First Course Project

You will also need to find a standard against which to compare your findings.I have selected Ford Motor Company, put yourself in the place of an analyst who has been asked to perform an analysis of the company and provide a recommendation to management.

Use ratio analysis, common size analysis, or other techniques to determine areas in which the company is doing well as well as areas that management should look at. Then, present your analysis and recommendations in the form of a paper.

A good place to start would be to perform a complete DuPont analysis of the company and compare it to the standard. The DuPont analysis might provide guidance as to what particular areas of the company should be examined next and what ratios should be calculated. If the DuPont analysis does not reveal anything useful, you might wish to calculate several of the ratios that are available to you.

Deliverable

The completed paper should be about 1,000 words long. In the paper, you do not have to explain the ratios in depth. You may assume that the reader has a basic understanding of finance and knows what ratio analysis is, although he or she might not be able to list all the ratios and how to calculate them from memory. The reader is not going to want a lot of background about financial analysis. He or she really wants information that he or she can apply to the given situation, which is the company that you have selected.

If you like, you can write the paper in the form of a memo to management. You do not have to cite your source for how to calculate the ratios. You do need to provide a reference to where you got that data not only for your subject company but for the other company or standard to which you compared your company.

• The spirit of this assignment is for you to calculate and interpret the results. The purpose is not for you to find calculations and interpretations that have been done by someone else.
• The paper is expected to conform to the standards for graduate school writing.
• The purpose of your analysis is internal evaluation. Refrain from using stock market valuation ratios.

Note....I have made it easy for you I have choose Ford Motor Company attached the spreadsheet to compare the three years on the balance sheet, cash flow, and income statement. Will have to included the debt ratio and to compare the net profit margins.

FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in millions) December 31, December 31, 2014 2013 ASSETS Cash and cash equivalents $ 10,757 $ 14,468 Marketable securities 20,393 22,100 Finance receivables, net (Note 5) 81,111 77,481 Other receivables, net 11,708 9,828 Net investment in operating leases (Note 6) 23,217 19,984 Inventories (Note 8) 7,866 7,708 Equity in net assets of affiliated companies (Note 9) 3,357 3,679 Net property (Note 10) 30,126 27,616 Deferred income taxes (Note 21) 13,639 13,468 6,353 5,847 Other assets Total assets $ 208,527 $ 202,179 $ 20,035 $ 19,531 LIABILITIES Payables Other liabilities and deferred revenue (Note 11) 43,577 40,886 119,171 114,688 570 598 183,353 175,703 342 331 39 39 1 1 Capital in excess of par value of stock 21,089 21,422 Retained earnings 24,556 23,386 (20,032 ) (18,230 ) (848 ) (506 ) Debt (Note 13) Deferred income taxes (Note 21) Total liabilities Redeemable noncontrolling interest (Note 14) EQUITY Capital stock (Note 23) Common Stock, par value $.01 per share (3,938 million shares issued of 6 billion authorized) Class B Stock, par value $.01 per share (71 million shares issued of 530 million authorized) Accumulated other comprehensive income/ (loss) (Note 17) Treasury stock (Note 23) Total equity attributable to Ford Motor Company 24,805 27 Total equity Total liabilities and equity $ 33 24,832 Equity attributable to noncontrolling interests 26,112 26,145 208,527 $ 202,179 FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (in millions) For the years ended December 31, 2014 2013 2012 Cash flows from operating activities of continuing operations Net income $ 3,186 $ 7,175 $ 5,612 Depreciation and tooling amortization 7,385 6,504 Other amortization 38 40 (186 ) Provision for credit and insurance losses 305 210 83 Pension and OPEB expense 1,249 2,543 1,557 Equity investment (earnings)/lo sses in excess of dividends received 189 (543 ) 23 Foreign currency adjustments 825 228 (116 ) Net (gain)/loss on changes in investments in affiliates 798 113 (594 ) Stock compensatio n 180 159 140 Net change in wholesale and other receivables (2,208 ) (3,044 ) (1,178 ) Provision for deferred income taxes 1,063 Decrease/ (Increase) in accounts receivable and other assets (2,897 ) (2,040 ) (2,508 ) Decrease/ (Increase) in inventory (875 ) (572 ) (1,401 ) Increase/ (Decrease) in accounts payable and accrued and other liabilities Other Net cash provided by/ (used in) operating activities 5,734 (465 ) (848 ) 1,231 (712 ) 5,486 1,754 599 (226 ) 14,507 10,444 9,045 (7,463 ) (6,597 ) (5,488 ) Acquisitions of finance receivables and operating leases (51,673 ) (45,822 ) (38,445 ) Collections of finance receivables and operating leases 36,497 33,966 31,570 Purchases of marketable securities (48,694 ) (119,993 ) (95,135 ) Sales and maturities of marketable securities 50,264 118,247 93,749 (477 ) 281 (217 ) (737 ) Cash flows from investing activities of continuing operations Capital spending Change related to Venezuelan operations (Note 1) Settlements of derivatives Proceeds from sales of retail finance receivables (Note 22) Other Net cash provided by/(used in) investing activities 495 141 190 196 (21,124 ) (19,731 ) (14,290 ) Cash dividends (1,952 ) (1,574 ) (763 ) Purchases of Common Stock (1,964 ) (213 ) (125 ) Net changes in short-term debt (3,870 ) (2,927 ) Proceeds from issuance of other debt 40,043 40,543 32,436 (28,859 ) (27,953 ) (29,210 ) Cash flows from financing activities of continuing operations Principal payments on other debt Other Net cash provided by/(used in) financing activities Effect of exchange rate changes on cash and cash equivalents 1,208 25 257 159 3,423 8,133 3,705 (517 ) (37 ) 51 Net increase/ (decrease) in cash and cash equivalents $ (3,711 ) $ (1,191 ) $ (1,489 ) Cash and cash equivalents at January 1 $ 14,468 $ 15,659 $ 17,148 Net increase/ (decrease) in cash and cash equivalents (3,711 ) Cash and cash equivalents at December 31 $ 10,757 (1,191 ) $ 14,468 (1,489 ) $ 15,659 FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT (in millions, except per share amounts) For the years ended December 31, 2014 2013 2012 Revenues Automotive $ 135,782 $ 139,369 $ 126,567 Financial Services 8,295 7,548 6,992 Total revenues 144,077 146,917 133,559 123,516 125,195 113,039 14,117 13,176 11,529 2,699 2,860 3,115 305 208 77 Total costs and expenses 140,637 141,439 127,760 Automotive interest expense 797 829 713 76 974 1,599 348 348 365 Equity in net income of affiliated companies 1,275 1,069 588 Income before income taxes 4,342 7,040 7,638 Provision for/(Benefit from) income taxes (Note 21) 1,156 Net income 3,186 Costs and expenses Automotive cost of sales Selling, administrative, and other expenses Financial Services