Abstract

Toyota Motor Corporation (Toyota) is Japan’s largest and the world’s fourth-largest automobile manufacturer. The company offers well-known car models like Camry, Corona, Corolla and Lexus. Though a late entrant, compared to General Motors and Ford, Toyota has become one of the strongest players in the automobile industry. Toyota has continued to set new benchmarks for providing value to customers more effectively than competitors. Toyota is exposed to market risk due to changes in currency rates, interest rates and certain commodity and equity prices. In order to manage these risks, Toyota uses various derivative financial instruments. These instruments are in general executed only with creditworthy financial institutions. The case outlines the various financial risks Toyota faces and how the company manages them.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• 0

Keywords

Toyota Motor Corporation, Toyota, Financial risk management, Sakichi Toyoda, Camry, Corona, Corolla, Lexus, US GAAP, generally accepted accounting principles, FAS 115, Hedging, Credit risk, Market risk, MBA case study, Strategy