ACCT101 Accounting and Financial Report

Analyze the financial performance of Ford Motors.

Write about the Corporate Financial Analysis.

Write Company Overview.

Introduction:

This report has been presented to analyze the financial performance of Ford Motors. This report depicts that how many changes have taken place into the performance and the position of the company. Financial analysis is a study which is performed by the chief financial officer, top level management, financial analyst and the stakeholders to analyze the performance of the company (Schlichting, 2013). Financial analysis is a procedure which evaluates the budgets, projects, businesses and other financial related factors of the company to evaluate the performance and the suitability of the company. Normally, financial analysis is a study which is used by the companies to determine the liquid, stable, solvent and profitable position of the company (Palicka, 2011).

 Financial performance of a company depicts about the strength and position of the company as well as it also depict about the performance of the company. It evaluates the trend, changes and the financial policies of the comapny and makes a better decision about the investment, changes, strategies, policies etc accordingly (Madhura, 2014). More, it has been found that it is requisite for the companies to analyze the performance to enhance the performance in near future.

In this report, the study has been done over the ratio analysis, economic environment consideration, and annual report of the company to analyze the performance of the company and depict the user about the long term perspective of the company. Further, for analyzing the performance of the company, competitor analysis has also been done so that a better decision could be made.

Company Overview:

Ford motors are operating its business in American market. This company has registered itself into US stock exchange. The main office of the company is in Dearborn, Michigan, America. Ford Motors has come into existence in 1903. The main operations of the company is manufacturing, designing and distributing the vehicles i.e. commercial vehicles and automobile vehicles under the brand of “FORD”. Further, it has been found that the luxurious cars are manufactured by this company and it is sold by the company under the brand of “Lincoln” (Home, 2017). According to the current reports of automotive industry, it has been found that around 8% of the market share is held by Ford Motors and the growth rate of the company is also enhancing rapidly.

For analyzing the performance of the ford Motors in a better way, competitive analysis has also been done and for competitive analysis, General Motors has been taken into consideration. This company is also operating its business in American market. The main office of the company is in Dearborn, Michigan, America. General Motors has come into existence in 1908 (Home, 2017). The main operations of the company is manufacturing, designing and distributing the vehicles i.e. commercial vehicles and automobile vehicles. Further, it has been found that the plants of this company are in 35 countries. According to the current reports of automotive industry, it has been found that this company was the largest vehicle manufacturing company worldwide.

Ratio analysis:

Firstly, for analyzing the performance of the company in a better way, the ratio analysis study has been performed. Ratio analysis study depict the management and chief financial officer about the liquid performance, profitability performance, solvency performance, debt structure performance, market performance etc. (Kruth, 2013). Following are the study of ratio analysis of Ford Motors:

Liquidity Ratios:

Liquidity ratios evaluate the ability of the company to pay debt obligation and the margin of safety of the company by calculating the metrics which contains the quick ratio and current ratio of a company. Current liabilities are evaluated in context to the liquid ratios to calculate the coverage of short term debts (Krantz, 2016). These ratios are quite useful to identify and manage the performance of the company. Further, this analysis could also be performed through internal and external aspects. This study expresses the better result when it is used as a comparative ratio. Further, it has been found that the liquid ratios are quite useful for the financial management to analyze the risk and return factors of the company and enhance the level of the working capital management.

Firstly, the study has been done over the current assets and current liabilities of the company to analyze the performance of the company. Current ratios and quick ratios of the company have been calculated to enhance the level of the liquid position of the company (Kinsky, 2011). Current ratios take a concern of current assets and liabilities and depict the user about the position of the company.

Through the analysis, it has been found that the liquid ratios of the company has been enhanced from 2014 in 2016. Further, it has also been found that the curernt ratio of the company is 1.94 whichd depict that the level of the current assets are quite higher than the level of current liabilities of the company. Further, it has also been found that the cost of the company is higher and it is suggestd to the company to reduce the level of the current asseets to manage the cost and risk of the company. Further, the quick ratio of the company has been analyzed and it has been found that the level of quick assets have been enahnced from 2014 in 2016. It depict that the company is required to reduce the level of the quick assets to manage the cost of the company as well as it would also assist the company to manage the other factors of the company (Elton, Gruber, Brown & Goetzmann, 2009).

