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Basic Overview

"Toyota engages in the design, manufacture, assembly and sale of passenger cars, minivans and commercial vehicles. It operates through three business segments. The car segment is engaged in the design, manufacture and sale of car products, including sedans, minivans, 2BOX cars, sport-utility vehicles and trucks, as well as related parts and accessories. The Finance segment is involved in the provision of financial services related to the sale of the company's products, as well as the leasing of vehicles and equipment. The others segment is involved in the design, manufacture and sale of housings, as well as information and communication business. Toyota Motor Corporation has a collaboration with Microsoft (MSFT) for the development and deployment of telematics applications on the Windows Azure platform for electric and plug-in hybrid vehicles."

A lot of key ratios are going to be used in this article so it would be best for investors to get a handle of some of the more important ratios, which are listed below.

Long-term debt-to-equity ratio is the total long term debt divided by the total equity. The amount of long-term debt a company carries on its balance sheet is very important for it to indicate the amount of money a company owes that it doesn't expect to pay off in the next year. A balance sheet that illustrates that long term debt has been decreasing for a few years is a sign that the company is doing well. When debt levels fall, and cash levels increase the balance sheet is said to be improving and vice versa. If a company has too much debt on its books, it could end up being overwhelmed with interest payments and risk having too little working capital which could in the worst case scenario lead to bankruptcy.

Free cash flow yield is obtained by dividing free cash flow per share by the current price of each share. Generally lower ratios are associated with an unattractive investment and vice versa. Free cash flow takes into account capital expenditures and other ongoing costs associated with the day to day to functions of the business. In our view free cash flow yield is a better valuation metric than earnings yield because of the above factor

Levered free cash flow is the amount of cash available to stock holders after interest payments on debt are made. A company with a small amount of debt will only have to spend a modest amount of money on interest payments, which in turn means that there is more money to send to shareholders in the form of dividends and vice versa.

Operating cash flow is generally a better metric than earnings per share because a company can show positive net earnings and still not be able to properly service its debt. The cash flow is what pays the bills.

The payout ratio tells us what portion of the profit is being returned to investors. A pay out ratio over 100% indicates that the company is paying out more money to shareholders than they are making; this situation cannot last forever. In general if the company has a high operating cash flow and access to capital markets, they can keep this going on for a while. As companies usually only pay the portion of the debt that is coming due and not the whole debt, this technique/trick can technically be employed to maintain the dividend for sometime. If the payout ratio continues to increase, the situation warrants close monitoring as this cannot last forever; if your tolerance for risk is low, look for similar companies with the same or higher yields, but with lower payout ratios. Individuals searching for other ideas might find this article to be of interest 5 Splendid Plays With Superb Yields As High As 7.5%.

Debt to Equity Ratio is found by dividing the company's total amount of long-term debt (debts with interest rates that have a maturity longer than one year) by the total amount of equity. A debt to equity ratio of 0.5 tells us that the company is using 50 cents of liabilities in addition to each $1 of shareholder equity in the business. There is no fixed ideal number as it depends on the industry the company is in. However, in general a ratio under 1 is acceptable and ideally it should be in the 0.5-0.6 ranges.

Current Ratio is obtained by dividing the current assets by current liabilities. This ratio allows you to see if the company can pay its current debts without potentially jeopardizing their future earnings. Ideally the company should have a ratio of 1 or higher.

Price to free cash flow is obtained by dividing the share price by free cash flow per share. Higher ratios are associated with more expensive companies and vice versa; lower ratios are generally more attractive. If a company generated 400 million in cash flow and then spent 100 million on capital expenditure, then its free flow is $300 million. If the share price is 100 and the free cash flow per share are $5, then company trades at 20 times-free cash flow. This ratio is also useful because it can be used as a comparison to the average within the industry; this gives you an idea of how the company you are interested in holds up to the other companies within the industry.

