Ford Motor Company
In this paper, we are going to discuss the following items related to our 1st Assignment: Ford Motor Company. 1. Based on the most recent quarter pre-tax operating profit project the profit for the next four (4) quarters assuming that the U.S economy stays the same as today, declines into a recession and modestly improves. Explain the assumptions made to support your calculations. 2. Discuss three (3) key financial ratios that you would analyze to determine whether or not Ford would be a wise investment opportunity. Explain your rationale. 3. Based on your analysis of the key ratios, describe the strategies you would recommend to Ford’s management team to improve its financial performance. Explain your rationale. 4. Evaluate how the refusal of the federal government’s “Bail Out” fund may have impacted Ford’s financial performance negatively and positively.
1. An icon of U.S. manufacturing, Ford Motor Company has been one of the most prominent automobile producers in the world for almost 100 years. Founded by Henry Ford in 1903, his vision was the production of cars that were affordable to the masses. Today, Ford has been losing money, particularly in its North American operations. Ford produces more vehicles than it can sell and does so under very difficult personnel conditions. The history of the company and its relations with the United Auto Workers labor union has left it with extraordinary long-term expenses in an environment of increasing competition from younger, more focused car companies (Cengage Learning).
In this section, we are going to project Ford’s Pre-Tax profits for the four quarters of 2013 based on the last quarter Pre-Tax profit of 2012 and three assumptions of an upcoming, normal, good economy or a recession.
All the following calculations regarding the three assumptions are based on the following 2012 consolidated income of operations (Ford Motor Company).
|In Millions of USD (except for per |3 months ending |3 months ending |3 months ending |3 months ending | |share items) |2012-12-31 |2012-09-30 |2012-06-30 |2012-03-31 | |Total Revenue |36,424.00 |32,172.00 |33,211.00 |32,445.00 | |Cost of Revenue, Total |32,139.00 |27,307.00 |28,567.00 |27,680.00 | |Gross Profit |4,285.00 |4,865.00 |4,644.00 |4,765.00 | |Selling/General/Admin. Expenses, Total |3,470.00 |2,966.00 |2,959.00 |2,873.00 | |Unusual Expense (Income) |2 |3 |6 |3 | |Total Operating Expense |35,611.00 |30,276.00 |31,532.00 |30,556.00 | | | | | | | |Income Before Tax |1,841.00 |2,246.00 |1,595.00 |2,038.00 |
A. Quarterly financial projections under Normal economy
• Revenue for Q1 and Q2 is based on average estimated revenue provided by 17 financial analysts. For Q3 and Q4 revenue is assumed to increase by 1% each quarter based on the trends of revenue of Q1 and Q2.
• Cost of revenue for the year 2012 on a quarterly basis is showing an increasing trend. Cost of revenue as percentage of...
References: Ford Motor Company. Consolidated Statements Of Operations. Retrieved April, 2013 from: http://www.google.com/finance?fstype=ii&q=NYSE:F
CNN Money: Ford Motor Company. Earnings and Sales Forecasts. Retrieved April, 2013 from:
Ford Motor Balance Sheet. Retrieved April, 2013 from:
Amdeo, A. (2012, March 28). The auto industry bailout. Retrieved April, 2013 from: http://useconomy.about.com/od/criticalssues/a/auto_bailout.htm
Ford Co. Ford motor company business plan submitted to the senate banking committee. Retrieved April, 2013 from: http://media.ford.com/images/10031/Ford_Motor_Company_Business_Plan.pdf
Cengage Learning. Chapter 5—Planning and Decision Making, Management. Retrieved April, 2013 from:
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