2009
2008
Profit Margin
-0.06
0.03
ROA
-0.05
0.02
ROI
-0.25
0.09
2009
2008
EPS
-2.38
1.08
PE Ratio
-8.95
18.92
Dividend Payout
-0.10
0.15
Ford Motor does not have good short-term liquidity -- however, this is expected, since the company has mostly long-term assets and the associated current liabilities within a heavily capitalized firm like Ford Motor will not be covered by current assets completely.
Ford is Uncompetitive and Weak When Compared to Competitors
Ford Motor is within a very competitive industry that requires the company to be innovative and continually develop products that can meet market demand and changing consumer tastes. The financial analysis shows that Ford Motor is competitive and has a strong financial outlook when compared to the industry.
Key Financial Ratios
As of 2009
FORD
GM
Market Cap:
13.09B
8.11B
Employ-ees:
246,000
266,000
Qtrly Rev Growth (yoy):
1.20%
-1.70%
Revenue (ttm):
Gross Margin (ttm):
12.07%
7.67%
EBITDA (ttm):
14.66B
5.58B
Oper Margins (ttm):
0.34%
-2.11%
Net Income (ttm):
-2.38B
-46.51B
EPS (ttm):
-1.141
-74.284
P/E (ttm):
N/a
N/a
PEG (5 yr expected):
N/a
N/a
P/S (ttm):
0.07
0.04
From the comparative table above from an industry comparison, Ford Motor is extremely competitive and stable, however when compared to its main competitor GM, then Ford Motor is outranked. More specifically, GM has almost three times Ford Motor revenue growth has an extremely higher gross margin and has more efficient and profit operations as measured by financial ratios.
However when compared with GM, then Ford Motor is considered a market leader among this group.
Dividends were not paid to the stockholders in 2009, since the company made a loss and decided to not pay-out dividends, also the financial statements were audited by Ernst & Young LLP, who act as independent auditors for Ford Motor. Also, the notes on the income statement shows that Ford Motor used the first-in-first-out (FIFO) inventory method during the accounting period examined.
Recommendations for Ford
The automobile -- manufacturing industry is competitive, however there are some market leaders that continue to have high market shares because of their innovativeness, as such it is essential that Ford Motor tries to maintain its competitive edge by continually innovating products that are inline with changing consumer taste.
Ford Motor will continue to increase its market share and diversify its products as it tries to compete with dominant firms. The strategic development process and strong corporate governance makes Ford Motor one of the more financially sound and diversified firms in the market.
Variables
The overall analysis will focus on a time trend or regression framework that will utilize a profit or revenue equation to determine how revenue is affected by marketing focused on growth sectors. Similarly a variable to measure marketing within the global environment will also be used to determine the relative differences in revenue changes from both perspectives.
The analysis will utilize time series data based on the revenue and independent variables that affect the revenue of the company. The choice of the independent variables will be based on the overall literature that explains the major variables that impact revenue.
With quantitative analysis, the Ford Company will discern the dependent (total revenue) and independent variables (consumer, marketing, and competitive variables), establish a hypothesis -- "as marketing increases, total revenue for Ford increases," show the primary and secondary research sources, establish a confidence interval, and a sample size. Although Ford Motor is a domestic leading brand with a strong portfolio and revenues in excess of $24 billion, the company's cash flow from operating activities decreased 7% in 2009 compared to 2008, and North America performance was far from robust. Annual company growth is approximately $1 billion while current quarterly income statements reflects nearly $7 billion, putting it on pace to recognize a significant annual income. However, competition from the global automobile companies grew 6.3% in 2008 and expects a 30% increase in revenue by 2010; expectations that concern Ford Motor and could affect financials.
It is also useful to test the hypothesis using regression analysis to get an idea of how different socio-economic variables, affect the prevalence revenue. The form of the regression will obtain coefficients from the least square method, so that the necessary measures can be further tested for unbiasedness and consistency. The form of the model is presented in equation 1 below.
Y =a + b1x1+ b2x2+ b3x3+ b4x4+ b5x5+...
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