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Corporate

Earnings- Ford Motor Company





Part 1: Income Statement Analysis




Gross Margin
Operating Margin
Pretax Margin
Net Income
Margin

2010
19.0%
5.2%
5.5%

2011
16.8%
8.3%
6.4%

2012
13.8%
4.7%
5.8%

2013
12.8%
3.7%
4.8%

2014
12.2%
2.4%
3.0%

5.1%

14.8%

4.2%

4.9%

2.2%

Ford's Margins
Gross Margin

Operating Margin

Pretax Margin

Net Income Margin

20.0%
15.0%

10.0%

5.0%

0.0%
2010

2011

2012

2013

2014



Revenue
Operating income
Gross profit
Net income

2010
$128,954
$6,658
$24,503
$6,561

2011
$136,264
$11,374
$22,919
$20,213

2012
$134,252
$6,291
$18,559
$5,665

2013
$146,917
$5,439
$18,823
$7,155

2014
$144,077
$3,440
$17,557
$3,187

Ford's Earnings in Millions


Revenue

Operating income

Gross profit

Net income

$200,000
$150,000
$100,000
$50,000
$2010

2011

2012

2013

2014

Part 1: Income Statement Analysis (continued)


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An increase in gross margin is a sign that the company is retaining more of each dollar in sales,
whereas a decrease in gross margin is a sign that each year the company is retaining less on
each dollar of sales to service its other costs and obligations.
Ford's gross margin has been decreasing every year. This is a sign that each year the company is
retaining less on each dollar of sales to service its other costs and obligations. This is not good.

Operating margin accounts for the revenue left over after paying for costs of production. When
operating margin decreases, it means a lower proportion of their revenue is left over after
paying for costs of production, and vice versa.
Ford's operating margin has also decreased over the past five years (with the exception of
2011). This means that each year, a lower proportion of their revenue is left over after paying
for costs of production. This is also bad.

A pretax margin is the sign of how profitable a company is. A decline means less profitability and
vice versa.
Ford's pretax margin has also declined over the past three years. This means that the company
has essentially become less profitable over the past three years. Not good at all!

Net income margin percentage is the amount of money earned by the company that is
translated into profits. The lower the net income margin percentage, the less amount of money
earned by the company is translated into profits, and vice versa.
Ford's net income margin is also not at a good place currently. The lower the net income margin
percentage, the less amount of money earned by the company is translated into profits. As of
2014, only 2.2% of each dollar earned by ford was translated into profits, compared to 5.1% in
2010, or 14.8% in 2011.

Although Ford has had increased revenues over the past five years, they have generally have
decreased in operating income, gross profit, and net income over the past 5 years. This is definitely a
problem for Ford.

Part 2: Balance Sheet Analysis



Current Ratio
Quick Ratio
Debt-to-Equity
Interest Coverage
ROE
ROA
Inventory Turnover
DSO
DPO

FORD MOTOR CO. BALANCE SHEET


2010
2011
2012
2.672095
1.8216
1.935147
2.55105
1.740806
1.834886
-245.7058
10.86771
10.94921
1.121631
2.566915
8.823282
4.0%
12.4%
3.2%
4.0%
11.3%
3.0%
21.8
23.1
18.2
219.2
210.4
223.9
38.1
0.0
0.0

2013
2.04461
1.940632
6.657431
6.560917
4.1%
3.5%
19.1
216.9
0.0

2014
2.009982
1.908013
7.406652
4.246914
1.7%
1.5%
18.3
235.1
0.0


Current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over
the next 12 months. Anything that is a 2.0 is considered good. It looks as though 2011 and 2012 were the only two
years that the current ratio was not good. Other than 2011 and 2012, Ford has had a good current ratio.

Quick ratio is a financial ratio used to gauge a company's liquidity. Anything over a 1.0 is considered good. It looks
as though Ford has had over a 1.0 every year for the past 5 years, which is good.

Debt-to-equity is a measure of a company's financial leverage. It indicates what proportion of equity and debt the
company is using to finance its assets. The smaller the ratio the better. It looks as though the last two years have
been the smallest debt to equity ratios for Ford.

Interest Coverage is a ratio used to determine how easily a company can pay interest on outstanding debt.
Anything from a 1.5 and lower is not good. It looks as though Ford is doing well since 2011; its rating is always over
1.5.

Return on equity measures a corporation's profitability by revealing how much profit a company generates with
the money shareholders have invested. Anything over 9% is good. It looks as though Ford's best year was 2011,
and besides that it has not had very good ROE numbers.

ROA gives an idea as to how efficient management is at using its assets to generate earnings. The higher the ROA
number the better, so it looks as though 2011 was Ford's best year in regards to ROA. Since then it has been
decreasing.

Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a period.
The lower the number the better. It looks as though Ford's ITR has been pretty consistent, and even decreasing in
the last three years, which is good.

DSO is a measure of the average number of days that a company takes to collect revenue after a sale has been
made. I low DSO number is better because it means that the company are taking a shorter period of time to collect
its money. It looks as though Ford has stayed pretty consistent over the five years for its DSO number, although
this number is extremely high (around 200 days). A DSO under 45 days is considered excellent. Since the
organization is so big, however, that might be the reason for the high number.

Days payable outstanding tells how long it takes a company to pay its invoices from trade creditors, such as
suppliers. It looks as though Ford has had no DPO numbers over the past four years, which could signify that they
are in a good situation because they are not having to pay invoices from trade creditors.

Part 3: Stock Market Performance



According to Yahoo Finance, it looks as though Ford's stock has been declining over the past months and
last year. At the beginning of May for example, their stock price was at $15.65, and today their stock
price is at $15.03. That is over a 3.9% decrease over the past month. In the past year, their stock price
has dropped from $16.52 to $15.03 today. That is almost a 9% decrease of stock price over the past
year.

However, if we look at the stock over a two year period, it looks as though the stock price has dipped up
and down dramatically, but stayed relatively the same now as back in 2013. The stock in 2013 at this
time of year was $15.37 and today it is at $15.03. It is still a decrease, but less of a drastic drop than
when we take a measurement over a year.

Over the past five years, we have actually seen Fords stock increase quite a bit. It has gone from $11.46
to $15.03 today. That is a 31% increase over the past five years. It is roughly the same increase over a
ten year period.

Fords market capitalization is currently at $59.769B ($15.03*10.7m). Fords P/E ratio is $19.2
($15.03/$0.78) over the last month.

In conclusion, it looks as though Fords stock is slowly growing over time, but that in the past few years it
has been weaker than usual.

Tesla is a company that we can compare Ford to. Their current market cap is 31.735B, and their P/E ratio
over the last month is $250.94/$-3.18. The negative EPS number means that Tesla does not have a
current P/E ratio to go off of. According to Yahoo Finance numbers, Tesla is a significantly smaller
company than Ford. Although Teslas stock price is higher, their smaller market cap is proof Fords size
dominates Tesla.

Another car company that we can compare Ford to is GM. Their current market cap is 57.0437B, and
their P/E ratio is $16.2 ($35.55/$2.15). Their market cap is relatively in the same league as Ford, but
their stock price is at a much higher number, and their P/E ratio is also better. Their stock price has also
increased .11% over this past year. From these numbers, stockholders expect GM to be more profitable
at this current time than at Ford. I think it would be safe to say that GM is in a better position in the
market than Ford is currently.