Financial Accounting - Financial Statement Analysis Project
Instructions: For this project, you will use the provided financial statements for Ford Motor Company and GM Motors. Take 2019 information given and perform the required financial ratios listed below. Compare the ratios of 2019 to each of the two auto companies. In comparing the ratios you will need to discuss which company has a better ratio, justify your rationale, and explain your findings in detail in your analysis. Write at least one paragraph discussing your results for each ratio.
Part 1:
1) What is the ratio used for, what is its’ purpose?
2) Write out formula
3) Fill out formula using the two years financial statement information for both companies
4) Your interpretation of ratio in at least one paragraph
Part 2: For each of the four categories of ratios, identify what the four categories are, and in your own words, explain the following
1) Who are the main stakeholders?
2) What are they assessing?
3) Why are they assessing it?
This project may need more than 5 pages
Financial Accounting Financial Statement Analysis Project Instructions For this project, you will use the provided financial statements for Ford Motor Company and GM Motors. Take 2019 information given and perform the required financial ratios listed below. Compare the ratios of 2019 to each of the two auto companies. In comparing the ratios you will need to discuss which company has a better ratio, justify your rationale, and explain your findings in detail in your analysis. Write at least one paragraph discussing your results for each ratio. Part 1: 1) What is the ratio used for, what is its’ purpose? 2) Write out formula 3) Fill out formula using the two years financial statement information for both companies 4) Your interpretation of ratio in at least one paragraph Part 2: For each of the four categories of ratios, identify what the four categories are, and in your own words, explain the following 1) Who are the main stakeholders? 2) What are they assessing? 3) Why are they assessing it? Part 1 Ford-2019 GM-2019 Profitability · Earnings Per Share 1) 2) 3) 4) · Return on Total Assets 1) 2) 3) 4) · Return on Equity 1) 2) 3) 4) · Profit Margin Ratio 1) 2) 3) 4) · Gross Margin Ratio 1) 2) 3) 4) Solvency/Leverage · Debt Ratio 1) 2) 3) 4) · Equity Ratio 1) 2) 3) 4) · Debt to Equity Ratio 1) 2) 3) 4) · Times Interest Earned 1) 2) 3) 4) Liquidity and Efficiency · Current Ratio 1) 2) 3) 4) · Acid-Test Ratio 1) 2) 3) 4) · Accounts Receivable Turnover 1) 2) 3) 4) · Inventory Turnover 1) 2) 3) 4) · Days’ Sales Uncollected 1) 2) 3) 4) · Days’ Sales in Inventory 1) 2) 3) 4) · Total Asset Turnover 1) 2) 3) 4) Market Prospects · Price-earnings Ratio 1) 2) 3) 4) · Dividend Yield 1) 2) 3) 4) Part 2 For each of the four categories of ratios, identify what the four categories are, and in your own words, explain the following: Category 1: Profitability 1) Who are the main stakeholders? 2) What are they assessing? 3) Why are they assessing it? Category 2: Solvency/Leverage 1) Who are the main stakeholders? 2) What are they assessing? 3) Why are they assessing it? Category 3: Liquidity and Efficiency 1) Who are the main stakeholders? 2) What are they assessing? 3) Why are they assessing it? Category 4: Market Prospects 1) Who are the main stakeholders? 2) What are they assessing? 3) Why are they assessing it? Book1 December 31, 2019 December 31, 2018 Revenues Automotive 143,599$ 148,294$ Ford Credit 12,260 12,018 Mobility 41 26 Total revenues (Note 4) 155,900 160,338 Costs and expenses Cost of sales - 134,693 136,269 Selling, administrative, and other expenses 11,161 11,403 Ford Credit interest, operating, and other expenses 9,472 9,463 Total costs and expenses 155,326 157,135 Operating income 574 3,203 Interest expense on Automotive debt 963 1,171 Interest expense on Other debt 57 57 Other income/(loss), net (Note 5) (226) 2,247 Equity in net income of affiliated companies 32 123 lncome/(Loss) before income taxes (640) 4,345 Provision for/(Benefit from) income taxes (Note 7) (724) 650 Net income 84 3,695 Less: Income attributable to noncontrolling interests 37 18 Net income attributable: to Ford Motor Company 47 3,677 Basic income 0.01$ 0.93$ Diluted income 0.01 0.92 Weighted-average shares used in computation of earnings per share Basic shares 3,972 3,974 Diluted shares 4,004 3,998 Net income December 31, 2019 December 31, 2018 Other comprehensive income/(loss), net of tax (Note 25) 84$ 3,695$ Foreign currency translation 174 (523) Marketable securities 130 (11) Derivative instruments (689) 183 Pension and other postretirement benefits 23 (56) Total other comprehensive income/(loss), net of tax _ (362) (407) Comprehensive income/(loss) (278) 3,288 Less: Comprehensive income/{loss) attributable to noncontrolling interests. 37 18 Comprehensive income/(loss) attributable to Ford Motor Company (315) 3,270 EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK {Note 8) FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT (in millions, except per share amounts) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ASSETS December 31, 2019 December 31, 2018 Current Assets Cash and cash equivalents (l\lote 9) 17,504$ 16,718$ Marketable securities (Note 9) . 17,147 17,233 Ford Credit finance receivables, net (Note 10) 53,651 54,353 Trade and other receivables, less allowances of $94 and $63 9,237 11,195 Inventories (Note 12) _ 10,786 11,220 Assets held for sale (Note 10 and Note 24) 2,383 - Other assetsꞏ - - 3,339 3,930 Total current assets 114,047 114,649 Ford Credit finance receivables, net (Note 10) 53,703 55,544 Net investment in operating leases (Note 13) 29,230 29,119 Net property (Note 14) 36,469 36,178 Equity in net assets of affiliated companies (Note 15) 2,519 2,709 Deferred income taxes (Note 7) 11,863 10,412 Other assets 10,706 7,929 Total assets 258,537 256,540 LIABILITIES Payables 20,673$ 21,520$ Other liabilities and deferred revenue (Note 17) 22,987 20,556 Automotive oebt payable within one year (Note 20) 1,445 2,314 Ford Credit debt payable within one year (Note 20) 52,371 51,179 Other debt payable Within one year (Note 20j 130 - Liabilities held for sale (Note 24) 526 - Total current liabilities 98,132 95,569 Other liabilities and deferred revenue (N.9te 17) 25,324 23,588 Automotive long-term debt (Note 20) 13,233 11,233 For.ct Credit'rong-te.rm ciebt.(Note 20) .• 87,658 88,887 Other long-term debt (Note 20) 470 600 Deferred income taxes (Note 7) 490 597 Total liabilities 225,307 220,474 Redeemable noncontrolling interest (Note 23) - 100 EQUITY Common Stock, par