Further, for analyzing the liquidity position of the company in the market, study has been performed over General Motors.

Through the analysis, it has been found that the level of the curernt assets and current liabilities have been reduced by the company and the management of the company to manage the level of the cost and the risk of the company (Baker & Nofsinger, 2010). From the study, it has been found that the level of the company is quite competive and the Ford Motors are also required to manage the level of the liquid position accoridng to the General Motors.  

Profitability ratios:

Profitability ratios depict about the position and performance of the company to manage the level of the profits and returns. Profitability ratios could be calculated through analyzing the net profit, revenues, equity, assets etc. These ratios depict about the performance and the position of the company in a better way (Ackert & Deaves, 2009). Net margin ratios of the company depict about the level of the company in terms of the total revenue of the company. These ratios are quite useful to identify and manage the performance of the company. This study expresses the better result when it is used as a comparative ratio. Further, it has been found that the profitability ratios are quite useful for the financial management to analyze the risk and return factors of the company and enhance the level of the efficiency of the company.

Firstly, the study has been done over the net margin and revenues of the company to analyze the performance of the company. Net margin and return on equity of the company have been calculated to enhance the level of the profitability position of the company. Net margin ratios take a concern of net profit and revenues of the company and depict the user about the position of the company.

Through the analysis, it has been found that the profitability ratios of the company has been enhanced from 2014 in 2016. Further, it has also been found that the net margin of the company is 4.93% which depict that the level of the net margin are quite higher than the level of revenues of the company. Further, it has also been found that the net profit of the company has been enahnecd and it depict that the performance of the company has been better from last 3 years (Morningstar, 2017). Further, the return on equity of the company has also been analyzed and it has been found that the level of equity have been reduced from 2014 in 2016. It depict that the company is required to manage the same level of the net profit and enahnce the position of the company.

Further, for analyzing the profitability position of the company in the market, study has been performed over General Motors.

Through the analysis, it has been found that the level of the net profit, equity and revneues have been enahnced by the company and the management of the company to manage the level of the met profit of the company. From the study, it has been found that the level of the company is quite competive and the Ford Motors are also required to manage the level of the profitability position accoridng to the General Motors (Warren, Reeve & Duchac, 2011).  

Solvency Ratios:

Solvency ratios depict about the position and performance of the company to manage the level of the debts, equity and assets of the company. Solvency ratios could be calculated through analyzing the various financial figures of the company such as debts, equity, assets etc. These ratios depict about the performance and the position of the company in a better way. Debt to equity ratios of the company depict about the level of the company in terms of the total equity and capital structure of the company (Weygandt, Kimmel & Kieso, 2015). These ratios are quite useful to identify and manage the performance of the company. This study expresses the better result when it is used as a comparative ratio. Further, it has been found that the solvency ratios are quite useful for the financial management to analyze the risk and return factors of the company and enhance the level of the efficiency of the company.

Firstly, the study has been done over the debts and equity and assets of the company to analyze the performance of the company. Debt to equity ratio and debt to assets ratio of the company have been calculated to enhance the level of the solvency position of the company. Debt to equity ratios take a concern of total debts and total equities of the company and depict the user about the position of the company (Larcker, Richardson & Tuna, 2007).

Through the analysis, it has been found that the solvency ratios of the company has been enhanced from 2014 in 2016. Further, it has also been found that the debt to equity ratios of the company is 6.82 which depict that the level of the debts are quite higher than the level of the total equity of the company (Juan García-Teruel & Martinez-Solano, 2007). Further, it has also been found that the debt equity ratio of the company has been enahnecd and it depict that the performance of the company has been worst in terms of managing the optimal capital strutcure of the company. Further, the debt to assets of the company has also been analyzed and it has been found that the level of assets have been managed the same from 2014 in 2016 (Morningstar, 2017). It depict that the company is required to reduce the level of the debts to save itself from extra risk.

