Ford Motor Company is one of the leading automakers that is based in the USA. The company was founded by Henry Ford. Henry Ford made his first automobile in 1896 using four bicycle wheels and a four-horsepower. The gearbox of the car has only two gears; both forward gears and no reverse gear. He horned his skills for making vehicles over the years. In 1901, he developed a 26-horsepower racecar that become victorious. After that, he decided to develop his own automobile company in 1903. Ford Motors was incorporated in 1903 with only 12 shareholders who had 1,000 shares each. By July of the same year, the company had already developed its first model under the Ford brand. The first international plant to assemble cars was built in 1904 in Walkersville (the present day Windsor). The popularity of the company cars increased over the years and so did its financial success. In 1956, the company became a publicly listed company when it made its first Initial Public Offering (IPO). To date, the company is still listed in the New York Stock Exchange (NYSE). Its ticker symbol is F.
Ford Company is audited by PriceWaterhouseCoopers LLP. They were the auditors for Ford Motors in the previous financial year and the company still intends to retain them as their external auditors. The financial performance of Ford Company improved between the latest two financial years (2014 and 2015). The financial year of Ford runs from January to December. Therefore, the financial year 2016 is not complete. The cash and cash equivalents increased from 10,757 million US dollars in 2014 to 14,272 million US dollars in 2015; an increase of 3,515 million US dollars. This is a 24.63 percent increase in cash and cash equivalents.
The current assets increased from 144,299 million US dollars in 2014 to 158,291 million US dollars in 2015; an increase of 13,992 million US dollars. This represents an increase of 9.7 percent. The largest current assets in 2014 were finance receivables at 81,111 million US dollars and net investment in operating lease at 23,217 million US dollars. Similarly, the largest current assets in 2014 were finance receivables at 90,691 million US dollars and net investment in operating lease at 27,093 US million dollars. The largest current assets remained the same in the two financial years. However, the dollar value for both assets increased between the two years.
The total assets for Ford Motors increased from 224,925 million dollars in 2014 to 208,615 million dollars in 2015; an increase of 16,310 million. This represents an increase of 7.25 percent. The total assets increased by a smaller proportion compared to the current assets. This means that the fixed assets increased by a much smaller proportion compared to the current assets of Ford Motors.
The trade payables for Ford Company increased from 20,035 million US dollars in 2014 to 20,272 million US dollars in 2015; an increase of 237 million US dollars. This represents an increase of 1.18.
The total current liabilities declined from 77,891 million US dollars to 75,657 million US dollars; a decline of 2,234 million US dollars. This represents a decline of 2.87 percent. The current assets increased by 9.7 percent while current liabilities decreased by 2.87 percent. This means that the liquidity position of the company has improved between the two years thus reducing the liquidity risks. The company has better liquidity management that it had in the previous years.
However, the total liabilities increased from 183,808 million US dollars to 196,174 million US dollars; an increase of 12,366 million US dollars. This represents an increase of 6.73 percent. The total liabilities increased by a smaller proportion compared to the total assets. Therefore, the gearing level of the company has declined. The company is employing better debt management strategies than before. Consequently, the bankruptcy risks are lower than before.
The total Equity also increased from 208,615 million US dollars to 224,925 million US dollars; an increase of 16,310 million US dollars. The increase is largely attributable to the increase in retained earnings. The retained earnings of the company increased from 9,422 million US dollars to 14,414 million US dollars in 2015. The equity level increased by 7.82 percent which is higher than the increase in debt. It is also an indication of a reduction in gearing level as the company is financing more assets with equity than debt compared to the previous years. As already discussed, a lower gearing ratio will reduce bankruptcy risks for Ford Motors. However, there is a need to compare the financing costs as well as identify if there are any profitable opportunities that the company can take advantage of which may necessitate taking loans. The total revenues of the company increased from 144,077 million US dollars in 2014 to 149,558 million US dollars in 2015; an increase of 5,481 million US dollars. This represents an increase of 3.80 percent.
References
Ford Motors. (2016). Ford Motors Annual Report 2015. New York: Ford Motors.
Ford Motors. (2016). Ford Motors Corporate History. Retrieved from https://corporate.ford.com: https://corporate.ford.com/company/history.html
