Ratio Analysis And Statement Of Cash Flows For Ford And Gm

936 words - 4 pages

INTRODUCTIONGeneral Motors and the Ford Motor Company are the number one and number two, automotive manufacturers in the United States, respectively. Both companies strive for success each and every year. The success of these two automotive giants, as well as other corporations, can be measured by analyzing a few important goals of management, the company's solvency, liquidity, and profitability. To enable investors and creditors to analyze these goals, each company distributes annual financial statements. With these financial statements, each company can be measured by analyzing factors such as return on sales, current ratio, earnings per share (EPS) debt ratio, and their price-earning ratio.LiquidityLiquidity can be defined as having enough money on hand to pay bills when they are due and to take care of unexpected needs for cash, while profitability refers to the ability of business to earn a satisfactory income.Moody's Investor Service a provider of independent credit ratings and financial research information, and is a standard in the financial world reported that Ford's liquidity remains very strong, with $23 billion in cash, securities, and short-term voluntary employee beneficiary association balances. That report is of March 31, 2005.GM's liquidity is positioned at $32 billion in balance sheet debt, $3 billion in present value of leases, and about $9 billion in un-funded pension liabilities (mostly international). Moody's Investor Services estimated that GM's balance sheet debt should mature within 19 years with only about $3 billion maturing over the next five years.ProfitabilityThe profit margin, which is net income, divided by net sales, is a measure of how many dollars of net income is produced by each dollar of sales. The Ford Motor Company is claiming the higher prices for gasoline, raw materials and health care, among other things, when describing why its 2005 earnings will fall as much as 35 percent from the previous year.The automaker also said it no longer expects to post annual pre-tax profits of $7 billion as early as 2006, blaming "vastly different market and business conditions."The warning comes as a setback for Ford Chairman and CEO Bill Ford Jr., who in 2001 started a major restructuring of the company. Ford has taken very aggressive steps to cut costs, including plant closings, job reductions, and a cut in its annual dividend. Over the past three years, it has reduced expenses by $4 billion. Ford is also planning a new round of early-retirement offers to cut an estimated 1,000 additional U.S. white-collar posts in the upcoming months.Ford's profit fell to $1.21 billion, or 60 cents a share, from $1.95 billion, or 94 cents a share, a year ago. Ford said sales rose to $45.1 billion from $44.7 billion, led by a 1.3% increase in worldwide automotive revenue.Ford Motor, broad sided investors earlier this month when it warned that it would miss 2005 estimates and come up shy of its highly publicized $7 billion target for...

Find Another Essay On Ratio Analysis and Statement of Cash Flows for Ford and GM

Ratio Analysis and Statement of Cash Flow: The Proctor and Gamble Company

1467 words - 6 pages . Looking at profitability, it seems to have remained almost stationary. This may be associated with the increased investment on capital, as seen in the increased dept ratio, but the company has yet to receive a stable return on that equipment. With that being said, P&G Corporation appears to be financially stable receiving a return on its invested assets for the 2005 financial year. Through the use of analysis and interpretation ratios above, P&amp

Ford and GM case study

2220 words - 9 pages Q: 1 Why are Ford and GM entering the Russian car market now? Why did they not invest earlier, and why do they do not postpone investment until the market is bigger?For any company going out for the foreign market is because of any one out of globalization, reducing tariff all over the world, to increase the market share, saturation of the local market, for getting the economies of scale of production, to use their excess capacity and use the

The Technology of Cash Flows

1830 words - 8 pages statement and are typically included in the calculation of net income (Gibson, 2011). With regard to Google, operating activities constituted the largest supply of its cash in 2006 through 2008 (as cited in Gibson, 2011). To further analyze the cash flows for Google, a horizontal common-size analysis for net income and operating net cash was completed. As shown in Exhibit 1, net income increased 36.6% from 2006 to 2007 and 37.3% from 2006 to 2008

Analysis of Tata Motors and GM

986 words - 4 pages . Furthermore, the takeover of Jaguar and Land Rover from Ford has allowed Tata to spread it horizons and target other parts of the society. Furthermore, the in mission statement the company talking about global recognition and to implement this Tata employed the technique of first establishing itself well within India and spreading its roots to foreign countries by constructing dealerships in 26 countries across 4 continents. G.M mission

Ratio Analysis & Statements of Cash Flow Final Report

3167 words - 13 pages ' invested money.Cash GeneratedThe three activities for businesses are classified into three groups and can be located on the statement of cash flows for Target and Wal-Mart. Operating activities are "transactions or events that involve selling products or services, buying for resale, and incurring and paying for necessary expenses associated with the primary activities of a company" (Albrecht et al, 2005, pg. 295). Investing activities are

