2019

Oxford Brookes University –

Research analysis project

AN EVALUATION OF THE BUSINESS AND FINANCIAL PERFORMANCE OF FORD

BETWEEN YEARS 2016 TILL DECEMBER 2018 & IN COMPARISON TO ???

ACCA REG. NUMBER:

WORD COUNT: 7431

 Oxford Brookes University – Research analysis project

Contents
Part 1: PROJECT OBJECTIVES AND OVERALL RESEARCH APPROACH ........................................ 3
1.1 Reasons for selecting the Research Topic and Organization ............................................................ 3
1.2 Aims of the research ............................................................................................................................... 3
1.3 Research Objectives ................................................................................................................................ 3
1.4 Research Questions ................................................................................................................................ 4
1.5 Research Approach ................................................................................................................................. 4
2.1 Sources and Methods of Information Gathering ................................................................................ 5
2.2 Limitations of Gathering Information ................................................................................................. 5
2.3 Ethical Issues ....................................................................................................................................... 6
2.4 Accounting Analysis Tools and Business Models Used and their limitations ..................................... 6
Introduction .................................................................................................................................................. 9
SWOT Analysis............................................................................................................................................... 9
Strengths ................................................................................................................................................... 9
Weaknesses ............................................................................................................................................ 10
Opportunities .......................................................................................................................................... 10
Threats .................................................................................................................................................... 11
PESTEL Analysis ........................................................................................................................................... 11
Political Factors ....................................................................................................................................... 11
Economic Factors .................................................................................................................................... 12
Social Factors .......................................................................................................................................... 13
Technological Factors.............................................................................................................................. 13
Environmental Factors ............................................................................................................................ 13
3.2 Financial Analysis .................................................................................................................................. 14
Revenue Recognition .............................................................................................................................. 14
Gross Profit ............................................................................................................................................. 16
Net Profit:................................................................................................................................................ 17
Liquidity................................................................................................................................................... 17
Cash Flows:.............................................................................................................................................. 19
Financial Stability .................................................................................................................................... 20
Interest Cover Ratio ................................................................................................................................ 21

1
 Oxford Brookes University – Research analysis project

Earnings per Share (EPS) ......................................................................................................................... 22

3.3 Conclusion and Recommendations....................................................................................................... 23
LIST OF REFERENCES ................................................................................................................................... 24

2
 Oxford Brookes University – Research analysis project

Part 1: PROJECT OBJECTIVES AND OVERALL RESEARCH APPROACH

Relationship of Chartered Certified Accountants (ACCA) as a team with Oxford Brookes

University gives ACCA understudies a brilliant chance to benefit BSC Honors in Applied
Accounting which is one of the most significant projects it offers.

1.1 Reasons for selecting the Research Topic and Organization

The explanations behind choosing Topic 8, "An Analysis and Evaluation of the business and
monetary execution of an association over a multiyear time frame" are:
As I have tremendous experience of considering proportions all through my tutoring and
furthermore in ACCA there are numerous papers that spotlights on ascertaining, dissecting and
deciphering proportions which incorporate F5, F7 and F9. In addition I have significant
enthusiasm for proportion examination and this venture will upgrade my knowledge and mastery
in monetary investigation.
This undertaking gives me an extraordinary chance to put my hypothetical learning about these in
genuine world and test my insight. Moreover, it will likewise help me in my vocation ahead. Be
that as it may, the tricky thing was choosing an association and after a great deal of research I
discovered FORD Motors which is an expanded industry.
So it is a difficult undertaking and I am completely eager to execute my hypothetical capability on
such a major industries. Besides, the monetary reports and business data of FORD Motors is
effectively and promptly accessible.
Another explanation is that I am going too attached to voyaging and the primary concern when
chosen where to make a trip is the spot to remain. So FORD having such an enormous diversified
and holding up business tasks, I am enchanted to deal with it. I would contrast it with General
Motors (GM) which is another huge name in this industry and one of the greatest adversary.

1.2 Aims of the research

The aim of this research analysis project is to examine the financial and business performance
of FORD Motors compared to its competitor General Motors (GM) over the three recent years
from 2016 to 2018.

1.3 Research Objectives

 This research analysis project has the following research objectives: This is not a question.
Also you can add a objective to evaluate the performance of ford over last three years.
 Analysis and evaluation of the financial performance of FORD Automobiles compared to
General Motors (GM) from 2016 to 2018. Ford evaluation with GM should be made in
most recent year.

3
 Oxford Brookes University – Research analysis project

 Analysis and evaluation of business environment using SWOT and PESTLE analysis and
identifying the factors affecting the financial performance of FORD.
 Conclusion and Recommendations.

1.4 Research Questions

The following are research questions for my RAP.

 How to compare the performance of FORD with General Motors (GM) over recent three
year using financial analysis tools and business models? Comparison with competitor can be
made only in recent year. Only three years performance of Ford required analysis.
 Determine who performed better?
 What are the major factors existing in the business environment affecting the financial
performance FORD?
 How well is FORD strategically positioned to avail different opportunities and fight different
threats in the outer environment?
 Based on the analysis and evaluation, what are the recommendation that can be made to the
management of FORD?

1.5 Research Approach

I have used the BSC information pack for my research work in the following way:
 I started off by downloading the annual reports of both companies from their respective
websites and studied these reports carefully and completely to get information.
 Then I performed ratio analysis using information on their respective annual reports and
depicted these ratios graphically using MS EXCEL.
 Using these calculated ratios, I evaluated and analyzed the financial performance of both
companies and compared who operated better.
 After which I gathered data and information from different secondary sources to support and
ratify my workings on financial and business performance of each organizations.
 Finally, I used MS Word for my project writing and used Harvard referencing system for
all references and MS PowerPoint for presentation.
Add 400 more words to chapter 1.

