Toyota Motor Corporation finance in management and leadership

7 billion US dollars in 2018 (Lucius 2018). The owners of Toyota include Denso, the master Trust Bank of Japan Nippon Life, Toyota industries and Japan trustee services bank in order of ownership from the lowest owner to the largest (Nkomo 2013). Users of financial information The financial information produced by Toyota in every business year provides information that provides raw data which can be used in broad spectrum with varying reasons to study the data. According to the stakeholder classification model, the stakeholders need to be involved in the entire undertaking of the company most especially in sharing financial information (Nkombo 2013). Firstly, internal users are interested in getting the financial information released by Toyota Motor Corporation with the aim of monitoring the general performance of the company.

Additionally, the stockholders are concerned with the financial information to identify how the company is managing its investments thus predicting the future prices of the stocks (Benmelech, et al. Communication of financial information to the stakeholders Toyota Motor Corporation uses different means to communicate the financial information to specific users. Primarily, the financial information is communicator to the external users in the corporation using different forms of financial statements. The major purpose why Toyota uses different forms of financial statements is to ensure that the needs of all diverse stakeholders are met. Although the board of directors and the board member of Toyota Motor Corporation have a variety of talents that they brings to the organization, some of them do not the experience in accounting and financial issue thus, they cannot understand the matter.

Further, while communicating the financial information, a summary of the report is provides while ignoring the line items in the statements that tends to make the financial information bulky (Erb and Pelger 2015). Further, a section that contains narratives is included which provides a comparison of the actual figures with the estimated figure or in some case comparing the current figures with the previous figures. For instance, instead of giving the information of all the sales made in 2017, the management chooses to give comparison figures that compares several past year’s sales and the current year’s sales. Further, the financial information document is produced in advance to allow the users to familiarize with the information in the records before the management provides a review of the financial information say a week.

Figure 1: A comparison of the sales made by Toyota Motor Corporation yearly (Benmelech, et al. The aggregate value of the company’s assets are recorded in the balance sheets of the company (Zeff 2013). Liabilities are also a type of financial data that are considered to be the obligations of the company or what the company owe to other entities. The liabilities include all the items and funds that the company owes to a lender such as the debt and the interests accrued to them. Further, the liabilities include the account payables which include the goods and services bought by the company such as furniture that has not been paid for by the company (Cascino, et al. Other obligations that Toyota Company uses to make decisions include the wages, tax deductions, and benefits that are paid by the organization.

(2014) states that the supplementary information include the statements that has the changing price disclosures and the oil and gas reserves information which is vital to Toyota Company. Notably, there are other financial information that Toyota Company uses to make decisions that include discussion of competition, reports from analysts, news articles about the company and other relevant companies and economic statistics. Types of Financial statements Toyota Company as stated by (Benmelech, et al. (2017) uses different types of financial data to communicate the financial information to the stakeholders. The financial statement is the major tool used to communicate financial information to the users. While issuing a financial statement, Toyota Company includes the balance sheet because it is an important documentation in financial reporting.

What is more, a cash flows statement is also prepared while presenting the financial statement of Toyota Company. The statement shows cash inflows and outflows that the Toyota has experienced within a given financial period of reporting. The cash flows are classified into three primary groups that include operating activities, activities that revolve around investing and the events that involve financing. Notably, statement of cash flows is hard to prepare, therefore, Bigus, and Hillebrand, (2017) considers that statement of cash flow is issued to the external users that are interested in having it. Toyota used the cash-basis accounting technique gas stations that are considerably not bust since there is no need to hire many accounting staffs. On the other hand, in large and busy Toyota investments such as busy motor hubs, the company uses accrual accounting which records the revenue when the exact transaction is completed and not when the company receives the payment (Bigus, and Hillebrand 2017).

Rules and regulations in accounting While preparing and reporting financial information, there are rules that Toyota follows to ensure acceptability of the financial information. Firstly, the company uses the principles of accounting in preparation of the financial information. Further, the company ensures that the financial statement is audited by an external or independent accountant. and McLaney, E. (2014) Accounting and Finance for Non- Specialists. 9th edn. London: Financial Times/Prentice Hall. Atrill, P. and Hillebrand, C. Bank relationships and private firms’ financial reporting quality. European Accounting Review, 26(2), pp. Cascino, S. , Clatworthy, M. 2nd edn. Basingstoke: Palgrave Macmillan Recommended Reading Erb, C. and Pelger, C. “Twisting words”? A study of the construction and reconstruction of reliability in financial reporting standard-setting. Accounting Organizations and society, 40, pp.