Shareholders and lenders, whilst not being the only stakeholders, provide capital to companies because they seek a return commensurate with the level of risk that they are willing to take.
It is within this context that Volkswagen AG, registered in Germany, manufactures and sells vehicles.
The price of Volkswagen AG’s ordinary shares have experienced a mixed performance over recent years and after the global recession the company has not returned to its share price high of late 2009.
Recent share price performance can be seen on the graph below:
However, as can be seen from the brief article overleaf, there may be some good news for Volkswagen:
VW cracks 6m in eight months Roberts, Graeme.
just – auto global news [Bromsgrove] 13 Sep 2013.
Volkswagen Group has sold over 6m vehicles in the first eight months of a year for the first time.
Sales from January to August 2013 rose 4.5% to 6.17m though August volume inched up just 0.1% to 720,400 units.
“The Volkswagen Group is in robust shape despite the economic uncertainty, and our development in the period to August remained satisfactory,” sales chief Christian Klingler said. “Notwithstanding the difficult conditions, we still expect deliveries for the full year to exceed the prior year level.”
For full details, click on ‘press release’.
Press release follows:
Volkswagen Group delivers over 6 million vehicles in period to August
* 4.5 percent increase in January – August deliveries to 6.17 million units*
* Situation in August on difficult world markets remained stable with deliveries running at 720,400 units (+0.1 percent)*
* Group Board Member for Sales Christian Klingler: “Satisfactory development despite economic uncertainties. Still expect to grow worldwide deliveries for full year.”
Wolfsburg, September 13, 2013 – For the first time the Volkswagen Group delivered over 6 million vehicles in the first eight months of a year. The company grew deliveries from January to August 2013 to 6.17 (January-August 2012: 5.91; +4.5 percent)* million vehicles. Deliveries in the month of August remained stable at 720,400 units (August 2012: 719,500; +0.1 percent)*. “The Volkswagen Group is in robust shape despite the economic uncertainty, and our development in the period to August remained satisfactory. For the first time, we delivered over six million vehicles to customers in the first eight months of a year,” Group Board Member for Sales Christian Klingler said in Wolfsburg on Friday, and added: “Notwithstanding the difficult conditions, we still expect deliveries for the full year to exceed the prior-year level.”
The Group brands delivered a total of 2.39 (2.47; -3.3 percent) million vehicles to customers on the overall European market from January to August. In Western Europe (excluding Germany), 1.22 (1.25; -2.7 percent) million customers took possession of a new vehicle. 757,300 (792,300; -4.4 percent) vehicles were delivered on the home market of Germany. The Group handed over 415,000 (426,700; -2.7 percent) vehicles to customers in the Central and Eastern Europe region in the period to August, of which 199,800 (206,800; -3.4 percent) units were delivered in Russia.
Trends varied in the Americas. Deliveries in the North America region in the period to August grew by 10.9 percent to 593,700 (535,300) vehicles, of which 414,800 (379,900; +9.2 percent) units were handed over to customers in the United States. The Volkswagen Group delivered 605,600 (678,500; -10.8 percent) vehicles in the South America region during the same period, of which 447,600 (518,700; -13.7 percent) units were handed over to customers in Brazil.
Group delivery figures for the Asia-Pacific region remained encouraging. 2.30 (1.98; +16.2 percent) million vehicles were handed over to customers there in the first eight months. In China (excluding Hong Kong), the region’s largest single market, deliveries topped the two million mark for the first time in an eight-month period, with 2.05 (1.74; +17.9 percent) million customers taking possession of a new vehicle. In India 63,600 (77,400; -17.9 percent) customers took delivery of a new Group model.
Outline of developments at Group brands
The Volkswagen Passenger Cars brand delivered 3.84 (3.72; +3.1 percent) million vehicles worldwide from January to August. The brand developed particularly well in China, where 1.56 (1.31; +18.4 percent) million units were handed over to customers, and in Mexico, where 92,100 (77,800; +18.3 percent) customers took possession of a new Volkswagen.
Audi delivered 1.03 (0.96) vehicles worldwide in the period to August; this not only represented an increase of 7.2 percent, but was also a new record for this period. The premium brand from Ingolstadt benefited inter alia from significant growth in China, where 310,300 (259,700; +19.5 percent) vehicles were handed over to customers. The brand also grew deliveries in the United States by 14.7 percent compared with the same prior-year period, handing over 101,300 (88,400) automobiles.