Part 2: Sources of Information and Business and Accounting Techniques Used

Primary sources could be termed as data which is observed or collected directly for the first time
whereas data already published and collected in the past is called secondary data. There are
different methods of collecting primary data which includes interviews, questionnaires, focus
group and observation. Primary data also known as first-hand data which is more reliable, relevant

4
 Oxford Brookes University – Research analysis project

and gives you an impartial information but this is a time consuming process and credibility of the
outcomes mainly depends on appropriate sample selection. Add reference here
Secondary data also known as second hand data is handily available but there will always be a
need to determine its legitimacy and tendency. Secondary data is used to expand the sample size
as it is efficiently and readily available as source of gathering information for research
works/studies. Add reference here
2.1 Sources and Methods of Information Gathering
I have arranged this examination investigation undertaking utilizing optional wellsprings of data
as showed in the data pack for Topic 8. There are a few risks related with these recycled
information, for example, biasness and window dressing. So these risks should be managed
profound looking into by utilizing various diverse valid sources as opposed to relying upon one.
This will incorporate perspectives of various business related and business expert just as
associations which will build the trustworthiness of my exploration. I have utilized the
accompanying sources Annual Reports of the two organizations, Web Search, Online Libraries
and distinctive course books. Can add two references here
Annual Report

Annual report is one of the fundamental document that is published annually by public companies
to show their financial position and performance for the year. This is published as it is an obligation
on listed companies to do so and is available for everyone regardless of you being shareholders or
not . It is one of the main source which could be used as collecting data and information for
research project.
Web Search/Online Libraries

Today the world is a global village, you are connected through a single click via the internet and
millions of information is easily available to you sitting anywhere. There are a lot of relevant
material available on the internet and my research report has enormously benefited from it. These
include articles, journals and online publication by the organization official site and different
external business analyst organizations. I have gathered information from sites such as NASDAQ
which is second largest stock exchange by market capitalization, one of the biggest business
journal Wall Street Journal and many other different sites.
Books

Course books have been very useful throughout my research work helping me refresh my
knowledge about ratios and their interpretation. It also helped me to go through different business
models/theories and improve my knowledge about it. One of the books that helped me a lot is,
“ACCA Paper F7” which is on (FINANCIAL REPORTING) text book from Kaplan publishing
where you can get a lot of information about ratio analysis and its interpretation.
2.2 Limitations of Gathering Information

5
 Oxford Brookes University – Research analysis project

Using secondary data to gather information has its own limitations. The data may be out of date
or inaccurate. If using data collected for different research purposes, it may not cover those samples
of the population researchers want to examine, or not in sufficient detail. Some of the problems I
faced gathering these information’s were:
 There are a lot of information available on the internet which causes information overload
and with this much available information I was very much confused but after a lot of
research, I tried to gather relevant information required for my research. Add reference
here
 Collecting this information was time consuming as you have to research your way through
to get the information you require. Add reference here
 The annual reports may be used by organizations to window dress its financial performance
to influence the decisions of investors and future potential investors resulting in misleading
them. So I tried to overcome these biasness by supporting my findings on ratio analysis
and management interpretation using annual reports by other sources too. Add reference
here
 As I was using secondary data where the information’s used could be old and unreliable
unlike primary source where it is more up to date and reliable. Add reference here
2.3 Ethical Issues

It is very important for a researcher to maintain immense level of ethical standards to avoid any
kind of plagiarism. Being an ACCA student and a professional accountant we have to abide with
some code of ethic which are integrity, objectivity, professional competence and due care,
confidentiality and professional behavior. So there is high level of ethical standards expected and
we as professionals have to maintain this level. Thus I have been cautious throughout my research
work to avoid any kind of cheating, falsification and have given references where I have used
others work as part of my research using the Harvard referencing style.
2.4 Accounting Analysis Tools and Business Models Used and their limitations

Ratios Analysis

Ratio analysis is an integral part of evaluating the financial performance of an organization. It

helps different stakeholders to easily understand the financial position of the organization.
Furthermore, it also helps the existing shareholders and potential investor make key decisions
based on these analysis. These ratios are calculated using data which is easily available in form of
financial statements in their annual reports. It also helps in comparing companies of different size
and its own performance over the years (Accounting Explained, 2018) Update reference using
Harvard Angela referencing. I have used the following financial ratios as a part of my research
analysis project.

6
 Oxford Brookes University – Research analysis project

 Profitability ratios: These ratios show how well the company has generated profit from its
operations. Some of the profitability ratios I have used to compare FORD and GM includes
gross profit margin, net profit margin. Add reference here
 Liquidity ratios: These ratios analyze the company’s ability to pay its short term debts as they
become due using current or quick assets (Investopedia, 2018) Update reference using
Harvard Angela referencing. Current ratio are calculated in this report to analyze liquidity
position of FORD and GM.
 Leverage ratios: These ratios shows how the company’s capital structure is shaped i.e. the
amount of debt used compared to equity and also the ability of the company to meet its long
term debts and its related interest expenses. Debt to Equity ratio and Interest cover are used in
this report for FORD and GM. Add reference here
 Investors Ratios: Theses ratios helps investors and potential investor’s in their decision
making about how and where to invest and whether to keep their investment or sell it. Earnings
per Share (EPS) is calculated for both FORD and GM. Add reference here

Limitations of Ratios Analysis

 Some of the limitations of ratio analysis are mentioned below: Not a bullet point
 Ratios could be manipulated by window dressing and different creative accounting techniques.
Add reference here
 Simply using these ratios does not provide meaningful analysis as business problems includes
more complex patterns which could not be solved by ratios alone (BOOK F7 Kaplan F7
Book, 2016). Update reference using Harvard Angela
 Ratios analysis focuses mainly on the quantitative aspect and thus fail to associate it with the
qualitative aspect which is the business environment as a whole such as the micro and macro-
economic circumstances in the current situation. Add reference here
 Ratio analysis is purely based on information available in data, slightest of error in these data
can cause the whole analysis to be wrong and misguide the users. Add reference here
SWOT Analysis