Interest coverage is usually calculated by dividing the earnings before interest and taxes for a period of one year by the interest expenses for the same time period. This ratio informs you of a company's ability to make its interest payments on its outstanding debt. Lower interest coverage ratios indicate that there is a larger debt burden on the company and vice versa. For example if a company has an interest ratio of 11.8, this means that it covers interest expenses 11.8 times with operating profits.

Inventory turnover is calculated by dividing sales by inventory. If a company generated $30 million in sales and had an average inventory of $6 million; the inventory turn over would be equal to 5. This value indicates that there are five inventory turnovers per year. This means that it takes roughly 2.4 months to sell the inventory. A low inventory turnover is a sign of inefficiency and vice versa.

Quick ratio or acid -test is obtained by adding cash and cash equivalents plus marketable securities and accounts receivable dividing them by current liabilities. It is a measure of a company's ability to use its quick assets (assets that can be sold of immediately at close to book value) to pay off its current liabilities immediately. A company with a quick ratio of less than 1 cannot pay back its current liabilities. Additional key metrics are addressed in this article Enterprise Products Is A Great Long-Term Play.

Company : Toyota Motor (TM)

Operating Cash Flow = 17.09B

Basic Key ratios

Percentage Held by Insiders = N/A

Market Cap ($mil) = 130695

Number of Institutional Sellers 12 Weeks = N/A

3 Month % Chg Short Interest = n/a

Growth

Net Income ($mil) 12/2011 = 4909

Net Income ($mil) 12/2010 = 2251

Net Income ($mil) 12/2009 = -4448

12mo Net Incm this Q/ 12mo Net Incm 4Q's ago = -57.2

Q Net Incm this Q/ same qtr yr ago = -6.01

EBITDA ($mil) 12/2011 = 21265

EBITDA ($mil) 12/2010 = 18696

EBITDA ($mil) 12/2009 = 9993

Net Incm Rpt Qtr ($mil) = 1056

Anl Net Incm this Yr/ Net Incm last Yr = 118.08

Cash Flow ($/sh) 12/2011 = 12.06

Cash Flow ($/sh) 12/2010 = 11.17

Cash Flow ($/sh) 12/2009 = 6.89

Sales ($mil) 12/2011 = 222226

Sales ($mil) 12/2010 = 208461

Sales ($mil) 12/2009 = 207349

Dividend history

Div Yield = 1.37

Div Yld 5 Yr Avg 12/2011 = 1.08

Div Yld 5 Yr Avg 09/2011 = 0.99

Annual Dividend 12/2011 = 1.11

Annual Dividend 12/2010 = 0.94

Forward Yield = 1.37

Div 5yr Growth 12/2011 = -10.19

R-squared Div Growth 12/2011 = 0.23

R-squared Div Growth 09/2011 = 0.28

Dividend sustainability

Payout Ratio 09/2011 = 0.72

Payout Ratio 06/2011 = 0.66

Payout Ratio 5 Yr Avg 12/2011 = 0.34

Payout Ratio 5 Yr Avg 09/2011 = 0.3

Payout Ratio 5 Yr Avg 06/2011 = 0.25

Change in Payout Ratio = 0.4

Performance

% Ch Price 52 Wks Rel to S&P 500 = -11.76

Std Dev Target Price Est = 0

Avg EPS Surprise Last 4 Qtr = N/A

EPS % Change F2/F1 = 124.05

Next 3-5 Yr Est EPS Gr rate = 23.29

Std Dev 3-5 Yr Est EPS Gr rate = N/A

EPS Gr Q(1)/Q(-3) = 106.94

5 Yr Hist EPS Gr 12/2011 = -30.02

5 Yr Hist EPS Gr 09/2011 = -28.66

ROE 5 Yr Avg 12/2011 = 5.75

