CHAPTER 15
SUMMARY
Toyota, the world's largest automaker, sank into the red for the October-December quarter, heading for its first annual net loss since 1950 because of the plunging global sales and the strong yen, which reduces the value of overseas earnings, adding salt to the wound.
Until the U.S. financial crisis erupted last year, Toyota had been on a roll with its fuel-efficient models, boasting rising profits for seven straight years.
"the downturn came extremely suddenly," said Yasuaki Iwamoto, analyst with Okasan Securities Co. in Tokyo, "the world's auto demand just changed in a flash."
Just a few hours before the earnings were released, Moody's Investors Service lowered its top credit rating of "Aaa" on Toyota by one notch to "Aa1," citing fears about its profitability.
A turnaround promised by Kinoshita, Toyota executive vice-president assured investors that Toyota will get back on its feet through cost cuts and new products. He said Toyota continues to be committed to developing gas-electric hybrids as a pillar of its growth strategy.
CONNECTION
Chapter 15 talks about how people would analyze a company's financial statements in order to make decisions within and outside the company, and how they will affect the insiders and outsiders in relation to the values and information presented on financial statements. As mentioned from the article, it has been told that investors have lowered its top credit - "Aaa" on Toyota to "Aa1", something that doesn't necessarily sound so great anymore. This indication shows that investor's confidence in Toyota motor corporation have decreased; Probably an outcome resulted from the recent values and percentages stated on the financial statements of Toyota. While this unfortunate event have happened to the all mighty Toyota, the insiders, also known as the managers, and other executive management members of the company have made promises and decisions as to the commitment to continue offering excellent quality and high performance vehicles for the upcoming eco-friendly products.
REFLECTION
From newspapers to radio broadcasts, televisions, and even on the worldwide internet, news about numerous businessses and companies closing down are no longer any big surprises to the people living in the current state of an unknown period of financial downturn. Globally, it is obvious that everything is slowing down, but natioanlly, everyone (governments, especially) is trying their best to boost their economy back up and in turn to drive the global economy back to it original state, more or less, every bit of efforts counts. We can see this phenonmenon in the article above, where the all mighty Toyota Motor Corp. is currently expericing its first ever loss in decades, and yet, they are not beaten down by the downturn scare and are trying their best in everyway to maintain its status in the industry and concentrating on their research development int he effort to bring back up its sales and what not. They want to ensure their investors that they will not give up and is down for any obstacles that comes to them.
3 comments:
Toyota, one of the worlds largest automakers, I was shocked when I read your article. Even though the confidence is down, I wouldn’t expect Toyota to get a net loss. This come surprising to me because if you think about it almost every third or fourth car is some sort of Toyota let alone the overcrowding of corollas on the streets of Vancouver. Since getting my learners license, I have dreamed of my owning my own car, but upon getting my novice license, I realized that not everyone could afford a Maserati or an Aston martin. So I then wanted something like a cheap Honda civic or Toyota Corolla, and in Vancouver there is also a stereotype that all Asian people have corollas. My whole point from this would be that I’m surprised that Toyota is running at a net loss even though many younger drivers decide that their first car would be something cheap.
It definitely is very surprising that the all mighty Toyota experiencing their first net lost in 58 years. I think that one of the reasons why Toyota is experiencing their first net loss in 50 years would be because of the newer cars that are being manufacture that is supposed to "save green" and go from low-gas to gas-free. And as what John had said, with the streets overwhelmed with Toyota Corolla's, I think this net loss won't last very long because of the popularity of cars like Corolla or Celica. After successfully receiving my learners, I'm hoping to one day own a cheap car like the Corolla.
-Michael Li
The fact that Toyota the worlds largest automaker, actually got an net loss is quite a significant sign. Seeing as even a big company such as Toyota is struggling to gain a profit, how would that bode for smaller companies that are just trying to make a living. So after seeing your article i was very shocked that even Toyota's investors or losing confidence in it, what chance is their for other smaller companies to turn a profit. But with all these new young drivers getting a cheap cars, they won't be at a net loss for long.
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