Writing Assignment: Financial Analysis
Ron Lentz, CPA, PhD
September 8, 2012
Henry Ford incorporated Ford Motor Company in 1903 at Dearborn, Michigan, USA and is known to have adapted practices that were not popular in those days. The Car Maker is known for their famous “Model T” and the unique innovation of interchangeable parts in moving assembly lines that makes it possible to assemble cars at low cost and high reliability. Ford Motor established an impressive financial track record almost throughout the 20th Century (barring the record loss of $7 billion in 1992) till the Millennium started (Alan Mullally, 2012). Ford motor Company is the second largest automobile company in the world
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Ford Motor Company is the biggest car manufacturer in the world. Net sales break down by activity as follows: # car sales (94.1%): 5.7 million vehicles sold in 2011 (Ford, Mercury and Lincoln brands); - financing services (5.9%): essentially vehicle purchase financing. At the end of 2011, the group had 69 production sites worldwide. Net sales break down geographically as follows: North America (60.3%), Europe (25.9%) and other (13.8%). My analysis of Ford’s of Financial Statements and Ratios reflect that Ford Motor Co.’s gross profit margin for the second quarter of its fiscal year 2012 has decreased when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. Gross profit margin is the difference between sales and the cost of goods sold divided by revenue. It expresses the relationship between gross profit (sales - cost of goods sold) and sales revenue. More specifically, gross profit margin represents the percentage of each dollar of a company's revenue that is available to cover fixed costs after paying for the goods or services that were sold (Garrison, 2012).
Ford finished the second quarter with automotive gross cash of $23.7 billion, an increase of $700 million during the quarter. Automotive debt of $14.2 billion at the end of the second quarter was up from $13.7 billion at the end of the first quarter, primarily reflecting additional