Ford Motor Financial Analysis
Ford Motor Financial Analysis The company selection that the research will be based on is The Ford Motor Company. The Ford Motor Company is an American multi-national corporation and the world’s fourth largest automaker based on worldwide vehicle sales (wikipedia. org). Based in Dearborn, Michigan, a suburb of Detroit, the automaker was founded by Henry Ford, and incorporated in June 16, 1903. Ford was started in a converted factory in 1903 with $28,000 in cash from twelve investors. Henry Ford was 40 years old when he founded the Ford Motor Company, which would go on to become one of the largest and most profitable companies in the world.
The Ford Company also was one of the few to survive the Great Depression. The largest family- controlled company in the world, the Ford Motor Company has been in continuous family control for over 100 years (wikipedia. org). Ford Motor Company designs, develops, manufactures, and services cars and trucks worldwide. It operates in two sectors, Automotive and Financial Services. The Automotive sector sells vehicles under Ford, Mercury, Lincoln, and Volvo brand names.
This sector markets cars, trucks, and parts through retail dealers in North America, and through distributors and dealers outside of North America (businessweek. m). The Financial Services sector offers various automotive financing products to and through automotive dealers. It offers retail financing, which includes purchasing retail installment sale contracts and retail lease contracts from dealers, and financing to commercial customers to purchase or lease vehicle fleets; wholesale financing that comprises making loans to dealers to finance the purchase of vehicle inventory; and other financing, which consists of making loans to dealers for working capital, improvements to dealership facilities, and to purchase or finance dealership real state (businessweek. om).
The Ford Company NYSE = F and is currently trading at $1 1. 56 per share. The total net income for the year of 2009 was a total of $2. 9 billion dollars. Problem Statement This proposal is directed to the shareholder wealth of Ford Motor Company. In order to provide high quality parts at a minimal cost, of Ford Motor Company needs equipment procedures that are safe, efficient, and accurate.
In addition, the procedures should not be overly costly for the company. Right now, of Ford Motor Company main process equipment tooling is designed out of carbon and aluminum fixtures.
The fixtures fail to make quality parts 20% of the time. When the fixtures fail, Ford Motor Company must replace the damaged parts monetarily. While the process equipment tooling fixtures have worked well up to this point, these fixtures have become worn and sometimes dangerous for the production parts. If Ford Motor Company continues to do use these fixtures, they will not only be wasting time and money, which Jeopardizes their overall efficiency and earning potential and will lead product/s.
A new set of process equipment tooling fixtures may surpass the old equipment in safety, efficiency, and productivity.
I propose to research the feasibility of establishing new tooling. We will investigate the accuracy, efficiency, and safety of the new tooling as well as implementation issues, proposing to drop the fall-out rate to 5 % with these improvements. If this is not corrected of Ford Motor Company will lose its valued customers that insure the longevity of it survival. Ford Motor Company achieved a pre-tax operating profit, excluding special items, of $472 million in 2009, which was a $7.
3 billion improvement over 2008. ONE Ford helped us achieve profitability and grow our business despite a global recession.
In every part f the world we are providing customers with great products, building a stronger business and contributing to a better world. We initiate coverage on Ford Motor Company with a SELL based on a weighted average target price of IJS$4. 74.
Our DCF valuation is based on a WACC of 7. 40% and perpetual growth rate of 3. 0% As of now we have the budget in our equipment maintenance program that has been holding a balance of 2. 5 million dollars per year. If we transfer this money into the assets of our tooling on the equipment, our ROI will show in less than 6 months. As with any company in this economic turmoil there is risk.