Automotive Industry Financial Analysis
Financial Analysis of General Motors and Ford Motor Company
FNCE442
Advanced Finance (FN)
Professor:
Due date: June 01, 2009
Table of Contents
Executive Summary 3 Introduction 4 Porter Five Forces Analysis Model 5 Competitive rivalry within the industry 5 Barriers to Entry 6 Threats of Substitutes and Complements 6 Bargaining Power of Customers 6 Bargaining Power of Suppliers 7 SWOT Analysis 7 GM SWOT Analysis 7 Strengths 7 Weaknesses 8 Opportunities 9 Threats 10 Ford SWOT Analysis 10 Strengths 11 Weaknesses 11 Opportunities 11 Threats 11 Ratio Analysis 12 Recommendations 13 Conclusion 13 Appendix “A” Financial Ratio’s 14 Appendix “B” Performance Ratings 18 Table 1 19 Table 2 20 Works Cited 21
Executive Summary The two largest automakers in the world want to maintain their status as the top two. GM and Ford have been around for over one hundred years making automobiles for everyone to enjoy. During these recessionary times it will be very hard for these two companies to survive.
Financial and non-financial aspects of the companies through a porter model and a SWOT analysis will show that if they do not focus on the external and internal aspects of the economy, it will be very difficult to realize the opportunities that await them in the future.
Financial analysis ratios such as the profitability, Operations, Resources, Debt, Liquidity, and value ratio will be analysed for both GM and Ford. The ratios will be compared to reveal overall there must be a reduction in the debt and expense in order to change these companies into viable companies again.
Overall, as weak as they are, Ford is showing to be stronger than GM. The vast majority of the ratios indicate that both GM and Ford must increase sales and decrease costs to produce profitable companies again. This can be accomplished somewhat by listening to the consumer demand and
FNCE442
Advanced Finance (FN)
Professor:
Due date: June 01, 2009
Table of Contents
Executive Summary 3 Introduction 4 Porter Five Forces Analysis Model 5 Competitive rivalry within the industry 5 Barriers to Entry 6 Threats of Substitutes and Complements 6 Bargaining Power of Customers 6 Bargaining Power of Suppliers 7 SWOT Analysis 7 GM SWOT Analysis 7 Strengths 7 Weaknesses 8 Opportunities 9 Threats 10 Ford SWOT Analysis 10 Strengths 11 Weaknesses 11 Opportunities 11 Threats 11 Ratio Analysis 12 Recommendations 13 Conclusion 13 Appendix “A” Financial Ratio’s 14 Appendix “B” Performance Ratings 18 Table 1 19 Table 2 20 Works Cited 21
Executive Summary The two largest automakers in the world want to maintain their status as the top two. GM and Ford have been around for over one hundred years making automobiles for everyone to enjoy. During these recessionary times it will be very hard for these two companies to survive.
Financial and non-financial aspects of the companies through a porter model and a SWOT analysis will show that if they do not focus on the external and internal aspects of the economy, it will be very difficult to realize the opportunities that await them in the future.
Financial analysis ratios such as the profitability, Operations, Resources, Debt, Liquidity, and value ratio will be analysed for both GM and Ford. The ratios will be compared to reveal overall there must be a reduction in the debt and expense in order to change these companies into viable companies again.
Overall, as weak as they are, Ford is showing to be stronger than GM. The vast majority of the ratios indicate that both GM and Ford must increase sales and decrease costs to produce profitable companies again. This can be accomplished somewhat by listening to the consumer demand and
Cited: Ford Motor Co. Annual Report 2004. 2004. 15 May 2009 <http://www.ford.com/doc/2004_annual_report.pdf>. —. Annual Report 2005. 2005. 15 May 2009 <http://www.ford.com/doc/2005_annual_report.pdf>. —. Annual Report 2006. 2006. 15 May 2009 <http://www.ford.com/doc/2006_annual_report.pdf>. —. Annual Report/2007. 2007. 15 May 2009 <http://www.ford.com/doc/2007_annual_report.pdf>. General Motors Corp. Annual Report 2004. 2004. 15 May 2009 <http://www.gm.com/corporate/investor_information/docs/fin_data/gm03ar/download/gm04arfull.pdf>. —. Annual Report 2005. 2005. 15 May 2009 <http://www.gm.com/corporate/investor_information/docs/fin_data/gm03ar/download/gm05arfull.pdf>. —. Annual Report 2006. 2006. 15 May 2009 <http://www.gm.com/corporate/investor_information/docs/fin_data/gm03ar/download/gm06arfull.pdf>. —. Annual Report 2007. 2007. 15 May 2009 <http://www.gm.com/corporate/investor_information/docs/fin_data/gm07ar/download/gm07arfull.pdf>. QuickMBA,Knowledge to power your business. Strategic Management. 2007. 15 May 2009 <http://www.quickmba.com/strategy/swot/>.