Ford's Business Analysis

Ford Motor is a major player in the automotive industry and is responsible for manufacturing and distributing vehicles across six continents.

Ford has 80 manufacturing facilities across the globe and its core brands include Ford, Mercury, Lincoln, and Volvo. Business operations are divided into two divisions that include automotive and financial services. The divisions are further classified into segments based on organizational structure and geographical location.The automotive division is responsible for designing, developing, manufacturing, selling and servicing cars, trucks and service parts The automotive division is broken down into different regions that include Ford North America, Asia Pacific, Europe and Africa.Ford sold approximately 4,817,000 automobiles in the financial year 2009.The financial services division conducts business through the company's subsidiary referred to as Ford Motor Credit which offers a wide range of vehicle financing products to and through automobile dealer(Company Spotlight,2011).

Swot analysis conducted by Company Spotlight (2011)indicates the company has strength in its strong engineering capacity whereby the company undertakes research and development with the aim of developing new products, improving performance, customer satisfaction and safety." The company also has an extensive dealer network reflected by its presence in 6 continents and it also has a diversified product base thus can appeal to a large market. Ford Motor has a strong market presence and was ranked third in 2009 accounting for 15.3% market share in the United States. In 2009,its market share increased by 7.7% compared to 1.8% for Toyota". (Company Spotlight 2011).

The automobile industry is highly competitive and dynamic and the companies are coming up with different strategies to attain competitive advantage.Changes in the environment such as globalization,digitalization,increased competition and individualizations have resulted in new challenges with the environment.Increased safety requirements have also affected the industry as companies have to increase inputs ensure that manufactured products meet requirements.Increased environmental concern has affected the automobile industry significantly as customers are increasingly becoming environmentally aware and demand vehicles that are environmentally friendly.(S. Jain & R. Garg 2009).

Ford Motor Corporation has registered mixed results in terms of income generated.In analyzing the company's income statement,we indentified that there is a period when the company was recording losses.In 2006,2007,and 2008,Ford record net loss of $(12,613)million,$(2,795)million,and $(14,766)million respectively (MSN,2012)This indicates that the company had poor financial performance where revenue was less, compared to expenses. However ,the company managed to overturn performance and generate revenue amounting to $6,557 million and $2,712 million 2010 and 2009 respectively (MSN,2012).In its last financial year Toyota had a net income of $4,925million while General Motors had net income of $6,172 million.Ford Motor and General Motor which are America companies recorded losses in 2008 and 2007 which indicates market conditions at the time.Ford Motor,Toyota and General Motor registered similar patterns over a course of four years whereby the companies recorded decreased revenue from 2007 up to 2009 but sales revenue in all companies increased in 2010.General Motor had the highest increase in sales revenue by 29.6% while increased in Ford was 10.9%.This indicates financial performance during the year increased thus increased net income.MSN(2012)provides that the average increase in sales for the period was 6% indicating that Ford is performing significantly better compared to other players in the industry.Ford has an average 5year increase in net income amounting to 32.13% while Toyota has registered average decrease of 21.53% and the industry's average is set at 6.28%(MSN,2012).Ford's increase in net income is much higher compared to industry's average which is a testament that Ford's financial performance is increasing at a high rate.According to MSN(2012),Ford had a gross margin of 14.5% compared to 11% in Toyota,12.2% in General Motors,and 17.4% for the industry.Ford had higher level of gross margin compared to its main competitors but the amount is lower compared to the industry.This indicates that the company requires should reduce manufacturing or production cost so as to increase gross margin.Ford had a net profit margin 5.1%,Toyota had 0.5%,and General Motors had 4.6% while the industry's value was 3.4%.Once again Ford has higher performance compared to its compared and net profit margin is higher than industry's average.

Analysis of the companies balance indicates that the companies maintain steady levels of assets liabilities with slight variation between years.In its last financial year Ford had total assets amounting to $ 162, 740 million compared to $ 148, 497 million in General Motors and $ 359, 775 million in Toyota (MSN, 2012). Ford had total liabilities amounting to $ 156, 758 million, Toyota's liabilities were worth $ 228, 018 million and General Motors had liabilities amounting to $103, 753 million (MSN, 2012). Total equity in Ford amounted to $ 5, 982 million, $124,667 million in Toyota and $ 44, 744 million in General Motors (MSN,2012).

Debt to equity is an important measure indicating an organization's financial condition and therefore must be calculated. Ford had a debt to equity ratio of 15.9 compared to 1.14 in Toyota, 0.26 in General Motors and 2.65 for the industry's average. Debt to equity ratio indicates that Ford cannot be able to meet its financial obligations through equity financing. Debt to equity ratio present in Ford indicates that the company finances through debt financing unlike General Motors which has a higher proportion of equity. Analysis of investment involves calculating return on equity whereby Ford has a return on equity amounting to 322.5, Toyota has 2, and General Motors has 26.7 while the industry's average is 45.1. Return on equity result indicates Ford is generating high levels of returns for its shareholders compared to the other two companies. Cash flow statement provides net cash available to each organization wherby General Motors had net cash amounting to $ 21, 256 million, Toyota had $2,594 million and Ford had $ 14, 805 million.

The management is charged with responsibility of ensuring that the company performs accordingly and is able to meet its objectives.Financial statements provide insight into an organization's financial performance thus managers can determine whether the business is meeting required goals. Managers utilize financial information to plan ahead and establish goals for the subsequent periods.The