This report presents the user about the comparison of two companies which are ford motors and General Motors on the basis of various financial data and the figures. For this report, various financial tools have been used.
Ford motors:
Ford Motors Company is an American company which is operating its business into international market. Headquarter of the company is in Dearborn, Michigan. This company has been founded in June, 1903. This company sells commercial and automobile vehicles under the name of Ford brand and the luxurious cars have been manufactured in Lincoln brand. Currently, around 8% of the market share has been owned by the ford Motors of the automobile industry (Home, 2017).
General Motors:
General Motors Company is an American company which is operating its business into international market. Headquarter of the company is in Detroit, Michigan. This company has been founded in September, 1908. This company manufactures, sells, designs and distributes the vehicle parts and the financial services. Currently, this company has its plant into the 35 countries (home, 2017). This company was the largest automobile manufacturing company in the industry from 1931 to 2007.
Analytics:
Financial analysis is a study which assists the chief financial officer, financial manager and the financial analyst to manage and administer the various levels and the performance of the company. In this analytics section, horizontal analysis, vertical analysis and ratio analysis study has been done of both the companies (Larcker, Richardson & Tuna, 2007). The comments and the calculations are as follows:
Vertical analysis:
Vertical analysis is the financial method which is used by the company to analyze the performance of the company on a single basic to analyze and administer the performance of the company on the basis of its sales and the total assets of the company. The comments and the calculations of vertical analysis over both the companies are as follows:
Ford Motors:
The calculations of vertical analysis have been performed over the ford motors to analyze and administer the performance and position of each activity on the basis of sales and total assets of the company. This evaluation has been done over the comapny to analyze that how this company is managing and administering the entire financial figures. The performance and the position of the company have been analyzed in the income statement of the company on the basis of their sales (Juan García-Teruel & Martinez-Solano, 2007). Such as the cost of goods sold is 82.94% on the basis of sales and the gross profit margin and net profit margin of the company is 17.06% and 4.93% which depict that gross profit has been enhanced in 2015 from 2014 and 2013’s data. These all activities assist the company to make a better decision about the performance of the company.
Further, the balance sheet of the company has been analyzed and the study of vertical analysis has been conducted over the comapny to manage and administer the various activities and financial figures on the basis of total assets of the company. The performance and the position of the company have been analyzed in the balance sheet of the company on the basis of their total assets (Hoque, 2012). Such as the total liabilities is 87.22% on the basis of total assets and the share holder equity of the company is 12.78%. These all activities assist the company to make a better decision about the performance of the company.
General Motors:
The calculations of vertical analysis have been performed over the General Motors to analyze and administer the performance and position of each activity on the basis of sales and total assets of the company. This evaluation has been done over the comapny to analyze that how this company is managing and administering the entire financial figures. The performance and the position of the company have been analyzed in the income statement of the General Motors on the basis of their sales. Such as the cost of goods sold is 84.22% on the basis of sales and the gross profit margin and net profit margin of the company is 15.78% and 5.07% in 2015 which depict that gross profit has been enhanced in 2015 from 2014 and 2013’s data (Heisinger, 2009). These all activities assist the company to make a better decision about the performance of the company.
Further, the balance sheet of the company has been analyzed and the study of vertical analysis has been conducted over the comapny to manage and administer the various activities and financial figures on the basis of total assets of the company. The performance and the position of the company have been analyzed in the balance sheet of the company on the basis of their total assets (Weygandt, Kimmel & Kieso, 2015). Such as the total liabilities is 79.27% on the basis of total assets and the share holder equity of the company is 20.73%. These all activities assist the company to make a better decision about the performance of the company.
Horizontal analysis:
Horizontal analysis is the financial method which is used by the company to analyze the performance of the company according to the historical data and past year performance to analyze and administer the performance of the company. The comments and the calculations of horizontal analysis over both the companies are as follows:
Ford Motors:
The calculations of horizontal analysis have been performed over the ford motors to analyze and administer the performance and position of each activity on the basis of their last year figures of the company. This evaluation has been done over the comapny to analyze that how this company is managing and administering the entire financial figures. The performance and the position of the company have been analyzed in the income statement of the company on the basis of 2013 years data. Such as the sales of the company is has been changed by 1.798% from 2013 in 2015. Other changes have also been analyzed and the calculations have been given into the appendix (Morningstar, 2017). These all activities assist the company to make a better decision about the performance of the company.
Further, the balance sheet of the company has been analyzed and the study of horizontal analysis has been conducted over the comapny to manage and administer the various activities and financial figures on the basis of their past performance. The performance and the position of the company have been analyzed in the balance sheet of the company on the basis of their 2013’s data. Such as the total liabilities of the company has been changed by 11.92% on the basis of 2013’s liability amount and the share holder equity of the company has been changed by 7.49% in 2015 (Garrison et al, 2010). These all activities assist the company to make a better decision about the performance of the company.
