Part 5: Ford Motor’s Ford Motor’s Strategy and Execution

(Diya Dara Ahmed), (AlMuntadher Yousif)

Since 1903 Ford Motor company revolutionized the way, the world moves through its

high groundbreaking technological inventions in automotive industries. Ford Motor has long

been recognized as a leading innovator in the automotive industry. What sets them apart is their

multifaceted approach, not only focusing on producing cars but also providing financial services.

Moreover, Ford stands out as one of the earliest companies to prioritize innovative workplace

designs that cater to the needs of both employees and customers. They prioritized innovations

aimed at enhancing the driving experience, along with groundbreaking job designs such as the $5

a day wage, which was a significant breakthrough for workers. In 1914, Henry Ford introduced a

novel approach to reducing turnover and enabling employees to afford their own cars by

implementing a $5 payment for every 40 hours worked, under the banner of profit-sharing. This

strategy had a profound impact, not only for Ford but also for numerous other companies.

Ford Motor's mission, is to "help build a better world, where every person is free to

move and pursue their dreams." The company is dedicated to simplifying the lives of customers

and individuals by enabling the freedom of movement, making mobility both accessible. Ford’s

mission is to bridge the gap between where you are and where you want to be, facilitating

connections both near and far, past, now and future. The company played an important role in

transcending the barriers between middle and high-class statuses by providing opportunities for

people to access automobiles, thereby granting them the freedom to move and purchase cars.

This mission goes beyond mere rhetoric to encourage people not only to drive but also to pursue

their aspirations unhindered. Ford's commitment to creating environmentally friendly vehicles

and its ability to endure and compete against new, highly innovative automotive brands and

financial services can be attributed to their focus on meeting customer demands within the

framework of freedom and challenging stereotypes that confine individuals to narrow

perspectives.

Ford's vision is to become the world's most trusted company through designing smart

vehicles for a smart world. The company aims to lead various industries through innovation, and

creation of product and service technologies that adapts with the advancements in mobility,

automation, and artificial intelligence of every age and time. They are committed to provide

customers with innovative solutions that meet their needs while delivering a seamless experience

with their product and services. Ford’s is specialized in connecting, personalizing, and

empowering customers to make choices that benefit both themselves and society, not alone their

business.

For achieving this vision, Ford prioritize integrity, innovation, sustainability, and

diversity. Them strive to meet stringent safety and reliability standards, shows in their constant

demand of feedback for improvement. The company also value employees, and they always look

for offering competitive salaries, that benefits employees’ growth in opportunities that will

enhance their skills and aspirations. Ford Motor’s put effort in raising awareness and taking

social responsibility, championing initiatives that create a more inclusive and environmentally

sustainable future that will aspire others.

 In the realm of all of this last year Ford Motors achieved a remarkable financial success

in the fiscal year of 2023, by boasting a total revenue of $147 billion, along $8.3 billion of net

income. This reinforced the company’s strong presence in the market, and they sold over 6.8

million vehicles globally. These out standing performance showed the result of the strategic

competence and operational excellence of the company that can thrive amidst the challenges and

capture the attentions in today’s fast paced growing global market.

Despite all the success still Ford is facing various of challenges that still due to slow

adaptability in their strategic approaches. The competition is highly rising in the automotive

industry due to the giant numbers of competitors across the world nowadays having a big name

is not enough to keep a company up floa but the strongest and the most adaptable are the ones

who can survive in the industry. With the emergence of electric cars customer’s demands has

drastically changed which demand a more flexible and adaptable strategy to keep forward.

All in all, Ford Motors’ mixed approach strategies are leading with integrity, caring about

customer’s need, looking ahead, and always thriving for the best. Also, the company based their

mission, vision and goals on growing a sustainable world with high innovative technologies, that

makes both customers and stockholders happy. Despite that all the positive changes the company

should still focus on the flexibility and ready for adjustment to whatever the future hold in the

market.

