Financial Analysis for Ford Motor Corporation

hybridization push Company was registered as a full accompany in 1919 and it manages ope dimensionns in the international car industry. track is responsible for the manufacture and supply of vehicles in six major(ip) continents in the world and its automobile products atomic number 18 hybridisation and Lincoln. The Lincoln marker sells lavish cars while the Ford brand sells commercial vehicles and automobiles.The company in any case manufactures automobile s tallye com equalityisonts, heavy trucks and tractors. Ford holds minor stakes in the U.Ks Aston Martin and Japans Mazda brands. Further more, the company is listed in the New York Stocks transpose (NYSE) with the Ford family has minority ownership. In addition, the companys automobile area is composed of Ford Asia Pacific Africa Regions, Ford Europe, Ford South and labor union America. In the financial social class 2012, the company recorded more than pentad million sales in units at whole sale globally. The compa nys spare parts, automobiles, and oppositewise accessories are supplies through retail traders in North America and via separate global retail stores that are each owned.Ford Asia Pacific division is focused on interchange and distributing in cardinal key market roles through wholesales and tracking every market in the region. Some of the regions tracked by the company include South Africa, China, Australia, India and draw of South East Nations (ASEAN). Ford Europe is have-to doe with in diffusion and tracking of Fords 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. force back Company competes with other global players, which include Toyota Motor skunk, Honda Motor Company, Fiat-Chrysler, Suzuki Motor potentiometer, PSA PeugeotCitroen, General Motors Company, Mercedes-Benz , Audi, BMW, Hyundai-KIA Automotive group and Renault Nissan B.V. Horizontal AnalysisThe plain summary for Ford Motor Corpo proportionalityn will enable to bear witness the changes of amounts in the corresponding financial statement items from 2010 to 2012. This is important in depict and analyzing the trend in these financial years. The earliest period between two financial years is used as the base year, that is, 2010 is the base year for the level compendium between 2010 and 2012, while 2011 is the base year for the horizontal analysis between 2011 and 2012.The horizontal analysis is important for the following reasons enables to appreciate the general performance of the Ford Motor Company. In addition, it will attend in evaluating the increases and decreases of items in the financial statements. Horizontal analysis assists in examining if the solicitude is realizing the set goals and objectives (Williams, 2008). Finally, the horizontal analysis will disclose the trends of items in the match sheet and the income statement.Horizontal Analysis of the Income Statement for Ford Motor Corpo symmetryn (In $ Millions)Item fall 2012 Dec 2011 intensify % 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% hit Expenses 121, 584 122,405 -821 -0.67% come to Expense 713 817 -104 -12.73% Interest Income and Other Income 1185 825 360 43.64% justice in Net Income 555 479 76 15.87% Income before Income Taxes 6010 6250 -240 -3.84%Horizontal Analysis of the Income Statement for Ford Motor potentiometer (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% add together Expenses 122,405 113, 491 8914 7.85% Interest Expense 817 1807 -990 -54.79%Interest Income and Other Income 825 -362 1187 -327.9% law in Net Income 479 526 -47 -8.94% Income before Income Taxes 6250 4146 2104 50.75%Negative and Positive Trends in Ford Corporation From the Income Statement horizontal analysis between 2012 and 2011, the company exhibits prohibit trends in the entire expenses, revenues, cost of sales, selling administrative and other expenses, have-to doe with expense and income before taxes. The imperative trends in 2012/2011 include equity in net income and in wager income and other income. From the income statement horizontal analysis between 2011and 2010, the company exhibits positive trends in the gibe 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 consolidated Balance tabloid for Ford Motor Company (In $ Millions) Item Dec2012 Dec2011 Change % Change ASSETS capital and Cash Equivalents 15 ,659 17,148 -1,489 -8.68% Marketable 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% virtue 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% Total Current Assets 165,525 155,877 9,648 6.18% Net intangible Assets 87 coulomb -13 -13%Net topographic point 24,942 22,371 2,571 11.49% Total 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 Term Debt 1386 1033 353 34.17%Deferred Income taxes 470 696 -226 -32.47 Total Current Liabilities 70,571 64,822 5,749 8.87% huge Term Debt 103,672 98,455 5,217 5.3% Total Liabilities 174,243 163,277 11,966 7.33%Redeemable noncontrolling Interest 322 _ _ _EQUITYCapital StockCommon Stock, par value $0.01 per trade 39 37 2 5.41% Cla ss B Stock, par value $0.01 per share 1 1 _ _ Capital in trim of par value of stock 20,976 20,905 71 0.34% Retained Earnings 18,077 12,985 5,092 39.21 Accumulated other comprehensive 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 impartiality 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 Leases 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 A ssets 4,770 6,214 -1,444 -23.24Total Current Assets 155,877 141,406 14,471 10.23% Net intangible 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 intere sts 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 total flowing assets, total assets, total circulating(prenominal) 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 underway 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. balance Analysis Current Ratio This financial ratio is derived from the balance sheet financial and is used to measures of a companys liquidity performance .This ratio assists in determining whether the current assets are right away available in order to pay off the curren t liabilities (Bodie, 2004). The current liabilities are cash 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 evaluated by dividing the current assets by the current liabilities Current Ratio = 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 conventional 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 conventional 21 ratio. This means that Fords current assets are readily available in paying off current liabilities. degenerate 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 collect its short-term goals from its liquid assets (Groppelli, 2000). The suggested target for the quick-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 whence means that Ford Motor Corporation is able to meet its short-term objectives. Cash Ratio This ratio assists in determining the companys liquidity by further refining the current ratio and the quick ratio (Bodie,2004). This ratio is evaluated by calculating the quantity of cash and cash equivalents or invested cash in hand that are in the current assets to cover current liabilities (Groppelli, 2000). It is calculated utilise 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 supra Cash Ratio results for 2012 and 2011 reveal that Ford Corporation is able to make up ones mind its current liabilities by use of its Cash and Cash equivalents only.Recommendation Any investor free to invest in Ford Motor Corporation should move beforehand and invest in the company. The companys fi nancial strength as depicted by the financial ratios reveals that the company is able to meet its centering term obligations. This is because the liquidity ratios reveal that the companys current assets are able to pay off the current liabilities.