The sports car manufacturer Porsche, which became a Volkswagen Group brand on August 1, 2012, delivered a total of 106,800 vehicles in the first eight months. At 32,500 units, the Asia-Pacific region accounted for the largest share, with a further 31,400 units handed over to customers in the North America region.
The SKODA brand delivered 598,400 (633,300; -5.5 percent) vehicles worldwide from January to August. The company handed over 393,200 (415,000; -5.2 percent) models on the overall European market. 156,300 (159,400; -1.9 percent) vehicles were delivered in China during the same period.
SEAT delivered 234,200 (210,100; +11.4 percent) vehicles worldwide in the period to August. The company handed over 191,700 (176,700; +8.5 percent) vehicles to customers on the overall European market. Developments on the German market were particularly encouraging, with deliveries there increasing by 26.4 percent to 50,600 (40,000) units.
Volkswagen Commercial Vehicles continued to record stable development in the period to August, delivering 358,400 (362,200; -1.1 percent) vehicles. 104,200 (106,100; -1.8 percent) vehicles were delivered to customers in Western Europe (excluding Germany) under difficult market conditions. In contrast, deliveries in the South America region developed well, with customers taking delivery of 104,100 (96,100; +8.2 percent) units.
*) including deliveries by the Porsche brand from August 1, 2012; excluding MAN and Scania
Original source: VW
Credit: Graeme Roberts
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It is possible to see a great deal of background information on Volkswagen AG at the corporate website:
http://www.volkswagenag.com/content/vwcorp/content/en/homepage.html
In addition, there are almost limitless articles concerning Volkswagen AG within the DMU library databases.
You are required to do as follows:
Task One
Using the Annual Report and Accounts of VOLKSWAGEN AG:
(available at: http://www.volkswagen.co.uk/about-us/company/annual-reports)
You should:
- Evaluate the performance of VOLKSWAGEN in the following areas, using ratio analysis:
- Profitability
- Liquidity/Solvency
- Working capital efficiency
- Long term financial structure
- Investors’ perspective
You should summarise your findings and make
particular reference to the interests of the different stakeholders of the company.
- You may use earlier years’ financial accounts to supplement your analysis if you wish to be specific with certain trends that you have identified.
- In addition you could also consider the performance of VOLKSWAGEN in comparison with its peer group of competitors.
Note: Any accounting ratios for VOLKSWAGEN
must be calculated (and workings shown) and
not extracted from external databases, although, further analysis may be supported by downloading ratios from external databases for competitor companies.
(60% weighting)
Task Two
Considering your response to Task One and any other, well-researched, ‘fundamental’ information that may impact on VOLKSWAGEN, you are required to provide advice, accompanied by rationale, as to whether you would recommend a buy, sell or hold (if they are already owned) policy for investors/potential investors in VOLKSWAGEN shares.
Note that the ‘fundamental’ information may relate to the car manufacturing industry, in general, as well as to VOLKSWAGEN, specifically.
(40% weighting)
(Total 100%)
Additional Information
You are required to present well structured answers of no more than 2,000 words (excluding calculations) in total. The words should be allotted according to the percentage marks awarded for each task.
Learning Outcomes specifically assessed:
Subject Specific Knowledge and Skills
- Identify and critically appraise the different components of a financial report, and assess the adequacy of current international financial reporting requirements for a greater understanding of company performance
- Analyse and interpret financial data and information, evaluate their relevance and validity, and synthesise a range of information in the context of business situations
- Demonstrate the ability to use conventional management accounting and financial management techniques to produce appropriate information for management to aid planning, control and decision making
- Evaluate the usefulness of contemporary management accounting techniques in measuring business performance
- Critically appraise management accounting techniques with respect to their effectiveness and identify any weaknesses inherent in their use
Non Subject Specific and Cognitive Skills
- Manage own learning, using the available range of resources, and ability to conduct research into business and management issues
- Ability to collect relevant information relating to a given situation, analyse that information and synthesise it into an appropriate form in order to evaluate decision alternatives
- Demonstrate a practical and integrative approach to a problem area or issue
- Demonstrate rigour of academic arguments as well as the application of theory
Assignments will be graded according to the general postgraduate assessment criteria and you should also bear the following in mind:
- Evidence of critical judgement in selecting, ordering and analysing content in order to present a sound argument
- The demonstration and understanding of relevant concepts and models
- The demonstration of insight and originality in responding to the assignment
- The provision of well-referenced evidence
Attachments:
accounting-ho….doc