Financial Statement Overview

1.0 Background – About Ford Motor Company

The Ford Motor Company was established by Henry Ford and incorporated in 1903 in the city of Detroit. Ford revoluntised the manufacturing process in the United States with the introduction of the Assembly Line to the United States and spearheaded many of the features we now take for granted in automobiles. (Ford.com, 2015)

From its modest beginnings with just a few cars manufactured daily, the Company is now the second largest automaker in the United States and the 7th largest in the world. (Encyclopedia Britannica, 2015)

The company headquartered in Dearborn, Michigan has two sectors – its Automobiles and its financial sector. Under the former operations include the manufacture and sale of small cars, trucks and luxury brand vehicles. Today Ford manufacturers a range of vehicles including, the following models of cars – the Fiesta, Focus, Fusion, Mustang, C-Max and the Taurus. Ford also has a line of SUV;s, Trucks, Hybrid and Commercial Vehicles.

Ford Credit is a subsidiary of Ford and provides vehicle and dealer financing to millions of customer and thousands of automotive dealers.

The crisis of 2008-2010 was felt throughout the world but intensely in the United States. At the centre of the crisis was increased fuel prices linked to the global energy crisis. This impacted upon the consumer demand for automobiles. While other car manufacturers in the US sought a government bail-out, Ford managed to avoid taking this step.

Strengths Weaknesses

1. Strong position in US market

2. Sound financial performance

3. ‘One Ford’ approach

4. Significant growth in China

5. Econetic Initiative 1. Poor environmental record

2. High cost structure

3. Unprofitable Europe operations

4.

Opportunities Threats

1. Positive attitude towards “green” vehicles

2. Increasing fuel prices

3. New emission standards

4. Growth through acquisitions 1. Decreasing fuel prices

2. Rising raw material prices

3. Intense competition

4. Fluctuating exchange rates

Figure 1: SWOT Analysis for Ford Motor Company adapted from (Jurevicius, 2015)

The automobile industry continues to face a number of challenges, including ongoing economic uncertainty, rising fuel and commodity costs, and the need to reduce CO2 emissions. In addition, growing worldwide sales volumes, particularly in developing markets, have caused concerns over traffic congestion in major cities. Some of these are captured in the Threats section of the foregoing SWOT Analysis for Ford. Some of these factors impact on costs and profit figures. The “Weaknesses’ section of course highlight factors internal to the company with which the organisation must also deal.

Ford’s Market Position

Figure 2 : Ford’s Market Share in the US 2011 Year End (Goodcarbadcar,net 2015)

The graph above shows the relative position of Ford in terms of Market Share as at the end of 2011. As we would note Ford’s major competitors are General Motors and Toyota. When analyzing Ford’s performance it may be worthwhile benchmarking to its closest competitors.

Ford is a global brand with operations in Asia Pacific, Europe, North America, Central and South America, Africa and the Middle East (Ford.com, 2015)

2.0 Overview of Financial Statements

Generally Accepted Accounting Principles require that organisations prepare three financial reports referred to as Financial Statements. These are: a Balance Sheet, an Income Statement and a Statement of Cash Flow. The main purpose of Financial is to “provide relevant information to parties external to the Business” (Anthony, Hawkins and Merchant, 1995, Page 17) and are most easily found in a Company’s Annual Report. It is often imperative that one refers as well to the body of the Annual Report and to the “notes