Analysis Report
Hyundai Motor
An analysis report is based on the following three topics
• Analysis of Consolidated Income Statement
• Analysis of Consolidated Statement of Financial Position
• Analysis of Consolidated Statement of Cash Flows
• Analysis of Important Financial Statement Ratio
Note:
All of the numbers reported here in the analysis are represented in “Millions of Korean Won [￦],
except per share amounts”
Analysis of Consolidated Income Statement
Starting with the Top Line item in any Income statement referred to as “Sales, Turnover, or Revenue”.
Company Turnover was 105,746,422 and 96,812,609 in the year 2019 and 2018. Turnover was increased
by 8,933,813 in the year 2019 representing a change of 9.23% which is a good chance for any mature
company operating in the Automobile Manufacturing Industry. As the company is generating revenues
from different sources but this change is mostly because of an increase in revenue in their two major
Revenue sources named “Sales of goods and Rendering of Services”. Sales of goods have increased by
8,317,981 representing a change of almost 10.2% whereas rendering of services increased by 435,520
representing a change of 19.58%. Both of these revenue sources increased by a healthy percentage which
is usually a good sign. By going into technical things, an analyst knows that weightage of main business
operation should not reduce by heavy percentage, In this case, in the year 2019 Sales of goods were
representing 84.9% of the total revenue whereas in the year 2018 the weightage was 84.18% so the
increase in revenue from “sales of goods” on yearly basis is good because their weightage of total revenue
also increases.
Talking about one of the major expense for any business known as “Cost of Sales”. Company Cost of Sales
was 88,091,409 and 81,670,479 in the year 2019 and 2018 respectively. The cost of Sales for the company
was increased by 6,420,930 in the year 2019 representing a change of 7.86%. Moreover, the weightage
of the cost of sales was 83.30% and 84.36% in the year 2019 and 2018.
If we compare Cost of sales data with revenue on yearly basis we get know that company executives
performed well in not only reducing the cost of sales weightage in 2019 but also the net effect is positive
in favor of revenue thus ultimately resulted in the higher gross profit figures and margin in the year 2019.
By examining one of the major expense which is not directly related to the revenue but is necessary to
run the operation smoothly. This expense is known as “Selling and administrative Expense”. Company
figures for this cost were 14,049,508 and 12,719,965 representing a weightage of 13.29% and 13.14% of
total revenue in the year 2019 and 2018, now this cost has increased by 1,329,543 showing a variance of
10.45% which is a huge change in any major expense for the company. If we go deep into analysis and
investigate why this line item in the consolidated income statement represents such a huge change we
came to know that major change was due to these items “Advertisement & Sales Promotions and
Expenses for warranties”.
Analysis Report
Advertisement & Sales Promotions figures were 2,551,347 and 2,308,527 in the year 2019 and 2018
representing a change of 242,820 in terms of figures and 10.5% in terms of percentage. Well, to be honest,
this change is justifiable because the increase in this number increases the sale for the company in the
latest year and will also have a positive impact on future revenue as well whereas if we talk about
Expenses for warranties, figures were 2,609,744 and 1,998,143 in the year 2019 and 2018 representing a
change of 611,601 in terms of figures and 30.6% in term of percentage which is a huge change. Such major
variance is dangerous for company executives because the customers start claiming 30.6% more as
compared to the previous year and there might be some scenario where few customers didn’t get
warranty claims. Those customers might start marketing negative things about the company which will
have an impact on future revenue. The company management should start talking specific measures in
reducing this number related to this specific expense otherwise it will cost major issues soon.
Despite such an increase in the “Selling and administrative expense” company still managed to get a high
operating profit figure in the year 2019 as compared to the year 2018. This change in the operating profit
is 1,183,340 in terms of figure and by 48% in terms of percentage. This is a huge change and this change
is surely happening because of the higher revenue and higher gross profit in the year 2019.
Financial Income, Financial Expenses, Other income, and other expenses are usually considered as an
unusual item in the Income statement but make sure these items’ weightage is not representing a major
part of revenue. In the Hyundai motor case, their weightage has slightly shows an up and downtrend
which is okay for management and shareholders.
One of the major things in any business Income statement is the bottom line of it also referred to as “Net
