Ford's FY 2018 Debt Obligations: An Overview - Essay Sample

Introduction

Ford's current debt stands at $95,569 while its long-term debt stands at $124,308 for FY 2018. The company presented the information in a manner that is easily understood by the reader. The company provided its current debt liabilities payable in one year, i.e., automotive and Ford Credit debt payable and the long-term debt among the long-term liabilities. The information is important because it helps us to understand the debt obligations of Ford Company and its ability to cater to its debts based on its liabilities. The organization of the debt goes in line with the FASB Accounting Standards Codification Topic 470 on Debt.

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Ford's investment from its balance sheet includes market securities at $17,233m, Credit Finance Receivables at $54,353m, inventories at $11,220m, net investment in operating leases $29,119m and equity in net assets of affiliated companies at $2,709. The section provides the user with vital information regarding the company's investments over the 2018 financial year and the revenues obtained from investment opportunities. It indicates the ability of the company's assets and revenues from its investments to cover its liabilities. They also help to provide a picture of how well a company can handle its long-term financial obligations. They contribute to the total assets of a company to provide a more favorable investment to increase the asset value while retaining the overall debt in its books. The company complies with the rules of the FASB 325 codification by applying the cost method investments and beneficial interests in securitized financial assets.

Ford Company offers defined benefit pension and OPEB plan obligations that are measured annually basing on the present value of projected future benefit payments for all the participants of the services rendered to date. The measurements are projected on the future benefits and are dependent on the provisions of each specific plan with reference to demographics covered by the group among other key assumptions. Plans that avail benefits depend on salary assumptions and change to benefit provisions beyond what is presently committed. It offers defined benefit pension plans that cover hourly and salaried employees in the US, Canada, UK, and Germany among others. It also provides defined contributions and savings plans for hourly and salaried employees in the US among other locations. The contributions to these plans are made on the Company's cash, thereby reducing its asset column while increasing its expenses. I would like to work for the company basing on the retirement plans it offers. The company complies with the FASB ASC 715 codification regulations that address matters concerning compensation and retirement benefits.

Ford Company provides lease commitments as it leases buildings, land, and equipment under agreements that expire under various contractual periods. The net property and equipment are depreciated using a straight-line method over the estimated useful life of an asset, i.e., 3 years to 36 years. It also entails net investment in operating leases that consist of lease contracts for vehicles with retail customers, government entities, daily rental companies and fleet customers. The capital or operating leasing arrangements positively impact the overall profitability and debt position of a company by increasing the number of revenues obtained from leases recorded in the company's asset column in the balance sheet. The company provided the assets that are under lease contracts in its notes section and this information is important to understand the amount of revenues obtained from each of its assets under the lease contracts, i.e., land, vehicles, and equipment. It complies with the FASB ASC code 310 that addresses receivables that include any nonrefundable fees, loans, debt and any acquired securities among others.

References

FASB Accounting Standards Codification. (2019). Iasplus.com. Retrieved from https://www.iasplus.com/en-us/standards/fasb

Ford Annual Report (2018). Corporate.ford.com. Retrieved from https://corporate.ford.com/microsites/sustainability-report-2018-19/assets/files/sr18-form-10-k.pdf