Financial Accounting
Financial Statement Analysis Project
Instructions
Please answer every question. For this project, you will use the provided financial statements for Ford Motor Company and GM Motors. Take 2019 information given and perform the required financial ratios listed below. Compare the ratios of 2019 to each of the two auto companies. In comparing the ratios you will need to discuss which company has a better ratio, justify your rationale, and explain your findings in detail in your analysis. Write at least one paragraph discussing your results for each ratio.
Part 1:
- What is the ratio used for, what is its purpose?
- Write out formula
- Fill out formula using the two years financial statement information for both companies
- Your interpretation of ratio in at least one paragraph
Part 2: For each of the four categories of ratios, identify what the four categories are, and in your own words, explain the following
- Who are the main stakeholders?
- What are they assessing?
- Why are they assessing it?
Part 1
Ford-2019 GM-2019
Profitability
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Solvency/Leverage
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Liquidity and Efficiency
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- Accounts Receivable Turnover
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Market Prospects
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Part 2
Category 1:
- Who are the main stakeholders?
- What are they assessing?
- Why are they assessing it?
Category 2:
- Who are the main stakeholders?
- What are they assessing?
- Why are they assessing it?
Category 3:
- Who are the main stakeholders?
- What are they assessing?
- Why are they assessing it?
Category 4:
- Who are the main stakeholders?
- What are they assessing?
- Why are they assessing it?
FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT (In millions, except per share amounts) For the years ended December 31, 2017 2018 2019 Revenues Automotive Ford Credit Mobility 145,653 $ 11,113 10 156,776 148,294 $ 12,018 26 160,338 143,599 12,260 41 155,900 Total revenues (Note 4) ( Costs and expenses Cost of sales Selling, administrative, and other expenses , Ford Credit interest, operating, and other expenses Total costs and expenses Operating income 131,321 11,527 9,047 134,693 11,161 136,269 11,403 9,463 157,135 3,203 9,472 151,895 4,881 155,326 574 Interest expense on Automotive debt Interest expense on Other debt 1,133 1,171963 57 57 57 Other Income/(loss), net (Note 5) Equity in net income of affiliated companies Income/(Loss) before income taxes Provision forl(Benefit from) income taxes (Note 7) Net income Less: Income attributable to noncontrolling interests Net income attributable to Ford Motor Company 3,267 1,201 8,159 402 7,757 2,247 123 4,345 650 3,695 (226) 32 (640) (724) 84 37 26 18 3,677 $ 7,731 $ 47 EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 8) Basic income $ 1.94 $ Diluted income 1.93 0.93 $ 0.92 0.01 0.01 Weighted average shares used in computation of earnings per share Basic shares Diluted shares 3,9753,9743,972 3,998 3,998 4,004 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (in millions) For the years ended December 31, 2017 2018 2019 7,757 $ 3,695 $ 84 Net income Other comprehensive incomelloss), net of tax (Note 25) Foreign currency translation Marketable securities Derivative instruments Pension and other postretirement benefits Total other comprehensive income (loss), net of tax Comprehensive income (loss) Less: Comprehensive income/(loss) attributable to noncontrolling interests Comprehensive Income/loss) attributable to Ford Motor Company 314 (34) (265) 37 (523) (11) 183 (56) (407) 3,288 18 3,270 $ 174 130 (689) 23 (362) (278) 37 (315) 52 7,809 24 7,785 $ $ FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in millions) December 31, 2018 December 31, 2019 3,930 ASSETS Cash and cash equivalents (Note 9) Marketable securities (Note 9) Ford Credit finance receivables, net (Note 10) Trade and other receivables, less allowances of $94 and $63 Inventories (Note 12) Assets held for sale (Note 10 and Note 24) Other assets Total current assets Ford Credit finance receivables, net (Note 10) Net investment in operating leases (Note 13) Net property (Note 14) Equity in net assets of affiliated companies (Note 15) Deferred income taxes (Note 7) Other assets Total assets LIABILITIES Payables Other liabilities and deferred revenue (Note 17) Automotive debt payable within one year (Note 20) Ford Credit debt payable within one year (Note 20) Other debt payable within one year (Note 20) Liabilities held for sale (Note 24) Total current liabilities Other liabilities and deferred revenue (Note 17) Automotive long-term debt (Note 20) Ford Credit long-term debt (Note 20) Other long-term debt (Note 20) Deferred income taxes (Note 7) Total liabilities $16,718 $ 17,504 17,233 17,147 54,35353,651 11,195 9,237 11,220 10,786 2,383 3,339 114,649 114,047 55,544 53,703 29,119 29,230 36,178 36,469 2,709 2,519 10,412 11,863 7,929 10,706 256,540 258,537 $ 21,520 20,556 2,314 51,179 20,673 22,987 1,445 52,371 130 526 98,132 95,569 23,588 11,233 88,887 600 597 220,474 25,324 13,233 87,658 470 490 225,307 100 40 Redeemable noncontrolling interest (Note 23) EQUITY Common Stock, par value $.01 per share (4,011 million shares issued of 6 billion authorized) Class B Stock, par value $.01 per share (71 million shares issued of 530 million authorized) Capital in excess of par value of stock Retained