The financial strategy ensures that the Group’s capital is used in the best possible manner by:
- balancing shareholders’ expectations on favorable returns with creditors’ demands for financial stability
- strong and stable credit ratings
- diversified access to financing from the capital markets
- margin in the balance sheet to cope with a strong decline in the economy
- financing at competitive conditions to customers.
The goal concerning capital structure is defined as the financial net debt for the Industrial Operations and it shall under normal circumstances be below 40% of shareholders’ equity.
Volvo carefully monitors the trend of financial key ratios to confirm that the financial position is in line with the Group’s policy. The financial key ratios include order intake as well as operational and financial development.
The good demand for the Group’s products continued in 2011 and has contributed to the improvement of the Volvo Group’s profitability and financial position. The financial net debt in Industrial Operations declined during the year from 37.4% of shareholders’ equity to 25.2%.