1. Ford Motor Company 2004 Annual Report Mandy Bennett ACG 2021 Section 002

2. Executive Summary The Ford Motor Company has had many disappointment in the past several years, but has slowly gained more confidence by introducing newer models and increasing technology. The company still has many problems that need to be worked out. The total liabilities are extremely high, resulting in low working capital. Accounts receivable are also remaining unpaid for far too long. Overall, the company seems to be improving from years past, but still has a long way to go. http://www.ford.com/en/company/investorInformation/compan yReports/annualReports/2004annualReport/2004_pdfs.htm

3. Introduction William Clay Ford, Jr. was appointed CEO of the Ford Motor Company on October 30, 2001. The home office is located in Dearborn, MI The last fiscal year ended on December 31, 2005 (The 2004 reports are used for this project, as the 2005 reports have not been released.) The Ford Company deals in automobile sales (Ford, Lincoln, Mercury, Volvo, Jaguar, Land Rover, and Aston Martin). They also provide many customer services, such as Ford Credit, Hertz, and Auto Service. While Ford has many dealerships around the world, their main location is in the United States.

4. Audit Report Ford Motor Company employs Pricewaterhouse Coopers LLC to perform the financial audit. They simply state that the yearly reports are adequate in all aspects.

5. Stock Market Information $7.95 - The most recent price of the company’s stock. $12.73 – Twelve month high. $7.57 – Twelve month low. $.40 (5%) – Dividend per share. The above information is accurate as of March 1, 2006. The stock for the Ford Company has been decreasing steadily for the past year, so I would not recommend buying, although if the stockholder already owned stock, I would consider holding it. The Company has several plans to increase the value of the stock.

6. Industry Situation and Company Plans The Ford Motor Company has made many achievements during 2004, and plans to continue into 2005. In 2004, Ford reduced it’s costs by almost $900 million, and improved performance. They also improved per-unit revenue of $745 in North America. The new Ford F-series, and the Ford Escape set sales records in 2004, and will hopefully have continued success in 2005. Ford is also optimistic about it’s new Ford Escape Hybrid model. This model was named “North American Truck of the Year,” and appeals to all types of people. Overall, Ford plans to continue to improve its performance for 2005.

7. Income Statement The Income Statement is prepared in multistep format. Within the year, the net income for the Ford Company has increased seven fold. Both the gross profit, and income from operations have increased greatly as well. 20032004 Gross Profit $8,575$11,278 Income from Operations $902$3,634 Net Income $495$3,487 *All numbers in millions

8. Balance Sheet Assets =Liabilities +Stockholders Equity 2003$299,397$287,087$11,651 2004$292,654$275,732$16,045 While the total assets in 2004, have decreased, the Stockholders equity has increased. The biggest change is the decrease in liabilities in 2004. *All numbers in millions

9. Statement of Cash Flows Cash flows from operations are much more than the net income: The company is not growing through investing, and in fact lost money, due to it’s investing activities. Net Income has greatly improved from 2003. Cash Flows from Operations Net Income 2003$17,280$495 2004$24,514$3,487 *All numbers in millions

10. Accounting Policies Ford presents its financial statements on two bases: Sector basis for Automotive and Financial Services Consolidated basis With this additional information, the reader is better able to understand the operating performance, financial position, cash flow and liquidity of the two very different businesses.

11. Financial Analysis Liquidity Ratios 20032004 Working Capital Remained stable through 2004. 205,594-139,872= $65,722 202,491-139,162= $63,329 Current Ratio $1.47 for every $1 in liabilities. 205,594/139,872= 1.46 202,491/139,162= 1.47 Receivable Turnover Very low turnover rate, down from previous years. 138,260/112,701= 1.23 times 147,134/114,710= 1.28 times Ave. Days Sales Uncollected Extremely long collection time. 365/1.23= 297 Days 365/1.28= 285 Days Inventory Turnover Turnover has remained stable. 129,685/9,151= 14.17 times 135,856/9,958= 13.64 times Ave. Days Inventory on Hand Taking longer to sell from previous years 365/14.17= 25.76 Days 365/13.64= 26.76 Days

12. Financial Analysis Profitability Ratios 20032004 Profit Margin Very low profit margin, but up from previous years. 495/138,260= 0.4% 3,487/147,134= 2% Asset Turnover Low turnover rate. 138,260/299,397= 0.46 times 147,134/296,025= 0.5 times Return on Assets Earnings are low, but improving for 2004. 495/299,397= 0.2% 3,487/296,025= 1.2% Return on Equity Returns greatly improved for 2004. 495/11,651= 4% 3,487/13,848= 25%

13. Financial Analysis Solvency Ratio 20032004 Debt to Equity Company needs to reduce its liabilities, and increase equity. The ratio is slowly decreasing, but is still of great concern. (287,087/11,651)= 2464% (275,732/16,045)= 1718%

14. Financial Analysis Market Strength Ratios 20032004 Price/Earnings per Share Earnings have increased greatly with the price staying fairly stable in 2004. 16.00/0.27= 59.26 14.64/1.91= 7.66 Dividend Yield The yield has been increasing for the past couple years. 0.4/16.00= 2.5% 0.4/14.64= 3%

15. Mandy Bennett Ford Motor Company