2. ANALYSIS OF PROBLEM 2.1 Statement of Problems . High costs and interest expenses associated with managing pension funds greatly affect Ford's balance sheet and income statement. Ford and Toyota have defined benefit plans, which promise to pay retirees based on factors that include the length of their service and their salary at the time of retirement. The employer bears the risk of maintaining enough capital over time, and must estimate how much capital is required to pay out its employees' pensions. The following table and graph explain the funded status of both Ford and Toyota in 2002 and 2003. The table and graph below illustrate why pension obligation is an enormous liability to both company