earnings Accumulated other comprehensive income/loss) (Note 25) Treasury stock Total equity attributable to Ford Motor Company Equity attributable to noncontrolling interests Total equity Total liabilities and equity 40 1 22,006 22,668 (7,366) (1,417) 35,932 34 35,966 256,540 $ 22,165 20,320 (7,728) (1,613) 33,185 45 33,230 258,537 The following table includes assets to be used to settle liabilities of the consolidated variable interest entities ("VIEs). These assets and liabilities are included in the consolidated balance sheet above. See Note 26 for additional information on our VIEs. December 31, 2018 December 31, 2019 ASSETS Cash and cash equivalents Ford Credit finance receivables, net Net investment in operating leases Other assets LIABILITIES Other liabilities and deferred revenue Debt 2,728 $ 3,202 58,662 58,478 16,33214,883 27 12 24 $19 53,269 50.865 The accom GENERAL MOTORS COMPANY AND SUBSIDIARIES Item 8. Financial Statements and Supplementary Data CONSOLIDATED INCOME STATEMENTS (In millions, except per share amounts) 2017 133.449 12,139 145.588 Years Ended December 31, 2019 2018 Net sales and revenue Automotive $ 122.697 S 133,045 S GM Financial..... 14,540 14.004 Total net sales and revenue (Note 3) 137.237 147,049 Costs and expenses....... Automotive and other cost of sales .. 110,651 120.656 GM Financial interest, operating and other expenses 12.614 12,298 Automotive and other selling, general and administrative expense 8,491 9,650 Total costs and expenses. 131,756 142,604 Operating income 5,481 4,445 Automotive interest expense 782 655 Interest income and other non-operating income, net (Note 19). 1,469 2,596 Equity income (Note 8) 1,268 2,163 Income before income taxes. 7.436 8.549 Income tax expense (Note 17) 769 474 Income from continuing operations 6,667 8,075 Loss from discontinued operations, net of tax (Note 22). 70 Net income (loss)..... 6,667 8,005 Net loss attributable to noncontrolling interests.. 65 9 Net income (loss) attributable to stockholders. 6,732 $ 8,014 'S Net income (loss) attributable to common stockholders. S 6,581 S 7,916 S Earnings per share (Note 21) Basic earnings per common share - continuing operations S 4.62 $ 5.66 S Basic loss per common share - discontinued operations. S S 0.05 S Basic earnings (loss) per common share. S 4.62 $ 5.61 $ Weighted-average common shares outstanding - basic 1.424 1,411 Diluted earnings per common share -- continuing operations S 4.57 S 5.58 S Diluted loss per common share - discontimed operations S $ 0.05 S Diluted earnings (loss) per common share .... $ 4.57 $ 5.53 S Weighted-average common shares outstanding - diluted 1,439 1,431 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) 116.229 11,128 9,570 136,927 8,661 575 1,645 2,132 11,863 11.533 330 4.212 (3.882) 18 (3.864) (3,880 0.23 2.88 (2.65) 1,465 0.22 2.82 (2.60) 1,492 Years Ended December 31, 2019 2018 2017 6,667 $ 8,005 S (3,882) 747 Net income (loss)... Other comprehensive income (loss), net of tax (Note 20) Foreign currency translation adjustments and other.. Defined benefit plans...... Other comprehensive income (loss), net of tax. Comprehensive income (loss)..... Comprehensive loss attributable to no controlling interests Comprehensive income (loss) attributable to stockholders... (6) (2,122) (2,128) 4,539 (715) (221) (936) 7,069 15 570 1,317 (2,565) 20 (2,545) 76 S 4,615 $ 7,084 $ GENERAL MOTORS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) December 31, 2019 December 31, 2018 19,069 $ 4,174 6,797 26,601 10,398 7,953 74,992 20,844 5.966 6.549 26,850 9.816 5,268 75,293 25,083 26.355 8,562 38,750 5,337 42,055 24,640 7.346 153,043 228.037 9.215 38,758 5,579 43,559 24,082 5.770 152.046 227,339 $ 21.018 S 22.297 ASSETS Current Assets Cash and cash equivalents Marketable debt securities (Note 4) Accounts and notes receivable (net of allowance of S201 and $211). GM Financial receivables, net (Note 5; Note 11 at VIES). Inventories (Note 6). Other current assets (Note 4; Note 11 at VIES). Total current assets .. Non-current Assets GM Financial receivables, net (Note 5; Note 11 at VIES). Equity in net assets of nonconsolidated affiliates (Note 8). Property, net (Note 9) Goodwill and intangible assets, net (Note 10). Equipment on operating leases, net (Note 7; Note 11 at VIES). Deferred income taxes (Note 17) Other assets (Note 4; Note 11 at VIES) Total non-current assets. Total Assets LIABILITIES AND EQUITY Current Liabilities Accounts payable (principally trade).... Short-term debt and current portion of long-term debt (Note 13). Automotive GM Financial (Note 11 at VIES) Accrued liabilities (Note 12). Total current liabilities. Non-current Liabilities Long-term debt (Note 13) Automotive ...... GM Financial (Note 11 at VIES) Postretirement benefits other than pensions (Note 15). Pensions (Note 15) Other liabilities (Note 12) Total non-current liabilities Total Liabilities. Commitments and contingencies (Note 16) Equity (Note 20) Common stock, S0.01 par value. Additional paid-in capital.. Retained earnings... Accumulated other comprehensive loss. Total stockholders' equity Noncontrolling interests. Total Equity Total Liabilities and Equity 1,897 35,503 26,487 84.905 935 30,956 28.049 82.237 12,489 53,435 5,935 12.170 13,146 97,175 182,080 13.028 60,032 5,370 11,538 12,357 102,325 184,562 14 25,563 22.322 14 26,074 26,860 (11,156 41,792 4.165 45.957 228.037 S (9.039) 38,860 3,917 42,777 227,339 Reference should be made to the notes to consolidated financial statements
