Ford Motor Company Case

1. Reviewing GM’s financial information in GM Exhibit 1 and its stock price in GM Exhibit

* It provides the mechanism that makes capital payment tp the shareholders (return of capital or capital distribution).

While financial statements can be quite extensive, it is important for companies to completely understand all aspects of their statements. In regards to the balance sheet, there are financial ratios that can be computed in order to determine the profitability, liquidity, and solvency of a company. Both Ford and Tesla are large car companies that have lots of assets. By examining the current ratio for both companies, accountants, investors and creditors can assess the liquidity and efficiency for Tesla and Ford to pay off their short-term liabilities with its current assets. The current ratio is a very significant measure tool as these short-term liabilities would be due within the next year. Thus, the companies have a limited time to acquire the funds necessary to pay off the liabilities. Current assets such as cash or cash equivalents can be easily liquidated. Typically, assets on the balance sheet are listed in order of easiest liquidity. If companies have large current assets, then they will be able

Explain what shareholders would receive in exchange for (a) old common shares, (b) old class B shares, and (c) old shares held in the employee saving plan.

Most everyone wanted to jump on the investment train this month with the release of Facebook’s Initial Public Offering (IPO). As a matter of fact, many people did buy stock in Facebook, trouble is, most of them will never be able to understand the paperwork they will receive while holding their shares. Every year publicly traded companies distribute what is known as their Annual Report, which is the yearly record of a publicly held company’s financial condition (Harvey). Throughout this paper we will go through Caterpillar’s annual report in an effort to better understand what we are reading. We

| Reinvested in the company or paid out to shareholders as dividends based on their share.

If the company were to adopt a more financially aggressive capital structure by issuing debt and repurchasing common stock, it could potentially enhance equity returns. AHP must review its current and future financial needs, and decide among four different capital structure alternatives; it may maintain current debt-free policy, or target a debt to total capital ratio of 30%, 50%, or 70%. If the company does issue bonds, it must also determine terms of the debt.

It was management’s opinion what consistent reliable business practices would add a sense of security to the company’s operations, employees and shareholders. The financial consistency of the company provided shareholders with comfort in their investment with the stock price at $43.92 in Year 6 and steadily rising to $128.11 by Year 12. As previously noted, the financial results were accomplished by providing consistent high net earnings on its operations each accounting year. The company did not incur long term debt and operated its business without having to utilized its bank operating line of credit (no interest cost), thus maintaining a healthy

General Motors Company and Subsidiaries Consolidation balance sheet lists assets in current order of liquidity; meaning the assets are in order of nearness of cash. General Motors divide the assets into two categories; current and non-current (long-term) assets. First listed current asset is cash and cash equivalents. Cash equivalents account for U.S. government treasury bonds, bank certificate of deposits, and other highly liquidated assets that can be converted into cash immediately when necessary (Kimmel, P.D., Weygandt, J.J., and Kelso, D.E., 2011). Proceeding forward marketable securities, restricted cash, accounts and notes receivable, GM financial receivable, inventory, equipment, deferred income tax, other assets are consistent with the order of listing (Barra, M.T., Steven, C.K. III, 2015). The non-current asset list are as follows: restricted cash and marketable securities, GM financial receivable, net, equity in net asset, property, net, goodwill, intangible assets, GM Financial

Total current inventory reported for Ford Motor Company was $48,875,000. General Motors reported $53,053,000 and Honda Motors reported $56,588,000. Total Assets is another figure in itself. Total assets is the sum of all assets, current and long term, owned by the company. Ford Motor Company invests more money in the long term than General Motors and Honda combined. Investing in long term, if your money compounds will generate earnings from previous earnings. Albert Einstein referred to compound interest as the greatest mathematical discovery of all time. Benjamin Franklin stated, “Money makes money, and the money that makes money, makes money.” Property Plant and Equipment,, Goodwill, Intangible assets, Accumulated amortization, Other assets, Deferred long term asset changes, also determine final figures when calculating Total assets. Ford is leading in that category. Liabilities are also on the balance sheet. Liabilities are the debts a company owes for the 12 month period. Liabilities consist of accounts payable, short/current long term debt, deferred long tern liability charges, minority interest, and negative goodwill. According to figures, Ford Motor Company has twice as much liability as Honda Motors. Stockholders’ equity, often referred to as the book value of the company, is an accumulation of total-assets minus total liabilities. Equity comes from two sources, originally invested money, and earnings retained by the company that accumulated over time

This section first lays out basic material of VEP, and compares several alternatives in cash distribution to justify feasibility of VEP in perspective of common shareholders. Then, we evaluate three options form the common shareholders’ perspective. Sensitivity analysis is conducted to give a broader picture of VEP under slightly different assumptions. Spin off related issues are discussed at last.

The main topic of the case was the problems caused by defective or damaged seats. TMM USA's seat problem was threefold. The first was the actual defects with the hooks and the damaged caused by cross threading by employees when installing the seats. This problem led to the second problem, which was the departure from the Toyota Production System (TPS) when dealing with the seat problem. Rather than fix the problem with the seat when it happened, they continued with the car's production and worried about the seat afterwards. And this led to the third problem, a build up of cars with seat problems in the off-line operation area.

These results show an improvement over the previous strategy. This improvement comes from a few different places. With respect to the X5, the company clearly benefitted from the CVP analysis, because this product was cut from the lineup, avoiding steep losses. The potential sales in 2015 were below the breakeven point, so this product had to be removed from the lineup. As no changes were made to the price point of this product,

Analysis and notation of a companies’ actualized capital structure and payout policies serves as a temporal exposé; much can be reveal regarding how the company is managed and how such data bodes for the future. Therefore, a comprehensive appraisal of GMs current conventions pertaining to financing is capable of functioning as a test of overall forward virility or debility. Ratiocinations can be drawn based on the policies uncovered and insights gained.

Research and development; Ford can use innovation and technology to advance and design smart automobiles in this competitive market. Supplies play very important role in the auto industry, maintaining a key supplier and at reasonable prices of parts could affect the finished product. Computer technology could be used to cut down cost and produce quality goods. Fords’ strength is its customers, Ford should be able to supply products that consumers wants to buy whiles not loosing site of the quality, design performance and the cost consumers are willing to pay. It is very important to focus on the chain value to cheek and make the necessary changes if any in order to stay on track on the company’s business level strategy. The chain value is also used to structure and restructure the company’s operations. From leadership (CEO) level through to lower management level, here the firm has control of all its factors of production and distribution. The chain helps Ford to re-evaluate performance and concentrate on production that they do better and to eliminate waste and time. The change is as strong as its weakest end, flexibility, coordination and flow of information across the management team is a must.