Part 6: Ford Motor’s Financial Performance Analysis

(Ali Abdulameer), (analyzed by Jegir Rajab)

In this section a comprehensive analysis of Ford’s financial statements using profitability

liquidity, solvency, and short-long term activity financial ratios are performed. Furthermore,
 Data over the last five years of income statements and balance sheets from the US market direct

competitors of Ford (Tesla, General Motors, and Toyota) is analyzed and averaged to be used as

an industry ratio. Eventually, we will provided an evaluation of the long-term health,

management, and profitability of the company. Pinpoint key weaknesses and strengths within the

company’s financial structure, and recommend the best financial position to take for investing in

Ford Motor

Section 1: Liquidity Ratios

Liquidity Ratios are financial metrics used to discover a debtor's ability to pay off current

debt obligations without raising outside equity financing through loans…etc. Liquidity ratios

measure a company's ability to pay debt obligations and its margin of safety by calculating

metrics including the current ratio, Acid-test (quick ratio), and operating cash flow ratio.

Ford's Liquidity Ratios VS Industry Avg (TSLA, GM, TM)

1.35
1.25
1.15
1.05
0.95
0.85
0.75
0.65
0.55
0.45
0.35
31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23
Current ratio (Ford) 1.16 1.2 1.2 1.2 1.2
Current ratio (industry avg) 1.02 1.31 1.18 1.24 1.3
Quick ratio (Ford) 1.05 1.09 1.07 1.06 1.04
Quick ratio (industry avg) 0.82 1.13 0.98 0.96 1.03
Cash ratio (Ford) 0.35 0.51 0.55 0.45 0.4
Cash ratio(industry avg) 0.4 0.69 0.57 0.52 0.56

Table Graph 1 Ford's Liquidity Ratios and Industry Average for the years (2019-2023)
 A. Current Ratio: Ford has maintained a stable but slightly below industry CR ratio at 1.2.

The stability shows that Ford has a consistent liquidity, they are able to pay off their

liabilities but they are slightly falling behind compared to the industry. Having less

coverage for short-term liabilities compared to its competitors may be a concern if the

industry faces a downturn.

B. Quick Ratio (Acid Test): Ford slightly went decreased their position from 2019(1.05)

to 2023(1.04) and peaked in 2020(1.09). Generally Ford is almost 1:1 in their liquid asset

to current liabilities which means they can pay off their short-term debts. Ford in the past

5 years has sat at a slight better position than the industry, fluctuating from the lowest

position at 0.82 to its peak at 1.13 but in 2023 they are both at a similar position.

C. Cash Ratio: Ford has seen an improvement in cash ratio from 2019 (0.35) to 2020 (0.51)

but has fell down over the years to 0.4 in 2023. Compared to the industry Ford has been

consistently below the industry average, this can result in an awkward position if sudden

financial obligations that require cash and equivalents rise.

Section 2: Profitability
Table Graph 2 Ford's Profitability Ratios and Industry Average for the years (2019-2023)

A. Gross Margin: Ford’s gross margin took a dip in 2020 from 7.53% to 4.55%, and spiked

in 2021 (12.06%). Since then it has been trending downwards. Ford could possibly have a

higher cost of production than competitors due to them being under the industry average

consistently. Ford’s fluctuation could be due to changes in COGS or a change in their

pricing strategy.
 45%

35%

Ford's Profitability R atios 25%

V S Industry A vg
(TSLA , G M, TM) 15%

5%

31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23

- 5%
G ros 0.0753 0.0455 0.1206 0.1086 0.0917
s
Mar
g in
( F or
d)
G ros 0.1491 0.167333333333333 0.1904 0.1934 0.1546
s
Mar
g in
( in-
dus-
try
avg )
Op- 0.0037 - 0.0347 0.0332 0.0397 0.031
erat-
ing
Profi
t
Mar
g in
( F or
d)
Op- 0.0416 0.0659 0.0916333333333333 0.110366666666667 0.0731
erat-
ing
Profi
t
Mar
g in( i
ndus
try
avg )
Net 0.0003 - 0.0101 0.1316 - 0.0125 0.0247
Profi
t
Mar
g in(
F ord
)
Net 0.0254333333333333 0.0478666666666667 0.088 0.1029 0.0933
Profi
t
Mar
g in( i
ndus
try
avg )
R e- 0.0014 - 0.04 0.4529 - 0.0432 0.1011
turn
On
Eq-
uity
(R O
E)
( F or
d)
R e- 0.0375666666666667 0.100066666666667 0.167833333333333 0.200633333333333 0.172466666666667
turn
On
Eq-
uity
(R O
E)
( in-
dus-
try
avg )
R e- 0.0002 - 0.0049 0.0684 - 0.0077 0.0164
turn
On
as-
sets
(R O
A)
( F or
d)
R e- 0.0127333333333333 0.0276333333333333 0.059 0.0851 0.0763666666666667
turn
On
as-
sets
(R O
A)
( in-
dus-
try
avg )
R OI - 0.0003 - 0.0226 0.0207 0.0211 0.0273
C %

(Fo
rd)
R OI 0.0225 0.0390666666666667 0.0779 0.123833333333333 0.1033
C %
( in-
dus-
try
avg )

B. Net Profit Margin: This ratio has also had a significant dip in 2020, then recovered in

2021. Ford’s operational efficiency or control over operating costs has a significant

difference from what the industry ratios show, sitting at lower trend.

