Financial Ratios and Trend Analyses

In the second week, you selected a manufacturing company and described its products and costs. For this week, refer back to that company and perform a trend analysis for the most recent 4 years (the financial statements needed for this assignment may be available at https://finance.yahoo.com/). Analyze the trends for 3 line items you believe are most important in evaluating a company for the balance sheet and for the income statement (3 each). In your initial post, answer the following questions:

  • What do you observe in the linear trends (i.e., are values increasing or decreasing)? 
  • What are the trends on a common-size basis?
  • What would be your next steps in completing a thorough analysis of the trends?

In your response to your peers, provide any additional insights you may have based on their analyses.

 

Below is the write up for week two that should be used in this assignment.

 

Costing 

Ford Motor Company is a firm involved in the business of manufacturing and selling automotive products. It also offers financial services to its customers. Its headquarters is located in Dearborn, Michigan, USA. Henry Ford founded Ford in 1903. The company manufactures and sells a wide range of products. These products include luxury vehicles, pickup trucks, automotive parts, SUVs, automobiles, and commercial vehicles. The company incurs a number of manufacturing costs on the products that it sells in different parts of the world. One of the types of costs that the company incurs is known as fixed costs. Fixed costs are those costs that an organization incurs but do not change due to changes in its manufacturing/production output (Drury, 2013). The costs incurred by Ford Motor Company that can be categorized as fixed include depreciation, utilities, insurance, interest expenses, rental costs, lease payments, property taxes, and salaries. These costs do not change despite an increase or decrease in the company’s production output. For example, the company’s property taxes on its production plant do not change, whether its production output increases or decreases in a given financial year. Another category of costs incurred by Ford is known as variable costs. Drury (2013) indicates that variable costs change as a result of production volume changing in an organization. The variable costs that Ford incurs due to its manufacturing activities include direct and indirect labor costs, sales commissions, raw material costs used in the company’s production activities, and manufacturing utility costs. For instance, the costs of raw materials are categorized as variable, as they increase or decrease depending on the company’s production output of its various automotive products. The last category of costs is known as mixed costs. Drury (2013) points out that mixed costs are those that have variable and fixed costs components. The major mixed costs incurred by Ford include water, electricity, and natural gas expenses.

Reference

 

Drury, C. M. (2013). Management and cost accounting. Springer. Retrieved from

https://doc1.bibliothek.li/aaw/FLMF019840.pdf

.

 
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