Financial Analysis for Ford Motor Corporation

interbreeding force political party was registered as a full community in 1919 and it manages operations in the international railroad car industry. cut through is responsible for the manufacture and supply of vehicles in six major continents in the creative activity and its automobile products are get across and capital of Nebraska. The Lincoln brand sells lavish cars while the cross brand sells commercial vehicles and automobiles.The conjunction as well as manufactures automobile fall by the wayside equatingts, heavy trucks and tractors. carrefour holds minor stakes in the U.Ks Aston Martin and Japans Mazda brands. Furthermore, the company is listed in the New York Stocks Exchange (NYSE) with the track family has nonage ownership. In addition, the companys automobile sector is composed of get over Asia Pacific Africa Regions, interbreeding Europe, pass over sulphur and trade union the States. In the fiscal year 2012, the company recorded more than five meg sal es in units at satisfying sale globally. The companys s scoree compar expertnessts, automobiles, and former(a)(a)wise accessories are supplies through sell traders in North America and via early(a) global retail stores that are one by one owned. cut across Asia Pacific division is focused on selling and distributing in twelve constitute commercialise regions through sells and tracking all(prenominal) market in the region. Some of the regions introduce by the company embarrass South Africa, China, Australia, India and Association of South East Nations (ASEAN). get across Europe is involved in scattering and tracking of covers wholesale brands in Russia and Turkey and it has affiliates with Ford Sollers and Ford Otosan. The Ford South and North America divisions are involved in the wholesale of both Lincoln and Ford brands.The market region is the U.S, Mexico and Canada. beat back order competes with former(a) global players, which include Toyota move spate, Honda repulse Company, Fiat-Chrysler, Suzuki Motor stomach, PSA PeugeotCitroen, General Motors Company, Mercedes-Benz, Audi, BMW, Hyundai-KIA self-propelled group and Renault Nissan B.V. plain analysisThe flat abbreviation for Ford Motor stool leave behind en suitable to exhibit the changes of amounts in the interchangeable financial statement items from 2010 to 2012. This is important in depicting and analyzing the trend in these financial years. The earliest period in the midst of ii financial years is used as the story year, that is, 2010 is the base year for the level analysis amongst 2010 and 2012, while 2011 is the base year for the horizontal analysis mingled with 2011 and 2012.The horizontal analysis is important for the next reasons enables to assess the general transaction of the Ford Motor Company. In addition, it will attend in evaluating the increases and decreases of items in the financial statements. even analysis assists in examining if the management is realizing the treated goals and objectives (Williams, 2008). Finally, the horizontal analysis will shop the trends of items in the relief canvas and the income statement.Horizontal Analysis of the Income Statement for Ford Motor spate (In $ Millions)Item declension 2012 fall 2011 spay % Change Revenues 126, 567 128, 168 -1601 -1.25% ExpensesCost of sales 112,578 113, 345 -767 -0.67% Selling, administrative and other Expenses 9,006 9060 -54 -0.60% intact Expenses 121, 584 122,405 -821 -0.67% absorb Expense 713 817 -104 -12.73% gratify Income and separate Income 1185 825 360 43.64% candor in meshwork Income 555 479 76 15.87% Income onward Income Taxes 6010 6250 -240 -3.84%Horizontal Analysis of the Income Statement for Ford Motor Corporation (In $ Millions)Item Dec 2011 Dec 2010 Change % Change Revenues 128, 168 119,280 8,888 7.45% ExpensesCost of Sales 113, 345 104,451 8,894 8.51% Selling, Administrative and other Expenses 9060 9040 20 0.22% gist Expenses 122,405 113 , 491 8914 7.85% Interest Expense 817 1807 -990 -54.79%Interest Income and separate Income 825 -362 1187 -327.9% fair-mindedness in Net