SWOT analysis is extensively used business model to analyze and evaluate organizations
strengths, weaknesses, opportunities and threats in its activities (CIMA Global, 2007). Reference
update required It helps an organization to overcome its weaknesses and threats and seek for new
available opportunities which could be used in the best interest of the organization with its own
strengths and having competitive edge over its rival. This business model analyzes the following
four distinctive form of an organization.
 Strengths: These are those internal features which gives your organization competitive
advantage over its rival. This includes your organizations unique selling points, brand name
and technological advancement. Add reference here

7
 Oxford Brookes University – Research analysis project

 Weaknesses: These are those internal features which leads to unstable situation such as higher
direct costs, management inefficiencies. Add reference here
 Opportunities: These are those occasions where organizations could benefit by these apparent
external opportunities. Add reference here
 Threats: These are those unfavorable changes in the external business environment which
could put it in a vulnerable situation such as inflation, unfavorable currency fluctuations. Add
reference here
Limitations of SWOT

 Famous writer describes SWOT as:” SWOT does not need to be recalled: It needs to be
enhanced” (Westga.edu, 2000). Explain the limitation
 It is an ongoing process which requires regular information of a business internally and
externally, so it takes a lot of time. Add reference here
 One of the major limitation is that this whole procedure completely depends on the analyst’s
expertise and reasoning and there is built in possibilities of unfairness. Add reference here
 It helps in recognizing and pinpointing the obstacles the organization is facing but does not
provides a valid solution. Add reference here

PESTLE Analysis

Pestle analysis also sometimes referred to as pest analysis, is a strategic tool used to identify the
macro (external) aspects that the organization is facing (Oxford College of Marketing Blog,
2016). Update Reference Pestle stands for political, economic, social, technological, legal and
environmental and is used for different purpose which also includes research report. Considering
these external factors, a business can enlarge the opportunities available and reduce threats to the
business.
 Political factors: All the circumstances arising due to political situation and decisions made
by the government or authority such as political stability/Instability. Add reference here
 Economic factors: These are all those elements linked with economic policies which influence
the consumers spending nature positively or negatively such as inflation, interest rate and
exchange rate. Add reference here
 Social factors: All those social factors such as culture, beliefs and attitude that will alter the
demand for the company’s product or services. Add reference here
 Technological factors: These factors include all type of technological advancement such
invention, innovation. Add reference here
 Legal factors: These include all those legal factors affecting the business such as land law,
employment law, and trade law. Add reference here
 Environmental factors: All those factors associated with environment that would influence
the demand for its product or service i.e. environmental regulations, sustainability. Add
reference here

8
 Oxford Brookes University – Research analysis project

Limitations of PESTLE analysis

 Some of the limitation associated with PESTLE analysis are as follow: Remove Bullet
 The business environment rapidly changes overtime and requires a regular scrutiny and
reviewing. Pestle analysis becomes exposed to errors as external factors are based on
assumptions and macro-economic conditions (Pestle Analysis, 2016). Update reference
 Getting information could be endless and tiring work depending on the complications of the
factor. So it will need a lot of ability and time (Pestle Analysis, 2016). Update reference
Part 3: Analysis, Evaluation, Results and Recommendations
3.1 Business Analysis
Overview of Business

Introduction
FORD Motor Company was incorporated in Delaware in 1919. By obtaining the matter of a
Michigan organization, moreover known as Ford Motor Company, which had been consolidated
in 1903 to produce and sell structured vehicles and engineered by Henry Ford. FORD is a
worldwide automobile industry and portability organization situated in Dearborn, Michigan. With
about 199,000 representatives and 67 plants around the globe, having center business incorporates
structuring, fabricating, promoting, financing, furthermore, adjusting a full line of Ford autos,
trucks, SUVs, and energized vehicles, just as Lincoln extravagance vehicles. At the same time,
that company is aggressively seeking after developing open doors through Ford Smart Mobility,
arrangement to be an innovator in availability, versatility, self-ruling vehicles, the client
experience, and information and examination by giving monetary benefits through Ford Motor
Credit Company LLC ("Ford Credit").
Henry Ford established Ford in 1903. It’s headquartered in Dearborn, Michigan, USA. It is one of
the top vehicle marks on the planet and sells business vehicles under the Ford brand while the
extravagance vehicles under the Lincoln brand. It is likewise a standout amongst other American-
based Automobile makers with the most benefits earned through the North American Segment.
Consistently it delivers around 1-3 million vehicles. It is the fifth biggest car maker on the planet.
With such gigantic benefits being earned each year and being one of the main vehicle marks on
the planet, where does it stand today? Add reference here

SWOT Analysis
Strengths

 Worldwide Recognition – Ford is a notable brand in the car business and is likewise perceived
in the worldwide markets as a result of its accomplishment in promoting and publicizing. Its
image worth is $12.74 billion as per the 2018 report of Statista. Add reference here
 Research and Development – Ford's innovative work is one of its key qualities on the grounds
that the organization is resolved to make and grow new items. They are constantly attempting

9
 Oxford Brookes University – Research analysis project

to improve the presentation of their vehicles. The variables that are assessed incorporate fuel,
effectiveness, wellbeing, and consumer loyalty. Add reference here
 Diverse Offerings – Ford takes into account a wide range of statistic bunches with their
broadened brands and vehicle models. They deal with the necessities and needs of their
purchasers by giving them more assortment of autos and business vehicles. Add reference here
 Versatility – Ford has a wide item and administrations portfolio which gives them solid
influence and less reliance on only one item go. Their duty to receiving new innovations
likewise gives them a lift in the aggressive vehicle advertise. They are additionally chipping
away at light weighting, lodge innovation, and powertrain to upgrade their item quality. Add
reference here
 Huge Network – The organization is likewise assorted in its tasks and dispersion, as they have
an assembling nearness in 62 nations over the world. Portage builds up its vehicles on
institutionalized methods. They additionally put vigorously in different fuel sources. Add
reference here

