come more efficient in building its trucks, thereby lowering its variable production expenses.Statement of Cash FlowsTable 3, Paccar’s consolidated statement of cash flows, breaks cash flows into cash generated through its normal operating activity; that is, sales of heavy trucks. But it also shows that Paccar generated over $33 million profit when it sold its auto parts division. And as we have come to expect, cash provided by operations increased in line with net sales, and ultimately, net income for the years 1997 through 1999.The second part of the cash flow statement shows how Paccar invested its earned income. From the table, financing receivables originated increased by about $500 million. And except for the $143 million generated from selling the auto parts division, all other investing activities show only a modest increase. Again, the cash flow statement shows that Paccar is trying to grow its financing division into a major player in the leasing and heavy truck financing arena.Paccar also generated roughly $200 million through the acquisition of long-term debt. As a result of its investment in its financing unit, even though net income increased by $167 million, Paccar’s 1999 year-end increase in cash and cash equivalents increased only by $96 million from the same period in 1998. Still, Paccar maintains about a half-billion dollars in cash reserves, in the form of working capital to maintain future business operations.Comparative Ratio AnalysisTable 4 is a 5-year (1995 – 1999) ratio analysis of Paccar’s manufacturing operations. Table 5 compares Paccar to four other heavy truck manufacturers: Navistar International, Oshkosh Trucks, Volvo, and DaimlerChrysler AG (Freightliner division). It also compares Paccar to an industry average that is composed of 33 auto and truck manufacturers. From table 4, profitability percentages show nothing but positive ratios. Gross profit and net profit margins ...
