Financial Analysis of Magna International Company

Bo Peng

Bachelor's thesis

Abstract:

The main objective of the thesis is to use some financial analysis methods to analyze selected company’s balance sheet, cash flow and income statement from the year 2007to 2011. In chapter 2, the methods of financial analysis used in this thesis will be described. There are two main parts in this chapter: one is common-size analysis, the other is financial ratio analysis. The purpose of using common-size analysis is to have a general understanding of the company’s financial structure and its development trends. The financial ratio analysis pays attentions to three main areas such as activity ratio, liquidity analysis and solvency analysis. We can know this company much more and deeper in this chapter. In chapter 3, the general introduction about Magna’s facts and history, innovation and responsibility will be followed closely. As a good analyzer, knowing the company comprehensively is needed. From all of this, we can have a general understanding of the situation of the company. Chapter 4 is the practical part and also the most important part in this thesis. In this chapter, the company’s performance from year 2007 to 2011 will be analyzed comprehensively from Balance Sheet, Income Statements and Cash Flow Statements of the company. Exactly, the data we use in this chapter will follow the company’s annual reports. As the most important part, all methods that will be used is necessary to be introduced: the common-size analysis will be used to show the general situation of the financial statement of the Magna International Inc. And then we will pay attention to the financial ratio analysis, which enables to spot trends and compares its conditions and performances of similar businesses in the same industry among the given 5 years. In the liquidity analysis, the current ratio and quick ratio will be used to measure the liquidity of the company’s ability to meet its short-term liabilities. Then we will use solvency analysis to measure the company’s ability to meet its long-term liabilities. In the end, we will use profitability analysis, DuPont analysis and influence quantification to examine the ability to generate profit from invested capital in the form of return during a period of the company in more detail. In chapter 5, we will go back to the thesis and have an overall look at all the data or figures we did and then get the conclusion about this company’s past and present situation and also the suggestion about the company’s future will be included.

Abstract:

The main objective of the thesis is to use some financial analysis methods to analyze selected company’s balance sheet, cash flow and income statement from the year 2007to 2011. In chapter 2, the methods of financial analysis used in this thesis will be described. There are two main parts in this chapter: one is common-size analysis, the other is financial ratio analysis. The purpose of using common-size analysis is to have a general understanding of the company’s financial structure and its development trends. The financial ratio analysis pays attentions to three main areas such as activity ratio, liquidity analysis and solvency analysis. We can know this company much more and deeper in this chapter. In chapter 3, the general introduction about Magna’s facts and history, innovation and responsibility will be followed closely. As a good analyzer, knowing the company comprehensively is needed. From all of this, we can have a general understanding of the situation of the company. Chapter 4 is the practical part and also the most important part in this thesis. In this chapter, the company’s performance from year 2007 to 2011 will be analyzed comprehensively from Balance Sheet, Income Statements and Cash Flow Statements of the company. Exactly, the data we use in this chapter will follow the company’s annual reports. As the most important part, all methods that will be used is necessary to be introduced: the common-size analysis will be used to show the general situation of the financial statement of the Magna International Inc. And then we will pay attention to the financial ratio analysis, which enables to spot trends and compares its conditions and performances of similar businesses in the same industry among the given 5 years. In the liquidity analysis, the current ratio and quick ratio will be used to measure the liquidity of the company’s ability to meet its short-term liabilities. Then we will use solvency analysis to measure the company’s ability to meet its long-term liabilities. In the end, we will use profitability analysis, DuPont analysis and influence quantification to examine the ability to generate profit from invested capital in the form of return during a period of the company in more detail. In chapter 5, we will go back to the thesis and have an overall look at all the data or figures we did and then get the conclusion about this company’s past and present situation and also the suggestion about the company’s future will be included.

Keywords

financial analysis, financial ratios, pyramidal decomposition, common-size analysis

Keywords

financial analysis, financial ratios, pyramidal decomposition, common-size analysis

Language used: English

Date on which the thesis was submitted / produced: 10. 5. 2013

Thesis defence

• Date of defence: 12. 6. 2013
• Supervisor: Martina Novotná
• Reader: Tomáš Tichý

VŠB - Technical University of Ostrava

Ekonomická fakulta

Bachelor programme / field:
Hospodářská politika a správa / Finance