Research Paper on Ford Motors Financial and Stock Analysis

Introduction

Ford Motors Company operates as a global mobility and automotive company based in Dearborn, United States. The company has 62 assembling plants globally, and the core business of the organization includes manufacturing, designing, servicing and marketing of Ford trucks, cars, SUVs and Lincoln luxury vehicle. Today, Ford motors have been ranked the second largest trucks and automobile manufacturer globally (Bayou, 2008). Therefore the company operates the 2nd largest finance company and also the key producer of steel, glass, and tractors. The company seeks to expand its business models through the pursuit of emerging opportunities and to invest in autonomy, electrification, and mobility.

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Ford offers financial services via Ford Motors' Credit Company. The main aim of many firms is to ensure that they maximize their resources to come up with plans on how they can use their available capital to generate profits for themselves. Financial performance is also used to measure how healthy a firm is regarding its economic status over a specified period. In this case, a firm can use its overall and annual generation of revenues to compare its financial performance to previous years and set down new plans for implementing improvements for a positive change in the future (Orlitzky et al., 2003).

Literature Review

Ford Motor Company Segmentation

The company has adopted the market segmentation strategy to maximize their market share. The idea of market segmentation categorizes its customers depending on their behavior, responses, brand taste, and consistency. Ford Company groups its customers according to the following segmentation.

Demographic

The company emphasizes on the average level of income by its customers in terms of age, gender, occupation, level of education, nationality, and race. The trends are associated with wants and the needs of the consumers (Vesey, 2016). Hence, the concept explains why it is difficult to describe a market target with non-demographic factors such as personality.

Geographic

According to Bayou (2008), Ford Company targeted to open up a market for its products in the UK and other several emerging markets such as India, China, and Malaysia. This segmentation focuses on dividing the market in terms of regions, nations, states, and cities (Bayou, 2008). In some cases, the company uses a combination of geographic and demographic approaches to beat its competitors and attain the highest profits levels.

Ford Company's Stock Analysis

According to Wee (2009), the financial performance report for Ford Motors shows that the company's financial progress has escalated over the recent years. In consideration of the various financial ratios such as profitability, Return on Assets, Equity Ratios, current ratio and debt ratio among others, the company has made a remarkable growth and returned to stock orders (Wee, 2009). The increased performance and the going concern has been enhanced by Ford's ability to compete. The company must contend the global competitors' engaged provision of similar commodities. The high competition level in the automotive industry, especially mature markets such as the United States has resulted in competitive pricing environments. Notably, competitive pricing in the industry mentioned above involves financing incentives and offering price discounts for customers' attraction purpose.

The revenues have increased progressively in the past three years; therefore, depicting the company's production has improved. For instance, the Corporation reported total revenue amounting to 151.8 Billion in the year ended 2016, and 149.558 and 144.077 in the year 2015 and 2014 respectively (Parker, 2017). The income statement shows a remarkable increase in Ford Motors revenues. The rise in sales cost lowers the profit margin, but, it can be seen from the income statement that the gross profit has increased due to high revenues thus outdoing the escalated costs. Notably, the company's net income declined in the year 2016 due to the rise in operating expenses as compared to those in the years 2015 and 2014.

Ford Company's Financial Analysis

Ford Motors has experienced changes in their incomes over the past three years reviewed in this paper. In the financial year ended 2015, the company reported an income amounting to 7.373B a positive change as compared to 2014 when the company recorded 1.231B. However, in 2016 the net income declined to 4.596B showing an adverse change. According to ( ), the negative is associated with the rise in the operational cost such as administration and operating income losses among others that have increased over the recent years. The EPS have grown in the past years showing a positive performance from an investor's point of view. For instance, last, the basic EPS was $ 1.16 a drop from the previous year's when the business paid $1.86 per share (Rowland, 2017). However, in 2014 the corporation reported $0.31 per share. A decrease in the EPS may have an adverse effect to the stakeholders; hence, demotivating the potential investors. Investors are attracted to businesses paying high EPS hence maximizing returns.

The company's assets, equity, and liabilities have changed positively over the three years. For instance, Ford Motors reported total assets worth 208.62 billion in the year ended in 2014. In the financial year 2015 there were 16.8 billion increases in the asset, and last year the assets as per the audited report amounted to 237.95 billion. Similarly, the corporations both the equity and liabilities have expanded over the years (Pratap, 2017). Notably, assets and equity are among the key considerations when the investors are buying stock in the business. A lot of assets owned by the Ford Motors ranks the company the second in the motor vehicle production globally. Therefore, the company is one of the best when an entrepreneur is considering making the stock investment.

Growth Opportunity for Ford Motors Company

Brand Expansion

Motors Company still has a chance to introduce new brands in the market. Ford ranks among the top motors producing companies. However, the company has not exhausted the available varieties (Macdonald, 2017). The company can expand current brand it manufactures and introduces new brands to increase vehicle market share.

Emerging Markets

The company has to stick to this strategy to achieve high profits margins. The company has experienced a high level of profits due to its good track record, and by so doing the company has attracted investors, who notably increased the company's market share. Market segmentation is arguably one of the most components in any company to yield high profits.

Conclusion

The changes are positive from the investors' point of view. Ford Company has shown a positive growth rate and remarkably high total revenues. The notion has led to high returns to the shareholders (Macdonald, 2017). Considering the Company's income statement, both the basic and the diluted earnings per share have been increasing. Therefore, from an investor's point of view, the company's performance translates its ability to compete and the going concern. The increase in EPS shows that the shareholders are maximizing returns.

References

Bayou, M. E., & De Korvin, A. (2008). Measuring the leanness of manufacturing systems-a case study of Ford Motor Company and General Motors. Journal of Engineering and Technology Management, 25(4), 287-304. http://marketrealist.com/2017/01/analysts-recommendations-on-ford-stock-afterits-dismal-4q16-results/

Macdonald, D. (2017). Ford Foundation. Routledge.

Orlitzky, M., Schmidt, F.L. and Rynes, S.L., 2003. Corporate social and financial performance: A meta-analysis. Organization studies, 24(3), pp.403-441.

Parker, J. (2017, January 27). Market Realist. Retrieved from Market Realist:

Pratap, Abhijeet. "Ford PESTEL Analysis." Cheshnotes. 2017.

Rowland, Christine. "Ford Motor Company PESTEL/PESTLE Analysis." Panmore Institute. 2017.

Vesey, J. T. (2016). The new competitors: they think in terms of 'speed-to-market'. Academy of Management Perspectives, 5(2), 23-33.

Wee, H. M., & Wu, S. (2009). Lean supply chain and its effect on product cost and quality: a case study on Ford Motor Company. Supply Chain Management: An International Journal, 14(5), 335-341.