Write a minimum of a 3-page (a full-page typically has at least 300 words) report, single-spaced, one-inch margins, 12-point font, with a double space between paragraphs. This page requirement includes data visualization (charts and graphs) that you create.
Include a title page (include your name on the title page). The report must consist of headings such as Accounts Receivable and Inventory (topics from the textbook); other examples would be the Income Statement, Balance Sheet, and the Statement of Shareholders’ Equity. Include a brief introduction of your company as well as a conclusion/summary at the end. Most of your report should include accounting topics in weeks one through five. You must include the Income Statement, Balance Sheet, Statement of Shareholders’ Equity, and Critical Audit Matters in your report.
Subject: WEEK7- Accounts Receivable and Inventory
Introduction
Ford Motor Company started its business in 1919 in Delaware. It acquired a company called Michigan Company; this company was incorporated in 1903. The company first started manufacturing and selling automobiles that were engineered by Henry Ford. It is an International company that trades all over the world. The headquarter is situated in Dearborn, Michigan, United States. Nearly 183,000 employees are associated with it. Ford is the largest manufacturing and retail business in the automobile sector. It manufactures designs, markets, and services automobiles. Its products like Ford trucks, utility vehicles, vans, cars, and Lincoln luxury vehicles are now leading in the market. Ford Motor’s Lincoln vehicles, service parts, and accessories worldwide are the factors to attract customers and the quality makes a significant difference from its competitors. Ford always centered on customer satisfaction. Currently, it ranked 21 among the Fortune 500 companies. The company’s profitability can be measured by reading its 10-K form (Sugrue, 2021,p.45).
Inventories
Last year (2020 financial year) company’s inventory was $10,808 million and in the current year (2021 financial year), it increased to $12,065 million as its finished goods were completed but they are waiting for the installation of components. The company couldn’t able to complete the task on time due to a shortage of semiconductors. Once all installation parts will be completed the company will next proceed with the quality review to ship the products to the dealers. Ford calculates its inventory by using the First-In, First-Out (FIFO) method. The below details are for the 2020 and 2021 financial years from Form 10K of the company’s report.
2020 2021
Raw materials, work-in-process, and supplies |
$4,676 |
$5,785 |
Finished products |
$6,132 |
$6,280 |
Total inventories |
$10,808 |
$12,065 |
The company calculates its total inventory by adding total raw materials with total finished goods from the above details we can see that last year its total Raw materials, work-in-process, and supplies was $4,676 and Finished products were $6,132 which is $10,808 in total. In the 2021 financial year the total inventories of $12,065 ($5,785 + $6,280). Besides, the effects of Covid-19 also had a major impact on delivering the products, thereby increasing the total inventories (sec.gov, 2022).
Accounts Receivable
Accounts receivables are the amount that the company will receive from its customers. Customers or dealers sometimes bought products on credit. The amount that the customer needs to pay later on behalf of product purchases comes under accounts receivable. As indicated in the below details (from SEC-10k Annual Report, 2021). In the financial year of 2021, Ford Motor Company’s accounts receivables decreased to 1141 million and in the financial year of 2020, it only decreased to 63 million. A decrease in accounts receivables means its cash flows are strengthened (Enkhbayar, 2018, p.27).
Balance Sheet
It always prepared at the end a financial year and it shows the company’s position and sustainability in the market. It shows the assets, liabilities, and equity of a company. Ford Motors’ balance sheet shows its total assets in the year 2020 $2, 67,261 million, and in the year 2021, its total assets are $2, 57,035 million. That means its total assets increased this year compared to last year. An increase in assets shows the wealth of the company. Ford motors’ liabilities in 2020 were $236,450 million; in 2021 it decreased to $208,413 million. Ford’s equity is also increased in 2021it is$257,035 million and whereas in 2020 it was $267,261. An increase in equity shows the growth of the company. From the below information it can be stated that the company is profitable and investable.
Property, Plant, and Equipment:
According to the 10-K form (2021) of Ford MotorsDepreciation and amortization are calculated by straight-line method over its asset’s useful lifetime. Plant and equipment, and gross profit slightly increased from $37,083 million in the 2021 financial year to $37,139 million in the 2020 financial year.
Income Statement
Ford Motor Company Consolidated Income Statements is a multi-step income statement that describes its revenue, net sales, profit margin, total costs, and earnings per share (EPS). There is an increase in revenue from last year, in 2020 its revenue was $115,894 million and in 2021 it increased to $126,150 million. An increase in revenue indicates to increase in net sales. It can be stated that the company is performing well and is in a growing stage (Neto & Dutordoir, 2020, p.36).
Cash flow statement
The consolidated cash flow statement shows its operating activities, investing activities, and financing activities. It consists of a net loss of $1,276 million in 2020 but in 2021 it got a net profit of $17,910 million. Similarly, its cash flow from Net cash provided by operating activities, and Net cash provided by investing activities increased to 15,787, and 2745 in 2021 respectively but Net cash provided by financing activities decreased by 23498. From the above information, it can be concluded that the company is performing well and in the profitable stage (Darmouni & Mota, 2020, p.35).
Conclusion
In conclusion, the company’s Sec-10k report is a roadmap in providing an overall view of its financial condition, the risk associated with it, organizational structure, and history. From this project, it can be concluded that the 10-K form of the company is very useful for both the investors and customers to learn detail about the company. It helps in understanding the methods and techniques used in the financial statements used in the 10-K form of the company.
It helps in judging the earning capacity of the form based on the form-10-K. The future earning capacity also can be forecasted that attract investors to invest in the company. The 10-K form states the areas that perform efficiently.
Ford Motors Company is a profitable and reputed company that attracts a large number of efficient investors to invest in the company. It can give a long-term return. Its revenue and net profit increased in the current year compared to the last financial year.
Reference List:
Darmouni, O., & Mota, L. (2020). The financial assets of non-financial firms. Available at SSRN 3543802.
Enkhbayar, A. (2018). Ford Motor Company’s Financial Analysis.
Neto, J. Q. F., & Dutordoir, M. (2020). Mapping the market for remanufacturing: An application of “Big Data” analytics. International Journal of Production Economics, 230, 107807.
Sugrue, D. (2021). Alternative financing for harbor infrastructure using big data analytics in the Great Lakes Waterway (Doctoral dissertation).
www.sec.gov Ford Motor Company Annual Report on Form 10-K For The Year Ended December 31, 2021 Retrieved from: https://www.sec.gov/ix?doc=/Archives/edgar/data/37996/000003799622000013/f-20211231.htm#i7778e69e11e6463998712ba0b0ab1b0e_277 [Retrieved on 10th March, 2022].
