Let’s take a look on the finical statement of Ford Motor Company. Ford Motor was one of the only automobile companies that is making a profit and did not have to take any money from the government to stay afloat from demise. Looking at the financial statements we will evaluate Ford Motor Company in detail in reference to the disclosures seen in relation to the cash and cash equivalents, receivables, and inventory. This paper will discuss the numerous disclosures that Ford Motor Company has in their financial statements for their assets.
As we dig deep into the financial statement to seek out disclosures, as well as making a detailed list that will identify the components of the organization’s cash and cash equivalents. Cash and Restricted Cash Disclosure Ford Motor Company Financial statement is loaded with major factual information regarding how well the company is doing. The company actually makes a book of the financial information adding more information then actually needed.
The one great thing Ford Motor Company has made it very easy to locate the information we are looking to investigate because they have made a table of contents that we can go straight to the information we are looking for. When looking at the table of contents the company has listed all the disclosers that company has, what page and reference number that can be utilized to look up information that pertains to what is being investigated. The Cash and Restricted Cash disclosure are one of the contents that are noted in the table contents.
The Cash and Restricted Cash disclosure under Note 5 which will be on page 95 of the financial information Ford Motor company has given. Ford Motor Company Financial Statements states “Cash and cash equivalents that are restricted as to withdrawal or usage under the terms of certain contractual arrangements are recorded as restricted in Other assets on our consolidated balance sheet. Restricted cash does not include required minimum balances, or cash securing debt rose through securitization transactions”.
The statement of Fords also stated that “For cash and cash equivalents, we review our disbursement accounts and reclassify any aggregate negative balances to a liability account included in Payables on our balance sheet”. Looking at the financial report Ford Motor Company reported that they had 789 dollars in the automotive sector and the financial service sector they had 335 dollars in Restricted Cash Flow which totaled to 1,124 dollars (Ford Motor Company 2009 Financial Statements (2009)).
Cash and Cash Equivalents List According to the Financial Statements, the following are the components of the cash and cash equivalent category mentioned in the statements: Bank Accounts Treasury Bills Commercial paper Money market funds Marketable Securities These cash and cash equivalents mentioned in the finance statement, were mentioned to have high liquidity, and are for the need of short term uses if Ford Motor Company has the need. Financial Receivables Disclosure Another disclosure mentioned in the financial statements was in relation to financial receivables, which is one of the largest receivable classifications for Ford Motor Company.
Note 7, entitled Finance Receivables – Financial Services Sector, touches on what the financial receivables entails on the financial statements and how revenue is classified. This note mentions, “Retail finance receivables consist primarily of installment loans and direct financing lease contracts for new and used vehicles with retail customers, daily rental companies, government entities, and fleet customers. ” It also mentions how the revenue from finance receivables is recognized in the financial statements using the interest method.
This note helps users to understand what Ford means when it mentions and discusses information about financing receivables that it is recognizing installment loans and direct financing lease contracts for their vehicles that are used in the varies categories mentioned. Inventory Disclosure One of the inventory disclosures that Ford mentions with their financial statements is Note 10 called Inventories. This disclosure informs users of how inventory is valuated and what method is used for the determination of the inventory.
Unlike many companies, Ford actually used both the LIFO and FIFO method in valuation, which is something vital that a user would need to know when reading the financial statements. This disclosure states that, “All inventories are stated at the lower of cost or market. Cost for a substantial portion of U. S. inventories is determined on a last-in, first-out (“LIFO”) basis. LIFO was used for approximately 28% and 24% of inventories at December 31, 2009 and 2008, respectively.
Cost of other inventories is determined on a first-in, first-out (“FIFO”) basis. ” Overall, the financial statements for Ford Motor Company have a vast amount of information along with a vast amount of disclosures and notes. There were a total of 31 disclosures in the table of content that Form creates alone. The three disclosures that were mentioned above dealt with assets, cash, and liquidity factors. Each disclosure was created in order to assist users with further evaluating, understanding, and making decisions with their financial statements.
Moreover, the disclosures mentioned within Ford Motor Company’s financial statements are vast and thorough, and do what they were meant to do, which is to help the users that evaluate the statements to understand methods used, valuations, as well as understand classifications used within the statements. Reference Ford Motor Company 2009 Financial Statements (2009). Financial Statements. Retrieved on November 1, 2010 from http://www. ford. com/doc/2009_annual_report. pdf