Financial Analysis of Ford Motors

Table Of Content

INTRODUCTION1

DISCUSSION1

Overview of the Company1

Ford Motor Company Restructuring Plan2

Global Recession & Ford Motors2

Financial Analysis of Ford Motors3

Profitability Ratios3

1)Net Profit Margin3

2)Asset Turnover3

3)Return on Assets4

4)Return on Equity4

Liquidity Ratio5

1)Current and Quick Ratio5

Financial Leverage Ratio7

Efficiency Ratio7

Ford Share Price Analysis8

Restructuring and Impact on Ford Financial Statements9

Analysis of Restructuring9

CONCLUSION12

REFERENCES13

APPENDIX15

Figure 1 (see appendix)15

Figure 2 (see appendix)15

Figure 3 (see appendix)16

Figure 4 (see appendix)16

Figure 5 (see appendix)17

Figure 6 (see appendix)17

Figure 7 (see appendix)18

Figure 8 (see appendix)18

Financial Analysis of Ford Motors

Introduction

The core reason for conducting this research work is to identify the reasons that led Ford Motor Company to adopt a restructuring program. The main focus of the research is to conduct the complete financial analysis of Ford Motor Company from the information available regarding their past and present performance and what has led the Ford Motors to be successful in the longer run. Most importantly, the question that how they restructured their company so that they would not have to take bailout from the government shall also be discussed in this reaserch paper.

For this purpose the data for last 10 years performance of Ford Compnay has been taken. Finally, the research describes various factors, which are responsible for evolution of the organization as one of best the automotive companies in USA, and tries to describe the overall concept and effect of corporate finance that has been used by the compnay.

Discussion

Overview of the Company

Ford Motors is one of the biggest car manufacturers in America and ranked among the world's largest car manufacturer in term of sales. Its headquarters is based in Dearborn, Detroit and Michigan. Currently, on the New York Stock Exchange (NYSE), the company has a market capitalization of $ 41.5 billion. The company calims ownership in number of other brands on its balance sheets like Ford, Lincoln and also own small stake in the Mazda and Aston Martin.

In 2006, new CEO of Ford Motors, Alan Mullaly decided to restructure the company's financial aspects in order to overcome the financial crisis. Ford Motors developed a $23.4 Billion financial package, and the package included debt restructuring and covering of losses in auto operations for the next two years (Ford Motors Annual Report, 2012).

Ford Motor Company Restructuring Plan

After the collapse of Lehman brother, the financial crisis was not only limited to the financial industry, but it also had a severe adverse effect on US auto industry. At that time, many automotive companies in US were operating at very high leverage along with the tightening of credit. These situation forced many auto maker to take bailout from the government. Beside this, the confidence of the auto industry deteriorated through falling consumer demand.

Out of three Detroit based carmakers, Chrysler and General Motors approached the government for bailout package, while Ford Motor decided to not to go for the bailout and decided to restructure their financials in order to overcome their losses and strengthen their financial position (Ford Motors Annual Report, 2012).

Global Recession & Ford Motors

2008 recession has forced many US auto makers to reduce their car ...