C. Return on Equity (ROE): Ford’s ROE has seen a lot of volatility over the past five

years, entering the negative side exiting year after year. They have been below the

industry average for the whole period, except a significant spike in 2021 reaching 45.29%

and heading to a negative trend the following year. Ford possibly has a lower return for

their shareholders on their equity unlike its competitors.

D. Return on Assets (ROA): similar to ROE ford is lower than the industry in the ROA

ratio section, with a lot of volatility from year to year entering and exiting the negative

area; hinting less efficiency in their use of assets.

 E. Return on Invested Capital (ROIC): The ROIC similar to the ROA and ROE has

shown some volatility with negative returns in the first two years. On the other hand, the

industry has been moving in an uptrend with a small setback in 2023 sitting at 10.33%

while ford at 2.73%, showing that returns from invested capital is much lower than the

industries.

Section 3: Solvency

4.7

Ford's Solvency Ratios 3.7

VS Industry Avg
(TSLA, GM, TM) 2.7

1.7

0.7

31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23

Debt-to-As- 0.61 0.61 0.54 0.55 0.55
set
(Ford)
Debt-to-As- 0.426666666666667 0.376666666666667 0.333333333333333 0.3 0.313333333333333
set
(industry
avg)
Debt-to-Eq- 4.72 5.31 2.88 3.25 3.53
uity (Ford)
Debt-to-Eq- 1.92333333333333 1.36666666666667 1.08 0.95 1.03333333333333
uity (indus-
try avg)
Debt-to- 1.01 1.28 1.02 0.89 0.86
Revenue
(Ford)
Debt-to- 0.683333333333333 0.683333333333333 0.66 0.55 0.533333333333333
Revenue (in-
dustry avg)

Table Graph 3 Ford's solvency ratios

A. Debt-to-Asset Ratio: Ford relies on debt to finance their assets as we can see from this

ratio which stayed relatively stable over the past 5 years with a slight decrease from 2020

to 2021, going from 0.61 to 0.54, respectively. Ford uses more debt in relation to their
 assets in comparison to the industry competitors. The industry average sits at a lower

ratio of 0.31 in 2023.

B. Debt-to-Equity Ratio: This ratio raises concerns for the company, causing volnrability

to downturns in the economy creating a high debt burden. Ford’s ratio is significantly

higher than the industry average sitting in the 0.55 to 0.61 area, compared to the industry

which has seen a downtrend from 0.43(2019) to 0.31(2023).

C. Debt-to-Revenue Ratio: Ford has improved their power to cover for the debts through

their revenues as seen in the decrease of this ratio from 2020 (1.28) to 2023 (0.86). But

Ford still sits at a higher ratio than the industry showing us that Ford has more debt

relative to competitors signalling a higher financial risk for Ford.

Section 4: Activity Turnover – Short-term

13

11

9
Ford's Activity Turnover
Ratios
VS Industry Avg 7
(TSLA, GM, TM)
5

31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23

In- 13.1 11.24 10.48 10.78 10.77
ven-
tory
Tur
nov
er

(F
ord
)
In- 9.18 8.83666666666667 8.59333333333333 7.79666666666667 7.59333333333333
ven-
tory
Tur
nov
er
(in
du
str
y
av
g)
Re- 2.43 2.21 2.83 3.21 3.03
ceiv
able
s
Tur
nov
er

(F
ord
)
Re- 8.23666666666667 7.42888888888889 7.30111111111111 7.26222222222222 7.13111111111111
ceiv
able
s
Tur
nov
er
(in
du
str
y
av
g)

Table Graph 4 Ford's activity turnover ratios for the short term
 A. Inventory Turnover: Ford has slowed down in selling and replacing their inventory, as

shown in the ratio as shown in the ratio over the years going down from 13.1 in 2019 to

10.77 in 2023. Ford has been more efficient in this ratio than the industry which has

consecutively decreased over the years, going from 9.18 in 2019 to 10.77 in 2023. This

decrease is not major enough to cause any risks it is quite slight.

