Acc 561 - American Corporation Analysis - Ford Motor Company

American Corporation Analysis

                                                 Ford Motor Company

Sarah Chau, Gabriella Goodfield, Janet Jackson, and Mohammed Al Mufti

ACC/561

October 26, 2015

Myrtle Clark

AMERICAN CORPORATION ANALYSIS

Introduction

Comparative Analysis

• Horizontal Analysis

Horizontal Analysis is use to evaluate the financial statements for several periods. “Horizontal analysis, also known as trend analysis, is a technique for evaluating a series of financial statement data over a period of time. Its purpose is to determine the increase or decrease that has taken place, expressed as either an amount or a percentage” (Kimmel, 2011 pg. 694 para 1).  The formula to use for the Balance sheet is Change Since Base period=Current Year Amount – Base Year Amount /Based Year Amount  and the formula to use for the Income Statement and the Statement of Cash Flows is Current Results in relation to based year= Current year/Based year Amount.

Learning Team D chose Ford Motor Company.  The Annual Report with the filing date August 3, 2015 is being used for the horizontal analysis.  Using 2012 as the based year and 2014 as current year to see if there are increases or decrease. In the income statement, Ford has the following as revenue that is on the income statement.

1. Operating leases
2. Retail Financing
3. Dealer Financing

Operating leases increased by 1.54% this shows that more people are leasing Ford’s cars rather than buying. Retail Financing has decrease by .93% this could mean that due the fact, the United States is going through a recession or people are buying cars from other care companies. Dealer financing is at 1.14%.  This could show that the dealerships are selling more cars and trucks.

The statements of cash flows show that net income has increase by 1.40%.  In the Statement of Cash flow, there are net changes that are in negative in years 2012 and 2014. Example is liabilities but Ford is improving on that.

The balance sheet shows that cash has decrease by 0.34 %( my calculations shows -0, 34%).  In other accounts such as finance, receivables there are good increases.  These results could show that Ford is on the rebound.

• Vertical Analysis

Ratio Analysis

• Liquidity Ratios

1. Current Ratio

Ford’s current ratio is at 1.103:1 this shows that for every dollar that Ford has in liabilities they have $1.103 in assets. In 2013, Ford current ratio was at 1.101.  The means that Ford has increase.  Ford liquidity in 2014 is extremely low.