Weaknesses
 Product Recalls – Ford confronted a tremendous misfortune and their image picture endured
because of the item reviews back in May 2016. They reviewed around 830,000 Ford and
Lincoln vehicles to supplant defective side entryway hooks. It likewise reviewed vehicles in
May 2015 due to the security disappointments of Takata airbags. Add reference here
 Feeble Foothold – As Ford's tasks are differentiated in numerous land territories, they need
center in execution and profitability. They don't have a fortification in developing markets like
India. Add reference here
 Poor Reputation – Ford has a poor notoriety contrasted with its European and Japanese
opponents. Lincoln, specifically, is viewed as a second rate brand when contrasted with
English and German extravagance vehicle brands. Add reference here
 Dependent on U.S Markets – Ford is exceptionally subject to the U.S and European market.
It confines its benefits and incomes. Specialists anticipate that most of future vehicle deals will
originate from developing markets, for example, China and India. Add reference here

Opportunities
 Eco-Friendly Vehicles – As Ford is now attempting to be innovatively versatile, they have a
phenomenal chance to deliver eco-friendly autos and business vehicles. For instance, they can
fabricate vehicles that keep running on various types of vitality. Along these lines, they have
more alternatives in structuring eco-accommodating vehicles. The 2018's C-Max and Fusion
Hybrid vehicle model can be their most noteworthy chance, as they have just caught the market
with this new model. Add reference here
 Increment In Customer Base – Ford is as of now dealing with entering the car showcase in
India and China, they have an incredible chance to take advantage of other little nations on the
planet and develop their client base. Add reference here

10
 Oxford Brookes University – Research analysis project

 Digital Marketing – Digital showcasing is winning everywhere throughout the world

nowadays, so Ford has a chance to take a shot at their computerized promoting abilities to
develop its client and provider commitment. Add reference here
 Self-driving vehicle – In 2017, Ford has put $1 Billion in Artificial knowledge organization,
Argo AI, to build up its self-driving innovation. What's more, Ford has joined forces with
Walmart and Postmates to test the eventual fate of staple conveyance. Add reference here
Threats
 High Competition – Ford is as of now confronting merciless challenge from its opponent
organizations like Toyota, Tesla, and Tata. Passage continues battling to keep up its inventive
situation in the business. Add reference here
 Expanded Prices of Raw Materials – The rising crude material costs of steel and steel loop
can straightforwardly influence the organization's expense and net revenue. Add reference here

 Regulations and consistence – The consistence and administrative dangers for vehicle brands
have expanded in the previous years as a result of ecological upgrades circumventing the
world. Vehicles are currently assessed for open wellbeing and quality issues. Portage can
confront genuine difficulties in the event that it neglects to consent to the new guidelines. Add
reference here

PESTEL Analysis
Political Factors
Political variables assume a huge job in deciding the elements that can effect Ford Motor
Company's long haul productivity in a specific nation or market. Portage Motor Company is
working in Auto Manufacturers - Major in excess of dozen nations and open itself to various sorts
of world of politics and political framework dangers. The make progress in such a unique Auto
Manufacturers - Major industry crosswise over different nations is to differentiate the orderly
dangers of world of politics. Passage Motor Company can intently dissect the accompanying
components before entering or putting resources into a specific market- This explanation should
be provided in chapter 2 not in chapter 3
 Political stability and significance of Auto Manufacturers - Major part in the nation's
economy. Impact on Ford Business Add reference here
 Risks of military invasion. Explanation required and impact on Ford. Add reference here
 Level of debasement - particularly levels of regulations in Consumer Goods segment. Impact
on Ford Business Add reference here
 Organization and impedance in Auto Manufacturers - Major industry by government.
 Lawful system for agreement implementation. Impact on Ford Business Add reference here
 Licensed innovation security. Impact on Ford Business Add reference here
 Exchange regulations and taxes identified with Consumer Goods. Impact on Ford Business
Add reference here

11
 Oxford Brookes University – Research analysis project

 Favored exchanging accomplices. Impact on Ford Business Add reference here

 Anti-trust laws related to Auto Manufacturers – Major. Impact on Ford Business Add reference
here
 Evaluating regulations – Are there any estimating administrative instrument for Consumer
Goods. Impact on Ford Business Add reference here
 Tax assessment - tax rates and motivators. Impact on Ford Business Add reference here
 Compensation enactment - the lowest pay permitted by law and additional time. Impact on
Ford Business Add reference here
 Work week regulations in Auto Manufacturers – Major.
 Mandatory representative benefits.
 Modern security guidelines in the Consumer Goods part.
 Product marking and different prerequisites in Auto Manufacturers – Major
OBU doesn’t require bullet points but impact on business operations with reference.

Economic Factors
The Macro condition factors, for example, – expansion rate, reserve funds rate, loan fee, outside
conversion scale and monetary cycle decide the total interest and total interest in an economy.
While smaller scale condition factors, for example, rivalry standards sway the upper hand of the
firm. Portage Motor Company can utilize nation's monetary factor, for example, development rate,
expansion and industry's financial markers, for example, Auto Manufacturers - Major industry
development rate, shopper spending and so on to conjecture the development direction of –
sectory-name- - part as well as that of the association. Financial components that Ford Motor
Company ought to consider while leading PESTEL examination are – This explanation should be
provided in chapter 2 not in chapter 3

 Types of monetary framework in nations of activity – what sort of financial framework

there is and how stable it is.
 Government mediation in the free market and related Consumer Goods.
 Trade rates and strength of host nation currency.
 Proficiency of financial related markets – Does Ford Motor Company needs to bring capital
up in nearby market?
 Infrastructure quality in Auto Manufacturers - Major industry.
 Work expenses and profitability in the economy.
 Business cycle stage (for example flourishing, downturn, recuperation).
 Financial development rate.
 Unemployment rate.
 Inflation rate.
 Interest costs.

