Ford Motor Company Essay -- Ford Transportation Vehicles Automobiles E

Ford Motor CompanyFord Motor Company, a larger-than-life United States automotive corporation, strives forsuccess each and every year. The success of Ford Motor Company, as well asother corporations, can be mensurable by analyzing the two most important goals ofmanagement, maintaining adequate liquidity and achieving passing(prenominal) acquireability. fluidness can be defined as having enough money on hand to paybills when they are due and to take care of unexpected needs for cash, whileprofitability refers to the ability of business to earn a satisfactory income.To enable investors and creditors to analyze these goals, Ford Motor Companydistributes annual financial statements. With these financial statements,liquidity of Ford Motor Company is measured by analyzing factors such as workingcapitol, new ratio, quick ratio, receivable turnover, average days salesuncollected, inventory turnover and average days inventory on hand whereasprofitability analyzes the profit margin, asset turnover, return on assets, debtto equity, and return on equity factors.LIQUIDITY Working CapitalFord Motor Companys working capital fluctuated significantly in the eld1991-1995. This phenomenon is directly attributable to the fact that FinancialServices current assets and current liabilities are not included in the totalcompany current asset and current liability accounts. For example, thefluctuation from 1994 ($1.4 billion) to 1995 (-$1.5 billion) of $2.5 billionwould suggest that Ford would be unable to pay liabilities during the currentperiod. However, examination of the Financial Services grimace of the businessreveals that surpluses of $13.6 billion existed in both 1994 and 1995,convincingly mitigating the figures indicating negative working capital.Current Ratio & Quick RatioThe current ratio in the years 1991-1995 has remained stable, fluctuatingbetween 0.9 and 1.1. The quick ratio has also remained stable, fluctuatingbetween 0.5 and 0.6. The larger fluctuation in the cur rent ratio versus thequick ratio is caused by inventories being included in the asset side of theequation. Although inventories were significantly higher in both 1994 and 1995,current liabilities were also higher. In addition, marketable securitiesdecreased substantially in 1994 and 1995. These factors resulted in thestability of both the curren... ...companyAPPENDIXDESCRIPTION PAGEConsolidated Income Statements...................................Appendix 1-2Spreadsheets..................................................Appendix 1Graphical Representation......................................Appendix 2Consolidated Balance Sheets......................................Appendix 3-5Spreadsheets.................................................Appendix 3-4Graphical Representation.....................................Appendix 5Consolidated Retained Earnings Statement.........................Appendix 6-7Spreadsheets.................................................Appendix 6Graphical Representa tion.....................................Appendix 7Consolidated Statement of Cash Flows.............................Appendix 8-9Spreadsheets.................................................Appendix 8Graphical Representation.....................................Appendix 9Evaluation of Liquidity..........................................Appendix 10-11Evaluation of Profitability......................................Appendix 12-13Liquidity & Profitability Formulas...............................Appendix 14