interest expense Financial Services provision for credit and insurance losses Automotive interest income and other income/(loss), net (Note 18) Financial Services other income/(loss), net (Note 18) Less: Income/(Loss) attributable to noncontrolling interests (135 ) 7,175 (1 ) Net income attributable to Ford Motor Company $ 3,187 2,026 5,612 (7 ) $ 7,182 (1 ) $ 5,613 $ 1.47 EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 23) Basic income $ 0.81 $ 1.83 Diluted income 0.8 1.77 1.41 Cash dividends declared 0.5 0.4 0.15 NOTE 13. DEBT AND COMMITMENTS (Continued) The carrying value of debt was $119.2 billion and $114.7 billion at December 31, 2014 and 2013, respectively. The carrying value of Automotive sector and Financial Services sector debt at December 31 was as follows (in millions): Interest Rates Average Contractual (a) Automotive Sector 2014 2013 Average Effective (b) 2014 2013 2014 2013 1.9 % 1.5 % 1.9 % 1.5 % 4.6 % 4.4 % 4.6 % 4.7 % 1.9 % 1.5 % 1.9 % 1.5 % Debt payable within one year Short-term $ 373 $ 562 Long-term payable within one year U.S. Department of Energy (\"DOE\") Advanced Technology Vehicles Manufacturing (\"ATVM\") Incentive Program 591 1,187 1,257 6,634 Total debt payable within one year 104 2,501 Other debt 350 European Investment Bank (\"EIB\") loans 591 6,799 Long-term debt payable after one year Public unsecured debt securities Unamortized (discount)/premium (144 ) Unamortized (discount)/premium DOE ATVM Incentive Program 908 Convertible notes (148 ) (110 ) 3,833 Total long-term debt payable after one year 1,258 11,323 Other debt 1,295 1,000 EIB loans 4,424 14,426 Total Automotive sector $ 13,824 $ 15,683 Fair value of Automotive sector debt (c) $ 15,553 $ 17,301 $ 9,761 $ 9,667 Financial Services Sector Short-term debt Unsecured debt Asset-backed debt 1,377 5,327 11,138 14,994 Notes payable within one year 8,795 4,475 Notes payable after one year 43,087 38,914 Total short-term debt Long-term debt Unsecured debt Asset-backed debt Notes payable within one year 16,738 17,337 Notes payable after one year 25,216 23,273 Unamortized (discount)/premium (55 ) (91 ) Fair value adjustments (d) 428 103 94,209 84,011 Total long-term debt Total Financial Services sector $ Fair value of Financial Services sector debt (c) $ __________ (a) Average contractual rates reflect the stated contractual interest rate. (b) Average effective rates reflect the average contractual interest rate plus amortization of discounts, premiums, and issuance fees. (c) The fair value of debt includes $13 1 million and $377 million of Automotive sector shortterm debt and $9.8 billi on and $9.7 billion of Financial Services sector shortterm debt at December 31, 2014 and 20 13, respectively, carried at cost which approximate s fair value. All debt is categorized within Level 2 of the fair value hierarchy. (d) Adjustments related to designated fair value hedges of unsecured debt. FS-43 FORD MOTOR COMPANY AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 105,347 $ 99,005 107,758 $ 102,399 2.8 % 3.1 % 2.9 % 3.3 % NOTE 13. DEBT AND COMMITMENTS (Continu ed) The fair value of debt presented above reflects interest accrued but not yet paid. Interest accrued on Automotive debt was $180 million and $195 million at December 31, 2014 and 20 13, respectively. Interest accrued on Financial Services debt was $602 million and $633 million at December 31, 2014 and 2013, respectively. Interest accrued on debt is reported in Other liabilities and deferred revenue. See Note 4 for fair value methodology. We paid interest of $774 million, $746 millio n, and $693 million in 2014, 2013, and 2012, respectively, on Automotive debt. We paid interest of $2.7 billion, $2.8 billion, and $3 billion in 2014, 2013, and 2012, respectively, on Financial Services debt. Maturities Debt maturities at December 31, 2014 were as follows (in millions): 2015 Automotive Sector Public unsecured debt 2016 2017 2018 2019 Thereafter Premium/(Discount) and Fair Value Adjustments Total Debt Matu Public unsecured debt securities $ 161 DOE ATVM Incentive Program $ $ $ 361 $ $ 6,273 $ (144 ) $ 591 591 591 591 591 1,469 4,42 1,749 280 141 148 113 318 2,74 2,501 871 732 1,100 704 8,060 (144 ) 13,82 Unsecured debt 18,556 10,402 11,096 6,028 5,582 9,979 375 62,01 Asset-backed debt 18,115 13,115 7,678 1,063 2,760 600 36,671 23,517 18,774 7,091 8,342 10,579 Short-term and other debt (a) Total Financial Services Sector Total Total Company $ 39,172 $ 24,388 __________ (a) Primarily non-U.S. affiliate debt and includes the EIB secured loans. FS-44 FORD MOTOR COMPANY AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS NOTE 13. DEBT AND COMMITMENTS (Continu ed) Automotive Sector Public Unsecured Debt Securities Our public, unsecured