12
 Oxford Brookes University – Research analysis project

OBU doesn’t require bullet points but impact on business operations with reference.
Social Factors
Society's way of life and method for accomplishing things sway the way of life of an association
in a domain. Common convictions and dispositions of the populace assume an extraordinary job
in how advertisers at Ford Motor Company will comprehend the clients of a given market and how
they structure the showcasing message for Auto Manufacturers - Major industry customers. Social
factors that initiative of Ford Motor Company ought to dissect for PESTEL investigation are –
 Demographics and skill level of the population.
 Class structure, progressive system and power structure in the general public.
 Instruction level just as training standard in the Ford Motor Company’s industry.
 Culture (gender roles, social shows and so forth.).
 Pioneering soul and more extensive nature of the general public. A few social orders empower
business enterprise while some don't.
 Aptitude (wellbeing, natural cognizance, and so on.).
 Leisure interests
OBU doesn’t require bullet points but impact on business operations with reference.

Technological Factors
Innovation is quick disturbing different ventures no matter how you look at it. Transportation
industry is a decent case to show this point. In the course of the most recent 5 years the business
has been changing quickly, not in any case offering opportunity to the set up players to adapt to
the changes. Taxi industry is currently overwhelmed by players like Uber and Lyft. Vehicle
industry is quick advancing toward mechanization driven by innovation firm, for example, Google
and assembling is disturbed by Tesla, which has expressed an electronic vehicle transformation.
Please follow the remarks above
 Later innovative improvements by Ford Motor Company contenders.
 Innovation's effect on item advertising.
 Effect on cost structure in Auto Manufacturers - Major industry.
 Effect on worth chain structure in Consumer Goods segment.
 Pace of mechanical dispersion.
Please follow the remarks above
Environmental Factors
Various markets have various standards or natural norms which can affect the benefit of an
association in those business sectors. Indeed, even inside a nation regularly states can have diverse
ecological laws and risk laws. For instance in United States – Texas and Florida have diverse risk

13
 Oxford Brookes University – Research analysis project

conditions if there should arise an occurrence of accidents or natural calamity. Additionally a great
deal of European nations give sound tax cuts to organizations that work in the sustainable area.
Before entering new markets or beginning another business in existing business sector the firm
ought to deliberately assess the natural models that are required to work in those business sectors.
A portion of the ecological components that a firm ought to consider previously are - Legal Factors
Please follow the remarks above
 Climate.
 Environmental change.
 Laws directing condition contamination.
 Air and water contamination guidelines in Auto Manufacturers - Major industry.
 Reusing factor.
 Squander the executives in Consumer Goods segment.
 Demeanors toward "green" or natural items
Please follow the remarks above

3.2 Financial Analysis

Revenue Recognition

REVENUE TREND (IN BILLIONS, U.S.D)

FORD GM

165,000
160,000
155,000
150,000
145,000
140,000
135,000
2016 2017 2018

14
 Oxford Brookes University – Research analysis project

Change in
Revenue ($ in billions) Revenue
2016 2017 2018 2018 2018
FORD 151,800 156,776 160,338 3% 2%
149,184 145,588 147,049 -2% 1%
This is
The not table
required
here
Graphs
are
enough.
Its
already Alignment
updated correction
in excel. required
depicts the fact shown in the graph, revenue of FORD grew by 3% in 2018 because of the major
acquisition in year 2018. $13 billion acquisition. FORD becomes the largest company in the world.
The record fee revenue of FORD in 2017 is also a result of strong growth. Automotive segment
revenue is produced principally by offers of vehicles, parts, and frill. Income is recorded when
control is moved to our clients (by and large, our sellers and merchants). For most of offers, this
happens when items are delivered from our assembling offices. This isn't the situation, be that as
it may, as for vehicles delivered available to be purchased to day by day rental vehicle
organizations with a commitment to repurchase the vehicle for an ensured sum, exercisable at the
choice of the client. These vehicles are represented as working leases, with rent income and
benefits perceived over the term of the rent. Continues from the clearance of vehicles at sale are
perceived in endless supply of control of the vehicle to the purchaser. Organization income for
entire year 2017 was $156.7 billion, $5 billion higher than 2016. Overall gain owing to Ford for
entire year 2017 was $7.7 billion or $1.93 weakened income per portion of Common and Class B
stock, an expansion of $3.1 billion or $0.78 per offer contrasted and 2016, due to the essentially
lower premeasurement misfortune on annuity and OPEB plans and good assessment arranging
activities. Organization balanced EBIT for entire year 2017 was $9.6 billion, a lessening of $1.7
billion from 2016, more than clarified by North America and Europe. Our weakened balanced
profit per portion of Common and Class B Stock was $1.78, up $0.02 per offer contrasted and
2016 because of ideal assessment arranging activities. Total compensation edge was 4.9% and
Company balanced EBIT edge was 6.1% for entire year 2017, up 1.9 rate focuses and down 1.4
rate focuses, individually, from 2016. References missing Provide a minimum of 3 to 4 references
here other than company financial statements.

