Detailed Analysis of Ford Motor Company's Cash Flow Statement

This report provides a detailed analysis of Ford Motor Company's cash flow statement. It examines the purpose of a cash flow statement and its significance in understanding a company's financial health. The analysis is segmented into three key sections: cash from operating activities, cash from investing activities, and cash from financing activities. The report uses data from Macro Trends to evaluate Ford's financial performance over an eight-year period, highlighting trends in net income, operating cash flow, investments, and debt management. The interpretation section assesses Ford's liquidity position, discussing the changes in net cash flow and offering insights into the company's ability to manage its cash effectively for long-term sustainability. The report concludes by emphasizing the importance of cash flow analysis in providing a clear picture of a company's financial performance and its potential for future growth.

Running Head: CASH FLOW STATEMENT 1
CASH FLOW STATEMENT

CASH FLOW STATEMENT 2
Contents
Introduction......................................................................................................................................3
Purpose of cash flow statement.......................................................................................................3
Analysis...........................................................................................................................................3
Interpretation....................................................................................................................................4
References........................................................................................................................................6

CASH FLOW STATEMENT 3
Introduction
Cash flow statement is the financial statement that depicts the details of the transactions
which have taken place during an accounting year. The clear picture can be observed through the
cash flows statement as it also supervises the movement of the cash for sustainable and long term
growth of the business (Mishra & Mishra, 2020).
Purpose of cash flow statement
The purpose of the cash flow statement is to explain for the changes taking place in the
position of the cash. The target of the Statement of cash flow is to give a detailed description of
how and in what ways the money is being utilized and streaming in the company or the firm. It
gives a portrayal of how a lot of cash was utilized in non-center exercises like contributing and
financing exercises. The cash flow statement is not only useful in determining the figures, but it
also provides the reason for the same. In this report a detailed analysis of the cash flow
statements of Ford Motor Company has been done in order to find out the variances if any and
the same shall be reported to the management to make necessary changes (LUCIAN, 2016).
Analysis
The cash flow statement of Ford Motors Company is bifurcated into three major sections
namely, cash from operating activities, cash from investing activities and cash from financing
activities. The cash from operating activities is the cash that is used in the day to day operations
of the business. The operating income plus non-cash items are involved in this section. To get the
insight in detail, the macro trends website has been used to analyze the data.

CASH FLOW STATEMENT 4
It can be seen that in the year 2012, Ford Motors, has a net income of $5612 and the same
had increased to $11946 in the very next year. The cash flow from operating activities was
$9045 and over the period of 8 years, the highest operating cash have been through $19850. This
implies that company has the potential to be solvent for long term period, to provide for
investing as well as financing activities. Major changes have been seen in inventories and net
income. In the financial year 2019, the net income has seen a drastic fall from $3695 to $84.
The cash flow from investing activities reflects purchase of property, plant and
equipment over the period of 8 years. The company kept on purchasing assets to deliver better
results and productivity. There were no new acquisitions and the other investing activities
increased from -$7416 to $-11863 in the year 2019 (Marco Trends, 2019). The position also
states that company was involved in making long term investments, to maintain the operational
efficiency and future growth (Deo, 2016).
The cash flow from financing activities is also one of the section, that is presented for
Ford Motors and which mentions the repayments of the long term debt from year 2012, where
the net long term debt was $3226, but suddenly thereafter the company invested in the debt
component and the loan increased to $12590. From thereafter to maintain an optimal capital
structure, the company also reduced the balance of the loan. The stock has been fluctuating but
stood at $2389 in the year 2019. The debt issuance in the year 2015 was $17148, but soon the
company realized the burden of the leverage and hence, the decrease was evident from thereafter
(Marco Trends, 2019).

CASH FLOW STATEMENT 5
Interpretation
Overall the net cash flow from all the activities have seen drastic changes over the period
of last 8 years. In the year 2012, the net cash flow was negative. At that time the liquidity
position of the company was not smooth and the cash was net of at ($1489). The situation
improves a bit in the year 2015, where the company was not able to generate enough net cash
and was stuck at $1683 only. The dividends were also declared due to which the cash in hand
was lower. From the perspective of liquidity it is beneficial, but from another perspective of
having safety, the cash in hand is necessary to deal with any small expenses that may occur out
of emergency. Hence, net cash of $834 in the year 2019, is not sufficient and the company must
revamp the current cycle to get rotate the cash faster (Knežević, Mitrović & Ilić, 2016).
Hence, from the overall analysis it can be stated how well the cash flow statement has
delivered information related to Ford Motors and the company is outstretching to be more liquid.

CASH FLOW STATEMENT 6
References
Deo, P. (2016). EVALUATING A CASH FLOW STATEMENT. International Journal of
Business, Accounting, & Finance, 10(1).
Knežević, S., Mitrović, A., & Ilić, Z. (2016). Different perspectives on the cash flow
statement. Hotel and Tourism Management, 4(2), 48-54.
LUCIAN, G. (2016). CASH FLOWS IN ROMANIAN SMALL AND MEDIUM
ENTERPRISES. Annals of'Constantin Brancusi'University of Targu-Jiu. Economy
Series, (4).
Marco Trends, (2019). Ford Motor Cash Flow Statement 2005-2020 | F. Retrieved from
https://www.macrotrends.net/stocks/charts/F/ford-motor/cash-flow-statement
Mishra, M., & Mishra, U. (2020). Financial statement Analysis of selected banks on the basis of
cash flow statement. Our Heritage, 68(49), 170-176.