debt securities outstanding at December 31 were as follows (in millions): Aggregate Principal Amount Outstanding Title of Security 2014 2013 4 7/8% Debentures due March 26, 2015 $ 161 6 1/2% Debentures due August 1, 2018 361 361 86 86 8 7/8% Debentures due January 15, 2022 $ 165 $ 19,506 $ 8,191 $ 9,046 $ 18,639 (2 ) 43,32 373 $ 229 105,34 $ 7 1/8% Debentures due November 15, 2025 209 209 7 1/2% Debentures due August 1, 2026 193 193 6 5/8% Debentures due February 15, 2028 104 104 6 5/8% Debentures due October 1, 2028 (a) 638 638 6 3/8% Debentures due February 1, 2029 (a) 260 260 1,794 1,794 8.900% Debentures due January 15, 2032 151 151 9.95% Debentures due February 15, 2032 4 4 5.75% Debentures due April 2, 2035 (b) 40 40 7.75% Debentures due June 15, 2043 73 73 7.40% Debentures due November 1, 2046 398 398 9.980% Debentures due February 15, 2047 181 181 7.70% Debentures due May 15, 2097 142 142 2,000 2,000 7.45% GLOBLS due July 16, 2031 (a) 4.75% Notes due January 15, 2043 Total public unsecured debt securities (c) $ __________ (a) Listed on the Luxembourg Exchange and on the Singapore Exchange. (b) Unregistered industrial revenue bond. (c) Excludes 9.2 15% Debent ures due September 1 5, 2021 with an outstanding balance at December 31, 2014 of $180 million. The proceeds from these securities were on-lent by Ford to Ford Holdings to fund Financial Services activity and are reported as Financial Services debt. Convertible Notes 6,795 $ 6,799 On January 22, 2014, we terminated the conversion rights of holders under the 4.25% Senior Convertible Notes due December 15, 2036 (\"2036 Convertible Notes\") in accordance with their terms and settled conversions occurring after notice of termination with cash. In 2014, $24 million of the 2036 Convertible Notes were converted by the holders, resulting in cash payments of $43 million and a $5 million loss recorded in Automotive interest income and other income/ (loss), net. On November 20, 2014, we terminated the conversion rights of holders under the 4.25% Senior Convertible Notes due November 15, 2016 (\"2016 Convertible Notes\") in accordance with their terms and settled conversions occurring after notice of termination with shares. In 2014, $882 million of the 2016 Convertible Notes (carrying value of $805 million) was converted by the holders, resulting in the issuance of 103 million shares of Ford Common Stock held as treasury stock, a $126 million loss recorded in Automotive interest income and other income/(loss), net, and a $66 million charge to Retained earnings. On November 21, 2014, we redeemed for cash the remaining$1 million of 2016 Convertible Notes outstanding on that date, resulting in a de minimis loss recorded in Automotive interest income and other income/ (loss), net. We no longer have convertible debt outstanding. FS-45 FORD MOTOR COMPANY AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS NOTE 13. DEBT AND COMMITMENTS (Continu ed) DOE ATVM Incentive Program In September 2009, we entered into a Loan Arrangement and Reimbursement Agreement with the DOE, under which we borrowed through multiple draws $5.9 billion to finance certain costs for fuel-efficient, advancedtechnology vehicles. At December 31, 2014, an aggregate $4.4 billion was outstanding. The principal amount of the ATVM loan bears interest at a blended rate based on the U.S. Treasury yield curve at the time each draw was made (with the weighted-average interest rate on all such draws being about 2.3% per annum). The ATVM loan is repayable in equal quarterly installments of $148 million, which began in September 2012 and will end in June 2022. EIB Credit Facilities On December 21, 2009, Ford Romania, our operating subsidiary in Romania, entered into a credit facility for an aggregate amount of 400 million (equivalent to $486 million at December 31, 2014) with the EIB (the \"EIB Romania Facility\"), and on July 12, 2010, Ford Motor Company Limited, our operating subsidiary in the United Kingdom, entered into a credit facility for an aggregate amount of 450 million (equivalent to $701 million atDecember 31, 2014) with the EIB (the \"EIB United Kingdom Facility\"). The facilities were fully drawn at December 31, 2014. Loans under the EIB Romania Facility and the EIB United Kingdom Facility bear interest at a fixed rate of 4.44% and 4% per annum, respectively, and mature on March 31, 2015 and September 11, 2015, respectively. Automotive Credit Facilities Lenders under our Second Amended and Restated Credit Agreement dated as of April 30, 2014 (the \"revolving credit facility\") have commitments to us totaling $12.2 billion, with about $9 billion maturing on April 30, 2019 and about $3 billion maturing on April 30, 2017. We have allocated $2 billion