15
 Oxford Brookes University – Research analysis project

Gross Profit

GROSS PROFIT TREND (in U.S

Dollar Billions)
40,000
AXIS TITLE

30,000
20,000
10,000
0
2016 2017 2018
Subsequently, examine the benefit
FORD 25,605 25,455 24,069
effect of certain cost changes
GM 27,400 29,359 26,393
holding steady present-year
volume and blend and cash trade, so as to assess our cost patterns missing the effect of shifting
generation and money trade levels. Examine these cost changes in the accompanying
classifications:
 Commitment Costs – these expenses commonly differ with generation volume. These
expenses incorporate material, item, guarantee, and cargo and obligation costs.
 Structural Costs – these expenses commonly don't have a legitimately proportionate
relationship to generation volume.
These expenses incorporate assembling, designing, spending-related, publicizing and deals
advancement, North America more than clarified the automotive portion's entire year 2018 benefit.
Car EBIT profited from the biggest improvement in market factors since 2015. This advantage
was more than balanced by product and cash headwinds, higher net item costs as we enter a
significant item invigorate cycle, higher guarantee expenses, and Ford-explicit challenges in
China and Europe. Contrasted with 2017, the decrease in Automotive EBIT was basically
because of China and Europe.

In 2018, FORD brought about headwinds of about $3.3 billion out of four zones. These effects
are not characteristic, generally, of the progressing run pace of the business. Our entire year 2018
outcomes reflect about $750 million in duty related impacts, about $1.1 billion of expanded item
cost random to duty impacts, about $750 million of troublesome trade net of estimating, and about
$775 million of cost identified with the Takata reviews declared a year ago in North America.
About $1.9 billion of the headwinds depicted above was reflected in North America's entire year
2018 EBIT, which declined $450 multi year over year. This mirrors the solid upgrades conveyed
in North America coming about because of the proceeded with spotlight on high-edge items. South
America was influenced by about $400 million of these headwinds, which prohibits other
inflationary impacts, yet it conveyed an entire year EBIT improvement of $75 million contrasted
with 2017. Asia Pacific was influenced by about $400 million of the headwinds portrayed above,
yet the district conveyed a much more profound EBIT decay of $1.8 billion contrasted with 2017
principally because of lower JV salary in China. Europe was influenced by about $600 million of
the headwinds, yet observed a year-over-year EBIT decrease of $765 million notwithstanding the

16
 Oxford Brookes University – Research analysis project

most grounded item invigorate among every one of our areas in 2018. References missing Provide
a minimum of 3 to 4 references here other than company financial statements.
Net Profit:

NET PROFIT TREND (IN U.S.D

MILLION)
10,000
5,000
0
2016 2017 2018
FORD 4,600 7757 3,695
GM 9269 330 8,075

Explanation of this ratio is missing

Liquidity

Current Ratio

1.20 1.23 1.20

0.89 0.89 0.92

Times

2016 2017 2018

FORD 1.20 1.23 1.20
GM 0.89 0.89 0.92

Ford Credit's capacity to acquire unbound subsidizing at a sensible expense is reliant on its FICO
assessments or its apparent financial soundness. Portage Credit's capacity to acquire securitized
financing under its submitted resource upheld liquidity programs and certain other resource
supported securitization exchanges is subject to having an adequate measure of benefits qualified
for these projects, just as Ford Credit's capacity to acquire fitting FICO scores and, for certain
submitted projects, subsidiaries to deal with the loan fee chance. After some time, furthermore,
especially in case of any FICO score minimize, advertise instability, showcase interruption, or
different variables, Ford Credit may decrease the measure of receivables it buys or starts as a result
of subsidizing limitations. The potential eliminate of LIBOR is one such hazard that could cause
showcase instability or interruption. In July 2017 the CEO of the United Kingdom Financial
17
 Oxford Brookes University – Research analysis project

Conduct Authority (the "FCA"), which manages LIBOR, declared that the FCA means to quit
convincing banks to submit rates for the count of LIBOR after 2021. It is obscure whether any
banks will keep on willfully submit rates for the estimation of LIBOR after 2021 or whether
LIBOR will keep on being distributed by its chairman dependent on these entries or on some other
premise. It is preposterous to expect to anticipate the impact of these changes, different changes,
or the foundation of elective reference rates, however the potential eliminate of LIBOR could
unfavorably influence Ford Credit's entrance to the capital markets and cost of subsidizing. At
December 31, 2018, total balance sheet cash, cash equivalents, marketable securities, and restricted
cash (including Ford Credit) was $34.1 billion. FORD analyze our balance sheet on a “Company”
basis which excludes Ford Credit. The key balance sheet metrics consider as: (i) Company cash,
which includes cash equivalents, marketable securities, and restricted cash, excluding Ford
Credit’s cash, cash equivalents, marketable securities, and restricted cash; and (ii) Company
liquidity, which includes Company cash, less restricted cash, and total available committed credit
lines. One of our key needs is to keep up a solid asset report, while simultaneously having assets
accessible to put resources into and develop our business. In view of our arranging presumptions,
FORD accept they have adequate liquidity also, capital assets to keep on putting resources into
new items and administrations, pay our obligations and commitments as and when they come due,
pay an ordinary profit, and give assurance inside a questionable worldwide monetary condition.
At December 31, 2018, they had $23.1 billion of Company money, with 90% held by solidified
substances domiciled in the US. To be set up for a monetary downturn, focus to have a continuous
Company money balance at or above $20 billion. They hope to have periods when they will be
above or beneath this sum because of: (I) future income desires, for example, for interests in future
chances, capital speculations, obligation developments, benefits commitments, or on the other
hand rebuilding necessities, (ii) transient planning contrasts, and (iii) changes in the worldwide
monetary condition. Company’s money speculations fundamentally incorporate U.S. Division of
Treasury commitments, government office protections, bank time stores with speculation grade
organizations, venture grade corporate protections, venture grade business paper, and obligation
commitments of a select gathering of non-U.S. governments, non-U.S. administrative
organizations, and supranational foundations. The normal development of these ventures is around
one year and balanced dependent on economic situations and liquidity needs. FORD screen
Company money levels and normal development once a day. Ford Credit's liquidity accessible for
use will vacillate quarterly dependent on variables including close term obligation developments,
receivable development, and timing of financing exchanges. Passage Credit targets liquidity of
about $25 billion. At December 31, 2018, Ford Credit's liquidity accessible for use was $27.3
billion, $2.2 billion lower than year-end 2017.
GM use acknowledge offices as a component to give extra adaptability in dealing with our
worldwide liquidity. At December 31, 2017 the all-out size of our credit offices was $14.5 billion,
which comprised primarily of our two essential spinning credit offices. In April 2018 they
corrected and rehashed our two existing rotating credit offices and went into a third office,
expanding our total obtaining limit from $14.5 billion to $16.5 billion. These offices comprise of
a 364-day, $2.0 billion office, a three-year, $4.0 billion office and a five-year, $10.5 billion office.