Further, for analyzing the solvency position of the company in the market, study has been performed over General Motors. Through the analysis, it has been found that the level of the total debts, total equity and total assets have been enahnced by the company and the management of the company to manage the level of the debt and equity of the company. From the study, it has been found that the level of the company is quite competive and the Ford Motors are also required to manage the level of the solvency position accoridng to the General Motors (Hoque, 2012).  

Efficiency ratios:

Lastly, the study has been done over the efficiency ratios which depict about the position and performance of the company to manage the level of the cash conversion cycle of the company. Efficiency ratios could be calculated through analyzing the various financial figures of the company such as total debtors, total creditors and assets of the company. These ratios depict about the performance and the position of the company in a better way. Ratios are quite useful to identify and manage the performance of the company. This study expresses the better result when it is used as a comparative ratio. Further, it has been found that the efficiency ratios are quite useful for the financial management to analyze the risk factors of the company (Heisinger, 2009).

Firstly, the study has been done over the total debtors, total creditors and total assets of the company. These ratios depict about the cash conversion cycle of the company. This study helps the company to manage and identify the level of total cost and risk.

Through the analysis, it has been found that the efficiency ratios of the company has been enhanced from 2014 in 2016. Further, it has also been found that the total receivable collection period and asset turnover ratio of the company has been enahnced and it depicts that the cash conversion cycle of the company would be lesser. Further, it has also been found that the extra cost would be required for the company to manage and run the business in a proper manner (Garrison, Noreen Brewer & McGowan, 2010). Further, the payable payment days of the company has also been analyzed and it has been found that the level of creditors payment have been enhanced. It depict that the company is required to manage the cash conversion cycle to manage the level of the risk.

Further, for analyzing the efficiency position of the company in the market, study has been performed over General Motors.

Through the analysis, it has been found that the level of the cash conversion cycle of the company have been reduced by the company and the management of the company to manage the level of the risk and cost of the company (Bromwich & Bhimani, 2005). From the study, it has been found that the level of the company is quite competive and the Ford Motors are also required to manage the level of the efficiency position accoridng to the General Motors.  

Economic environment consideration:

Further, the economical environment of the country has been analyzed to identify the performance of the company and the external factors of the company in a better way. Through this analysis, it has been found that various changes have taken place into the position of the company from last few years. the global financial crisis have affected the financial market and economy of the company very badly and thus the company is required to make few changes into the policies and strategies accordingly (Davies & Crawford, 2011).  Through the analysis, it has also been found that the economy of the country have been better from last 2-3 years and currently, the companies are again enhancing their financial position. More, it has been found that Ford Motors are still performing very well; few changes are only required by the company to change so that the position and performance of the company would be better (Davies & Crawford, 2011).

Investor analysis:

Investor analysis study has been performed over the Ford Motors and it has been found that the position of Ford Motors is quite good in the market. From the analysis over the annual report and the financial statement of the company, it has been found that it is suggested to the investors to invest the amount in Ford Motors for a long term. Currently, company is not performing very well but the ratio analysis study depict that the performance of the company is getting better day by day (Morningstar, 2017). Further, it has also been found that the return and the dividend of this company are way better and it would offer the higher return to the investors in a long term.

Long term perspective:

Through the above analysis, it has been found that the company is required to manage the financial performance in a better way to enhance the performance in future. Through the analysis, it has been found that the few changes are required to be done by the company to enhance the performance in future. It has been suggested to the company to manage optimal capitals structure to reduce the issues of risk and through it the return of the company could also be higher (Garleanu & Pedersen, 2007). Further, it has been suggested to the company to manage a better liquid position and cash conversion cycle so that the extra cost of the company could be reduced as well as the position of the company and working capital management of the company could be better.

From the analysis over the annual report and the financial statement of the company, it has been found that it is suggested to the investors to invest the amount in Ford Motors for a long term. Currently, company is not performing very well but the ratio analysis study depict that the performance of the company is getting better day by day. Further, it has also been found that the return and the dividend of this company are way better and it would offer the higher return to the investors in a long term.

References:

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