Essay on "Ford Motor Company Is an American"

Essay 5 pages (1451 words) Sources: 4

[EXCERPT] . . . .

Ford Motor Company is an American company specializing in the manufacturing of auto-cars. In 1903, Henry Ford founded the Ford Motor and the company was based in the Michigan. Major company brands are Ford and Lincoln. The company also owns small stakes in Mazda, Japan and Aston Martin in the UK. Ford is the second largest auto-maker in the United States and fifth largest automaker globally. Ford has also established its stake in Europe and become the fifth largest automakers in Europe making the Ford Motor to be listed as the 9th largest company on the 2012 Fortune list. At the end of the 2011 fiscal year, Ford recorded $128 Billion total revenue and the net income of $20 Billion. Between 2009 and 2011, the company recorded a revenue growth. Despite the total revenue growth that the company recorded between 2009 and 2011, the company recorded a loss in the revenue at the end of the 2008 fiscal year. The reason was attributed to the U.S. financial crisis in 2008, which declined the purchasing power of several Americans. Since 2009, the company records a growth in the net income.

Ford Company publishes its financial statements every three-month. The fiscal year comprises of first quarter (Q1), second quarter (Q2), third quarter (Q3) and fourth quarter (Q1). The latest quarter within the FY 2012 is QI, published in April 27, 2012. The first quarter displays the key financial summary for the 1st quarter of the 2012 financial year.

Fundamental objective of this paper is to present the most recent quarter of financial reporting for Ford Motor Company.

Projection of Next Four (4) Quarters for Ford Company

Ford Company records $2.3 Billion for Pre-Tax Operating profits within the first quarter of 2012. Comparing the first quarter of 2012 to the first quarter of 2011, the company recorded a decline of $544 in the operating profit in the first quarter of 2012 because the company recorded Pre-tax operating profit of $2.8 billion in the first quarter of 2011. However, the company recorded a pre-tax profit of $2.3 billion within the 2012 first quarter. Despite the decline in the operating profit between first quarter of 2011 and the first quarter 2012, the company remains focused and is committed to implement aggressive structuring. (Ford, 2012). By the end of the 2012 fiscal year, Ford expects its net profits of the 2012 fiscal year to be higher than the net profit of the 2011 fiscal year. Based on the commitment of the Ford to achieve growth rate within the 2012 fiscal year, the report projects the profits for the next four quarters in Table 1.

Table 1: Projection of Ford Profit for the next Four (4) quarters ($Billion)

Profits

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q 1, 2013 (FY 2013)

Pre-Tax Operating Profits

$2.3

$3.4

$5.8

$8.9

$2.9

After-Tax Operating profit

$1.5

$2.3

$3.1

$6.2

$1.8

After Tax, Net Income

$1.39

$6.5

$14.5

$18.0

$2.5

As being revealed in Table 1, the report forecasts that Ford will record $8.9 Billion for the Pre-operating profits in the next four quarters, and $6.2 billion for the next four quarter for the after-tax operating profits. To arrive at these results, the report assumes that there will be a decline in the U.S. recession as well as modest improvement in the economy. The report projects profits for the next four quarters based on the data provided by the Bureau of Financial Analysis (2012). Overview of 2012 first quarter of the U.S. economy reveals that the United States records the increase in the annual growth rate of 1.9%. Typically, the Bureau of Economic Analysis projects that there would be an increase of 3% in the real GDP (Gross Domestic Product) within the fourth quarter of 2012. Since GDP is used to measure the economic activity, the report projects that the U.S. economy will record a decline in the recession within the next fourth quarter.

Based on the financial data provided for the Ford Company, the report provides the key financial ratios to analyze whether Ford would be a wise investment.

Discussion about the Key Financial Ratios

The report uses the profitability ratio, efficiency ratio, ROA (Return on Asset) and operating margin to determine whether Ford Company is a wise investment opportunity for investors. The report uses the past four financial years to analyze the Ford… READ MORE

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