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FordMotorCompany.pptx
Ford Motor Company
Asia Sabree
April 1st, 2020
Wilmington University
FIN 306: Corporate Finance
Ford Motor Company
Founded in 1903.
Global automotive and mobility company.
Net worth of $27.64B.
Firm, Industry, Environment
An impending recession is reducing demand for automobiles, and impacting Ford’s sales and profitability
Currently redesigning domestic and international business structures.
William Clay Ford is the Executive Chairman.
Jim Hackett, President and Chief Executive Officer.
Ford’s top competitors
American auto manufacturer General Motors (net worth $43.88B).
Japanese auto manufacturer Toyota Motors (net worth $236B).
Indian auto manufacturer, Tata Motors (net worth $6.6B).
German auto manufacturer Daimler AG (net worth $44.85B).
South Korean auto manufacturer Hyundai Motors (net worth $19.6B).
Consolidation of Financial position
Assets
Equity
Liabilities
Short term liquidity: FORD V GMC
Ford: 2019 2018 2017
Current Ratio 1.16 1.20 1.23
Quick (Acid-Test) Ratio 0.11 0.12 0.12
General Motors 2019 2018 2017
Current Ratio 0.88 0 .91 0.89
Quick (Acid-Test) Ratio 0.12 0.11 0.13
Activity Ratios: FORD V GMC
Ford: 2019 2018 2017
Inventory Turnover 12.49 12.14 12.78
Average Collection Period 23 28 27
Average Payment Period 56 58 65
Total Asset Turnover 0.56 0.58 0.56
General Motors 2019 2018 2017
Inventory Turnover 10.64 12.29 10.77
Average Collection Period 20 18 22
Average Payment Period 69 67 76
Total Asset Turnover 0.54 0.59 0.63
Financial Leverage: FORD V GMC
Ford: 2019 2018 2017
Debt Ratio 7.79 7.14 7.39
Time Interest Earned 0.37 4.54 8.19
General Motors 2019 2018 2017
Debt Ratio 5.46 5.85 6.07
Time Interest Earned 10.51 14.05 21.63
Profitability/Market Ratios: FORD V GMC
Ford: 2019 2018 2017
Gross Profit Margin 6.20% 8.11% 9.83%
Operating Profit Margin 0.40% 2.16% 3.30%
Net Profit Margin 0.03% 2.48% 5.22%
Earnings per share $0.01 $0.92 $1.93
Return on Total Assets 0.02% 1.43% 2.95%
Return on Common Equity 0.14% 10.23% 21.79%
General Motors 2019 2018 2017
Gross Profit Margin 9.82% 9.31% 13.92%
Operating Profit Margin 4.47% 3.34% 7.51%
Net Profit Margin 5.49% 6.02% -2.90%
Earnings per share $4.57 $5.53 $-2.60
Return on Total Assets 2.95% 3.53% -1.82%
Return on Equity 16.11% 20.62 -11.04%
FORD’s Common-Sized Income Statement
FORd’s Common-Sized Income Statement (continued)
Common-Sized Income Statement Analysis
For full year 2019, Ford’s revenue was down 3 percent, to $155.9 billion.
Net income margin was 0.0 percent in 2019, down from 2.3 percent in 2018.
Automotive revenue was down 3.1 percent from 2018, reflecting decreases in mobility and ford credit segments.
The $3.6 billion year-over-year decline in net income in 2019 is explained by the $6 billion of “special item” charges related to Ford’s global redesign.
Ford’s gross profit for the year is $12.22 billion
Ford’s Capital Structure
Current ratio indicates that, at year-end 2019, current assets covered current liabilities 1.16 times, less from 2018.
Ford’s capital structure is 62.26% equity and 37.74% debt.
Total assets increased by $19.97 billion, due to deferred income taxes, asset depreciation on net operating leases.
Ford’s Capital Structure
Total assets increased by $19.97 billion, due to deferred income taxes, asset depreciation on net operating leases.
Total liabilities increased by a total of 48.3 billion over the years.
Ford’s Strengths
Ford’s competitive advantage is innovative technology and low production cost.
The introduction of technology and making some of the process online cuts down Ford’s excessive cost.
This low-cost strategy gives Ford a competitive advantage as compared to its competitors.
Ford’s Weaknesses
Ford is declining in sales volume, particularly in the United States, Europe, & China.
Lower-than-anticipated market acceptance of Ford’s new & existing products or services.
Failure to achieve expected growth.
Investment Potential
For the past two years Ford’s stock prices have been falling.
Currently Ford’s stock is trading at $6.96 per share.
Ford stock returns of 0.5% underperformed in the market.
Ford intends to continue to pay a quarterly cash dividend on our outstanding Common Stock and Class B Stock.
conclusion
Industry forecasts predict a bearish economic outlook for short-term, mid-term, and long-term investments.
According to Ford, it is too early to estimate implications of the coronavirus outbreak on its business.
Resources
Ford Historic timeline. (2020). Retrieved from https://corporate.ford.com/history.html
Ford Stock Metrics. (2020) retrieved from
https://finance.yahoo.com/quote/F?p=F&.tsrc=fin-srch
Ford Industry Averages. (2020). Retrieved from
FORD MOTOR COMPANY ISSUES A SAFETY COMPLIANCE RECALL AND TWO SAFETY RECALLS. (2020). Retrieved from https://media.ford.com/content/fordmedia/fna/us/en/news.html
Ford Annual 10-K. (2020). Retrieved from https://s22.q4cdn.com/857684434/files/doc_financials/2019/q4/Ford-2019-10-K-Report.pdf
Ford Annual 10-K. (2019). Retrieved from https://s22.q4cdn.com/857684434/files/doc_financials/2019/q4/Ford-2019-10-K-Report.pdf
General Motor Company Annual 10-K (2020). Retrieved from https://investor.gm.com/sec-filings/sec-filing/10-k/0001467858-19-000033
General Motor Company Annual 10-K (2019). Retrieved from https://investor.gm.com/sec-filings/sec-filing/10-k/0001467858-19-000033
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