of commitments to Ford Credit on an irrevocable and exclusive basis to support its liquidity. Any borrowings by Ford Credit under the revolving credit facility would be guaranteed by us. The revolving credit facility is unsecured and free of material adverse change conditions to borrowing, restrictive financial covenants (for example, interest or fixed charge coverage ratio, debt-toequity ratio, and minimum net worth requirements), and credit rating triggers that could limit our ability to obtain funding. The revolving credit facility contains a liquidity covenant that requires us to maintain a minimum of $4 billion in aggregate of domestic cash, cash equivalents, and loaned and marketable securities and/or availability under the revolving credit facility. If our senior, unsecured, longterm debt does not maintain at least two investment grade ratings from Fitch, Moody's, and S&P, the guarantees of certain subsidiaries will be required. At December 31, 2014, the utilized portion of the revolving credit facility was $58 million, representing amounts utilized as letters of credit. At December 31, 2014, we had $822 million of local credit facilities available to non-U.S. Automotive affiliates, of which $175 million had been utilized. FS-46 FORD MOTOR COMPANY AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS NOTE 13. DEBT AND COMMITMENTS (Continu ed) Financial Services Sector Asset-Backed Debt secured debt is issued by Ford Credit and includes asset-backed securities used to fund operations and maintain liquidity. Assets securing the related debt issued as part of all our securitization transactions are included in our consolidated results and are based upon the legal transfer of the underlying assets in order to reflect legal ownership and the beneficial ownership of the debt holder. The third-party investors in the securitization transactions have legal recourse only to the assets securing the debt and do not have such recourse to us, except for the customary representation and warranty provisions or when we are counterparty to certain derivative transactions of the special purpose entities (\"SPEs\"). In addition, the cash flows generated by the assets are restricted only to pay such liabilities; Ford Credit retains the right to residual cash flows. See Note 15 for additional information. Although not contractually required, we regularly support our wholesale securitization programs by repurchasing receivables of a dealer from a SPE when the dealer's performance is at risk, which transfers the corresponding risk of loss from the SPE to us. In order to continue to fund the wholesale receivables, we also may contribute additional cash or wholesale receivables if the collateral falls below required levels. The balances of cash related to these contributions were $0 at December 31, 2014 and 2013, and ranged from $0 to $242 million duri ng 2014 and $0 to $177 million duri ng 2013. SPEs that are exposed to interest rate or currency risk have reduced their risks by entering into derivative transactions. In certain instances, we have entered into offsetting derivative transactions with the SPE to protect the SPE from the risks that are not mitigated through the derivative transactions between the SPE and its external counterparty. In other instances, we have entered into derivative transactions with the counterparty to protect the counterparty from risks absorbed through derivative transactions with the SPEs. Derivative expense/(income) related to the derivative transactions that support Ford Credit's securitization programs were $(4) million, $25 millio n, and $239 million for the years ended December 31, 2014, 2013 and 2012, respectively. See Note 16 for additional information regarding the accounting for derivatives. Interest expense on securitization debt was $595 million, $640 mill ion, and $854 million in 2014, 2 013, and 2012, respectively. The assets and liabilities related to our asset-backed debt arrangements included on our financial statements at December 31 were as follows (in billions): 2014 2013 ASSETS Cash and cash equivalents Finance receivables, net Net investment in operating leases $ 2.4 $ 4.4 46.1 51.4 9.6 8.1 43.3 45.9 LIABILITIES Debt Committed Credit Facilities At December 31, 2014, Ford Credit's committed capacity totaled $37.3 billion of which $21.6 billion is available for use. Ford Credit's committed capacity is primarily comprised of unsecured credit facilities with financial institutions, committed asset-backed security lines from banksponsored commercial paper conduits and other financial institutions, and allocated commitments under the revolving credit facility. al Debt Maturities 6,651 4,424 2,749 13,824 62,018 43,329 105,347 119,171