ANNUAL REPORT

1
ANNUAL REPORT

• HONDA MOTOR CO., LTD.
• BLAKE GOLDEN
• 002

2
Executive Summary

• I believe that Honda is a very reliable and safe
  company to invest in.
• Honda is on the cutting edge of hybrid
  technology.
• Honda is also among the industry leaders in
  safety.
• http//world.honda.com/investors/annualreport/2005
  /index.html

3
Introduction

• Hondas C.E.O
• - Takeo Fukui
• Hondas Home Office
• - Minato-ku, Tokyo
• Ending date of last fiscal year
• - March 31, 2005
• Products
• - Automobile, Motorcycles, Personal
  Watercrafts, Lawn
• Power products
• Geographic Area of Operation
• - Japan and the United States of America

4
Audit Report

• KPMG is Honda Motor Co., Ltds independent
  auditor
• The auditors believe that Honda Motor Co. Ltds
  financial statements are accurate and fall into
  accordance with all SEC guidelines.

5
Stock Market Information

• STOCK PRICE 3-3-2006 28.96
• 52 WEEK RANGE 23.75 - 30.36
• DIVIDEND PER SHARE (PER 2005 FINANCIAL
  STATEMENT) 0.47
• THE INFORMATION ABOVE IS FROM 3-3-2006
• I WOULD HOLD ONTO THIS STOCK BECAUSE IT HAS BEEN
  GROWING OVER THE PAST YEAR

6
INDUSTRY SITUATION AND COMPANY PLANS

• The industry situation for motorized products is
  on the rise, especially for the motorcycles and
  mopeds. Due to everyone trying to save money on
  gas Honda has made many advances in its hybrid
  technologies.
• Honda is also shifting some of its automobile
  focus to light trucks instead of cars. As you
  can see by the 2005 J.D. Power truck of the year
  Honda Ridgeline.
• Honda is currently near the top of the low
  emissions standard with its new 4-stroke engines
  in its motorized vehicles.

7
Income Statement

• Multi-step model
• 2004 2005
• GROSS PROFIT 8,162,800 8,650,105
• OPERATING INCOME 600,144 630,920
• NET INCOME 464,338 486,197
• All of these amounts are represented in millions
  Japanese Yen
• All amounts made a jump from 2004-2005

8
Balance sheet (Millions Yen)

• ASSETS LIABILITIES OWNERS
  EQUITY
• 2004 8,328,768 5,454,368
  2,874,400
• 2005 9,316,970 6,027,676 3,289,294
• - From 2004 to 2005 it seems to me the company
  is growing in a positive direction due to the
  jump in the companies assets through there new
  inovations.

9
Statement of Cash Flows

• Cash flows for both 2004 and 2005 were more than
  the net income.
• Through my findings I do not see any significant
  growing through investments of plant, property,
  etc.
• Long-term Loans are Hondas primary source of
  financing
• Cash has increased over the past two years.

10
Accounting Policies

• I could not find any significant accounting
  policies that differed from the ones learned in
  class.

11
Financial AnalysisLiquidity Ratios (Yen)

• 2004 2005
• Working capital 318,435 260,178
• Current Ration 1.09 1.07
• Receivable turnover 11.9 11.7
• Avg. days sales uncollected 30.7 days 31.2days
• Inventory turnover 7.3 7.4
• Avg. days inventory on hand 50 days 49 days

12
Profitability Ratios

• 2004 2005
• Profit Margin 5.8 5.7
• Asset Turnover 1 1
• Return on Assets 5.6 5.6
• Return on Equity 17.2 14.7

13
Solvency Ratio

• 2004 2005
• DEBT TO EQUITY 190 183

14
Market Strength Ratios

• 2005
• Price/Earnings ratio 15.2 times
• Dividend yield 1.3