Financial Analysis in the Case of Ford Motor Co and Microsoft Corporation

1814 Words Mar 24th, 2011 8 Pages
Financial analysis in the case of Ford Motor Co and Microsoft Corporation

Each company must prepare financial statements to provide a comprehensive picture about its past performance and situation for the owners, the managers, the state and other stakeholders as well. In the case of enormous, international public limited companies like Ford and Microsoft these statements and data are public, so anybody can reach them through the internet. Moreover, we can also compute a lot of financial ratios based on these data. If we want to get an authentic frame about the firms, we have to know what these statement and ratios mean. In addition, it’s difficult for the companies that they want to give other picture about their financial status to
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This isn’t surprising, namely its market capitalization could be said high, also within the industry, but its income is lagging behind the main competitors.
About the rate of Ford’s growth we can say it decreases. From 2007 the operating revenue, the gross operating profit and also the EBITDA reduced strongly from year to year. In 2007, its operating revenue was more than 170 million $, whereas just 118 million $ last year. However, the rate of the depreciation and the interest expenses lessened in the recent years, so Ford could realize raising net income. Its free cash flow growth was also negative last year, and 6 companies had passed Ford in this aspect in the industry. Also its revenue and net profit margin are less than the main competitors’ ones in the recent years, by the former GM and Toyota come before the Ford, by the latter also the Toyota, Honda, SORL and Tata.
In conclusion, we can state that Ford’s ratios shows a lot about the situation of the company. It’s clear, that also its book value equity and the net income were negative in the last years, it can realize a less than 3000 million $ net income only in 2009. In addition, its sales fall short of the previous ones, the operating revenue decreases continually. Besides, the total debt of the company is also very high, over the past 4 years it remained over 100 billion $ all the time, but it lessens yearly, as the interests too. The amount of Ford’s total

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