ROE 5 Yr Avg 09/2011 = 6.41

ROE 5 Yr Avg 06/2011 = 7.07

Return on Investment 12/2011 = 1.16

Return on Investment 09/2011 = 1.18

Return on Investment 06/2011 = 1.24

Debt/Tot Cap 5 Yr Avg 12/2011 = 37.41

Debt/Tot Cap 5 Yr Avg 09/2011 = 37.45

Debt/Tot Cap 5 Yr Avg 06/2011 = 37.71

Current Ratio 12/2011 = N/A

Current Ratio 09/2011 = 1.03

Current Ratio 06/2011 = 1.08

Curr Ratio 5 Yr Avg = 1.1

Quick Ratio = 0.98

Cash Ratio = 0.43

Interest Coverage 12/2011 = N/A

Interest Coverage 09/2011 = 13.36

Interest Coverage 06/2011 = N/A

Valuation

Book Value Qtr ($/sh) 12/2011 = N/A

Book Value Qtr ($/sh) 09/2011 = 88.05

Book Value Qtr ($/sh) 06/2011 = 85.38

Anl EPS before NRI 12/2007 = 4.61

Anl EPS before NRI 12/2008 = 9.74

Anl EPS before NRI 12/2009 = -1.41

Anl EPS before NRI 12/2010 = 1.46

Anl EPS before NRI 12/2011 = 3.04

Price/ Book = 0.95

Price/ Cash Flow = 6.91

Price/ Sales = 0.6

EV/EBITDA 12 Mo = 7.72

P/E/G F1 = 1.51

Q1 Std Dev/ Consensus = N/A

R-squared EPS Growth 12/2011 = 0.74

R-squared EPS Growth 09/2011 = 0.7

P/E F1/ LT EPS Gr = 1.51

Std Dev Cons Current Qtr = N/A

Median Est Next Qtr = N/A

# Anlst in Cons Q3 = N/A

Related companies (Peer Group)

Company : Fiat Spa (OTCPK:FIATY)

Operating Cash Flow = N/A

Basic Key ratios

Percentage Held by Insiders = 1

Number of Institutional Sellers 12 Weeks = N/A

3 Month % Chg Short Interest = n/a

Growth

Net Income ($mil) 12/2011 = 822

Net Income ($mil) 12/2010 = 797

Net Income ($mil) 12/2009 = -1183

12mo Net Incm this Q/ 12mo Net Incm 4Q's ago = -42.9

Q Net Incm this Q/ same qtr yr ago = -62.53

EBITDA ($mil) 12/2011 = N/A

EBITDA ($mil) 12/2010 = N/A

EBITDA ($mil) 12/2009 = 3216

Cash Flow ($/sh) 12/2011 = N/A

Cash Flow ($/sh) 12/2010 = N/A

Cash Flow ($/sh) 12/2009 = 2.89

Sales ($mil) 12/2011 = 32001

Sales ($mil) 12/2010 = 47649

Sales ($mil) 12/2009 = 69892

Dividend history

Div Yield = 1.37

Div Yld 5 Yr Avg 12/2011 = 1.55

Forward Yield = 1.37

Div 5yr Growth 12/2011 = -18.11

Dividend sustainability

Payout Ratio 09/2011 = N/A

Payout Ratio 5 Yr Avg 12/2011 = N/A

Change in Payout Ratio = N/A

Performance

% Ch Price 52 Wks Rel to S&P 500 = -35.99

Avg EPS Surprise Last 4 Qtr = N/A

EPS % Change F2/F1 = 9.17

Next 3-5 Yr Est EPS Gr rate = 2.95

EPS Gr Q(1)/Q(-3) = 160.61

5 Yr Hist EPS Gr 12/2011 = N/A

ROE 5 Yr Avg 12/2011 = 9.86

Return on Investment 12/2011 = 1.13

Return on Investment 09/2011 = 2.02

Debt/Tot Cap 5 Yr Avg 12/2011 = 67.84

Current Ratio 12/2011 = N/A

Curr Ratio 5 Yr Avg = 1.99

Quick Ratio = N/A

Cash Ratio = N/A

Interest Coverage 12/2011 = N/A

Interest Coverage 09/2011 = N/A

Valuation

Book Value Qtr ($/sh) 12/2011 = N/A

Book Value Qtr ($/sh) 09/2011 = 13.46

Anl EPS before NRI 12/2007 = 2.15

Anl EPS before NRI 12/2008 = 2.43

Anl EPS before NRI 12/2009 = -0.72

Anl EPS before NRI 12/2010 = 0.27

Anl EPS before NRI 12/2011 = 0.71

Price/ Book = 0.47

Price/ Cash Flow = N/A

Price/ Sales = 0.14

EV/EBITDA 12 Mo = N/A

P/E/G F1 = 2.26

Q1 Std Dev/ Consensus = N/A

Median Est Next Qtr = 0.28

# Anlst in Cons Q3 = 1

Company : Honda Motor (HMC)

