Toyota Reportedly Down To $18.5 Billion In Cash, Same Level As Ford.

[Sprint XR8]

The cash burn rate through 2008 at General Motors, Chrysler and, to a lesser degree, Ford, has been one of the big new stories in the auto business. After a disastrous third quarter, GM was down to about $11 billion and, along with Chrysler, was in danger of having insufficient cash on hand to pay bills at the end of the year.

Meanwhile, Toyota has been raking in the profits for ages now and was thought to have up to $90 billion in reserves as recently as a couple of years ago. The other day, however, John McElroy reported that Toyota may be down to only $18.5 billion in cash with rapidly spiraling debts.

The company has spent heavily on new factories and new products in the U.S. in recent years, but saw its sales plummet as much as the domestics in the second half of 2008. Its total current short-term liabilities are now roughly equal to its total current assets, and its cash reserves put the company on par with Ford. In recent months, Toyota has been moving aggressively to cut costs and budgets have been slashed company wide. The automaker famous for avoiding layoffs was also reportedly considering shedding some jobs in the U.S. and UK, but had denied those reports are true.
http://www.autoblog.com/2009/01/26/t...llion-in-cash/


Toyota’s Weakening Financials

Toyota used to be in such a strong financial position that it earned the nickname the Bank of Toyota. That description no longer replies. Also, many industry observers are under the mistaken impression that Toyota has no corporate debt. That doesn’t apply anymore, either.As part of its ambitious global expansion efforts, Toyota’s borrowing and have debt load more than doubled over the last decade. In 2000 Toyota’s current liabilities* totaled ¥5.5 trillion, right now that stands at ¥12.4 trillion.

Although the company still has a solid balance sheet, it’s not as solid as it used to be. Moreover, the company is projecting it will lose money in the current fiscal year, something that has never happened before in its history.

This helps explain why Toyota is taking drastic action in the face of the current economic downturn, such as temporarily shutting down all of its manufacturing facilities in Japan. Now, even Toyota has to worry about how much cash it has on hand.


In its most recent financial report, Toyota states that it has ¥1.8 trillion in cash, which is roughly $18.5 billion, or about the same level of cash Ford reported in its most recent financial statement.

More tellingly, Toyotas total current liabilities (short term) now match its total current assets. In the past, Toyota’s current assets always exceeded its current liabilities. When a company’s liabilities exceed its assets, it has to dip into its cash reserves to make up the difference-unless its operations are generating positive cash flow. But right now Toyota is not generating positive cash flow.

This is the same situation that the Big Three found themselves in some years back, but failed to address. Toyota is obviously attacking the problem head-on. But it’s surprising to see how close the company has come to the edge of the cliff.

* current liabilities include: borrowing, long-term debt payments, accounts payable and accrued expenses.
http://www.autolinedetroit.tv/journal/?p=2431#more-2431