Honda Motor co, is a Japanese corporation founded on October 1946 and was incorporated on 24th of September 1948. The company manufacture , develops and distribute automobiles, power products & aircrafts worldwide.
The company operates four segments as follows:
1. Motorcycle business:
This segment develops and produces sport models including trial and moto-cross racing vehicles; business and commuter models; all-terrain vehicles; and side-by-side models.
2. Automobile business:
This segment develops and manufacture passenger cars, light trucks and mini vehicles, as well as vehicles powered with alternative fuel, such as ethanol, battery electric and fuel cell vehicles.
3. Financial services business :
This segment provides various financial
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• The net profit margin ratio of Honda is generally higher than its competitors , which means that the company is better at managing its overall expenditures.
• Honda Return on equity has been fluctuating but declining as well. When its compared to its competitors , the Company has a generally lower ROE , which means its ability to generate money internally is not as strong as its competitors.
• The three company’s ROA has been fluctuating over the years ,however when we compare Honda’s ratio with its competitors we can see that the company allocations of its assets hasn’t been strong. With its competitor general motors having the higher hand in this ratio.
Conclusion: Profitability ratios are a metric tools that help interested parties such as investors, shareholder etc to evaluate the company’s operating productivity. In order to be able to asses the profitability of a company , the analyst has to compare the ratios of certain years against each other and against the ratios of competitor. These help the parties to take decisions about whether they want to invest or purchase the company’s