18
 Oxford Brookes University – Research analysis project

The offices are accessible to us as well as certain entirely claimed auxiliaries, including GM
Financial. The three-year, $4.0 billion office takes into consideration borrowings in U.S. Dollars
and other monetary forms and incorporates a letter of credit sub-office of $1.1 billion. The five-
year, $10.5 billion office takes into consideration borrowings in U.S. Dollars and other monetary
forms. The 364-day, $2.0 billion office takes into consideration obtaining in U.S. Dollars as it
were. They have apportioned the 364-day, $2.0 billion office for elite use by GM Financial. All
out car accessible credit under the office stayed unaltered at $14.5 billion at December 31, 2018.
In January 2019 they gone into another three-year unbound rotating acknowledge office for an
underlying getting limit of $3.0 billion, diminishing to $2.0 billion in July 2020. The office will
be utilized to reserve costs identified with the change exercises declared in November 2018 and to
give extra money related adaptability. References missing Provide a minimum of 3 to 4 references
here other than company financial statements.
Cash Flows:
In hospitality industry Its not Hospitality industry cash flows play an important role in determining
liquidity of business specifically in service industry, this is a critical success factor.

FORD Cashflow Trend GM Cash Flow Trend

25000 20000
20000 10000
15000
0
in U.S $

10000
5000 -10000
in U.S $

0 -20000
-5000
-30000
-10000
-15000 -40000
-20000 2016 2017 2018
-25000 Cashflow
-30000 from
2016 2017 2018 16607 17328 15256
operating
Cashflow from activities
operating 19850 18096 15022 Cashflow
activities from
-35643 -27572 -20763
Cashflow from Investing
investing -25302 -19360 -16261 activities
activities Cashflow
Cashflow from from
17077 12584 11454
financing 7400 3394 -122 financing
activities activities

Consolidated Statement of Cash Flows for the years ended December 31, 2016, 2017, and 2018.
FORD convey stock on our united monetary record that is contained completed items, crude
materials, work-in process, and supplies. As of January 1, 2018, we changed our bookkeeping
technique for U.S. inventories to a first-in, first out premise from towards the end in, first-out
premise. Company accept this adjustment in bookkeeping strategy is best as it is reliable with how
we deal with our business, brings about a uniform technique to esteem our stock over all areas in

19
 Oxford Brookes University – Research analysis project

our business, and improves equivalence with our friends. The impact of this change was irrelevant
on our combined accounting report at December 31, 2018 and on our united proclamations of pay
and incomes for the year at that point finished. Company has reflectively applied this adjustment
in bookkeeping technique to every single earlier period. As of December 31, 2015, the aggregate
impact of the change expanded Retained profit by $566 million.
GM all out vehicle deals in the U.S., our biggest market in North America, totaled 3.0 million units
for piece of the overall industry of 16.7% in the year finished December 31, 2018 speaking to a
diminishing of 0.4 rate focuses contrasted with the comparing time frame in 2017. They keep on
driving the U.S. industry in piece of the overall industry. In November 2018 declared designs to
quicken steps to improve our general business execution including the rearrangement of worldwide
item advancement staffs, the realignment of assembling limit because of market-related volume
decreases in traveler autos and a decrease of our salaried workforce. Company recorded charges
of $1.2 billion in the year finished December 31, 2018 and hope to record extra charges of $1.5
billion to $2.0 billion in 2019. These charges are fundamentally viewed as extraordinary for EBIT-
balanced, EPS weakened balanced, and balanced car free income purposes. References missing
Provide a minimum of 3 to 4 references here other than company financial statements.
Financial Stability

Debt / Equity Ratio

3.20
2.88 2.80
Times

1.92 1.88

1.17

2016 2017 2018

FORD 3.20 2.88 2.80
GM 1.17 1.92 1.88

Overall gain owing to Ford and Company balanced EBIT were driven by our Automotive and Ford
Credit fragments. Versatility and Corporate Other, true to form, were misfortunes. The year-over-
year decrease in overall gain was principally because of the lower Automotive EBIT, the bigger
imprint to market change for worldwide annuity and OPEB designs because of antagonistic
monetary economic situations that happened late in 2018, and work force partition related
activities in North America, South America, and Europe. The lower Automotive EBIT completely
clarifies the $2.6 billion decrease in Company balanced EBIT, contrasted and 2017. Portage Credit

20
 Oxford Brookes University – Research analysis project

produced an entire year 2018 EBT of $2.6 billion, $317 million higher than a year prior, and its
best EBT in eight years. Portage Credit's EBT improvement was driven by positive rent remaining
execution and good volume what's more, blend. This was counterbalanced by troublesome
subordinates showcase valuation.
GM utilize restrictive scoring frameworks in the endorsing procedure that measure the credit
nature of retail fund receivables utilizing a few elements, for example, credit agency data, buyer
credit hazard scores (for example FICO score or its proportional) and agreement qualities.
Moreover consider different factors, for example, work history, monetary steadiness and ability to
pay. Ensuing to beginning audit the credit nature of retail money receivables dependent on client
installment action. At December 31, 2018 and 2017 25% and 33% of retail money receivables
were from customers with sub-prime FICO assessments, which are characterized as a FICO score
or its likeness under 620 at the hour of advance beginning. They buy retail account contracts from
car vendors without plan of action, and as needs be, the seller has no obligation to GM Financial
if the shopper defaults on the agreement. Fund receivables are collateralized by vehicle titles and
GM Financial has the privilege to repossess the vehicle in the occasion the shopper defaults on the
installment terms of the agreement.
References missing Provide a minimum of 3 to 4 references here other than company financial
statements.
Interest Cover Ratio
As this ratio determines how easily a company can pay its debt interest by dividing Earnings
before Interest and Tax by the company’s interest expenses. This is already explained in chapter
2 no need to explain again.

