Capital Structure and Financial Performance in Car Manufacturing Sector: The Case of Germany and Japan

This Thesis aims to investigate the capital structure of automobile manufacturing industries in two developed countries of Germany and Japan during different crises between 2007 and 2013. Capital (or Financial) Ratio Analysis is conducted to investigate the impact of capital and leverage ratios of Debt to Equity, Total Debt to Total Assets, and Current Ratio on their capital structure strategies during the 2007 to 2013, to observe the effects of different world crisis on them. The results indicate that car manufacturing companies are considered to be capital intensive industries and use a large number of debts to finance their operations. Capital structure is varying from country to another country because of economic conditions. In both Germany and Japan, car manufacturing corporations showed that in times of insufficient capital they relied on banks. However, nowadays in European car manufacturing countries, there is no shortage of capital in the capital market and they continued to finance themselves relatively even though facing economic and natural crises. Keywords: Capital structure, equity, debt, ratio analysis, Germany, Japon. Automobile sector