1. ANNUAL REPORT HONDA MOTOR CO., LTD. HONDA MOTOR CO., LTD. BLAKE GOLDEN BLAKE GOLDEN 002 002

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 Honda’s C.E.O - Takeo Fukui Honda’s 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., Ltd’s independent auditor - The auditors believe that Honda Motor Co. Ltd’s 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 Multi-step model 20042005 GROSS PROFIT8,162,8008,650,105 OPERATING INCOME 600,144630,920 NET INCOME 464,338486,197 - 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 + OWNER’S EQUITY 20048,328,768 = 5,454,368+ 2,874,400 20059,316,970 = 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 Honda’s 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. I could not find any significant accounting policies that differed from the ones learned in class.

11. Financial Analysis Liquidity Ratios (Yen) 20042005 Working capital318,435260,178 Current Ration1.091.07 Receivable turnover11.911.7 Avg. days’ sales uncollected 30.7 days31.2days Inventory turnover7.37.4 Avg. days’ inventory on hand50 days49 days

12. Profitability Ratios 20042005 Profit Margin5.8%5.7% Asset Turnover11 Return on Assets5.6%5.6% Return on Equity17.2%14.7%

13. Solvency Ratio 20042005 DEBT TO EQUITY 190%183%

14. Market Strength Ratios 2005 Price/Earnings ratio15.2 times Dividend yield1.3%