There are 5 parts to this assignment -
Part A: Financial analysis of a publicly-held company. Use Ford's latest consolidated and segment financial statements (form 10K) as filed with the SEC.
1. Calculate the current ratio and profit margin for the company as a whole. Also answer general questions relating to Ford's business operations - What are Ford's 2 major segments?
2. What are the major 3 components associated with Ford's profitability for cars and trucks?
3. Comment briefly (one paragraph) on Ford's planning assumptions and key metrics share.
4. Comment briefly (one paragraph) on Ford's Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Part B: Discussion of risks. Search Ford's form 10K, item 1A and identify three (3) major risks identified by the company you consider most important. Also calculate the company's Beta coefficient of the stock. From any of the websites listed online, how does your calculation compare?
1. From the form 10K, review item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. Assess the company's market share.1. Read the form 10K, item 7, Management discussion and analysis of financial Condition and Results of Operations.
2. Locate information about production volume of cars and market share.
3. Explain if the company's market share for automobiles increased or decreased over the past year. You may look at other sources to support management's position.
Calculate the company's growth rate of EPS or dividends. Compare your calculation with publicly-available information from any of the websites listed in the directions.
Compare your result to publicly-available rates.
Part C: Discussion of Ford's capital structure. You will review Ford's consolidated financial statements. You will calculate the company's debt/equity ratio and earnings per share. You will also determine the company's return on investment and weighted average cost of capital.
Step 1: Review the form 10K, item 15, to determine Ford's capital structure. From the consolidated balance sheet, what kinds of stock has Ford issued?
Step 2: Read note 24. CAPITAL STOCK AND AMOUNTS PER SHARE. What is the meaning of Earnings per share and diluted earnings per share?
Step 3: Calculate the debt/equity ratio. Use all long-term debt in your calculation. Compare your answer to publicly available information..
Step 4: Calculate the Earnings per Share. Compare your answer to publicly available information.
Step 5: Determine the company's return on investment. Compare your answer to any website listed in the directions.
Step 6: Determine the company's weighted average cost of capital. Compare your answer to any of the websites listed in the directions.
Step 7: Comment on whether the firm's capital structure is optimal.
Part D: Discussion of Free Cash Flow. You will determine Ford's consolidated free cash flow. In this part, you will make a prediction as to what the company's stock price would be in three (3) months. You will also review analysts' estimates and predictions for the past year.
Step 1: Look at Ford's Consolidated Statement of Cash Flows. Note the operating cash flow section is found in Note 25.Step 2: Calculate the free cash flow. Compare your answer to any of the websites listed in the directions.
Part E:
Requirements: Answer the following questions and write your final report.
Step 1: Is the company maximizing the wealth of its shareholders? If not, what can they do to achieve this result?
Step 2: Review your calculations and analysis of the following 6 ratios and financial measures: Current Ratio, Debt/Equity Ratio, Return on Investment, Earnings per Share, Profit Margin and Free Cash Flow.
Step 3: Conclude your analysis with other observations on the firm and whether your analysis differs from other analyses that are available. Indicate if there is any other measure you would want in order to make an investment recommendation.
Step 4: Make an Investment Recommendation. Assume you have been asked by an investor, age 35, who wishes to invest in conservative stocks that will provide some income now but is mainly interested in growth over the next ten (10) years. Begin your essay with an investment recommendation to this investor and support it with solid financial analysis. Your report should include your conclusions related to each of the five parts of this financial statement analysis project. You should conclude with a statement on whether or not Ford would meet this investor's investment goals.
Essay should be in 2,000 to 2,500 words, written in APA style, and cite any sources.