Selected balance sheet and income statement information from Ford Motor Company and its two prin- cipal...

 

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Selected balance sheet and income statement information from Ford Motor Company and its two prin- cipal business segments, Automotive and Financial Services, for 2018 follows. $ millions Automotive .. Financial services. Other... Ford Motor, Consolidated.. Pretax Income $5,422 2,627 (3,704) $4,345 Interest Expense $1,228 3,929 $5,157 Net Income $4,717 2,224 (3,246) $3,695 Total Liabilities $ 79,572 146,703 (5,801) $220,474 Equity $20,991 14,975 $35,966 Required a. Compute return on equity (ROE), times interest earned ratio and total liabilities-to-equity for the company's two business segments and the company as a whole. (Use year-end equity for the return on equity calculation.) b. What is your overall assessment of the company's credit risk? Explain. What differences do you ob- serve between the two business segments? Do these differences correspond to your prior expectations given each company's business model? c. Discuss the implications of the analysis of consolidated financial statements and the additional insight that can be gained from a more in-depth analysis of primary business segments. Selected balance sheet and income statement information from Ford Motor Company and its two prin- cipal business segments, Automotive and Financial Services, for 2018 follows. $ millions Automotive .. Financial services. Other... Ford Motor, Consolidated.. Pretax Income $5,422 2,627 (3,704) $4,345 Interest Expense $1,228 3,929 $5,157 Net Income $4,717 2,224 (3,246) $3,695 Total Liabilities $ 79,572 146,703 (5,801) $220,474 Equity $20,991 14,975 $35,966 Required a. Compute return on equity (ROE), times interest earned ratio and total liabilities-to-equity for the company's two business segments and the company as a whole. (Use year-end equity for the return on equity calculation.) b. What is your overall assessment of the company's credit risk? Explain. What differences do you ob- serve between the two business segments? Do these differences correspond to your prior expectations given each company's business model? c. Discuss the implications of the analysis of consolidated financial statements and the additional insight that can be gained from a more in-depth analysis of primary business segments.

Answer rating: 100% (QA)

a Return on Equity ROE Net Income Equity ROE for Automotive segment 4717 20991 022 or 22 ROE for Financial Services segment 2224 14975 015 or 15 ROE for Ford Motor Consolidated 3695 35966 010 or 10 Ti... View the full answer