Essay Ford Motor Company Memo

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Memo
To:Retire at Age Fifty Fund (RAFF)
From: Penelope Magouliotis, Jeffery Childs, Marcus Eggleston, Syed AzeemDate:February 15, 2014
Subject:Ford’s Shareholder Value Enhancement Plan (VEP) Evaluation
Ford Motor Company
Ford Motor Company is an American automaker, it is the world's fifth largest automaker based on worldwide vehicle sales. Its headquarters are based in Dearborn, Michigan, which is a suburb in Detroit. Henry Ford founded Ford Motor Company on June 16, 1903 and it became one of the largest and most profitable companies in the world, as well as being one of the few to survive the Great Depression. Ford Company is the largest family-controlled company in the world; it has been in continuous family power for over 110
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GM has just over one year’s worth. DC currently has negative free cash flows because of high capital expenditures, so it has negative Cash to Free Cash Flow ratio. Based on all this Ford has a good amount of cash.
What are Ford’s primary sources of cash? Why did Ford choose to accumulate so much cash?
Ford’s primary resource of cash is issuing stock to shareholders. By having class A and class B shares, Ford is able to have control of the corporation in the family. They have increased given the shareholders a confidence by increasing their dividends as well. Ford need to accumulate cash because the automotive industry easily once projects start to fail. A prime example would be its failure of the car Edsel, which marked as one of the greatest flops in the world of business history.
Provide an overview of Value Enhancement Plan (VEP) by briefly discussing the aspects below.
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.
Explain how dividends and taxations will be applied to VEP.
The VEP is basically a plan for investors to capitalize on instead of having control over the corporation. The entire reason behind this plan is so that the Ford family does not loose any control over the corporation, yet still have good financial backing from its investors.
For class A shareholders, the VEP shareholders would exchange their
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