Interest Cover Ratio

22.33 21.63

14.05
Times

8.13 7.86
4.54

2016 2017 2018

FORD 8.13 7.86 4.54
GM 22.33 21.63 14.05

21
 Oxford Brookes University – Research analysis project

Net interest income on income taxes of FORD was $3 million, $2 million, and $33 million for the
years ended December 31, 2016, 2017, and 2018, respectively. These were reported in other
income/ (loss), net in our consolidated income statement. Net payables for tax related interest were
$70 million and $29 million as of December 31, 2017 and 2018, respectively. Paid income taxes
of $740 million, $586 million, and $821 million in 2016, 2017, and 2018, respectively. More
detailed analysis is required. References missing Provide a minimum of 1 to 2 references here
other than company financial statements.
Earnings per Share (EPS)

EPS basic
$7.00

$6.00

$5.00
In U.S $

$4.00

$3.00

$2.00

$1.00

$0.00
2016 2017 2018
FORD $1.16 $1.94 $0.93
GM $6.12 $0.23 $5.66

FORD present both fundamental and weakened income per offer ("EPS") sums in our budgetary
detailing. Essential EPS rejects weakening and is registered by partitioning pay accessible to
Common and Class B Stock holders by the weighted-normal number of Common and Class B
Stock exceptional for the period. Weakened EPS mirrors the most extreme potential weakening
that could happen from our offer based remuneration, including "in-the-cash" investment
opportunities, unvested confined stock units, and unvested confined stock offers. Possibly dilutive
offers are barred from the count in the event that they have against dilutive impact in the period.
For the year ending December 31, 2019 GM expect EPS-diluted of between $5.17 and $6.00 and
EPS-diluted-adjusted of between $6.50 and $7.00. The following table reconciles expected EPS-
diluted under U.S. GAAP to expected EPS-diluted-adjusted and includes the future impact of the
expected adjustment related to transformation activities. In November 2018 they announced plans
to accelerate steps to improve our overall business performance including the reorganization of
global product development staffs, the realignment of manufacturing capacity in response to
market-related volume declines in passenger cars and a reduction of our salaried workforce
recorded charges of $1.2 billion in the year ended December 31, 2018 and expect to record
additional charges of $1.5 billion to $2.0 billion in 2019. These charges are primarily considered
special for EBIT-adjusted, EPS diluted-adjusted, and adjusted automotive free cash flow purposes.

22
 Oxford Brookes University – Research analysis project

References missing Provide a minimum of 3 to 4 references here other than company financial
statements.
In total ratios must be allocated with a proportionate word share. For example more words can be
added to profitability section but make sure don’t miss the word count for a specific ratio.
Referencing is one of the critical area missing in full report.

3.3 Conclusion and Recommendations

Now that I am done with my analysis, I am able to give concluding remarks on the finding of this
research analysis project, as per the set objectives of this project. With the promise of increasing
demand and better business conditions, emerging markets and technological advents hold ample
opportunities for Ford to expand its operations and build on a developing customer base. As Ford is
manufacturing in various countries, they should try to improve their operations department
by increasing efficiency and hiring the right employees and labor. Ford should start producing
more eco-friendly vehicles because the demand for these kinds of vehicles is growing all around the
world. Ford can partner up with Uber and other app-based vehicle services to grow its revenue and
customer base.

23
 Oxford Brookes University – Research analysis project

LIST OF REFERENCES
1. Accounting Explained. (2018). [online] Advantages of ratio analysis. Available at:
https://www.toppr.com/guides/accountancy/accounting-ratios/meaning-objectives-
advantages-and-limitations-of-ratio-analysis/ [Accessed 3 April 2018]
2. Accounting Tools. (2017). Interest coverage ratio. [Online]. Available at:
https://www.accountingtools.com/articles/2017/5/5/interest-coverage-ratio [Accessed 20
May 2018].
3. Annual Report of GM available at http://annualreports.com/Company/general-
motors[Accessed 2016].
4. Annual Report of GM available at http://annualreports.com/Company/general-
motors[Accessed 2017].
5. Annual Report of GM available at http://annualreports.com/Company/general-
motors[Accessed 2018].
6. Ford Revenue Recognition available at https://www.revenuehub.org/revenue-
disaggregation-disclosures-ford-case-study/
7. Stock analysis revenue available at https://www.stock-analysis-
on.net/NYSE/Company/Ford-Motor-Co/Analysis/Revenues
8. PESTLE analysis on GM available at http://fernfortuniversity.com/term-
papers/pestel/nyse4/648-ford-motor-company.php
9. SWOT analysis of Ford available at https://bstrategyhub.com/swot-analysis-of-ford-2019-
ford-swot-analysis/

Books
1. ACCA. F7. (2016). Berkshire: Kaplan Publishing UK, pp.594-596.
References must be added in separate file that is Bibliography. Referencing must not
increase the word count of RAP file.
Important Note referencing must constitute round 7 to 8 pages of bibliography file.

24