Operating Cash Flow = 10.22B

Basic Key ratios

Percentage Held by Insiders = N/A

Number of Institutional Sellers 12 Weeks = N/A

3 Month % Chg Short Interest = n/a

Growth

Net Income ($mil) 12/2011 = 6762

Net Income ($mil) 12/2010 = 3052

Net Income ($mil) 12/2009 = 1370

12mo Net Incm this Q/ 12mo Net Incm 4Q's ago = 20.08

Q Net Incm this Q/ same qtr yr ago = 184.01

EBITDA ($mil) 12/2011 = 14432

EBITDA ($mil) 12/2010 = 10567

EBITDA ($mil) 12/2009 = 8219

Cash Flow ($/sh) 12/2011 = 7.32

Cash Flow ($/sh) 12/2010 = 4.56

Cash Flow ($/sh) 12/2009 = 4.28

Sales ($mil) 12/2011 = 107479

Sales ($mil) 12/2010 = 107020

Sales ($mil) 12/2009 = 101916

Dividend history

Div Yield = 1.88

Div Yld 5 Yr Avg 12/2011 = 1.42

Forward Yield = 1.88

Div 5yr Growth 12/2011 = 9.55

Dividend sustainability

Payout Ratio 09/2011 = 0.46

Payout Ratio 5 Yr Avg 12/2011 = 0.5

Change in Payout Ratio = -0.22

Performance

% Ch Price 52 Wks Rel to S&P 500 = -17

Avg EPS Surprise Last 4 Qtr = N/A

EPS % Change F2/F1 = 107.78

Next 3-5 Yr Est EPS Gr rate = 1.34

EPS Gr Q(1)/Q(-3) = 1-183.64

5 Yr Hist EPS Gr 12/2011 = -12.88

ROE 5 Yr Avg 12/2011 = 7.67

Return on Investment 12/2011 = 5.7

Return on Investment 09/2011 = 3.42

Debt/Tot Cap 5 Yr Avg 12/2011 = 31.99

Current Ratio 12/2011 = 1.27

Curr Ratio 5 Yr Avg = 1.23

Quick Ratio = 1.06

Cash Ratio = 0.52

Interest Coverage 12/2011 = 24.92

Interest Coverage 09/2011 = 31.38

Valuation

Book Value Qtr ($/sh) 12/2011 = 31.2

Book Value Qtr ($/sh) 09/2011 = 31.84

Anl EPS before NRI 12/2007 = 2.75

Anl EPS before NRI 12/2008 = 2.97

Anl EPS before NRI 12/2009 = 0.77

Anl EPS before NRI 12/2010 = 0.81

Anl EPS before NRI 12/2011 = 3.56

Price/ Book = 1.2

Price/ Cash Flow = 5.12

Price/ Sales = 0.39

EV/EBITDA 12 Mo = 5.31

P/E/G F1 = 16.73

Q1 Std Dev/ Consensus = N/A

Median Est Next Qtr = N/A

# Anlst in Cons Q3 = N/A

Company : Nissan Adr (OTCPK:NSANY)

