Question

Please examine and make an assessment on Ford's debt analysis over the last five years compare to the auto industry? [200 words or more][Will give thumbs up]

Answer 1

Answer

Make an assessment on Ford's debt analysis over the last five years compare to the auto industry:-

The Ford Motor Company’s debt

Introduction:-

The debt/equity ratio can be defined as a measure of a company's financial leverage calculated by dividing its long-term debt by stockholders' equity.

In 2008, when the global economy tumbled into recession, the CEOs of all Big Three US automakers flew into Washington DC to plead for emergency government aid. Unlike General Motors and Chrysler, Ford’s executive Alan Mulally decided against a rescue package from Congress, although the firm recorded losses of around 15 billion US dollars in 2008 – which represented an annual loss of about 11 billion US dollars. The situation was further exacerbated when the company lost market share to Asian carmakers: The automobile manufacturer’s U.S. market share declined by almost nine percent between 1999 and 2009. In order to shave down the significant debt obligations it had, the Ford Motor Company underwent a restructuring process which included the elimination of various brands from its portfolio. As a result, the rating for Ford’s bonds was raised from junk to BB in 2010. In the fiscal year of 2012, the Ford Motor Company reported total debt of around 90 billion US dollars, down from about 154 billion US dollars in the fiscal year of 2008.

Debt statement of last five years(2015 to 2019):-

Selected Financial Data (US$ in millions) 2019 2018 2017 2016
	Automotive debt payable within one year	1,445	2,314	3,356	2,685	1,779
	Ford Credit debt payable within one year	52,371	51,179	48,265	46,984	41,196
	Other debt payable within one year	130	—	—	—	—
	Automotive long-term debt payable after one year	13,233	11,233	12,575	13,222	11,060
	Ford Credit long-term debt payable after one year	87,658	88,887	89,492	80,079	78,819
	Other long-term debt payable after one year	470	600	599	—	—
	Total debt	155,307	154,213	154,287	142,970	132,854

Ford Motor Co., debt to equity, long-term trends, comparison to competitors

Years	Ford Motors	General Motors
Dec 31, 2019	4.68	2.47
Dec 31, 2018	4.29	2.70
Dec 31, 2017	4.42	2.69
Dec 31, 2016	4.90	1.93
Dec 31, 2015	4.64	1.58

Conclusion:

Ss per the above analysis, Ford Motors is good Wealth and Dedt as compared by other Competitors ( General Motors).