

Dividend Policy
FORD MOTOR COMPANY
Variable- slightly inconsistent
Last Dividend – 2006
$.40 per share
Loss $12.613B
Financial Position Pre-2006
$.27B, $1.73B, $1.05B
Start up – 2012
$.10 Per Share
Financial Position Pre-2012
$.86B, $1.66B, $4.94B
Splits and Buybacks
Ford Motor Company & Toyota Motor Corp.
A Framework for Analyzing Dividends
Valuation
Toyota Motor Corp.
Ford Motor Company
YTM: 4.86%
Market Value of Debt: 102 billion
Market Debt to Equity Ratio: 158%
WACC: 6.45%
Ford Motor Company
Ford Motor Company
Toyota Motor Corp.
Ford Motor Company
Ford Motor Company
Enterprise Value: 166 billion
FY 2012 FCFF: 5.1 Billion
Cost of Capital: 6.45%
Implied Growth: 3.3%
Toyota Motor Corp.
Risk Free rate: 2.81%
Historical Return on the Market: 7.63%
Risk premium: 4.82%
Toyota Motor Corp.
YTM: 2.88%
Market Value of Debt: 9,875 billion Yen
Market Debt to Equity Ratio: 47.5%
WACC: 4.93%
Toyota Motor Corp.
Enterprise Value: 30,666 billion Yen
FY 2012 FCFF: 52.5 Billion Yen
Cost of Capital: 6.45%
Implied Growth: 4.8%
Toyota Motor Corp.
Group 4 - Agustin, Elisha, Jeff, Mike
MGP 260
Corporate
Finance

University of California, Davis Graduate School of Management
TOYOTA MOTOR COMPANY
Top Priority – Shareholders
Payout Ratio 30%
Mid year and End of year Dividend
Shareholder Meetings
Financial Position Earnings- 2006-2012
$10.9B, $11.7B, $13.9B, $17.1B, $2.2B, ($4.4B), $4.9B, and $3.4B
Financial Position Cash Flows- 2005-2012
$13B to $25B
Annual Dividends 2005-2012
$.61, $.77, $1.02, $1.40, $.48, $1.02, $.60, and $.61 per share
Splits and Buybacks
Risk Free rate: 2.81%
Historical Return on the Market: 7.73%
Risk premium: 4.92%



Ford Motor Company
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