Ratio analysis and types of ratios

1153 words - 5 pages This has most of the average / industry trends but some companies will be different like supermarkets (high stock / Not much debt and lots of cash sales)so some ratios might be void. Thanks :)! Good LuckRatio Analysis : Content* (1) analyse financial data; evaluate the results and formulate conclusions* (2) prepare a budget and explain how it would be negotiated and monitored.* (3) produce a financial proposal and present a sound business case

Ford Motor Company, Microsoft and Exxon - working capital, current ratio, and quick (acid-test) ratio

1316 words - 5 pages for ExxonMobile.How well a company is doing in its operations can be determined by looking at the three year trend in Net Income on the Income Statement and at Cash Flow from Operating Activities on the Statement of Cash Flows. Net income is the amount by which total revenue exceeds total expenses for the reporting period. The resulting profit is added to the owner's capital account. However, if total expenses are greater than total revenue, a

Financial Statement and Ratio Analysis: Key Tools to Successful Financial Management

2633 words - 11 pages financial health. Although financial statement and ratio analysis have significant limitations, these tools are designed to provide essential guidelines and strategies for making well-informed managerial and business decisions.IntroductionA company's finances and operations are integrally connected. The activities, method of operation, and competitive strategy all serve as the foundation of a firm's financial structure. Conversely, almost all financial

Legal and Ethical Analysis of Ford Pinto

3714 words - 15 pages FactsOn Tuesday August 9, 1977, Herbert L Misch, vice president of environmental and safety engineering at Ford Motor Company (Ford), read an unfavorable article entitled "Pinto Madness" published by Mother Jones magazine (1). This self-styled radical magazine had cited ford "secret documents' which, according to the author, proved the company had known for eight years that the Pinto was a "firetrap" (2).The article claimed that preproduction

Equity, Cash Flow, and Notes Analysis Paper of Samsung Electronics

1444 words - 6 pages IntroductionThe Chief Executive Officer for Samsung Electronics, Jong-Yong Yun, contacted our firm to request our service to prepare a financial overview for the record management team regarding the following segments: Statement of Changes in Owner's Equity, Statement of Cash Flows, Notes, and other Financial Information. The theme and goal for this company is to endeavor to become the best; through the spirit of excellence; however, the only

An analysis of Procter & Gamble equity, cash flow, and notes

1982 words - 8 pages from we will examine the statement of owners' equity and the statement of cash flow.The statement of shareholder's equity is comprised of preferred stock, common stock, treasury purchases, paid-in capital, dividends, accumulated comprehensive income and retained earnings. On the other hand the statement of cash flows is comprised of operating activities, including net earnings, depreciation and amortization, change inaccounts receivable, change in

Similar Essays

Ratio Analysis And Statement Of Cash Flows Paper

1430 words - 6 pages Dell verses GatewayThe two publicly traded companies chosen were Dell and Gateway. Both of these companies are well known for their technology in the personal computer industry. Based on the ratio analysis and statements of cash flows Dell is doing better in the market than Gateway.Record global product shipments, revenue, operating and net income, earnings per share and cash from operations made Dell's fiscal year 2005 the best reporting period

Fin 324 Ratio Analysis And Statement Of Cash Flows

1806 words - 7 pages and profitability are shown in the income statement. Assets are also shown in this report and can forecast risk for the company. A balance sheet is another tool that can be used in the gaming industry. A balance sheet is a financial statement that shows the value of the firm's assts and liabilities at a particular time. (Brealey, 2003) This ratio will help the company forecast its assets and liabilities for the upcoming years.Leverage ratios are

Ratio Analysis And Statement Of Cash Flow: Wendy's Vs. Mc Donald's

1502 words - 6 pages Cash flow is the lifeblood of all businesses, regardless of size; if a company has no cash flow it would have to cease doing business. For the McDonald's Corporation, cash flow from operating during the time period ending December 2004 was $3,903,600,000. The balance sheet of McDonald's also reveals that the cash flow generated by investing was $1,383,100,000 through December 31, 2004, according to annual data, and cash flow from financial

Complete Business Plan For Ficticious Marketing Consultant Firm Includes Cash Budget And Statement Of Cash Flows

3288 words - 13 pages objectives and make our company a success. Another important aspect of planning for the firm's success is preparing a cash budget. Our preliminary cash budget for the first year is attached:A&L MarketingCash Budget for the First YearCash Flow ManagementAs a new company it is difficult to decide just how much cash we need to flow in, at the right times, so that it is available to flow out as needed. For the first year, we only expect income to