The consolidated statement of income for Ford Motor Company appears at the top of the following page.

1. What is the first thing you notice about the way revenues and expenses are partitioned?

2. For the Automotive division, compute the ratio (Cost of sales/Sales) for each of the three years presented. Interpret the results.

3. Look at the operating results for the Automotive division. Is there any good news for Ford in these results?

4. Depreciation expense is reported by the Financial Services division but not by the Automotive division. Explain why the Automotive division does not report depreciation expense.

5. Which of the company's two divisions seems to be performing better over time?

6. Is Ford a car company that finances automobiles or a finance company that makescars?

Transcribed Image Text:

Ford Motor Company and Subsidiaries Consolidated Statement of Income Selling, administrative and other expenses Interest Income and other non-operating income Equity in net income (loss) of affiliated companies Incomel(loss) before income taxes-automotve~.. -1,054 Provision for credit and insurance losses Incomel(loss) before income taxes-financial services .. INCOME(LOSS) BEFORE MINORITY INTERESTS Minority interests in net incomel(loss) of subsidiaries INCOME FROM CONTINUING OPERATIONS Cumulative effect of change in accounting principle -1.002