Bmw group1 overwiew

QUESTIONS:

1. 
   What do you consider to be the main strengths and weaknesses of the BMW from the economic and financial side?
   
2. 
   Give your intuition about 2000 performance of Ford Motors Company and BMW Group.
   
3. 
   Would you invest in BMW preference share and why?
   
4. 
   Evaluate the contribution of BMW Group segments on overall company performance.
   

EXHIBIT 1 THE BMW GROUP FINANCIAL ANALYSIS – MAIN RATIOS AND INDICATORS

	1999	1998
LIQUIDITY
Current ratio (current assets/current liabilities^5)	2.13
ACID TEST (liquid funds/current liabilities)	0.16
DEBT^6
Quantity
debt/(debt + equity)	89%	80%
Quality (current liabilities/debt)	39%
Cost of debt (interest paid/debt)	6%	7%
ASSET MANAGEMENT
ASSET TURNOVER
sales/assets	0.92	1.05
sales/fixed assets	3.92	4.13
DAYS
collection period (trade receivables/sales x 365)	25.64	22.91
credit period (trade payables/sales x 365)	23.74	20.64
EXPENSES
production cost/sales	83.59%	83.96%
marketing and administration cost/sales	13.66%	12.84%
total expenses/sales	97.25%	96.80%
PERFORMANCE
(sales 98 - sales 99)/sales 98	6.6%
results from ordinary business activities, mil.euro	1111	1061
net income/loss, mil.euro	-2487	462
cash flow, mil.euro	2807	2479
MARGIN AND PROFIT
ROS (profit/sales)	2.71%	3.82%
gross profit/sales	16%	16%
ROI (EBIT^7/assets)	2.48%	4.02%
ROE net profit/equity (after extraordinary result)	-63.25%	7.17%
KEY DATA PER SHARE
dividend in euro ordinary share	0.4	10.23
preference share	0.42	10.74
Cash Flow Per Share	4.19	3.71
shareholders equity	5.47	9.28

EXHIBIT 2 SELECTED BMW AND FORD RATIOS IN COMPARISON , 1999

	BMW	FORD
LIQUIDITY
Current ratio	2.13	1.98
DEBT^8
Quantity (total liabilities/total funds)	89%	90%
Quality (current liabilities/debt)	39%	17%
ASSETS MANAGEMENT
ASSET TURNOVER (sales/assets)	0.92	0.50
DAYS
collection period	25.64	10.04
credit period	23.74	38.51
SALES
(sales 99 - sales 98)/sales 98*100%	6.6%	15.0%
EXPENSES
production cost/sales	83.59%	86.91%
marketing and administration cost/sales	13.66%	6.97%
total expenses/sales	97.25%	93.88%
MARGIN AND PROFIT
ROS (profit/sales)	2.71%	6.12%
GROSS PROFIT (gross profit/sales)	16%	13%
ROI (EBIT/assets)	2.48%	3.03%
DUPONT ANALYSIS /ROI
(EBIT/sales x sales/assets)	2.71% X 0.92	6.12% X 0.50
ROE (net profit/equity) before extraordinary result	16.86%	26%
ROE (after extraordinary result)	-63.25%

1 This case study has been written by Kasperskaya Yulia , with the collaboration of Oriol Amat, Department of Economics and Business, Universitat Pompeu Fabra (Barcelona).

2 The 1999 BMW Group´ structure is given.

3 The segment ratios are calculated respect to result from ordinary business activities

4 The figure are given in million of dollars, the exchange rate 1 euro = 1.008 USD.

5 There is not available information to distinguish current liabilities in 1998 in BMW notes to balance sheet. In 1999 a group of liabilities up to 1 year without pension and other provisions is considered as “current liabilities”.

6 Debt is considered as liabilities without pension provisions.

7 EBIT IS calculated like: Gross earnings from sales – Sales and marketing cost – General administration cost + Other operating income – Other operating expenses.

8 In order to provide uniform base for comparison BMW and FORD companies for debt quantity estimation ratio “total liabilities/total funds” has been chosen.