Income 479 526 -47 -8.94% Income in advance Income Taxes 6250 4146 2104 50.75% ban and Positive Trends in Ford Corporation From the Income Statement horizontal analysis between 2012 and 2011, the company exhibits negative trends in the nub expenses, revenues, cost of sales, selling administrative and other expenses, interest expense and income before taxes. The imperative trends in 2012/2011 include equity in net income and in interest income and other income. From the income statement horizontal analysis between 2011and 2010, the company exhibits validatory trends in the bring expenses, cost of sales, selling and administrative expenses and income before income taxes. The negative trends in the 2011/2010 include interest expenses, interest income and other income and equity in net income.2012/2011 Horizontal Analysis of the coalesced Balan ce rag week for Ford Motor Company (In $ Millions) Item Dec2012 Dec2011 Change % Change ASSETS bullion and Cash Equivalents 15,659 17,148 -1,489 -8.68% salable Securities 20,284 18,618 1,666 8.95% Finance Receivables 71,510 69,976 1534 2.19% Other Receivables 10,828 8,565 2263 26.42% Net Investments in Operating Leases 16,451 12,838 3613 28.14% Inventories 7,362 5,901 1,461 24.76% fair play in Net Assets 3,246 2,936 310 10.56%Deferred income taxes 15,185 15,125 60 0.4% Other Assets 5,000 4,770 230 4.82% count trustworthy Assets 165,525 155,877 9,648 6.18% Net impalpable Assets 87 100 -13 -13%Net airplane propeller 24,942 22,371 2,571 11.49% good Assets 190,554 178,348 12,206 6.84%LIABILITIESPayables 19,308 17,724 1,584 8.94% Accrued Liabilities 49,407 45,369 1,038 2.29% Short margin Debt 1386 1033 353 34.17%Deferred Income taxes 470 696 -226 -32.47 sum hit authorized Liabilities 70,571 64,822 5,749 8.87% Long marches Debt 103,672 98,455 5,217 5.3% pith Liabilities 174, 243 163,277 11,966 7.33%Redeemable noncontrolling Interest 322 _ _ _EQUITYCapital StockCommon Stock, par note value $0.01 per dowery 39 37 2 5.41% kin B Stock, par value $0.01 per share 1 1 _ _ Capital in Excess of par value of investment company 20,976 20,905 71 0.34% retain Earnings 18,077 12,985 5,092 39.21 Accumulated other blanket(prenominal) inc. (22,854) (18,734) -4,120 22% Treasury Stock (292) (166) -126 75.9% Total equity to Ford Motor Company 15,947 15,028 919 6.12%Equitable to noncontrolling interests 42 43 -1 2.32% Total law 15,989 15,071 918 6.09% Total Liabilities and Equity 190,554 178,348 12,206 6.85%2011/2010 Horizontal Analysis of the Consolidated Balance Sheet for Ford Motor Company (In $ Millions) ItemDec2011 Dec 2010 Change % Change ASSETSCash and Cash Equivalents 17,148 14,805 2,343 15.83% Marketable Securities 18,618 20,765 -2,147 -10.34%Finance Receivables 69,976 70,070 -94 -0.13% Other Receivables 8,565 7,388 1,177 15.93%Net Investments in Operating L eases 12,838 11,675 1,163 9.96% Inventories 5,901 5,917 -16 -0.27% Equity in Net Assets 2,936 2,569 367 14.29Deferred income taxes 15,125 2,003 13,122 655% Other Assets 4,770 6,214 -1,444 -23.24Total Current Assets 155,877 141,406 14,471 10.23% Net nonphysical Assets 100 102 -2 -1.96% Net Property 22,371 23,179 -808 -3.49% Total Assets 178,348 164,687 13,661 8.29%LIABILITIESPayables 17,724 16,362 1,362 8.34% Accrued Liabilities 45,369 43,844 1,525 3.48% Short Term Debt 1033 2049 -1,016 -49.59% Deferred Income taxes 696 1,135 -439 -38.68% Total Current Liabilities 64,822 63,390 1,432 2.24% Long Term Debt 98,455 101,939 -3,484 -3.42% Total Liabilities 163,277 165,329 -2,052 -1.24%Redeemable noncontrolling Interest _ _ _ _EQUITYCapital StockCommon Stock, par value $0.01 per share 37 37 _ _ Class B Stock, par value $0.01 per share 1 1 _ _ Capital in Excess of par value of stock 20,905 20,803 102 0.05% Retained Earnings 12,985 (7,038) 20,023 -284.5%Accumulated other comprehensive inc. ( 18,734) (14,313) -4,421 30.89% Treasury Stock (166) (163) -3 1.84% Total equity to Ford Motor Company 15,028 (673) 15,701 -2332.99%Equitable to noncontrolling interests 43 31 18 38.71% Total Equity 15,071 (642) 15,713 -2,447.5% Total Liabilities and Equity 178,348 164,687 