Jalal Pirzada: CEO Maria Legos: COO Colleen McDonald: CFO

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Overview

Industry: Auto & Truck Manufacturers Ford #2 maker of cars and trucks. Major competitors: DaimlerChrysler, General Motors, and Toyota. Ford makes vehicles under Aston Martin, Ford, Jaguar, Lincoln, Mercury, and Volvo brands. Owns a stake in Mazda and has purchased BMW’s Land Rover SUV operations. Hertz car rental, it has an auto finance company, Ford Motor Credit, and owns QualityCare and Kwik-Fit automotive services. The Ford family owns about 40% of the firm’s voting stock / Ford’s employees own 20%.

History

Vision

To be the world’s largest consumer company for automotive products and services.

Mission

We are a global family with a proud heritage, passionately committed to providing personal mobility for people around the world. We anticipate consumer needs and deliver outstanding products and services that improve people’s lives.

Strategic Objectives

• To build strong lasting relationships with our customers and grow our business.

• To improve the fuel economy of our sport utility vehicles 25% by 2005.

• To continue to be a positive contributor to the community.

• To create family service and learning centers at our facilities in the United States in partnership with the United Auto Workers Union.

• In 2002 will launch “Tire Pressure Monitoring System”

Strategic Objectives

(cont..) • To become a consumer focused team.

• To view our customer business from a customers perspective.

• To create an “early warning system” for tire information • To introduce at least 45 new products in the next five years.

• To improve our performance in South America

Financial Objectives

• We plan to continue to deliver superior shareholder returns into the future.

• To be in the top quartile of the Standard & Poor’s 500 for share holder returns.

• To achieve more than 4% return on sales in North America.

• To achieve more than 1% return on sales in Europe.

Financial Objectives

(cont..) • To save $200m in the next 2 years with our Consumer Driven 6-Sigma.

• To reduce total costs by $1 billion.

• To contain capital spending at $8b or less.

• To improve returns and grow earnings 10% of Ford’s credit.

• To increase revenue $5 billion.

Strengths

• Ford Focus and F-Series best selling car and truck in the world • #4 Fortune 500, S&P 500, #89 FT Global 500 • Ford corporate umbrella strong brand names: Aston Martin, Ford, Jaguar, Lincoln, Land Rover, Mercury, 33% Mazda and Volvo • US #1 auto finance company (Ford Motor Credit) & Quality Care • Hertz #1 car rental firm in the world • Kwik-Fit and Automobile Protection Corporation (APCO) • Sold 7424 000 Cars & Trucks up 204 000 units from 1999

Weaknesses

• Decrease in Automotive cash of $5b in 2000 compared to 1999 due bought back shares • Visteon had a $2.3 billion loss due to carrying value was more than fair market value • 6.5 million tires recalled, Bridgestone /Firestone controversy increased higher warranty costs • Assets impairment and restructuring costs in Europe $1019m of Ford brand operations

Weaknesses

(cont..) • South America lost $240m in the automotive sector • Write down of assets associated with Nemak Joint Venture $133 million • Inventory related profit reduction Land Rover $106m

Opportunities

• Implementing a long term European Turnaround strategy • To become an industry leader we will address environmental issues • View our business from the customers perspective; “transaction” mentality to a “relationship” headset

Opportunities

(cont..) • Ford.com & FordDirect.com

• Wingcast will bring wireless, digital information and entertainment services directly into our cars and trucks • Web portal launched with GM, DaimlerChrysler, Bell, and Howell to make distribution of service parts faster and more efficient

Threats

• Difficult economic conditions • Tougher competition • Rapidly advancing technology • Stricter regulations • Changing marketplace • Increasing demands from a variety of stakeholder groups

Market Data: Ford 2000

• HQ: Dearborn, MI • Employees: 345 911 • NYSE: F • 52-Week High: $58.40 Low: $22.75

• Shares Outstanding (M): 1837 • Market Value (M): $43 059.3

• Total Consolidated Revenue: $170.06 Billion, Up 6% from 1999

Ford Motor

Wall Street Consensus

Financial Ratios Analysis

Profitability Ratios

1.

Gross Profit Margin

= Measures how much of each sales dollar earned use to cover operating expenses and profit Gross Profit Margin = Sales – COSG / Sales 170064 – 140499 / 170064 = 26.76% Ford = 26.76% Industry = 27.79% Ford’s every one dollar of sales, it has 27 cents left to cover operating costs and profit.

Profitability Ratios

2.

Profit Margin

= Measures the percentage of profits earned per dollar of sales Profit Margin = (Net Profit / Net Sales) x 100 (3467 / 170064) x 100 = 2.04% Ford = 2.04% Industry = 1.47% Ford makes 2 cents for every $1.00 dollar of sale.

Liquidity Ratios

1.

Current Ratio

= Measures how much current assets are available to meet its maturing short term obligations Current Ratio = Current Assets / Current Liabilities 39310 / 43327 = 0.91

Ford = 0.91:1 Industry = 1.99:1 Ford has 91 cents of current assets to meet $1.00 of its current liability.

Liquidity Ratios

2.

Quick Ratio

= Measures company’s ability to pay off short-term obligations without relying on the sales of its inventories. Quick Ratio = Current Assets – Inventories / Current Liabilities 39310 – 7514 / 43327 = 0.6

Ford = 0.6:1 Industry = 1.4:1 Ford has 60 cents of Quick Assets to meet $1.00 of its current liability.

1.

Leverage Ratios

Interest Coverage Ratio

= is the measurement of how many times interest payments could be made with a firm’s earnings before interest expenses and taxes are paid Interest Coverage Ratio = Earnings Before Interest and Taxes (EBIT) over Interest expense EBIT = 5529 + 1383 + 9519 + 2705 = 19136 Interest Expense = 1383 + 9519 = 10902 19136 / 10902 = 1.7

Ford = 1.7

Industry = 2.1

Ford compared to industry is less solvent and can only meet interest obligation little less than twice a year.

Leverage Ratios

2.

Debt-To-Equity Ratio

= Measures how much funds provided by Creditors versus Owners. Higher Debt to Equity ratio means that creditors have more stake and risk then shareholders. Debt-To-Equity Ratio = Total Debt / Total Stockholders’ Equity 166279 / 18610 = 8.90

Ford = 8.90

Industry = 2.10

Ford has $8.90 of LT debt for every $1.00 of equity.

Activity Ratios

1.

Days of Sales Outstanding

= Measures how long in days it takes a company to convert its sales receivables into cash Days of Sales Outstanding = (Accounts Receivables / Sales) 365 6272 / 170064 x 365 = 13.28 Ford = 13 Days Industry = 121 Days It takes 13 days for Ford to covert its receivables into cash while it takes 121 days for the industry.

Activity Ratios

2.

Inventory Turnover Ratio

= Measures firm’s efficiency in terms of how fast can a company move its inventory in a year Inventory Turnover = Net Sales / Inventory 170064 / 7514 = 17.9

Ford = 17.9 Industry = 8.9

Ford is able to rotate its inventory in sales 18 times in a fiscal year.

Recommendations

• Shift from Transactional view to

Customer relationship

• #2 South Korea car maker

DAEWOO MOTOR

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Acquisitions costs loss

Land Rover, Kwit-Fit and Viseton and

spin off High Unusual Items losses

Assets Impairment & Restructuring. Further Purchases put on

HOLD. Debt is expensive then equity

•

Think

cars available at Avis and other nations wide car rentals