Business Analysis- Ford Motor Company
Business Analysis Part III
Nancy Holly
MGT/521 Management
January 27, 2012
Jim O’Keeffe, Facilitator
Abstract A financial analysis of Ford Motor Company’s (Ford) statements will identify their solvency in today’s automobile market. Elements such as liquidity, leverage, profitability, and activity ratios will demonstrate Ford’s financial health and stability. A further assessment of their technological advantages, global strategies, and benchmarking analysis will indicate the future prognosis of this company.
Business Analysis Part III: Ford Motor Company
Ford Motor Company: Strategic Initiative
Liquidity Ratios Managers frequently use liquidity ratios to measure a company’s financial status. Banks and/or creditors particularly find interest in this analysis because liquidity ratios measure a company's ability to convert assets to cash to pay short-term debts, debt that a company will be able to pay within one year. According to the Federal Deposit Insurance Guidelines (2012), “Liquidity represents the ability to fund assets and meet obligations as they become due. Liquidity is essential in all banks to compensate for expected and unexpected balance sheet fluctuations and provide funds for growth. Liquidity risk is the risk of not being able to obtain funds at a reasonable price within a reasonable time period to meet obligations as they become due. Because liquidity is critical to the ongoing viability of any bank, liquidity management is among the most important activities that a bank conducts.” Therefore, banks monitor the liquidity assets of organizations for funding purposes. The equation to determine a liquidity ratio is the company's current assets (cash, accounts receivables, notes receivables, inventory, etc.) divided by the company’s current liabilities (accounts payable, notes payable, accrued taxes, accrued salaries, etc.). A review of Ford Motor Company’s (Ford’s) September 2011 Balance Sheet revealed
Nancy Holly
MGT/521 Management
January 27, 2012
Jim O’Keeffe, Facilitator
Abstract A financial analysis of Ford Motor Company’s (Ford) statements will identify their solvency in today’s automobile market. Elements such as liquidity, leverage, profitability, and activity ratios will demonstrate Ford’s financial health and stability. A further assessment of their technological advantages, global strategies, and benchmarking analysis will indicate the future prognosis of this company.
Business Analysis Part III: Ford Motor Company
Ford Motor Company: Strategic Initiative
Liquidity Ratios Managers frequently use liquidity ratios to measure a company’s financial status. Banks and/or creditors particularly find interest in this analysis because liquidity ratios measure a company's ability to convert assets to cash to pay short-term debts, debt that a company will be able to pay within one year. According to the Federal Deposit Insurance Guidelines (2012), “Liquidity represents the ability to fund assets and meet obligations as they become due. Liquidity is essential in all banks to compensate for expected and unexpected balance sheet fluctuations and provide funds for growth. Liquidity risk is the risk of not being able to obtain funds at a reasonable price within a reasonable time period to meet obligations as they become due. Because liquidity is critical to the ongoing viability of any bank, liquidity management is among the most important activities that a bank conducts.” Therefore, banks monitor the liquidity assets of organizations for funding purposes. The equation to determine a liquidity ratio is the company's current assets (cash, accounts receivables, notes receivables, inventory, etc.) divided by the company’s current liabilities (accounts payable, notes payable, accrued taxes, accrued salaries, etc.). A review of Ford Motor Company’s (Ford’s) September 2011 Balance Sheet revealed
References: . (2012)., (),. Retrieved from http://www.fdic.gov/regulations/safety/manual/section6-1.html . (2012)., (),. Retrieved from http://www.marketwatch.com/investing/stock/F/financials Ahmed, S. (2008, August 18). Ford Motor Company - Case Study. Retrieved January 18, 2012, from http://ezinearticles.com/?Ford-Motor-Company---Case-Study&id=1420478 . (2012)., (),. Retrieved from http://corporate.ford.com/innovation/innovation-features/innovation-detail/fs-global-vehicle-product-development http://www.marketwatch.com/investing/stock/GM/financials/balance-sheet GM, Ford and Chrysler Rack Up Strong Gains in 2011 (2012). Industry Week , (),. http://industryweek.com/articles/gm_ford_and_chrysler_rack_up_strong_gains_in_2011_26289.aspx