13,661 8.29%Negative and Positive Trends in Ford Corporation From the balance sheet horizontal analysis between 2012 and 2011, the company exhibits positive trends in the thorough authorized assets, add assets, total certain liabilities, total liabilities, total equity and total liabilities and equity. From the balance sheet horizontal analysis between 2011and 2010, the company exhibits positive trends in the total flow assets, total assets, total on-going liabilities, and total liabilities and equity. The company however depicts negative trends in the total liabilities and total equity. symmetry Analysis Current balance This financial ratio is derived from the balance sheet financial and is used to measures of a companys liquid state performance .This ratio assists in determining whether the on-going assets are right away available in order to pay collide with the oc legitimate liabilities (Bodie, 2004). The current liabilities are coin and cash equivalents, accounts receivables, inventory and marketable securities. The current liabilities include accrued expenses, accounts payables, short term debt, taxes and notes payables (Groppelli, 2000). The 21 ratio is the typically suitable current ratio. It is approximated by dividing the current assets by the current liabilities Current proportion = Current Assets/Current LiabilitiesCurrent Ratio 2012 =(15,659+20,284+71,150+10,828+16,451+7362+3,246+15,185+5,000) / (19,308+ 49,407+1,386+470) = (162,525)/ (70,571) = 2.3 The 2012 current ratio for Ford Motor Corporation is commendable since it is slightly more than the customary 21 ratio.Current Ratio 2011 = (17,148+18,618+69,976+8565+12,838+5901+2936+15125+4770) / (17,724+45,369+1,033+ 696) = (155,877)/ (64,822) = 2.4The 2011 current ratio for Ford Motor Corporation is recommendable since it is slightly more than the schematic 21 ratio. This means that Fords current assets are readily available in paying forward current liabilities. Quick Ratio This is a rather enhanced method to evaluate for liquidity since it does not include inventories from current assets. This is due to the reason inventories may be obsolete, harmed and at times stolen. This ratio reveals the ability of a firm is able to carry out its short-run goals from its liquid assets (Groppelli, 2000). The suggested target for the sprightly-ratio is 11 and it is evaluated as Quick Ratio = (Current Assets Inventories or Stocks)/ Current Liabilities QuickRatio2012 = (15,659+20,284+71,150+10,828+16,451+3,246+15,185+5,000) / (19,308+ 49,407+1,386+470) = (165,525 7,362)/ 70,571= 2.24Quick Ratio2011 = (17,148+18,618+69,976+8565+12,838+2936+15125+4770) / (17,724+45,369+1,033+696) = (155,877 5,901)/ 64, 822= 2.31The 2011and 2012 Quick ratios for Ford Motor Corporation are commendable since they exceed the conventional 11 ratio. This therefore means that Ford Motor Corporation is able to meet its short-term objectives. Cash Ratio This ratio assists in determining the companys liquidity by just refining the current ratio and the quick ratio (Bodie,2004). This ratio is evaluated by astute the quantity of cash and cash equivalents or invested funds that are in the current assets to cover current liabilities (Groppelli, 2000). It is calculated use the following formula Cash Ratio= (Cash+ Cash Equivalents+ Invested Funds)/ Current Liabilities CashRatio2012= (15,659+20,284+71,150+10,828+16,451) / (19,308+ 49,407+1,386+470) = (134,372)/ 70,571= 1.9Cash Ratio2011 = (17,148+18,618+69,976+8565+12,838) / (17,724+45,369+1,033+696) = (127,415)/ (64,822)=1.96The above Cash Ratio results for 2012 and 2011 reveal that Ford Corporation is able to settle its current liabilities by use of its Cash and Cash equivalents only.Recommendation whatsoever investor willing to invest in Ford Motor Corporation should move in front and invest in the company. The companys financial strength as portrayed by the financial ratios reveals that the company is able to meet its shot term obligations. This is because the liquidity ratios reveal that the companys current assets are able to pay off the current liabilities.