Operating Cash Flow = 8.04B

Basic Key ratios

Percentage Held by Insiders = N/A

Number of Institutional Sellers 12 Weeks = N/A

3 Month % Chg Short Interest = n/a

Growth

Net Income ($mil) 12/2011 = 3831

Net Income ($mil) 12/2010 = 466

Net Income ($mil) 12/2009 = -2337

12mo Net Incm this Q/ 12mo Net Incm 4Q's ago = 17.81

Q Net Incm this Q/ same qtr yr ago = 11.85

EBITDA ($mil) 12/2011 = 13819

EBITDA ($mil) 12/2010 = 9268

EBITDA ($mil) 12/2009 = 5924

Cash Flow ($/sh) 12/2011 = 5.16

Cash Flow ($/sh) 12/2010 = 3.61

Cash Flow ($/sh) 12/2009 = 2.59

Sales ($mil) 12/2011 = 105277

Sales ($mil) 12/2010 = 82690

Sales ($mil) 12/2009 = 86057

Dividend history

Div Yield = 0

Div Yld 5 Yr Avg 12/2011 = 1.38

Forward Yield = N/A

Div 5yr Growth 12/2011 = N/A

Dividend sustainability

Payout Ratio 09/2011 = N/A

Payout Ratio 5 Yr Avg 12/2011 = 0.23

Change in Payout Ratio = N/A

Performance

% Ch Price 52 Wks Rel to S&P 500 = -6.18

Avg EPS Surprise Last 4 Qtr = N/A

EPS % Change F2/F1 = 14.97

Next 3-5 Yr Est EPS Gr rate = 10.69

EPS Gr Q(1)/Q(-3) = N/A

5 Yr Hist EPS Gr 12/2011 = N/A

ROE 5 Yr Avg 12/2011 = 5.73

Return on Investment 12/2011 = 5.64

Return on Investment 09/2011 = 5.67

Debt/Tot Cap 5 Yr Avg 12/2011 = 40.52

Current Ratio 12/2011 = 1.6

Curr Ratio 5 Yr Avg = 1.37

Quick Ratio = 1.24

Cash Ratio = 0.62

Interest Coverage 12/2011 = 15.73

Interest Coverage 09/2011 = 19.05

Valuation

Book Value Qtr ($/sh) 12/2011 = 18.49

Book Value Qtr ($/sh) 09/2011 = 18.66

Anl EPS before NRI 12/2007 = 0.95

Anl EPS before NRI 12/2008 = 2.12

Anl EPS before NRI 12/2009 = -0.47

Anl EPS before NRI 12/2010 = 0.36

Anl EPS before NRI 12/2011 = 1.89

Price/ Book = 1.09

Price/ Cash Flow = 3.91

Price/ Sales = 0.4

EV/EBITDA 12 Mo = 4.8

P/E/G F1 = 1.01

Q1 Std Dev/ Consensus = N/A

Median Est Next Qtr = N/A

# Anlst in Cons Q3 = N/A

Company : Volkswagen-Adr (OTCQX:VLKAY)

