Financial Analysis Report: Ford Motor Company Asset Ratio Analysis

This report analyzes the asset ratios of Ford Motor Company to assess its financial position and make recommendations for improving revenue generation and profitability. The analysis focuses on receivables turnover, average collection period, inventory turnover, average days in inventory, and asset turnover ratios for the years 2017, 2018, and 2019. The report highlights a decrease in asset turnover, indicating a need for better asset utilization. Recommendations include improving receivables collection by offering timely payment options and optimizing inventory management to reduce average days in inventory. The report suggests that Ford should focus on generating more revenue from its assets to improve financial performance, ultimately contributing to increased net profit. The analysis uses data from Ford's annual reports and external financial sources to support the findings and recommendations, providing valuable insights for the CFO and other stakeholders.

Financial Statement Analysis

Accounting 1
Date: 15/3/2020
To: Chief financial officer (CFO)
From:
Subject: Financial Position
According to evaluation of assets ratio of Ford Motors, it is observed that the collects the
receivable amount in 150.35 days in current year 2019. It states that the collecting days has been
increases as the passage of time such as 139.90 and 146.10 in 2017 and 2018 respectively (Ford
Motor Company, 2017a). As per the receivable turnover, that the company collects its average
account receivable in 2.43 number of times per year. It states that the company sells it goods on
credit with high amount as the amount of average account receivable is less as compare to the
amount of net sales.
Average day’s inventory has been decreases from 2017 to 2019 such as 155.18 to 29.82. In 2019,
the average days have been decreases which states that the company financial position has been
improved as it quickly sells the inventory. As per the inventory turnover ratio, it has been
estimated that the company ordered the inventory in 12.24 times in a year which describes that it
ordered the inventory in less period of time. The amount of inventory has been fluctuated from
the last three years such as 102777000, 11220000 and 10786000 in 2017, 2018 and 2018
respectively. The inventory amount has been increases from 102777000 to 11220000 in 2017 to
2018 but from 2018 to 2019, the inventory amount has been decreases such as 11220000 and
10786000 in a respective manner (Ford Motor Company, 2018b).

Accounting 2
It is evaluated that asset turnover ratio of Ford Motors has been decreases in the last three years
such as 0.63, 0.63 and 0.61 in 2017, 2018 and 2019 respectively (Ford Motor Company, 2017a).
The amount of net sales is less as compare to the amount of total assets which depicts it has the
ability to generate the sale. But according the assets turnover ratio, it is evaluated that the
company ratio of generating the net sales has been decreases by using the assets. The decreasing
net sales affect the net profit of the company which is a major motive for the organization while
operating the business (Schroeder, Clark, & Cathey, 2019).
From the above discussion, it has been estimated that it is not able to generate the revenue by
using the amount of assets. It is suggested that the company has to utilize its machines and
equipment’s to generate the revenue by increasing the quantity of products. Utilizing the assets
within the similar period of time enhances its financial position. It is also recommended that the
company has to collect the amount of receivable in few days in order to improve its efficiency
and net profit by using that money for further investments. It also has to provide the automobile
products on time payment instead of selling them on credit (Robinson, 2020). Delivering the
goods on payment helps the company to maintain the amount of cash in hand which directly
maintain its efficiency to operate the business by paying small or long term obligations.

Accounting 3
References
Ford Motor Company. (2018) Annual Report On Form 10-K. Retrieved From:
https://corporate.ford.com/microsites/sustainability-report-2018-19/assets/files/sr18-
form-10-k.pdf
Ford Motor Company. (2017) 2017 Annual Report. Retrieved From:
https://corporate.ford.com/content/dam/corporate/en/company/corporate-governance/
Final-Annual-Report-2017.pdf
Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial accounting theory and
analysis: text and cases. John Wiley & Sons.
Robinson, T. R. (2020). International financial statement analysis. John Wiley & Sons.
Yahoo Finance. (2019). Ford Motor Company (F). Retrieved From:
https://finance.yahoo.com/quote/F/financials?p=F