B. Receivables Turnover: By looking at the ratios for Ford it shows a slight increase and

eventually sitting at 3.03 in 2023, but it is not impressive. Ford takes quite longer than the

industry averages (≈ 7) in collecting from their customers, this could result in

bottlenecking their cash flows. Furthermore, worsening their position in paying back

debts.

Section 5: Activity Turnover in days – Short-term

170

150

130
Ford's Activity AV G
N umber Of D110ays
V S Industry A vg
90
(TSLA, GM, TM)
70

50

30

31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23

Day 27.86 32.47 34.81 33.87 33.91
s
In-
ven-
tory

(F
ord
)
Day 42.9833333333333 43.1 42.66 48.0633333333333 49.92
s
In-
ven-
tory
(in
du
str
y
av
g)
Day 53.41 64.48 67.81 62.12 58.84
s
Pay
able

(F
ord
)
Day 55.8833333333333 59.1666666666667 61.2833333333333 64.8166666666667 64.3566666666667
s
Pay
able
(in
du
str
y
av
g)
Day 150.35 165.47 128.91 113.57 120.65
s
S ale
s
Out
stan
ding

(F or
d)
Day 71.54 75.45333 76.96 72.93 74.77333
s
S ale
s
Out
stan
ding
(in-
dus-
try
avg )

Table Graph 5 Ford's activity ratios for the short term in days
 A. Days Payable: Ford has an average payback time in general, and not too different from its

peers in the industry, two months’ to pay off creditors is generally the accepted window of

time.

B. Days Sales Outstanding: A higher DSO indicates that Ford is taking longer to collect

revenues after a sale, Ford has seen a significant increase in 2020 reaching 165 days to

collect and then dramatically decreasing the years following. In 2023 Ford sat at 120 days to

collect revenues but it is much longer than its peers in the industry sitting at 74 days to

collect, which could tie up cash in receivables that could be put into operations and

investments.

Section 6: Fords Dividend

6.5

5.5

Ford's Dividend 4.5

VS Industry Avg
(GM, TM) 3.5

2.5

1.5

0.5

-0.5 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23

Dividend Payout Ratio 0.52 0.42 0.06 0.27 0.3
(Ford)
Dividend Payout Ratio 0.32 0.08 0 0.02 0.05
(industry avg)
Dividend Yield % 6.45 1.71 0.48 4.33 4.92
(Ford)
Days Payable 3.745 1.68 1.36 1.525 1.9
(industry avg)

Table Graph 6 Ford's dividend

 A. Dividend Payout Ratio: Fords dividend went down significantly in 2021 (0.06) from the

previous 0.52 and 0.42, and then recovered in the following years 0.3 in 2023. Ford is

performing better than industry and does not seem to be retaining more cash than the

industry, which is a positive sign for investors showing that the company has a healthy

amount of cash profit.

B. Dividend Yield %: This ratio indicates how much an investor earns in dividends in

relation to the price of the stock. Ford has seen a sharp decline from 2019 to 2021 where

the ratio has hit 0.48% and then a sharp incline to 4.92% in 2023. The industry has stayed

relatively stable, but fords ratios are higher making the stock more lucrative for investors

to buy.

Part 7: Conclusion and Position

Ford is strong in the management of inventory but needs to improve profitability,

liquidity, and collection efficiency. They are trying to manage their debts as seen in their debt to

asset ratio, but are still falling behind. Their yields for the dividend have increased, but the ratios

remain in the zone of wariness.

It is advised to stay in the hold position of the stock if the company starts improving their

profitability and manage their debts efficiently. In the long term they show promising results and

as an indicator of that we can look at the dividend yield and the inventory turnover. In the short

term the company is in a relative volatile state, and has issues in their sales of market trend due

to higher prices of their products compared to industry competitors

It would not be the worst decision to buy the stock in the short term, solely for their

dividend yield and belief in the company to improve profitability from better competition with
the industry. But better timing can result in better profit, perhaps in the next two years the

decision will be clearer.

If there is concern from the high debt to equity ratios, lower cash ratios, and receivables

consideration of selling the stock might rise, but the industry is healthy enough for Ford to

perform better. Any fear of market downturn can be avoided by looking the healthy financial

state of it.
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