Operating Cash Flow = 10.13B

Basic Key ratios

Percentage Held by Insiders = N/A

Number of Institutional Sellers 12 Weeks = N/A

3 Month % Chg Short Interest = n/a

Growth

Net Income ($mil) 12/2011 = N/A

Net Income ($mil) 12/2010 = 9597

Net Income ($mil) 12/2009 = 1270

12mo Net Incm this Q/ 12mo Net Incm 4Q's ago = 344.65

Q Net Incm this Q/ same qtr yr ago = 264.07

EBITDA ($mil) 12/2011 = N/A

EBITDA ($mil) 12/2010 = 25340

EBITDA ($mil) 12/2009 = 14116

Cash Flow ($/sh) 12/2011 = N/A

Cash Flow ($/sh) 12/2010 = 15.46

Cash Flow ($/sh) 12/2009 = 9.29

Sales ($mil) 12/2011 = N/A

Sales ($mil) 12/2010 = 174736

Sales ($mil) 12/2009 = 146697

Dividend history

Div Yield = 1.41

Div Yld 5 Yr Avg 12/2011 = 1.08

Forward Yield = 1.41

Div 5yr Growth 12/2011 = 9.34

Dividend sustainability

Payout Ratio 09/2011 = 0.05

Payout Ratio 5 Yr Avg 12/2011 = 0.17

Change in Payout Ratio = -0.12

Performance

% Ch Price 52 Wks Rel to S&P 500 = 9.06

Avg EPS Surprise Last 4 Qtr = N/A

EPS % Change F2/F1 = -45.02

Next 3-5 Yr Est EPS Gr rate = 48.78

EPS Gr Q(1)/Q(-3) = 1-132.24

5 Yr Hist EPS Gr 12/2011 = N/A

ROE 5 Yr Avg 12/2011 = 12.54

Return on Investment 12/2011 = N/A

Return on Investment 09/2011 = 30.71

Debt/Tot Cap 5 Yr Avg 12/2011 = 4.6

Current Ratio 12/2011 = N/A

Curr Ratio 5 Yr Avg = 1.18

Quick Ratio = 0.89

Cash Ratio = 0.41

Interest Coverage 12/2011 = N/A

Interest Coverage 09/2011 = N/A

Valuation

Book Value Qtr ($/sh) 12/2011 = N/A

Book Value Qtr ($/sh) 09/2011 = 57.82

Anl EPS before NRI 12/2007 = 14.3

Anl EPS before NRI 12/2008 = 3.01

Anl EPS before NRI 12/2009 = 0.66

Anl EPS before NRI 12/2010 = 4.18

Anl EPS before NRI 12/2011 = N/A

Price/ Book = 0.59

Price/ Cash Flow = 2.21

Price/ Sales = 0.24

EV/EBITDA 12 Mo = 0.45

P/E/G F1 = 0.15

Q1 Std Dev/ Consensus = N/A

Median Est Next Qtr = N/A

# Anlst in Cons Q3 = N/A

Conclusion

We are bullish on Toyota for the following reasons:

  1. Its global car production is back to speed, and management expects a 20% growth in global sales to 8.48 million vehicles in 2012, which is being driven by a 24% increase in production. Toyota also stated that it expects to sell almost 9 million (8.95) vehicles in 2013; this level of sales would be higher than those attained by the company in 2007.
  2. Demand for its cars in emerging markets continue to soar; it forecasts that revenue in China and other developing countries will make up 45% of its worldwide sales compared with 33% five years ago. It has stated that it will invest $200 million in Indonesia for expanding its automobile production at its Karawang plant by 40% by 2013, in order to deal with the surge in domestic demand. It is also planning on increasing its annual production capacity in India to 210,000 units from 150,000 in the first half of 2012 in order to meet local demand for Etios which was launched in 2010. It expects to sell 100,000 more units in 2012 and plans to use the engineering platform for the vehicle for cars that will be eventually sold in Brazil.
  3. It occupies the number one spot in the hybrid sector and has sold over 3.5 units since 1997. Last year it launched a new version called the Prius Alpha both in 5- seater and 7-seater version. It has decided to boost monthly output of the Prius Hybrid wagon and Prius Alpha by 70%; monthly output will be raised from 3,000 to 5,000 units. It also plans to deliver a plug-in version of the Prius Hybrid; a significant challenge and threat to Nissan's Leaf electric car and General Motors' Volt. This model is expected to deliver 83.3 miles to the gallon.
  4. We expect the overvalued yen to pull back strongly going forward, which in turn will provide an additional boost in revenue and profit margins.
  5. It is planning on introducing up to 10 more new-generation energy-efficient vehicles and envisions selling 9 million units globally in 2013 and is aiming for 10 million in 2014, a level that no other car maker has yet hit.
  6. In 2011 it earned $3 per share, and earnings could surge by more than 250% in 2012.
  7. Its total cost and expenses were reduced by 14% in 2011.
  8. After taking a beating in 2010 net income has more than doubled from 2.2 billion in 2010 to $4.9 billion in 2011.
  9. It has a good five year dividend growth rate of 10.19%
  10. A manageable payout ratio of 72%
  11. A decent current ratio of 1.08
  12. A good interest coverage ratio of 13.36

Most of the historical data was supplied by Zacks.com. EPS charts, key ratios for Toyota were sourced from zacks.com.

Source: Toyota: The Sleeping Giant With Great Long-Term Prospects

Additional disclosure: This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies-let the buyer beware.