Strategic Audit For Ford Motor Company

Strategic AuditSection 1: Current Situation.My team members and I have researched the Ford Motor Company and have found that they seem to be doing quite well despite the $12.6 billion in losses and plants.   They have the first SUV Hybrid on the market and it continues to be number one. Last year in 2007 for the J.D. Power Initial Quality Study, Ford vehicles got 14 vehicle honors and that is more than any other automaker. Their mission is to provide personal mobility for everyone around the globe with heritage, culture, and passion.   They anticipate consumer needs and deliver high quality products and services that will help improve the lives of the people around them (Ford Motor Co., 2005, April 27). One of their major goals is to contribute to stabilizing the climate by considering reducing long-term emission.   They have reported that they will achieve this goal by continuously reducing the GHG emissions and energy usage of their operations, developing more products that lower GHG-emissions, and establishing an effective and predictable market policy and technological framework for reducing road transport GHG emissions. Another one of their goals is to promote the development of an infrastructure that will expand the use of bio-fuels and help reduce our dependence on oil. One more goal of theirs is to cut the usage of global energy by 27% and the usage of water by 25% which they have been working on since 2000. Some of their major timeframe targets they are currently working on to contribute to the climate are to reduce North American facility emissions by 6% by 2010, voluntarily offset 2007 and 2008 CO2 emissions from manufacturing facilities, and reduce U.S. facility emissions by 10% per vehicle produced by 2012. Section 2: Corporate Governance.Ford Motor Company:   Board of Directors(Feb 2007)

RATIOS

Ford Motor Company was founded in 1903 by automotive and industrial pioneer Henry Ford in Dearborn, Michigan. Being first to implement a moving assembly line for automotive manufacturing, Ford was able to more efficiently mass produce their products than their competitors. In 1908 the Model T was introduced and went on to sell over 15 million vehicles, firmly establishing Ford as the major player in the early automotive industry with 50% market share by the 1920s. The company went public 1956 and since then has grown to be a significant presence in the global automotive market. Financial ratios are useful indicators of a firm’s performance and financial situation (Friedlob & Schleifer, 2003). Ratios can be used to analyze trends and to compare a firm’s financials to other firms. Although there is an abundant amount of ratios, we will only be looking at the ones that are most important when analyzing Ford Motors activities and results for the last 3years.Profitability RatiosBased on the results(See Appendix 1), the recession has really taken its toll on Ford motors. The general decline in nits profitability ratios suggest that the company has not been performing well in recent times. In actual fact, the company's financial conditions began to decline since 2005 which was even before the recession. The negative earnings per share (EPS), profit margin, return on assets raises an alarm. The low profitability is also responsible for the low fixed and total assets turnover ratios. Return on equity however shows a slight improvement which can also be a result of the recent re-engineering process by the company.Liquidity RatiosThe company's Current ratio is low but not alarming (see financial statement in Appendix 1), the general expectation is for current assets to cover current liabilities at company's quick ratio of 1.26 is quite good as it suggests that the company will be able to meet its urgent current liabilities as they fall due even...

Financial Ratio Analysis Report Of Ford Motor Company

Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries.   To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets.   Luckily, there are many well-tested ratios out there that make the task a bit less daunting.   Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities.   However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable.   By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.This is a trend table of Ford's financial ratio for the previous five years:

Ford Motor Co. (DE)

Ratios 12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000

Return on Equity (%) 22.65 7.9 5.08 -70.04 29.07Return on Assets (%) 1.19 0.29 0.1 -1.97 1.9Return on Investment 8.13 5.62 5.87 2.23 11.24Gross Margin 0.021 0.021 0.023 0.02 0.026Operating Margin (%) 6.22 4.94 5.56 2.07 10.42Net Profit Margin (%) 2.03 0.3 -0.6 -3.36 2.04Quick Ratio 0.29 0.35 0.35 0.22 0.2Current Ratio 0.47 0.52 0.51 0.37 0.33Working Capital/Total Assets -0.22 -0.18 -0.16 -0.23 -0.28Total Debt to Equity 8.61 13 25.67 18.3 6.05Long Term Debt to Assets 0.35 0.38 0.41 0.44 0.35Interest Coverage 1.69 1.18 1.11 0.3 1.76

This is a trend table of industrial average financial ratio for the previous five years in comparison: