Ford Motor Company
Ford Motor Company
In 2008, three major U.S. automakers asked the government for a bailout. Ford, along with GMC, was two of those companies. Ford was able to mortgage enough assets and avoid for a bailout to avoid bankruptcy. Since that time, Ford has made strides toward increasing their annual income, providing more fuel efficient cars, and becoming known in the global world market.
After reviewing the 2010 income statement, Ford reported a full net income of $6.6 billion. It competitors, Honda reported a full net income of $6.88 billion and GMC a full net income of $6.17 billion. Even though GMC shares are higher, Ford showed higher earnings than GM. According ...view middle of the document...
Ford shows remarkably less debt when it comes to inventories of their operating activities. Management can use this inventory report as a positive step toward furthering their reduction in inventory.
To summarize these automakers financial health, it is important to include the following. First, the debt to equity ratio “measures the degree to which the company is financed by borrowed funds that it must repay” (p. 474). The debt to equity ratio shows all three companies have rather high debt. Honda has 39%, Ford is second with 43% and GMC has the highest with 65% (Appendix B). Even though these are quite high, it can be influenced by the struggling economy.
Second, return on sales tells us “whether the firm is doing as well as its competition in generating income sales (Nickels, McHugh, & McHugh, 2010, p. 475). The three companies are close in comparison with Honda at 5.97%, Ford at 5.08% and GMC at 4.55%. Apparently, individuals purchasing cars are attracted to the marketing strategies being implemented by these three automakers.
Management can use the figures of the cash flow sheets detailed operating, investing and financing activities to improve the future of the company. It should be noted that Ford is improving by reducing its debt and increasing its earnings per share. Ford would benefit from making improvements on the pre-tax operating profit and cash flow.
Ford Motor Company is developing new and different innovations and technologies. Ford listens to what consumers want and try to fill their needs. Ford’s different technologies include upgrading its “SYNC system with voice activated traffic, directions, and information application that helps customers save time, fuel, and money” (Media Ford, 2011). Also, the company has innovated the Active Park Assist which takes the stress and guesswork out of parallel parking. Ford has put in place several new safety technologies that include the introduction of new, faster-deploying pressure based side airbag and the Mykey system that encourages safe teen driving by allowing parents to program the car to limit top speeds of 80 m.p.h. and the audio system to be muted until seat belts are fastened and other features (Media Ford, 2011). Ford has also developed all-electric vehicles and plug-in hybrid vehicles.
According to Honda, technological advantages are geared towards safety and the importance of fuel economy. The company offers an Advanced Safety Vehicle which strives to make vehicles safer. “These Advanced Safety Vehicles are designed to exchange speed and positional information and other data between vehicles or between a vehicle and an electric cart (vehicle-to-vehicle communications), as well as between the vehicle and road infrastructure (vehicle-to-infrastructure communications), in order to provide the drivers with information which may help to prevent an accident” (World Honda, 2009). Also, Honda has come up with variable cylinder management that combines ample...