General Motors:
The calculations of horizontal analysis have been performed over the General Motors to analyze and administer the performance and position of each activity on the basis of their last year figures of the company. This evaluation has been done over the comapny to analyze that how this company is managing and administering the entire financial figures. The performance and the position of the company have been analyzed in the income statement of the company on the basis of 2013 years data. Such as the sales of the company is has been changed by 1.98% from 2013 in 2015. Other changes have also been analyzed and the calculations have been given into the appendix (Garleanu & Pedersen, 2007). These all activities assist the company to make a better decision about the performance of the company.
Further, the balance sheet of the company has been analyzed and the study of horizontal analysis has been conducted over the comapny to manage and administer the various activities and financial figures on the basis of their past performance. The performance and the position of the company have been analyzed in the balance sheet of the company on the basis of their 2013’s data (Morningstar, 2017). Such as the total liabilities of the company has been changed by 25.19% on the basis of 2013’s liability amount and the share holder equity of the company has been changed by -6.60% in 2015. These all activities assist the company to make a better decision about the performance of the company.
Ratio analysis:
Further, the study of ratio analysis has been analyzed. It is the financial method which is used by the company to analyze the performance of the company according to the various liquidity, profitability, solvency and capital structure level to analyze and administer the performance of the company. The comments and the calculations of ratio analysis over both the companies are as follows:
Ford Motors:
The calculations of ratio have been performed over the ford motors to analyze and administer the performance and position of the company on the various levels. This evaluation has been done over the comapny to analyze that how this company is managing and administering the entire financial position. The performance and the position of the company have been analyzed through analyzing the financial figures of the company from the income statement, balance sheet and cash flow statement (Davies & Crawford, 2011). Such as the gross profit ratio of the company from last3 3 years are 4.93%, 2.21% and 4.87% respectively. Other ratio analysis has also been analyzed and the calculations have been given into the appendix. These all activities assist the company to make a better decision about the performance of the company.
Further, the net margin, return on equity, current ratio, quick ratio, receivable collection period, payable payment period, asset turnover, capital position etc of the company has been analyzed and the calculations of ratio analysis has been conducted over the comapny to manage and administer the various activities and financial figures on the basis of their past performance (Warren, Reeve & Duchac, 2011). These activities and the figures of the company help the financial analyst and the managers to make a better decision of the company.
General Motors:
The calculations of ratio have been performed over the General Motors to analyze and administer the performance and position of the company on the various levels. This evaluation has been done over the comapny to analyze that how this company is managing and administering the entire financial position. The performance and the position of the company have been analyzed through analyzing the financial figures of the company from the income statement, balance sheet and cash flow statement. Such as the net profit ratio of the company from last 3 years are 6.36%, 2.53% and 3.44% respectively. Other ratio analysis has also been analyzed and the calculations have been given into the appendix. These all activities assist the company to make a better decision about the performance of the company (Bromwich & Bhimani, 2005).
Further, the net margin, return on equity, current ratio, quick ratio, receivable collection period, payable payment period, asset turnover, capital position etc of the company has been analyzed and the calculations of ratio analysis has been conducted over the comapny to manage and administer the various activities and financial figures on the basis of their past performance (Ansari, 2004). These activities and the figures of the company help the financial analyst and the managers to make a better decision of the company.
Conclusion:
Through the above evaluation, it has been found that both the companies are performing very well and thus the financial performance of the company is also enhancing continuously. Further, through the vertical analysis, horizontal analysis and the ratio analysis, it has been found that the performance of the general Motors is way better than the Fore motors so the investors are suggested to invest into the General Motors.
References:
Ansari S. (2004). Management Accounting: A Strategic Focus. Houghton Mifflin College Devision.
Bromwich, M. & Bhimani, A., (2005). Management accounting: Pathways to progress. Cima publishing.
Davies, T. & Crawford, I., (2011). Business accounting and finance. Pearson.
Garleanu, N. B., & Pedersen, L. H. (2007). Liquidity and risk management (No. w12887). National Bureau of Economic Research.
Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A. (2010). Managerial accounting. Issues in Accounting Education, 25(4), 792-793.
Heisinger K. (2009). Essentials of Managerial Accounting. Cengage learning.
Home. (2017). Ford Motors. Retrieved from https://www.ford.com/ as on 9th Nov 2017.
Home. (2017). General Motors. Retrieved from https://www.gm.com/ as on 9th Nov 2017.
Hoque, Z., (2012). Strategic management accounting. Spiro Press.
Juan García-Teruel, P., & Martinez-Solano, P. (2007). Effects of working capital management on SME profitability. International Journal of managerial finance, 3(2), 164-177.
Larcker, D.F., Richardson, S.A. & Tuna, I., (2007). Corporate governance, accounting outcomes, and organizational performance. The Accounting Review, 82(4), pp.963-1008.
Morningstar. (2017). Ford Motors. Retrieved from https://beta.morningstar.com/stocks/xnys/f/quote.html as on 9th Nov 2017.
Morningstar. (2017). General Motors. Retrieved from https://beta.morningstar.com/stocks/XNYS/GM/quote.html as on 9th Nov 2017.
Warren C., Reeve J. & Duchac J. (2011). Financial and Managerail Accounting. Cengage Learning.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting. John Wiley & Sons.
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