Table 1 shows various ratios of Volkswagen and Toyota. The profitability ratios of the company reveal that both gross profit margin and net operating margin increased from the last year. ROCE also slightly increased from the previous year indicating the improvement in the profitability of the company. When compared to the performance of Volkswagen with that of Toyota, the performance of Volkswagen has more gross profit margin than the latter, and it is far ahead than Toyota in net operating margin and ROCE. It also indicates Volkswagen performs well and is efficiently controlling its variable and manufacturing costs.
The current ratio of Volkswagen is 1.07 and 1.04, and the acid-test ratio is 0.80 and 0.77 in 2012 and 2011respectively. There is a slight increase in the ratios of the company from the last year. Yet, it has to improve its current and acid-test ratios. The ideal current ratio is 2 and acid-test ratio is 1 and the company has ratios below that indicating the company’s difficulty in meeting its current financial obligations and the more reliance on its stock. Yet, Volkswagen’s liquidity ratios are approximately at par with that of Toyota indicating the similar performance of its peer group.