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Business combination: GM Aquirse Ford Corp - Research Paper Example

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This implies that the net income per share of common stocks and class B stocks of Ford Motor Corp. was $4.94. The total revenues generated by the company in 2011 were…
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Business combination: GM Aquirse Ford Corp
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BUSINESS COMBINATION: GM ACQUIRES FORD CORP Table of Contents Table of Contents 2 GM ACQUIRES FORD CORP 3 References 4 GM ACQUIRES FORD CORP The net income that is attributable to Ford Motor Company was calculated as $20,213 million in the year 2011. This implies that the net income per share of common stocks and class B stocks of Ford Motor Corp. was $4.94. The total revenues generated by the company in 2011 were $136,264 million of which $128,168 was attributable towards its automotive section and $8,096 million towards the financial services offered by the company. The total operating costs amounted to $129,321 million. Hence, the operating income of the company for the year 2011 can be calculated as $(136,264 - 129,321) or $6,943 million (Ford Motor Co., 2012).
The weighted average cost of capital of the company has been calculated to be around 16%.
The intrinsic value of the firm can be calculated as the present value of the cash flows of the company which are discounted by the required rate of return or weighted average cost of capital of the firm. It has been estimated that the intrinsic value of Ford Motor Corp. is nearly double the price of its shares at present (Seekingalpha, 2012).
The average number of outstanding shares Ford Motor Corp. as on 31 December 2011 was around 3,793 million. On that particular date the closing price of its common stock as recorded in the New York Stock Exchange (NYSE) was $10.76 per share. Hence, the market value of the firm can be calculated as around $40.81 billion as on 31 December 2012 (Ford Motor Co., 2012).
The book value of the firm as represented in its financial statements was $15,071 million as at 31 December 2011 (Ford Motor Co., 2012).
References
Ford Motor Co. (2012). 10−K: Annual report 2011. Retrieved from http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMDAzNzk5Ni0xMi0wMDAwMDcvZG9jL0ZvcmRNb3RvckNvbXBhbnlfMTBLXzIwMTIwMjIxLnBkZiZ0eXBlPTImZm49Rm9yZE1vdG9yQ29tcGFueV8xMEtfMjAxMjAyMjEucGRm.
Seekingalpha. (2012). Fords intrinsic value is roughly double its current share price. Retrieved from . Read More
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